AMERICAN WASTE SERVICES INC, 10-K405, 1998-03-25

AMERICAN WASTE SERVICES INC
10-K405, 1998-03-25
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<PAGE>

1997

================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________

FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the fiscal year ended December 31, 1997

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

Commission File Number 1-10599
______________________________

AMERICAN WASTE SERVICES, INC.
(Exact name of registrant as specified in its charter)

Ohio 34-1602983
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

One American Way, Warren, Ohio 44484-5555
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (330) 856-8800

Securities registered pursuant to Section 12(b) of the Act:

Name of Each Exchange
Title of Each Class on Which Registered
------------------- ----------------------
Class A Common Stock, no par value New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ x ]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
----- -----

The aggregate market value of Class A Common Stock of the registrant held by
non-affiliates on February 9, 1998 was $91.4 million. Assuming that the market
value of the Company's Class B Common Stock was the same as its Class A Common
Stock by reason of its one-to-one conversion rights, the market value of Class B
Common Stock of the registrant held by non-affiliates on February 9, 1998 was
$.7 million. The registrant had 25,300,608 shares of its Class A Common Stock
and 5,124,558 shares of its Class B Common Stock outstanding as of March 2,
1998.

================================================================================
<PAGE>

AMERICAN WASTE SERVICES, INC. AND SUBSIDIARIES
_________________________________

As used in this report, the terms "AWS," "Company," and "Registrant" mean
American Waste Services, Inc. and its wholly owned subsidiaries, taken as a
whole, unless the context indicates otherwise.

_________________________________

TABLE OF CONTENTS

Part I
Page
----
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 12
Item 3. Legal Proceedings........................................... 13
Item 4. Submission of Matters to a Vote of
Security Holders............................................ 14

Executive Officers of the Registrant..................................... 14

Part II

Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters............................. 15
Item 6. Selected Financial Data..................................... 16
Item 7. Management's Discussion and Analysis of
Financial Condition and Results
of Operations............................................... 17
Item 8. Financial Statements and Supplementary
Data........................................................ 23
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure........................................ 38

Part III
Item 10. Directors and Executive Officers of the
Registrant.................................................. 39
Item 11. Executive Compensation...................................... 41
Item 12. Security Ownership of Certain Beneficial
Owners and Management....................................... 43
Item 13. Certain Relationships and Related........................... 44
Transactions

Part IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K..................................... 45

Signatures................................................................ 47

<PAGE>

PART I

ITEM 1. BUSINESS

Merger
- ------

On February 6, 1998, the Company entered into a definitive Agreement and Plan
of Merger pursuant to which the Company will merge with a wholly owned
subsidiary of USA Waste Services, Inc. ("USA Waste"). Prior to the merger, the
Company will contribute its transportation, technical services, waste disposal
brokerage and management, and golf course and related operations together with
certain other assets and liabilities of the parent corporation into a wholly
owned subsidiary, Avalon Holdings Corporation ("Avalon"). After Avalon's stock
has been registered with the Securities and Exchange Commission, it will be
distributed in the form of a dividend from the Company on a corresponding and
pro rata basis to the Company's stockholders immediately prior to the merger
being consummated. The transaction will provide for the Company's stockholders
to receive $4.00 per share in cash plus stock in Avalon. Upon consummation of
the merger, the Company will become a wholly owned subsidiary of USA Waste.

Ronald E. Klingle, Chairman and Chief Executive Officer of the Company,
Darrell D. Wilson, President and Chief Operating Officer of the Company, and
other executive officers of the Company will resign their positions with the
Company and will assume similar positions with Avalon.

The proposed merger has been approved by the Boards of AWS and USA Waste.
Approval by the Company's stockholders is required, in addition to regulatory
reviews and approvals and other customary closing conditions. The parties
expect to complete the transactions during the second quarter of 1998.

General
- -------

The Company was incorporated in Ohio in August 1988 under the name American
Acquisition Corporation. In March 1990, the name of the Company was changed to
American Waste Services, Inc.

In December 1989, after the Company obtained the approval of the Ohio
Environmental Protection Agency (the "Ohio EPA") for the transfer of ownership,
the Company acquired the stock of what is now American Landfill, Inc., a
nonhazardous waste disposal facility. In January 1990, the Company acquired
AWMS, Inc., a hazardous and nonhazardous waste brokerage and management
business; Envirco Transportation, Inc., a hazardous and nonhazardous waste
transporter; Envirco Transportation Management, Inc., a waste transportation
brokerage and management business; and DartAmericA, Inc., a hazardous and
nonhazardous waste transporter and common carrier.

In October 1990 the Company acquired its environmental consulting, laboratory
and remediation companies: Earth Sciences Consultants, Inc., Antech Ltd., and
AWS Remediation, Inc. These technical environmental firms are referred to
collectively as the "Earth Sciences Companies."

In January 1992, following the Ohio EPA's approval, the acquisition of
Mahoning Landfill, Inc. ("MLI"), a nonhazardous solid waste disposal facility,
was consummated. Since January 1990, the Company had managed the facility
pending approval by the Ohio EPA of the transfer of ownership.

In March 1993, the Company through East Liverpool Landfill, Inc. ("ELLI")
acquired the East Liverpool landfill, a nonhazardous solid waste disposal
facility, from the City of East Liverpool, Ohio (the "City"). Since February
1990, ELLI had operated the East Liverpool landfill pending approval by the Ohio
EPA of the transfer of ownership and issuance of a Permit To Install ("PTI").

During the third quarter of 1996, the Company, through newly organized
subsidiaries, American Waste, Inc., American Waste of Mahoning Valley, Inc., and
America Waste of Northeast Ohio, Inc., started commercial collection operations
with the intent to begin residential collection in the future.

During the third quarter of 1997, through a newly organized subsidiary,
American Landfill Management, Inc. ("ALMI"), the Company started a captive
landfill management operation.

The Company's primary business segment provides integrated waste management
and environmental services, including disposal, collection, technical,
transportation and disposal brokerage and management services, to industrial,
commercial, municipal and governmental customers primarily in selected eastern

1
<PAGE>

and midwestern U. S. markets. The Company's principal activities include the
operation of nonhazardous solid waste landfills in Ohio for the disposal of
special waste and municipal solid waste; transportation of hazardous and
nonhazardous waste; transportation and disposal brokerage and management
services; collection services; and environmental engineering, site assessment,
analytical laboratory and remediation services. The Company, as part of its
transportation business, also operates a second business segment: a common
carrier of general and bulk commodities within the United States and several
provinces of Canada.

Waste Disposal Services
- -----------------------

It is the Company's policy to make its landfills available, on a priority
basis: first, for waste generated by the local communities in which its
landfills are located; and second, for the state's disposal needs. Any
remaining capacity is utilized for out-of-state waste. The Company believes
this policy has enabled it to maintain good relations with the communities in
which its landfills operate and governmental authorities. During 1997, 1996 and
1995 approximately 71%, 78% and 66%, respectively, of the waste received by its
landfills was generated in the State of Ohio.

The Company's landfills accept municipal solid waste and special waste for
disposal. Special waste is waste material that is neither refuse nor garbage,
nor hazardous waste. Special waste includes continuously generated material
such as nonhazardous industrial waste products (including those produced by air
and water pollution control processes), combustion ashes, and industrial and
municipal sludges. The Company also considers material removed from a site as
part of a remediation project (such as asbestos or soils contaminated with
petroleum or certain other chemicals), tires and demolition debris as special
waste. Special waste does not require the extensive and costly treatment and
sealed containment required for hazardous waste. Proper transportation,
treatment and disposal of special waste does, however, require the technical
expertise to determine that the material is in fact nonhazardous, because the
failure to accurately identify the waste can expose the generator and the waste
disposal facility to substantial liability. The Company relies on its
management and other key personnel, with their professional and technical
backgrounds, in both the nonhazardous and hazardous waste industry, to provide
this technical expertise.

Facilities

The Company, through wholly owned subsidiaries, owns three nonhazardous solid
waste disposal facilities in Ohio operated by American Landfill, Inc. ("ALI"),
Mahoning Landfill, Inc. ("MLI"), and East Liverpool Landfill, Inc. ("ELLI"). ALI
also owns and operates the Company's tire monofill and the Company's liquid
solidification facility which has the capacity to accept and properly solidify
in excess of 50,000 gallons per day of nonhazardous liquid wastes. Following is
information as to the location, approximate total property acres, permitted
facility acres and currently permitted daily waste receipt limits of the
Company's disposal facilities.

<TABLE>
<CAPTION>
Total Permitted Permitted Daily
Property Facility Waste
Landfill Location Acres Acres Receipt Limit
-------- -------- -------- --------- ---------------
<S> <C> <C> <C> <C>
American Landfill Waynesburg, Ohio 870 510 8,000 tons
Tire Monofill Waynesburg, Ohio 80 80 492 tons
Mahoning Landfill New Springfield, Ohio 200 120 2,500 tons
East Liverpool Landfill East Liverpool, Ohio 200 150 1,500 tons
</TABLE>

In May 1996, ALI received an expansion permit that increased the disposal
capacity of the landfill to approximately 23 million cubic gross air yards,
thereby significantly increasing the life of the landfill. During 1997, 1996
and 1995 ALI operated, on average, at approximately 55%, 52% and 50%,
respectively, of its permitted daily waste receipt limit. Municipal solid waste
represented approximately 54%, 60% and 54%, respectively, and special waste
represented approximately 46%, 40% and 46%, respectively, of the total volume of
waste disposed of at ALI during 1997, 1996 and 1995.

2
<PAGE>

Under Ohio law and related regulations, whole scrap tires as well as shredded
scrap tires are no longer permitted to be disposed of in sanitary landfills. In
August of 1992, the Ohio EPA issued to ALI, Ohio's first PTI for a tire
monofill. ALI, which acquired tire shredding and related equipment, began
operating the tire monofill in January 1995. The tire monofill, which is
located adjacent to the American landfill, has a permitted daily capacity of 492
tons and is expected to have the capacity to dispose in excess of 75 million
shredded tires.

The Company completed construction of a landfill gas extraction facility at
its American landfill and began production in September 1996. The production
and sale of the landfill gas entitle the Company to qualify for tax credits from
the production of fuel from a nonconventional source.

On March 1, 1995, the Company received a final Permit to Install ("PTI") from
the Ohio EPA to upgrade the Mahoning landfill facility to comply with "best
available technology" standards. The final PTI increased Mahoning Landfill,
Inc.'s daily waste receipts limit to 2,500 tons per day from 1,500 tons per day
and increased the Mahoning landfill's total capacity to approximately 10 million
cubic gross air yards. In 1997, 1996 and 1995 MLI operated, on average, at
approximately 26%, 21% and 20%, respectively, of its permitted daily waste
receipt limit of 2,500 tons per day.

In light of market conditions, regulatory requirements and other business
factors, in 1995 ELLI determined that the significant capital investment
necessary to develop the East Liverpool landfill facility in the foreseeable
future was not economically justified. Although this facility has permitted
capacity of approximately 13.7 million cubic gross air yards, as a result of the
decision not to further develop the facility in the foreseeable future, it has
very limited airspace currently available for waste disposal. The Company
significantly reduced the quantity of waste accepted for disposal commencing in
July 1996. In 1995 the East Liverpool landfill operated, on average, at
approximately 28% of its current permitted daily waste receipt limit. Both
municipal solid waste and special waste may be disposed of at the East Liverpool
landfill.

The Company estimates that the remaining permitted disposal capacity of its
facilities is approximately 30 million cubic gross air yards. Such overall
disposal capacity does not include approximately 13.6 million cubic gross air
yards of permitted capacity at the Company's East Liverpool landfill which the
Company does not intend to develop in the foreseeable future. The relationship
of the compactability and weight of waste to the amount of air space utilized to
dispose of the waste can vary significantly between different categories of
waste which otherwise meet the Company's permits and disposal standards. As a
result, the actual volume of waste (measured in either cubic yards or tons) that
the Company is able to dispose of will depend upon the mix of waste accepted,
its weight and compactability, operating practices and the airspace utilized by
cover material. The Company does not have any guidelines respecting acceptance
of waste based upon compactability and accepts all categories of waste which
otherwise meet its permit and disposal standards.

Waste Disposal Operations
- -------------------------

The Company's landfill customers are charged a tipping fee for the waste
disposed of at the facility. The volume of waste received by the Company's
landfills is somewhat seasonal with generally greater amounts of waste received
in the warmer months. Additionally, the volume of waste received by the
Company's landfills is somewhat dependent on general economic conditions.
Restrictions or impediments (including increased governmental fees) on the
acceptance of waste could adversely affect the Company's disposal revenues.

Waste Monitoring. Because waste generators remain liable for their waste both
before and after disposal, they require assurances that their waste will be
safely and properly transported, treated and disposed. To give customers this
confidence, as well as to limit its own potential liability, the Company has
instituted procedures designed to minimize the risks of improper handling or
disposal of waste.

Prior to acceptance of special waste for disposal, a potential customer must
complete a detailed questionnaire setting forth the amount, chemical
composition and any special characteristics for each separate waste to be
disposed in a Company landfill. Representative samples of the waste are
analyzed by a laboratory selected from a Company-approved list of state or
federally certified laboratories. In some cases, additional samples will be
taken for analysis by the Company. In addition, a Company representative
generally inspects the process generating the waste, the location where the
waste may be

3
<PAGE>

temporarily stored or the site of the remediation project producing the waste,
and interviews representatives of the generator familiar with the waste. This
inspection, along with the laboratory results, allows the Company to determine
whether the waste is within acceptable parameters for disposal in its
facilities, and if so, what special handling and treatment procedures must be
instituted. If the waste is continuously generated, new representative samples
are tested on a periodic basis.

These procedures are important to both the Company and its customers since the
key to proper handling of special waste is accurate identification. Hazardous
waste which is not identified as such and thus improperly disposed can result in
substantial liability to the waste generator and the disposal facility, and
potentially to all other waste generators that have used the disposal site.
Conversely, waste that could safely and legally be disposed of in a solid waste
landfill but is instead sent to a hazardous waste facility for treatment and
disposal will result in substantial and unnecessary expense to the generator.

If the waste is identified as hazardous or requires special treatment that the
Company is unable to provide, or contains levels of any of a large list of toxic
or otherwise dangerous chemicals that the Company has determined are
unacceptable for its facilities, the Company will not accept the waste for
disposal at its facilities. American Waste Management Services, Inc. ("AWMS"),
the Company's waste disposal brokerage subsidiary, can assist customers to
direct wastes to alternative, approved treatment and disposal sites if those
wastes cannot be accepted into a Company facility. Additionally, even if a
waste is within acceptable parameters for disposal at its landfills, the
Company's brokerage operations may direct the waste to an unaffiliated site
better suited to a customer's location.

The Company manages the transportation of substantially all special waste
accepted for disposal in its facilities, by utilizing either the Company's
transportation equipment or Company-approved carriers. See Item 1.
"Transportation Services." Managing the transportation ensures the integrity
and reliability of the transporter, verifies the type of waste loaded for
delivery and regulates the flow of trucks into the landfills. The Company
assigns a waste identification number to each special waste accepted for
disposal in one of its facilities, and provides the customer with preprinted
transportation manifests bearing such number. Each transportation manifest
provides for certification by the waste generator that the waste delivered to
the carrier conforms to the waste previously approved for disposal. The
manifest is also signed by the carrier upon pickup and by the landfill upon
delivery, and a signed copy is returned to the customer. Accordingly, each
truckload of special waste can be traced from waste generator to disposal at the
landfill, and the customer can be assured that its waste has been properly
transported and disposed.

At the landfills, the Company's employees visually inspect each truckload of
special waste for any nonconformity with the waste identified by the waste
number appearing on the manifest. In addition, periodic testing and analysis of
waste on a random basis is performed. If it appears that the material in the
truck does not conform to the specifications of the approved waste or is
unacceptable for any other reason, the Company will not accept the waste for
disposal.

Residential and commercial garbage and refuse is delivered to the landfills
for disposal either directly after collection, or in certain cases, from
regional transfer stations. In addition, individuals bring small loads of
garbage or refuse to the facilities. Employees of the Company visually inspect
all garbage and refuse at the landfill for any irregularities which would
warrant further investigation or rejection.

Cell preparation; Waste Disposal; Cell Closure. The Company disposes of
special waste and municipal solid waste at its landfill facilities in a series
of "cells", which it prepares by excavating earth to a layer of naturally
present clay. This clay is highly impermeable and thus prevents liquids from
seeping through the base of the landfill and mixing with the groundwater.
ALI's, MLI's and ELLI's permits, as well as The United States Environmental
Protection Agency's "Subtitle (D) Regulations," require the use of a composite
liner system consisting of clay and synthetic materials and a leachate
collection system in connection with the construction of new cells where no
previous waste placement activities have occurred. Cell preparation procedures
at the Company's disposal facilities comply with such requirements and their
respective permits.

The Company's employees direct trucks to deposit their waste at the "working
face" of the currently operating cell where the waste is again inspected prior
to special equipment spreading and compacting the deposited material into the
cell. Most special waste and municipal solid waste is deposited upon its
arrival at the landfill into the presently operating cell. Certain wastes,
however, require special treatment

4
<PAGE>

and/or segregated disposal. For example, Ohio law prohibits solid waste
landfills from accepting waste containing free liquids. ALI operates a
solidification facility, under a special permit from the Ohio EPA, which
solidifies liquid waste so that it can then be disposed of in the landfill. In
addition, ALI currently operates, under a special permit from the Ohio EPA,
single purpose cells for sealed containers of asbestos, which are disposed of
using special procedures to avoid the release of fibers.

At the end of each day, the Company covers the waste deposited in each cell
with either a layer of earthen material, which applicable regulations require to
be at least six inches thick, or an approved synthetic daily cover. Use of
synthetic daily cover provides more efficient utilization of disposal capacity.
Once a portion of a landfill reaches its permitted capacity, or is otherwise
closed, it is covered with clay, synthetic material, topsoil, other earthen
materials and vegetation in accordance with applicable permits, licenses and
regulations.

The disposal of yard waste in sanitary landfills is restricted. In order to
provide yard waste management services to its customers, the Company operates a
Class IV yard waste composting facility at its American landfill and has
instituted yard waste restriction programs at all three landfill facilities.

As a result of federal and state laws and regulations, the Company has future
financial obligations with regard to closure costs and post-closure monitoring
costs associated with the disposal sites it operates. Although the precise
amount of these future obligations cannot be determined, the Company has
developed procedures to estimate such total projected costs based on currently
available facts, existing technology and presently enacted laws and regulations.
As of December 31, 1997, the Company estimates that the remaining total closure
costs and post-closure monitoring costs it will incur for all of its disposal
facilities is approximately $30.2 million. In accordance with Ohio's financial
assurance regulations, the Company currently estimates that it will be required
to provide approximately $31.7 million of financial assurances to the State of
Ohio; however, such financial assurances are reduced by actual expenditures.
The Company utilizes insurance to satisfy the financial assurance requirements
for its American and Mahoning landfill facilities and its tire monofill
facility. The Company utilizes a trust fund to satisfy the financial assurance
requirements for its East Liverpool landfill facility.

Transportation Services
- -----------------------

General

The Company transports waste and other products on behalf of customers within
the United States and portions of Canada, and provides transportation brokerage
and management services. The Company's transportation operations have the
equipment and the expertise to transport virtually all types of waste and
commodity products. In addition the Company provides intermodal transportation
services.

The Company estimates that approximately 8%, 7% and 7% of the net operating
revenues of the integrated waste management and environmental services segment
involved hauling waste to the Company's landfills during 1997, 1996 and 1995,
respectively. The Company also transports hazardous waste to waste treatment
and disposal facilities owned by third parties. In providing this service, the
Company utilizes a variety of trucks, dump trailers, tankers and other equipment
specially designed and constructed to transport hazardous waste. All drivers
engaged in the transportation of hazardous waste for the Company have completed
all training mandated by applicable governmental regulations. Each driver also
attends safety meetings on approximately a quarterly basis and each possesses
all required

5
<PAGE>

governmental certificates. The transportation of hazardous waste represented
approximately 22%, 20% and 22% of the net operating revenue of the integrated
waste management and environmental services business segment in 1997, 1996 and
1995, respectively. Carriers of hazardous waste can be held responsible under
environmental laws and regulations for improper handling of such waste. See Item
1. "Environmental Regulations."

As is the case with any transportation company, an increase in fuel prices may
subject the Company to increased operating expenses, which the Company may not
be able to pass on to its customers. Restrictions or impediments to the
interstate transportation of waste or the acceptance of out-of-state waste for
disposal at the Company's landfills could adversely affect the Company's
transportation revenues.

DartAmericA, Inc. ("Dart")

Through Dart and its subsidiaries, the Company is engaged in the
transportation of waste and is a common carrier of both general and bulk
commodities. Dart, which commenced operations in 1965, also engages in the
brokerage of transportation.

Dart is a fully licensed hazardous and nonhazardous waste carrier.
Approximately 60%, 59% and 62% of the revenue generated by Dart in 1997, 1996
and 1995, respectively, related to the transportation of waste. Hazardous waste
represented 67%, 66% and 66% of Dart's waste transportation revenues in 1997,
1996 and 1995, respectively.

Dart, which is licensed as a common carrier in 49 states and several provinces
of Canada, derived 40%, 41% and 38% of its revenues in 1997, 1996 and 1995,
respectively, from the transportation of bulk commodities, such as coal, salt,
sand and ash, as well as steel products and heavy machinery. A common carrier
engaged in the transportation of goods owned by others is subject to federal and
state regulations which establish operating and safety standards. Carriers are
liable for loss of or damage to goods entrusted to their care. Public liability
and property damage insurance is compulsory.

A majority of the truck power units, and a substantial number of the trailers,
used by Dart are owned and operated by independent truckers who receive a
negotiated percentage of the gross revenue from the carriage. Most of the
approximately 80-100 independent truckers who provide services for Dart have
been doing so for a number of years. These independent truckers pay for fuel
and all other expenses with the exception of automotive insurance, hazardous
waste permits, special equipment required to carry hazardous waste and other
safety equipment, all of which are provided by Dart. Equipment used by the
independent truckers is inspected at least annually and is subject to random
inspections by Dart. See Item 2. "Properties."

Dart leases roll-off containers to customers that fill the containers with
waste as it is generated. Using specially designed trailers, Dart periodically
picks up and replaces the containers, which it transports to the Company's
landfills or other approved facilities for disposal. As is the case with any
waste accepted for disposal at a Company facility, the Company carefully
monitors the waste deposited in the roll-off containers. See Item 1. "Waste
Disposal Operations." All hazardous waste is transported by roll-off trailers,
specialized tanker, van, dump or flatbed trailers to treatment and disposal
facilities owned by third parties. See Item 2. "Properties."

Envirco Transportation Management, Inc. ("ETMI")

ETMI provides waste transportation brokerage and management services to a
variety of customers. ETMI's operations are primarily engaged in securing
transportation, through Dart or otherwise, for special waste destined for the
Company's landfills. ETMI also arranges transportation of waste to other
disposal sites which are better suited to the customer's location or which are
equipped to accept and treat hazardous waste or other waste that the Company's
landfills do not accept. The Company maintains lists of approved transporters,
which it periodically reviews and updates, and the Company will only engage
transporters that it believes are reliable and efficient in providing the
services required in accordance with the Company's standards.

6
<PAGE>

Collection Services
- -------------------

During the third quarter of 1996, the Company, through newly organized
subsidiaries, American Waste, Inc., American Waste of Mahoning Valley, Inc., and
American Waste of Northeast Ohio, Inc., started commercial collection operations
with the intent to begin residential collection in the future. The Company has
initially targeted local markets in which the Company's American and Mahoning
landfills are located. The Company expects its collection operations to provide
its disposal facilities with municipal solid waste which the Company's landfills
may not otherwise receive.

Consulting, Analytical and Remediation Services
- -----------------------------------------------

The Earth Sciences Companies provide a wide range of technical environmental
services including environmental impact studies, landfill design, permitting,
site assessments, waste management and minimization consulting, laboratory
services, environmental site remediation and environmentally related
construction activities including removal of underground storage tanks,
remediating Superfund sites and conducting landfill closure and decommissioning.
These companies also provide hazardous and nonhazardous waste management,
groundwater remediation, and underground storage tank management. The Earth
Sciences Companies are often engaged to perform a remedial
investigation/feasibility study (ORI/FSO), which first entails performing a
site assessment involving the gathering of samples from the contaminated site,
followed by laboratory analysis to establish or verify the nature and extent of
the contaminants. Alternative solutions to remedy the particular problem are
then developed, evaluated and presented to the client. The Earth Sciences
Companies are equipped to implement the mitigation and decontamination program
then selected by the client and approved by the appropriate regulatory agency.
When implementing such a program, the Earth Sciences Companies may employ the
Company's transportation, disposal and/or brokerage services. The Earth
Sciences Companies also possess the expertise to perform the evaluation and
analysis necessary to advise clients respecting compliance with federal and
state environmental regulations, and have assisted clients in developing waste
management and compliance policies, including the development of plans for waste
minimization and disposal. The Earth Sciences Companies also provide services
related to evaluation of the environmental condition of real estate for law
firms, banks or potential purchasers as well as expert environmental testimony
in legal proceedings.

The Earth Sciences Companies also provide comprehensive organic, inorganic and
radiochemical laboratory services including water and waste water analyses,
waste characterization, sludge, soil and rock analyses and related bench
studies.

The Earth Sciences Companies have extensive experience in siting, designing,
constructing, monitoring and performing closure of landfills. As a result, the
Company has utilized the Earth Sciences Companies to expand the permitted
capacity of its landfills, and to obtain permits for the design and development
of new sites by providing the required scientific, engineering and support
services. The Earth Sciences Companies can also assist in the design,
construction and maintenance of permitted on-site disposal facilities for the
Company's customers.

In 1997, 1996 and 1995, the Earth Sciences Companies derived approximately
95%, 96% and 95%, respectively, of their revenues from environmental
assessments, RI/FS's, industrial consulting, site remediation and other
laboratory analyses services, and 5%, 4% and 5%, respectively, from consulting
work in the solid waste disposal area. The Earth Sciences Companies obtained
approximately 3%, 4% and 5% of their revenues from the Company in 1997, 1996 and
1995, respectively.

Avalon Lakes
- ------------

In June 1990, the Company purchased approximately 5.6 acres of real estate
located in Howland Township, Ohio, on which it constructed a 26,000 square foot
office building to serve as its corporate headquarters. In connection with the
acquisition of such property, the Company's subsidiary, Avalon Lakes Golf, Inc.
("ALGI"), acquired the real and personal property associated with the Avalon
Lakes Golf Course, an 18-hole public golf course adjacent to the office
property. See Item 2. "Properties."

7
<PAGE>

Environmental Regulations
- -------------------------

General

The Company is subject to extensive and evolving environmental laws and
regulations that have been enacted in response to technological advances and the
public's increased concern over environmental issues. These regulations are
administered by the U. S. Environmental Protection Agency (the "EPA"), the Ohio
EPA, and various other federal, state and local environmental, zoning, health
and safety agencies, many of which periodically examine the Company's operations
to monitor compliance with such laws and regulations. The Company believes it
is currently in substantial compliance with applicable federal, state and local
laws and regulations. Furthermore, the Company believes there will be increased
regulation and legislation related to the waste management industry.

The federal government as well as numerous states and local governmental
bodies are increasingly considering, proposing or enacting legislation to either
restrict or impede the disposal and/or transportation of waste. A significant
portion of the Company's disposal and transportation revenues are derived from
the disposal or transportation of out-of-state waste. All of the Company's
landfills are located within the State of Ohio. Any regulation restricting or
impeding the transportation of waste, the acceptance of out-of-state waste for
disposal at any of the Company's landfills, or which levies significant taxes or
fees on the disposal of waste could have a significant negative effect on the
Company. The Company's landfill and transportation operations may also be
affected by the trend toward laws requiring the development of waste reduction
and recycling or other programs, although the Company does not expect recycling
programs to have a great impact on special waste disposal.

In order to operate a landfill, the Company must possess and maintain one or
more operating permits and licenses and, in certain instances, applicable
regulatory approvals. Obtaining the necessary permits and approvals in
connection with the acquisition, development or expansion of a landfill is
difficult, time-consuming and expensive, and is frequently opposed by local
citizen groups. Once obtained, operating permits are subject to modification
and revocation by the issuing agency. The Company's landfill operations are
also subject to evolving and expanding operational, monitoring, site maintenance
and closure and post-closure requirements.

In order to transport hazardous waste and, in certain cases, special waste,
the Company must possess and maintain one or more state operating permits.
These operating permits must be renewed annually and are subject to modification
and revocation by the issuing agency. In addition, the Company's waste
transportation operations are subject to evolving and expanding operational,
monitoring and safety requirements.

In the ordinary course of its disposal and transportation operations, the
Company may from time to time receive citations, notices or comments from
regulatory authorities that such operations are not in compliance with
applicable environmental regulations. These agencies may seek to impose fines
on the Company or to revoke or deny renewal of the Company's operating permits
or licenses, or to require the Company to remediate environmental problems at
its sites relating to waste disposed of by the Company or its predecessors, or
resulting from its transportation operations. Upon receipt of such citations,
notices or comments, the Company works with the authorities in an attempt to
resolve the issues raised. Failure to correct the problems to the satisfaction
of the authorities could lead to fines or a curtailment or cessation of such
operations.

As a result of participating in the waste management industry, many of the
Company's capital and other expenditures relate to compliance with existing, and
in some cases, proposed environmental laws and regulations. Compliance with
future environmental laws and regulations may require the Company, together with
others in the waste management industry, to make significant capital and
operating expenditures. There can be no assurance that the Company would be
able to recover all such expenditures from its customers or that its earnings or
competitive position would not be materially and adversely affected. See Item
1. "Waste Disposal Services - Facilities" and "Cell Preparation; Waste
Disposal; Cell Closure."

8
<PAGE>

Statutes

The following are the principal statutes affecting the Company's business:

The Ohio Solid Waste Law (the "Ohio SW Law"). In June 1988, the Ohio
legislature enacted the Ohio SW Law (often referred to as House Bill 592 and
codified as Ohio Revised Code Chapter 3734) in response to a perceived solid
waste disposal crisis facing the State of Ohio. Although hazardous waste and
municipal solid waste have been subject to state and/or federal regulation for
over two decades, House Bill 592 was the first comprehensive measure by the
State of Ohio addressing the waste industry. The Ohio SW Law enables the Ohio
EPA, through the Ohio Attorney General, to conduct criminal investigations and
background checks of officers, directors and owners of solid waste management
companies, which are required for landfill permits and for transfer of ownership
of landfills.

The Ohio SW Law and the regulations promulgated thereunder, require landfill
operators to employ the "best available technology" in their daily operations
and to submit annual reports to the Ohio EPA respecting operations and
procedures. These regulations also require landfills to upgrade their cell
preparation and closure and post-closure procedures to "best available
technology" in accordance with plans which must be submitted to, and approved
by, the Ohio EPA in accordance with specified schedules. These plans must
provide for landfill cell liners consisting of at least five feet of highly
impermeable clay (which must be recompacted) and a layer of synthetic material,
as well as a leachate collection system designed to remove, for treatment or
disposal, any water which collects on the top of the landfill liners. Upon
approval, the upgrading will be implemented over the life of the landfills as
current cells are closed and additional cells are prepared for use. The
regulations do not require previously filled areas to meet all "best available
technology" requirements. The Ohio SW Law also requires landfill operators to
meet and maintain certain net worth and financial tests, to post bonds or make
similar financial assurance arrangements, or to deposit sufficient funds into a
state approved trust account, during the operation of the landfill to assure
that adequate resources will be available for cell-closure and post-closure
monitoring. See Item 1. "Waste Disposal Services."

The Ohio SW Law and the regulations promulgated thereunder authorize the
formation of local solid waste management districts to further regulate the
disposal of solid waste. Certain categories of applications for PTIs must be
reviewed and approved by the district prior to submission to the Ohio EPA.
Subject to the provisions of the Ohio SW Law, districts are authorized (i) to
prevent the disposal of wastes generated within such district at facilities that
are not designated by such district in accordance with the Ohio SW Law and, (ii)
prevent disposal facilities located within the district and designated by such
district from accepting for disposal wastes generated outside of the district.
If districts were to successfully exercise such authority, the result could have
a material adverse effect on the business of the Company. Each district also
has the authority to impose a fee on waste deposited in landfills located within
its boundaries. These solid waste management district fees are currently
limited to a maximum of $4.00 per ton for wastes generated outside of the
district but within Ohio and $2.00 per ton for waste generated within the
district or outside of Ohio. The districts are also empowered to impose a fee
on the generation of waste within such district. The Ohio SW Law also
authorizes the State of Ohio to collect a fee on waste disposed of in an Ohio
landfill at the present rate of $1.75 per ton. Municipal corporations or
townships in which landfills are located are authorized to collect an additional
$.25 per ton. The Company is obligated to pay these governmental fees which
have been imposed on its facilities whether or not it collects such fees from
its customers.

Ohio Senate Bill 165, passed by the Ohio legislature in October 1993, required
the Ohio EPA to promulgate rules governing storage, collection, transportation
and disposal of scrap tires. The Ohio EPA promulgated rules effective March 1,
1996 relating to such legislation. Whole scrap tires as well as shredded scrap
tires are no longer permitted to be disposed of in sanitary landfills.

The Resource Conservation and Recovery Act of 1976 ("RCRA"). RCRA regulates
the handling, transportation and disposal of hazardous and nonhazardous waste
and requires states to develop programs to insure the safe disposal of solid
waste in sanitary landfills, which programs will require special waste to be
disposed of off-site to a greater degree than in the past. In October 1991 the
EPA promulgated subtitle D of RCRA ("Subtitle D"), and announced the
Comprehensive Solid Waste Management Guidelines, which include location
standards, facility design, operating criteria, closure and post-closure

9
<PAGE>

requirements, financial assurance standards and groundwater monitoring as well
as corrective action standards, many of which have not commonly been in place or
enforced at landfills. On October 9, 1993 Subtitle D became effective and
states are required to revise their landfill regulations to meet these
requirements in order to obtain authorization to enforce the provisions of
Subtitle D. Ohio has revised its regulations and is currently so authorized.
Because some parts of the new regulations will be phased in over time, the full
effect may not be apparent for several years. Regulations currently in effect
pursuant to the Ohio SW Law include, in many cases, stricter standards and
requirements for solid waste landfills such as those operated by the Company
than required by Subtitle D. Several bills have been proposed or introduced
into Congress relating to the "Reauthorization of RCRA." Such bills vary in
scope and nature with several addressing the transportation and disposal of out-
of-state waste. The Company is presently unable to determine what legislation,
if any, will ultimately result with respect to the "Reauthorization of RCRA."

The following summarizes certain other environmental statutes affecting the
business of the Company:

The Federal Water Pollution Control Act (the "Clean Water Act"). The Clean
Water Act established rules regulating the discharge of pollutants from a
variety of sources, including solid waste disposal sites, into streams or other
surface waters. Should runoff or collected leachate from the Company's
landfills be discharged into surface waters, the Clean Water Act would require
the Company to apply for and obtain discharge permits, conduct sampling and
monitoring and, under certain circumstances, reduce the quantity of pollutants
in those discharges.

The Comprehensive Environmental Response, Compensation, and Liability Act of
1980 ("Superfund" or "CERCLA"). CERCLA addresses problems created by the
release of any hazardous substance into the environment. CERCLA's primary
mechanism for remediating such problems is to impose strict joint and several
liability for cleanup of disposal sites among all past and current owners and
operators of the site as well as the waste generators and the transporters. The
costs of CERCLA cleanup can be very substantial. Liability under CERCLA does
not depend upon the existence or disposal of "hazardous wastes" but can also be
founded upon the existence of even very small amounts of the more than 700
"hazardous substances" listed by the EPA. See Item 3. "Legal Proceedings."

The Clean Air Act, as amended (the "Clean Air Act"). The Clean Air Act
provides for federal, state and local regulation of the emission of air
pollutants and has been construed by the EPA to apply to landfills. The 1990
amendments to the Clean Air Act focused on reducing acid rain pollutants and
urban smog and eliminating most toxic chemical emissions from industrial plants
by the year 2000. The EPA has developed air emission guidelines for solid waste
landfills. These rules govern emissions on non-methane organic compounds and
methane and were proposed on May 30, 1991.

State Regulation. In addition to federal laws and regulations, each state in
which the Company now operates, or may operate in the future, has laws and
regulations governing handling, transportation and disposal of waste, water and
air pollution and, in most cases, the design, operation, maintenance, closure
and post-closure maintenance of landfills.

Sales and Marketing
- -------------------

The Company's sales and marketing strategy focuses upon the cross-selling of
each of the integrated waste management and environmental services provided by
the Company. The Company's sales force is familiar with the various
environmental services offered by the Company and directs his or her efforts
toward selling an integrated waste management package to potential customers.
The Company has established a separate sales force for its collection operations
which primarily focuses on commercial municipal solid waste collection
opportunities.

Competition
- -----------

The nonhazardous solid waste management business is highly competitive and
fragmented. The industry is characterized by several large national waste
management companies as well as numerous local and regional companies of varying
sizes and financial resources. The Company competes for business primarily by
providing a full range of quality waste management and environmental services
at a competitive price.

10
<PAGE>

Competition among landfills is based upon price, service and the proximity of
the landfill to the waste generator. The Company focuses on the special waste
segment of the industry, in addition to the disposal of municipal solid waste.
Competitors previously engaged primarily in the collection and disposal of
municipal solid waste and/or disposal of hazardous waste have significantly
increased their presence in the special waste market. Competition may also be
affected by the increasing national emphasis on recycling, composting,
incineration and other waste reduction programs or any legislation restricting
or impeding the transportation and/or disposal of waste, or imposing significant
taxes or governmental fees on disposal of waste.

The Company is subject to extensive and evolving environmental laws and
regulations that have been enacted in response to technological advances and the
public's increased concern over environmental issues. As a result, the Company
believes that costs associated with the engineering, construction, ownership and
operation of landfills will increase in the future. Competitive factors may
require the Company to absorb all or a portion of these increased expenses.

Competitive pressures with regard to disposal services have intensified in
recent years. Increases in additional disposal capacity within the industry,
consolidation within the industry and aggressive pricing strategies of certain
competitors could result in further softening of disposal rates and a decline in
disposal volumes.

The markets for the transportation of hazardous and nonhazardous waste and for
the transportation of general and bulk commodities are each highly competitive.
There are numerous participants, and no one transporter has a dominant market
share. The Company competes primarily with other short and long-haul carriers
for both truckload and less than truckload shipments. Competition for the
transportation of waste is based not only on the ability of the carrier to
transport the waste at a competitive price, but also in accordance with
applicable regulations and the latest advances in technology. Access to
disposal capacity assists the Company in competing for waste transportation
business. Competition for the transportation of commodities is based primarily
on price and service.

The Earth Sciences Companies compete with numerous large and small companies,
each of which is able to provide one or more of the environmental services
offered by the Earth Sciences Companies and some of which have greater financial
resources. The Earth Sciences Companies attempt to develop relationships with
clients who have an ongoing need for their integrated technical environmental
services. The availability of skilled technical personnel, quality of
performance, and service are the key competitive factors in developing such
relationships.

Competition for collection services is based upon price and customer service.
The Company's collection operations compete with numerous national and local
companies, each of which is able to provide the services offered by the Company.
Many commercial collection customers have entered into multi-year service
agreements, most of which provide for automatic renewals absent notice of
termination by the customer. These agreements have the effect of impeding new
collection companies from obtaining customers. The Company anticipates that
significant growth of its commercial collection operations could take a number
of years.

Insurance
- ---------

The Company carries $21 million of comprehensive general liability insurance
coverage for the Company and its subsidiaries (other than with respect to ALGI,
which has separate insurance). This policy includes coverage for automobile
liability (including a pollution liability endorsement which covers certain
liabilities from its spills), comprehensive property damage, and other customary
coverage. Dart self-insures collision risks. The Earth Sciences Companies also
maintain professional and pollution legal liability coverage.

The Company may be subject to liability for any off-site environmental damage
its landfills may cause, particularly as a result of the contamination of
drinking water sources or the soil, including damage resulting from conditions
existing prior to the acquisition of the landfills by the Company. The Company
may also be subject to liability for any off-site environmental contamination
caused by pollutants the transportation, treatment, or disposal of which was
arranged for by the Company or its predecessors. The Company carries a
pollution legal liability insurance policy covering liability, on a claims

11
<PAGE>

made and reported basis, of up to $3 million per occurrence ($6 million in the
aggregate), respecting certain off-site environmental damage from its American
landfill operations. The policy does not cover losses arising from conditions in
existence prior to the inception of the policy. No assurance can be given that
such insurance will be available in the future or, if available, that the
premiums will be reasonable.

If the Company were to incur a substantial liability for damages not covered
by insurance or substantially in excess of its policy limits, or at a time when
it no longer was able to obtain liability insurance, its consolidated financial
condition could be materially adversely affected.

The Company has entered into several contracts with governmental authorities
for a variety of environmental services. Typically, such contracts require
surety bonds or other financial instruments to assure performance under the
terms of a contract. The Company has obtained in the past, and expects to be
able to obtain in the future, such bonds or other financial instruments.

Employees
- ---------

As of December 31, 1997, the Company had 529 employees, 53 of whom were
employed in waste disposal, 148 of whom were employed in transportation, 160 of
whom were employed in environmental consulting, analytical and remediation
services, 43 of whom were employed in collection services, 70 of whom were
employed in corporate sales and marketing, financial and other corporate
activities and 55 of whom were employed by ALGI in the operation of the golf
course and restaurant. The Company believes that it has a good relationship
with its employees.

Other Business Factors
- ----------------------

None of the Company's business segments is materially dependent on patents,
trademarks, licenses, franchises or concessions held other than permits,
licenses and approvals issued by regulatory agencies. In addition, none of the
Company's business segments is materially dependent upon a single customer or a
few customers. See "Business Segment Information" contained herein under Item 8
"Financial Statements and Supplementary Data" for financial information relating
to business segments. The Company does not sponsor significant research and
development activities.

ITEM 2. PROPERTIES

The principal fixed assets of the Company's waste disposal operations consist
of land and land improvements (primarily disposal site and disposal site
improvements) in addition to landfill operating equipment. The Company also
owns a landfill gas extraction facility at its American landfill. The Company's
principal real estate is its interest in the landfills described under Item 1.
"Business - Waste Disposal Services." ALI owns approximately 950 acres of real
property on which it operates. MLI owns the 200 acres of real property on which
its facility is located. ELLI owns the 200 acres of real property on which the
East Liverpool landfill is located. The landfill operations including the
captive landfill operations use approximately 44 pieces of major equipment (such
as compactors, bulldozers, scrapers, tire shredding equipment, rock crushing
equipment and backhoes), substantially all of which are owned by the Company.
See Item 1. "Business - Waste Disposal Services."

At December 31, 1997, the collection operations own one service truck, two
container delivery trucks, eleven front-load collection trucks, and fourteen
roll-off trucks, in addition to hundreds of containers of various sizes and
other related equipment.

The Company provides transportation services from locations in Canfield, Ohio
(Dart's headquarters, consisting of approximately 19,500 square feet); Oxford,
Massachusetts (where Dart leases a 5,760 square foot terminal); Toledo, Ohio
(where Dart rents a 720 square foot terminal); Kenova, West Virginia (where Dart
leases a 1,500 square foot terminal); and Chicago, Illinois (where Dart rents a
500 square foot terminal). At December 31, 1997, the transportation operations
owned a fleet of 39 power units (in addition to 42 power units which are
leased), 229 trailers (in addition to 25 trailers which are leased and 115 which
are rented), and 600 roll-off and other containers. In addition, 120-140 power
units and 155-175 trailers owned by independent owner/operators are available
for use in Dart's operations. Certain transportation equipment acquired during
1993 is subject to liens securing the repayment of indebtedness incurred to
purchase such equipment.

12
<PAGE>

The Earth Sciences Companies own their main offices and laboratory facilities
located in a 48,000 square foot building in Export, Pennsylvania. The Earth
Sciences Companies lease office space of approximately 4,000 square feet in
Akron, Ohio; 2,500 square feet in Blue Bell, Pennsylvania, near Philadelphia;
and 2,500 square feet near Denver, Colorado. In addition, 13,000 square feet is
leased for field equipment and vehicle storage and dispatch in Murrysville,
Pennsylvania. The Earth Sciences Companies also own numerous pieces of
laboratory, field, computer and other equipment.

The Company owns a 26,000 square foot headquarters building located on
approximately 5.6 acres of property in Howland Township, Ohio. Adjacent to such
property is an 18-hole public golf course owned and operated by ALGI including a
maintenance and storage building of approximately 12,000 square feet, a pro shop
and restaurant building of approximately 10,400 square feet, and a banquet
facility of approximately 7,000 square feet. The golf course property together
with the pro shop, restaurant facility and banquet facility serve as collateral
securing repayment of indebtedness incurred to construct such facilities.

Generally, the Company's fixed assets are in good condition and are
satisfactory for the purposes for which they are intended.

ITEM 3. LEGAL PROCEEDINGS

On or about October 3, 1991, one shareholder owning 100 shares of stock
brought suit against the Company and others on behalf of himself and a purported
class of other shareholders in the United States District Court for the Southern
District of New York. The suit, which was transferred to the District Court for
the Northern District of Ohio, alleges that the Company, the signatories to the
registration statement filed with the Securities and Exchange Commission during
October 1990, and the Company's underwriters violated federal securities laws in
connection with the Company's public offering of six million shares of Class A
Common Stock in October 1990. Among other things, the suit alleges
misrepresentations and failure to disclose allegedly material information
concerning the nature of the Company's market; the size of the Company's market;
the Company's failure to disclose that its landfills were located within a 50-
mile radius of each other in Ohio, thus making the Company especially vulnerable
to local conditions and competition; the Company's failure to set forth the
present and imminent competition; and the Company's growth. The plaintiff
sought damages in an unspecified amount alleged to have arisen in part from the
decline in the price of the Company's stock following the public offering, and
rescission.

On September 26, 1997 the Court granted the defendants' Motion for Summary
Judgment and dismissed plaintiff's case. On October 25, 1997, pursuant to the
federal rules of appellate procedure, plaintiff filed a Notice of Appeal. Such
appeal is currently pending and the Company intends to vigorously defend the
Court's order.

In September 1995, certain subsidiaries of the Company were informed that they
had been identified as potentially responsible parties by the Indiana Department
of Environmental Management relating to a Fulton County, Indiana, hazardous
waste disposal facility which is subject to remedial action under Indiana
environmental laws. Such identification is based upon the subsidiaries having
been involved in the transportation of hazardous substances to the facility.
These transportation activities occurred prior to the acquisition of such
subsidiaries by the Company. During the third quarter of 1997, the Company's
subsidiaries became parties to an Agreed Order for Remedial
Investigation/Feasibility Study and the Four County Landfill Site Participation
Agreement ("Participation Agreement"). A large number of waste generators and
other waste transportation and disposal companies have also been identified as
responsible or potentially responsible parties with respect to this facility.
Because the relevant law provides for joint and several liability among the
responsible parties, any one of them, including the Company's subsidiaries,
could be assessed the entire cost of the remediation, although this is unlikely.
Currently, no remedy has been selected and the extent of any ultimate liability
of any of the Company's subsidiaries with respect to this facility is currently
unknown.

13
<PAGE>

cies, and the number, financial resources and relative degree of responsibility
of other potentially responsible parties who are jointly and severally liable
for remediation of the site as well as the typical allocation of costs among
such parties. If a range of possible outcomes is estimated and no amount within
the range appears to be a better estimate than any other, then the Company will
provide for the minimum amount within the range, in accordance with generally
accepted accounting principles. As such, the Company accrued a liability of
approximately $941,000 in the fourth quarter of 1995 relating to this matter.
The Company's estimates are revised, as deemed necessary, as additional
information becomes known. The Company anticipates obtaining additional
information by reason of, among other things, having entered into the
Participation Agreement.

While the measurement of environmental liabilities is inherently difficult and
the possibility remains that technological, regulatory or enforcement
developments, the results of environmental studies or other factors could
materially alter the Company's expectations at any time, the Company does not
anticipate that the amount of any such revisions will have a material adverse
effect on it.

In addition to the foregoing, in the ordinary course of the Company's
business, the Company's transportation and other subsidiaries may become subject
to claims for personal injury and property damage (for which the Company carries
automobile liability and general liability insurance), and the Company's waste
disposal subsidiaries may become subject to environmental liability claims and
involved in various judicial and administrative proceedings with federal, state
and local agencies as well as citizen groups, in connection with the permitting
of its landfills and alleged violations of such permits. At the present time,
the Company and certain of the Company's subsidiaries are named defendants in
several lawsuits arising from the ordinary course of their respective
businesses. Although the outcome of such lawsuits or other proceedings cannot
be predicted with certainty, the Company does not believe that any uninsured
ultimate liabilities, fines or penalties resulting from such lawsuits or
proceedings, alone or in the aggregate, would have a material adverse effect on
the consolidated financial condition of the Company. See Item 1. "Business -
Insurance."

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Company's security holders during
the fourth quarter of 1997.

EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding executive officers is contained in Item 10 of Part III
of this report.

14
<PAGE>

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

Common stock information
- ------------------------

The Company's Class A Common Stock is listed on the New York Stock Exchange
(symbol: AW). Quarterly stock information for 1997 and 1996 as reported by The
Wall Street Journal is as follows:

1997:
Quarter Ended High Low Close
- -------------------------------------------------------
March 31 $2 3/8 $1 7/8 $1 7/8
June 30 2 1/8 1 1/2 1 5/8
September 30 1 15/16 1 1/4 1 7/8
December 31 1 7/8 1 3/8 1 5/8

1996:
Quarter Ended High Low Close
- -------------------------------------------------------
March 31 $3 1/4 $2 $2 7/8
June 30 4 3/4 2 3/8 3 1/4
September 30 3 1/4 2 1/4 2 1/2
December 31 2 1/2 2 2 3/8

No dividends were paid during 1997 or 1996.

There are 976 Class A and 19 Class B Common Stock shareholders of record as of
the close of business on March 2, 1998. The number of holders is based upon the
actual holders registered on the records of the Company's transfer agent and
registrar and does not include holders of shares in "street names" or persons,
partnerships, associations, corporations or other entities identified in
security position listings maintained by depository trust companies.

Dividend policy
- ---------------

The Company presently intends to retain earnings for use in the operation and
expansion of its business and therefore does not anticipate paying any cash
dividends in the foreseeable future; however, in the event the pending merger
with USA Waste is consummated, the Company will distribute as a dividend all of
the issued and outstanding shares of capital stock of Avalon to the Company's
stockholders. See Item 1. "Business - Merger."

Annual Report on Form 10-K

Copies of the Company's annual report on Form 10-K can be obtained free of
charge by writing to American Waste Services, Inc., One American Way, Warren,
Ohio 44484-5555, Attention: Shareholder Relations.

15
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

(All amounts are in thousands, except per share data and percentages)
---------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Selected statement of operations information

Net operating revenues............................... $ 81,450 $ 79,024 $ 83,700 $ 88,779 $ 87,323
Income (loss) from operations........................ 2,008 4,476 (40,304) 4,339 7,962
Interest expense and amortization
of debt discount................................... 302 223 974 1,128 1,646
Income (loss) before income taxes and
extraordinary credit............................... 2,718 4,879 (41,553) 3,720 6,776
Extraordinary credit, net of tax..................... -- -- 2,489 -- --
Net income (loss).................................... 1,922 3,122 (29,241) 2,040 4,011
Income (loss) per share before
extraordinary credit............................... .06 .10 (1.06) .07 .14
Extraordinary credit, per share...................... -- -- .08 -- --
Net income (loss) per share.......................... .06 .10 (.98) .07 .14
Dividends per Class A share.......................... -- -- -- -- --
Dividends per Class B share.......................... -- -- -- -- --
Weighted average shares used to calculate
basic net income (loss) per share.................. 30,383 30,107 29,915 29,888 29,686
Weighted average shares to calculate
diluted net income (loss) per share................ 30,391 30,236 29,982 29,888 29,710

Selected cash flow information

Cash flows provided by
operating activities............................... 5,929 18,922 15,155 11,807 14,899
Cash used for capital expenditures................... 11,564 18,754 11,032 6,224 10,174
Cash used for business acquisitions.................. -- -- -- 87 2,359

Selected year-end balance sheet information

Cash and cash equivalents............................ 3,080 4,286 5,186 7,347 6,467
Current assets....................................... 23,869 22,012 28,308 30,833 26,857
Current liabilities.................................. 12,913 15,729 12,177 16,045 15,942
Working capital...................................... 10,956 6,283 16,131 14,788 10,915
Properties less accumulated
depreciation and amortization...................... 93,393 89,637 78,636 87,375 91,362
Total assets......................................... 123,382 117,463 115,736 141,809 141,703
Current portion of long-term debt.................... 230 305 358 4,559 4,568
Long-term debt....................................... 8,205 3,836 8,748 11,843 21,770
Deferred income taxes................................ 9,186 7,757 6,559 10,352 9,977
Shareholders' equity................................. 73,419 70,932 67,245 96,480 93,842

Other information

Current ratio........................................ 1.8:1 1.4:1 2.3:1 1.9:1 1.7:1
Percent of debt-to-total capital employed............ 10% 6% 12% 15% 22%
</TABLE>

16
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion provides information which management believes is
relevant to an assessment and understanding of the Company's operations and
financial condition. This discussion should be read in conjunction with the
consolidated financial statements and accompanying notes.

Statements included in Management's Discussion and Analysis of Financial
Condition and Results of Operations which are not historical in nature are
intended to be, and are hereby identified as, "forward looking statements." The
Company cautions readers that forward looking statements, including, without
limitation, those relating to the Company's future business prospects, revenues,
working capital, liquidity, capital needs, interest costs, and income, are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those indicated in the forward looking statements, due to
risks and factors identified herein and from time to time in the Company's
reports filed with the Securities and Exchange Commission.

Merger

Liquidity and Capital Resources

During 1997, the Company utilized existing cash and borrowings under its
revolving credit facility to meet operating needs, repay indebtedness and fund
capital expenditure programs. Cash provided by operations for 1997, 1996 and
1995 totaled $5.9 million, $18.9 million and $15.2 million, respectively.

Working capital increased to $11 million at December 31, 1997 compared with
$6.3 million at December 31, 1996. The increase in working capital is primarily
attributable to an increase in accounts receivable, an increase in refundable
income taxes and decreased accounts payable. Accounts receivable were higher at
December 31, 1997 compared to December 31, 1996 primarily as a result of
increased net operating revenue in the fourth quarter of 1997 compared to the
fourth quarter of the prior year. The increase in refundable income taxes was
primarily the result of a net operating loss carry-forward from 1996 and the
utilization of tax credits from the sale of methane gas from the Company's
methane gas extraction system located at the Company's American landfill.
Accounts payable decreased at December 31, 1997 compared to December 31, 1996
primarily because the balance at the end of 1996 included unpaid retainage and
invoices associated with capital spending, which was paid in 1997.

17
<PAGE>

final maturity date on term loans to no later than seven years from the
amendment date. On December 31, 2000 the Company must convert any outstanding
revolving credit loans into term loans payable quarterly with a final maturity
date no later than December 31, 2003. The agreement also provides for the
issuance of letters of credit up to an aggregate amount of $13 million until
December 31, 2000. The Company had $8.3 million and $8 million in outstanding
letters of credit at December 31, 1997 and December 31, 1996, respectively. The
letters of credit were utilized to capitalize a captive insurance company,
incorporated and licensed under the laws of the State of Vermont, which issued
an insurance policy to provide the required financial assurances for closure and
post-closure monitoring costs to the State of Ohio for the Company's American
and Mahoning landfill facilities and its tire monofill facility.

During 1997 the Company had additional net borrowings of $4.6 million under
its revolving credit facility. Aggregate annual maturities of all of the
Company's long-term debt scheduled to be paid in the years 1998 through 2002
total $.2 million, $.1 million, $.1 million, $2.3 million and $2.5 million,
respectively.

During 1997 capital spending totaled $11.6 million which was principally
related to the purchase of equipment for the Company's collection and
transportation operations and continued landfill development. The Company's
capital spending in 1998 is expected to range from $10 million to $12 million.
Capital expenditures in 1998 will relate principally to landfill development,
acquiring transportation equipment, acquiring additional equipment to support
disposal operations, acquiring equipment associated with collection services,
and engineering and construction costs relating to regulatory compliance at the
Company's landfills. Compliance with current and future regulatory requirements
may require the Company, as well as others in the waste management industry,
from time to time to make significant capital and operating expenditures.

As a result of federal and state laws and regulations, the Company has future
financial obligations with regard to closure costs and post-closure monitoring
costs associated with the disposal sites it operates. Although the precise
amount of these future obligations cannot be determined, the Company has
developed procedures to estimate such total projected costs based on currently
available facts, existing technology and presently enacted laws and regulations.
As of December 31, 1997, the Company estimates that the remaining total closure
costs and post-closure monitoring costs it will incur for all of its disposal
facilities is approximately $30.2 million. In accordance with Ohio's financial
assurance regulations, the Company currently estimates that it will be required
to provide approximately $31.7 million of financial assurances to the State of
Ohio relating to such costs; however, such financial assurances are reduced by
actual expenditures. During 1997 the Company utilized insurance to satisfy the
financial assurance requirements for its American and Mahoning landfill
facilities and its tire monofill facility. The Company uses a trust fund to
satisfy the financial assurance requirements for its East Liverpool landfill
facility. In April 1997 and April 1996 the Company deposited approximately $.3
million into the trust fund to satisfy the current financial assurance
obligation for that facility. The Company will continue to review and update
the underlying assumptions used to estimate the total projected costs and
financial assurance requirements and, accordingly, such estimates will be
subject to periodic revision and adjustment at least annually.

Management believes that cash provided from operations, the availability of
working capital and the Company's unused portion of its revolving credit
facility as well as the Company's ability to incur additional indebtedness will
be for the foreseeable future sufficient to meet operating requirements, fund
debt repayments, fund present capital expenditure programs and provide for
financial assurance requirements of its disposal facilities.

18
<PAGE>

Results of Operations

The Company's primary business segment provides integrated waste management
and environmental services which include the operation of nonhazardous solid
waste landfills for the disposal of special waste and municipal solid waste;
transportation of hazardous and nonhazardous waste; transportation and disposal
brokerage and management services; collection services; and environmental
consulting and engineering, site assessment, analytical laboratory and
remediation services. The Company, as part of its transportation operations,
also operates a second business segment: a common carrier of general and bulk
commodities throughout the United States and several provinces of Canada.

Performance in 1997 compared with 1996

Overall performance. Net operating revenues were $81.5 million in 1997
compared to $79 million in 1996. Net income totaled $1.9 million or $.06 per
share in 1997 compared with net income of $3.1 million or $.10 per share in
1996.

Segment performance. Segment performance should be read in conjunction with
Note 12 to the Consolidated Financial Statements.

Net operating revenues of the Company's primary business segment, integrated
waste management and environmental services increased 2.1% to $64.7 million in
1997 compared to $63.4 million in 1996. The increase in net operating revenues
is primarily attributed to the collection operations and the transportation
operations, partially offset by decreased net operating revenues of the
technical environmental services business and disposal operations. The net
operating revenues of the collection operations, which commenced operating in
the third quarter of 1996, increased as a result of operating for the entire
year. The net operating revenues of the transportation operations increased
primarily as a result of increased transportation of hazardous and industrial
waste, while the technical environmental services business declined
significantly as a result of decreased remediation and engineering services
provided. The net operating revenues of the disposal operations decreased
primarily as a result of a decrease in the disposal brokerage business.

The integrated waste management and environmental services segment recorded
operating income of $7.0 million in 1997 compared to $9.4 million in 1996. The
decrease in operating income was primarily the result of a significant operating
loss incurred by the technical environmental services business compared with
operating income in the prior year. The decrease was partially offset by
increased operating income of the transportation and disposal operations. The
operating loss of the technical environmental services business was primarily
attributed to losses incurred during the first quarter of 1997 in connection
with a remediation project in Denver, Colorado, as well as a pre-tax charge of
$.5 million during the third quarter of 1997 relating to the settlement of a
dispute regarding the project, as well as operating inefficiencies and delays at
other projects. The operating loss was also attributed to decreased levels of
engineering, consulting and remediation services provided. Operating income of
the transportation operations increased in 1997 compared with 1996 primarily as
a result of increased transportation of hazardous and industrial waste. The
disposal operations recorded increased operating income in 1997 compared with
1996 primarily as a result of recognizing pre-tax income of $.9 million relating
to a settlement of disputed real estate taxes associated with the Company's East
Liverpool landfill for years 1992 through 1997 and the Company recognizing pre-
tax income of $.3 million as a result of a payment from a customer in
consideration for the Company releasing the customer from future contractual
obligations. This increase was partially offset by a decrease in operating
income of the disposal brokerage operations. The collection operations, which
commenced operations in the third quarter of 1996, incurred modest operating
losses in 1997 and 1996.

19
<PAGE>

The Company's second business segment, the transportation of general and bulk
commodities, recorded net operating revenues of $13.2 million in 1997 compared
to $12.2 million in 1996. This segment recorded operating income of $.7 million
in 1997 compared with operating income of $.6 million in the prior year. The
increase in net operating revenues and operating income are both the result of
transporting increased volumes of general and bulk commodities.

Interest expense. Interest expense increased to $.3 million in 1997 compared
to $.2 million in 1996 primarily due to an increase in the amount of principal
outstanding under the Company's revolving credit facility. During 1997 and 1996
interest costs capitalized amounted to $.5 million and $.3 million,
respectively.

General corporate expenses. General corporate expenses were $5.6 million in
both 1997 and 1996.

Net income. The Company recorded net income of $1.9 million in 1997 compared
with net income of $3.1 million in 1996 primarily as a result of the foregoing.
The Company recorded a provision for income taxes of $.8 million in 1997
compared to a provision for income taxes of $1.8 million in 1996. The Company's
overall effective income tax rate, including the effect of state income tax
provisions, was 29.3% in 1997 and 36% in 1996. The 1997 overall effective
income tax rate was lower than the statutory income tax rate primarily as a
result of the tax credits available from the production and sale of landfill
gas.

Performance in 1996 compared with 1995

Overall performance. Net operating revenues were $79 million in 1996 compared
with $83.7 million in 1995. Net income totaled $3.1 million or $.10 per share
compared with a net loss of $29.2 million or $.98 per share in 1995. During
1995, in accordance with the Company's asset impairment policy, the Company
performed an analysis for impairment of certain long-lived assets. As a result,
in 1995 the Company incurred significant charges for the write-down of assets
and the write-down of costs in excess of fair market value of net assets of
acquired businesses and other intangibles. In 1995, the Company also incurred
significant charges for closure and post-closure monitoring costs associated
with the Company's American and East Liverpool landfill facilities.

Segment performance. Segment performance should be read in conjunction with
Note 12 to the Consolidated Financial Statements.

Net operating revenues of the Company's primary business segment, integrated
waste management and environmental services declined 7% to $63.4 million in 1996
from $67.9 million in 1995. The Company's technical environmental services
business reported a modest increase in net operating revenues compared with the
prior year primarily as a result of increased remediation business. The net
operating revenues of the disposal operations, including disposal brokerage,
decreased in 1996 compared to 1995 primarily as a result of lower net operating
revenues of the disposal brokerage business and the Company's decision to
significantly curtail operations at its East Liverpool landfill facility in July
1996. Net operating revenues of the transportation and transportation related
operations declined significantly in 1996 compared with 1995 primarily due to
the closing of two transportation terminals resulting in decreased revenues
associated with the transportation of hazardous waste and, to a lesser extent,
the transportation of industrial waste.

As previously mentioned, the Company incurred significant charges in 1995 for
the write-down of assets, the write-down of costs in excess of fair market value
of net assets of acquired businesses and other intangibles and for closure and
post-closure monitoring costs. As a result, operating costs of the integrated
waste management and environmental services segment were significantly lower in
1996 than in 1995. Operating costs of this segment were 85% of net operating
revenues in 1996. Excluding the effects of the aforementioned charges,
operating costs would have been 92% of net operating revenues in 1995.
Operating costs of the transportation and transportation related operations
decreased as a percentage of net operating revenues primarily as a result of
lower depreciation and amortization expense and the closing of transportation
terminals which had high operating costs as a percentage of net operating
revenues and in 1995 the transportation operations recorded a liability as a
result of one of the transportation companies having been identified as a
potential responsible party relating to a hazardous waste disposal facility.
The disposal operations had lower operating costs in 1996 compared with 1995
primarily due to lower closure and post-closure monitoring expense and reduced
depreciation and amortization

20
<PAGE>

expense as a result of obtaining an expansion permit in May 1996 for the
Company's American landfill facility and improved gross margins on the disposal
brokerage business. The technical environmental services business also had lower
operating costs in 1996 compared with 1995 primarily as a result of decreased
subcontractor costs and decreased depreciation and amortization expense.

The integrated waste management and environmental services segment recorded
operating income of $9.4 million in 1996 compared with an operating loss of
$33.8 million in 1995. Excluding the effect of the aforementioned charges on
1995 operating income, the integrated waste management and environmental
services segment would have recorded operating income of $5.8 million in 1995.
The increase in operating income in 1996 is primarily the result of increased
operating income of the transportation and transportation related operations and
the technical environmental services business both of which incurred operating
losses in 1995.

The Company's second business segment, the transportation of general and bulk
commodities, recorded net operating revenues of $12.2 million in 1996 compared
with $12.6 million in 1995. This segment recorded operating income of $.6
million compared with an operating loss of $1.3 million in 1995. The increase
in operating income is primarily the result of decreased depreciation and
amortization expense in 1996 and the fact that 1995's operating results
included a $1.1 million charge relating to impaired assets.

Interest Expense. Interest expense declined significantly to $.2 million in
1996 compared to $1 million in 1995 primarily due to a reduction in the amount
of principal outstanding and lower weighted average interest rates. During 1996
and 1995 interest costs capitalized amounted to $.3 million and $1 million,
respectively.

General Corporate Expenses. General corporate expenses declined to $5.6
million in 1996 compared to $6.2 million in 1995. In 1995 the Company incurred
a $.8 million prepayment charge in connection with the prepayment of a senior
secured note prior to maturity.

Net Income (Loss). The Company recorded net income of $3.1 million in 1996
compared with a net loss of $29.2 million in 1995 primarily as a result of the
foregoing. The Company recorded a provision for income taxes of $1.8 million in
1996 compared to a benefit for income taxes of $9.8 million in 1995. The
Company's overall effective income tax rate, including the effect of state
income tax provisions, was 36% in 1996 and 23.6% in 1995. The 1995 overall
effective income tax rate was substantially lower than the statutory income tax
rate primarily because of the nondeductibility for tax purposes of the
amortization and write-down of costs in excess of fair market value of net
assets of acquired businesses.

Trends and uncertainties

In the ordinary course of conducting its business, the Company becomes
involved in lawsuits, administrative proceedings and governmental
investigations, including those relating to environmental matters. Some of
these proceedings may result in fines, penalties or judgments being assessed
against the Company which, from time to time, may have an impact on its business
and financial condition.

Failure to consummate the previously mentioned transactions with USA Waste
could have an adverse impact upon the Company's future financial performance due
to, among other things, the incurrence of substantial fees and expenses relating
to the transactions and the potential disruption of the Company's relationships
with its customers and employees.

The Company is subject to extensive and evolving environmental laws and
regulations that have been enacted in response to technological advances and the
public's increased concern over environmental issues. As a result, the Company
believes that costs associated with the engineering, construction, ownership and
operation of landfills will increase in the future. Competitive factors may
require the Company to absorb all or a portion of these increased expenses.

The federal government as well as numerous states and local governmental
bodies are increasingly considering, proposing or enacting legislation to either
restrict or impede disposal and/or transportation of waste. A significant
portion of the Company's disposal and transportation revenues are derived from
the disposal or transportation of out-of-state waste. All of the Company's
landfills are located within the State of Ohio. Any

21
<PAGE>

regulation restricting or impeding the transportation of waste, the acceptance
of out-of-state waste for disposal, or which levies significant taxes on the
disposal of waste could have a significant negative effect on the Company.

Competitive pressures within the environmental industry continue to impact the
financial performance of the Company's disposal, transportation and technical
environmental services operations. Increases in additional disposal capacity
within the industry, consolidation within the industry, and aggressive pricing
strategies of certain competitors could result in further declines in disposal
rates and/or disposal volumes thereby affecting the Company's financial
performance. Additionally, a further decline in the rates which customers are
willing to pay for its technical environmental and transportation services could
impact the future financial performance of the Company's operations.

The Company completed the construction of a landfill gas extraction facility
at its American landfill and began production in September 1996. In November
1996 the Company entered into a contract for the sale of all of the landfill
gas, the principal component of which is methane. The production and sale of
the landfill gas is expected to entitle the Company to qualify for tax credits
from the production of fuel from a nonconventional source. These tax credits,
which under current legislation expire at the end of 2007, have and could
significantly reduce the Company's overall effective tax rate.

During the fourth quarter of 1996, the Company's technical environmental
services business began experiencing operating losses. Such losses have
continued during 1997 primarily as a result of inefficiencies and delays
occurring at certain remediation projects. These operating losses have
adversely affected the Company's operating results and may continue to impact
them in the future.

Market risk

The Company does not have significant exposure to changing interest rates.
The Company does not undertake any specific actions to cover its exposure to
interest rate risk and the Company is not a party to any interest rate risk
management transactions.

The Company does not purchase or hold any derivative financial instruments for
trading purposes.

An 84 basis point move in interest rates (10% of the Company's weighted
average interest rate) affecting the Company's floating financial instruments,
including both debt obligations and investments, would have an immaterial effect
on the Company's pretax earnings for the next fiscal year. The 84 basis point
move in interest rates would also have an immaterial effect on the fair value of
the Company's fixed rate financial instruments.

Inflation impact

The Company has not entered into any long-term fixed price contracts which
could have a material adverse impact upon its financial performance in periods
of inflation. In general, management believes that rising costs resulting from
price inflation could be passed on to customers; however, the Company may need
to absorb all or a portion of these cost increases until current competitive
conditions ease. During the three years ended December 31, 1997, management
believes inflationary pressures did not significantly impact the Company's
financial performance.

22
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information regarding financial statement schedules is contained in Item 14(a)
of Part IV of this report.

Consolidated Balance Sheets
(in thousands, except for shares)

<TABLE>
<CAPTION>
December 31,
----------------------
1997 1996
----------------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents.............................................. $ 3,080 $ 4,286
Accounts receivable, less allowance for
doubtful accounts of $650 in 1997 and $506 in 1996................... 17,004 14,510
Refundable income taxes................................................ 1,137 --
Current deferred tax benefit (Note 5).................................. 260 197
Prepaid expenses and other current assets.............................. 2,388 3,019
----------------------
Total current assets.............................................. 23,869 22,012
Property and equipment, net (Notes 2, 3 and 4)............................ 93,393 89,637
Deposits (Note 10)........................................................ 2,765 2,314
Costs in excess of fair market value of net assets of acquired
businesses, net (Notes 1 and 2).......................................... 3,022 3,193
Other assets, net (Notes 1 and 2)......................................... 333 307
----------------------
Total assets...................................................... $123,382 $117,463
----------------------

Liabilities and Shareholders' Equity
Current Liabilities:
Current portion of long-term debt (Note 4)............................. $ 230 $ 305
Accounts payable....................................................... 7,116 8,495
Accrued payroll and other compensation................................. 1,114 1,076
Accrued income taxes................................................... 209 315
Other accrued taxes.................................................... 1,291 2,127
Other liabilities and accrued expenses (Notes 1 and 6)................. 2,953 3,411
----------------------
Total current liabilities......................................... 12,913 15,729
Long-term debt (Note 4)................................................... 8,205 3,836
Deferred income taxes (Note 5)............................................ 9,186 7,757
Accrued closure costs and post-closure monitoring costs
(Notes 1, 2 and 10)...................................................... 17,567 16,932
Other noncurrent liabilities (Notes 2 and 9).............................. 2,092 2,277
Contingencies and Commitments (Notes 9, 10 and 11)........................ -- --
Shareholders' Equity (Notes 6, 7 and 8):
Preferred Stock, no par value; authorized 2,000,000 shares;
no shares issued or outstanding...................................... -- --
Class A Common Stock, no par value, one vote per share;
authorized 70,000,000 shares; issued 25,300,278 shares
at December 31, 1997 and 25,015,615 shares at
December 31, 1996..................................................... 64,267 63,702
Class B Common Stock, no par value, ten votes per share;
authorized 30,000,000 shares; issued 5,163,714 shares at
December 31, 1997 and 5,165,569 shares at December 31, 1996........... 780 780
Retained earnings...................................................... 8,552 6,630
Treasury Stock, Class B Common Stock, at cost.......................... (180) (180)
----------------------
Total shareholders' equity....................................... 73,419 70,932
----------------------
Total liabilities and shareholders' equity....................... $123,382 $117,463
----------------------
</TABLE>
See accompanying notes to consolidated financial statements.

23
<PAGE>

Consolidated Statements of Operations
(in thousands, except for per share amounts)

<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1997 1996 1995
--------------------------------
<S> <C> <C> <C>
Net operating revenues............................................. $ 81,450 $ 79,024 $ 83,700

Cost and expenses:
Cost of operations.............................................. 66,296 63,269 71,754
Closure and post-closure monitoring costs (Notes 1, 2 and 10)... 481 591 17,124
Write-down of costs in excess of fair market value of net
assets of acquired businesses and other intangibles
(Note 2)....................................................... -- -- 13,020
Write-down of assets (Note 2)................................... -- -- 11,685
Selling, general and administrative expense..................... 12,665 10,688 10,421
--------------------------------
Income (loss) from operations...................................... 2,008 4,476 (40,304)

Other income (expense):
Interest expense (Note 4)....................................... (302) (223) (974)
Interest income................................................. 284 390 665
Other income (expense), net (Note 4)............................ 728 236 (940)
--------------------------------
Income (loss) before income taxes and extraordinary credit......... 2,718 4,879 (41,553)

Provision (benefit) for income taxes (Note 5):
Current......................................................... (570) 565 (4,742)
Deferred........................................................ 1,366 1,192 (5,081)
--------------------------------
796 1,757 (9,823)
--------------------------------

Income (loss) before extraordinary credit.......................... 1,922 3,122 (31,730)

Extraordinary credit, net of tax (Note 2).......................... -- -- 2,489
--------------------------------
Net income (loss).................................................. $ 1,922 $ 3,122 $(29,241)
--------------------------------

Basic and diluted net income (loss) per share before
extraordinary credit.............................................. $.06 $.10 $(1.06)

Basic and diluted extraordinary credit per share................... -- -- .08
--------------------------------

Basic and diluted net income (loss) per share...................... $.06 $.10 $(.98)
--------------------------------

Basic weighted average shares outstanding (Note 1)................. 30,383 30,107 29,915
--------------------------------

Diluted weighted average shares outstanding (Note 1)............... 30,391 30,236 29,982
--------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.

24
<PAGE>

Consolidated Statements of Cash Flows
(in thousands)

Year Ended December 31,
---------------------------------
1997 1996 1995
---------------------------------
<S> <C> <C> <C>
Operating activities:
Net income (loss)............................................ $ 1,922 $ 3,122 $(29,241)
Reconciliation of net income to cash provided by operating
activities:
Extraordinary credit...................................... -- -- (2,489)
Depreciation and amortization............................. 7,767 6,975 8,561
Closure and post-closure monitoring costs................. 481 591 17,124
Write-down of costs in excess of fair market value of net
assets of acquired businesses and other intangibles...... -- -- 13,020
Write-down of assets...................................... -- -- 11,685
Deferred income taxes..................................... 1,366 1,192 (5,081)
Provision for losses on accounts receivable............... 905 (85) 610
(Gain) loss from disposal of property and equipment....... (308) (103) 302
Change in assets and liabilities:
(Increase) decrease in accounts receivable............... (3,399) 56 5,825
(Increase) decrease in refundable taxes.................. (1,137) 5,519 (5,363)
(Increase) decrease in prepaid expenses and other
current assets.......................................... 631 (88) (759)
(Increase) decrease in other assets...................... (92) (37) 5
Increase (decrease) in accounts payable.................. (1,379) 2,525 855
Increase (decrease) in accrued payroll and other
compensation............................................ 38 156 (683)
Increase (decrease) in accrued income taxes.............. (106) 149 2
Increase (decrease) in other accrued taxes............... (836) 323 576
Increase (decrease) in other liabilities and accrued
expenses................................................ 1,374 (251) (417)
Decrease in accrued closure costs and post-closure
monitoring costs...................................... (1,113) (911) --
Increase (decrease) in other noncurrent liabilities...... (185) (211) 623
---------------------------------
Net cash provided by operating activities............. 5,929 18,922 15,155
---------------------------------

Investing activities:
Capital expenditures......................................... (11,564) (18,754) (11,032)
Proceeds from disposal of property and equipment............ 586 1,094 8
(Increase) decrease in deposits, net......................... (451) 2,803 920
---------------------------------
Net cash provided (used) in investing activities...... (11,429) (14,857) (10,026)
---------------------------------

Financing activities:
Proceeds from sale of common stock........................... -- -- 6
Proceeds from issuance of long-term debt..................... 6,200 3,100 9,831
Repayments of long-term debt................................. (1,906) (8,065) (17,127)
---------------------------------
Net cash provided (used) in financing activities...... 4,294 (4,965) (7,290)
---------------------------------

Decrease in cash and cash equivalents........................... (1,206) (900) (2,161)
Cash and cash equivalents at beginning of year.................. 4,286 5,186 7,347
---------------------------------
Cash and cash equivalents at end of year........................ $ 3,080 $ 4,286 $ 5,186
---------------------------------
</TABLE>

For supplemental disclosures of cash flow information and non-cash investing
and financing activities, see Notes 1, 2, 5 and 6.

See accompanying notes to consolidated financial statements.

25
<PAGE>

Consolidated Statements of Shareholders' Equity
(in thousands)

<TABLE>
<CAPTION>
For The Three Years Ended December 31, 1997
------------------------------------------------------------------
Class B
Shares Common Stock Treasury Stock
---------------- ---------------- Retained --------------
Class A Class B Class A Class B Earnings Shares Cost
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995................. 24,470 5,482 $63,073 $838 $ 32,749 39 $180
Exercise of stock options (Note 7)........ 3 -- 6 -- -- -- --
Conversion of shares by shareholders
(Note 8)................................ 311 (311) 57 (57) -- -- --
Net loss................................. -- -- -- -- (29,241) -- --
------------------------------------------------------------------
Balance at December 31, 1995............... 24,784 5,171 63,136 781 3,508 39 180
Stock Contributed to 401(k) plan
(Note 6)................................ 226 -- 565 -- -- -- --
Conversion of shares by shareholders
(Note 8)................................ 5 (5) 1 (1) -- -- --
Net income............................... -- -- -- -- 3,122 -- --
------------------------------------------------------------------
Balance at December 31, 1996............... 25,015 5,166 63,702 780 6,630 39 180
Stock Contributed to 401(k) plan
(Note 6)................................ 283 -- 565 -- -- -- --
Conversion of shares by shareholders
(Note 8)................................ 2 (2) -- -- -- -- --
Net income............................... -- -- -- -- 1,922 -- --
------------------------------------------------------------------
Balance at December 31, 1997............... 25,300 5,164 $64,267 $780 $ 8,552 39 $180
------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.

26
<PAGE>

American Waste Services, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

The significant accounting policies of American Waste Services, Inc. and its
subsidiaries (collectively the "Company" or "AWS"), which are summarized below,
are consistent with generally accepted accounting principles and reflect
practices appropriate to the businesses in which they operate. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates. Certain prior year amounts have been reclassified
to be consistent with the 1997 presentations.

Principles of consolidation

The consolidated financial statements include the accounts of American Waste
Services, Inc. and all wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.

Cash and cash equivalents

Cash and cash equivalents include money market instruments and other highly
liquid investments that are stated at cost which approximates market value.
Such investments, which mature in three months or less from date of purchase,
are considered to be cash equivalents for purposes of the consolidated
statements of cash flows. The balance of such short-term investments was
$2,015,000 and $2,016,000 at December 31, 1997 and 1996, respectively.

Financial instruments

The fair value of financial instruments, consisting of investments in cash,
cash equivalents, receivables, obligations under accounts payable, and debt
instruments, is based on interest rates available to the Company and comparisons
to quoted prices. At December 31, 1997 and 1996, the fair value of these
financial instruments approximated carrying value.

Property and equipment

Disposal sites include the cost of acquisitions in addition to engineering,
permitting and certain preparation costs related to disposal sites in operation.
These costs are amortized as disposal capacity is used which is based on
engineering estimates of remaining available airspace. Engineering, legal and
other costs associated with the expansion of capacity of existing sites are
deferred until receipt of all necessary operating permits. Such costs are
capitalized and amortized after receipt of the necessary operating permits.
Disposal site improvements are capitalized and amortized using the straight-line
method over the estimated useful life of the asset which varies from 5 to 20
years. All other property and equipment is stated at cost and depreciated using
the straight-line method over the estimated useful life of the asset which
varies from 5 to 50 years in the case of buildings and improvements and from 3
to 15 years in the case of all other property and equipment.

Major additions and improvements are charged to the property and equipment
accounts while replacements, maintenance and repairs which do not improve or
extend the life of the respective asset are expensed currently. The cost of
assets retired or otherwise disposed of and the related accumulated depreciation
is eliminated from the accounts in the year of disposal. Gains or losses
resulting from disposals of property and equipment are credited or charged to
operations currently. Interest costs are capitalized on significant projects of
landfill development or expansion and other construction (see Note 4).

Closure costs and post-closure monitoring costs

Disposal site closure costs and post-closure monitoring costs are estimated
based on currently available facts, existing technology and presently enacted
laws and regulations. Such costs are accrued over the estimated life of the
related disposal site as disposal capacity is utilized based on engineering
estimates of remaining available airspace. Closure costs and post-closure
monitoring costs charged to operations were $481,000 in 1997, $591,000 in 1996,
and $17,124,000 in 1995. The balance of accrued closure and post-

27
<PAGE>

closure monitoring costs at December 31, 1997 was $17,567,000 which was included
in "Accrued closure costs and post-closure monitoring costs." At December 31,
1996 the balance was $18,199,000, of which $1,267,000 was included in "Other
current liabilities" and $16,932,000 was included in "Accrued closure costs and
post-closure monitoring costs" (see Notes 2 and 10).

Costs in excess of fair market value of net assets of acquired businesses

The costs in excess of fair market value of net assets of acquired businesses
is amortized on a straight-line basis over 25 years. Amortization of these
costs was $171,000 in 1997, $172,000 in 1996 and $798,000 in 1995. Accumulated
amortization at December 31, 1997 and 1996 was $4,624,000 and $4,453,000,
respectively. During the fourth quarter of 1995 in accordance with the
Company's asset impairment accounting policy, a portion of the costs in excess
of fair market value of net assets of acquired businesses was written off (see
Note 2).

Other intangible assets

Included in the balance of "Other assets, net" are other intangible assets of
$199,000 and $163,000 at December 31, 1997 and 1996, respectively. Other
intangible assets consist primarily of a coal mining permit for the Company's
American landfill facility. The permit is amortized as the coal is mined
during construction of the landfill facility and is based upon engineering
estimates of remaining coal reserves. In the fourth quarter of 1995, certain
intrastate operating authorities relating to the transportation operations were
written off (see Note 2). Amortization of other intangible assets in 1997, 1996
and 1995 was $65,000, $41,000 and $65,000, respectively.

Income taxes

Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.

Revenue recognition

The Company recognizes revenue for waste disposal services when the waste is
accepted at the landfill sites and revenue related to transportation services is
recognized on the date of delivery. Revenue for collection and technical
services, excluding laboratory services, is recognized as services are
performed, while revenue for laboratory services is recognized when the service
is completed. On contracts where the percentage-of-completion method is used,
revenue is recognized for a portion of the total contract revenue, in the
proportion that costs incurred bear to management's estimate of total contract
costs to be incurred, commencing when progress reaches a point where experience
is sufficient to estimate final results with reasonable accuracy. Earnings and
costs on contracts are subject to revision throughout the term of the contract,
and any required revisions are made in the periods in which revisions become
known. Provision is made for the full amount of anticipated losses in the
period in which they are determinable.

Costs and estimated earnings in excess of billings on uncompleted contracts
represent revenues recognized on contracts for which billings will be presented
in accordance with contract provisions. Such revenues are generally expected to
be billed and collected within one year.

Net income (loss) per share

Class A Common Stock and Class B Common Stock are considered as one class of
stock for the calculation of basic and diluted net income (loss) per share. The
basic per share data has been computed using the weighted average number of
common shares outstanding each year which amounted to 30,383,000, 30,107,000 and
29,915,000 in 1997, 1996 and 1995, respectively. The diluted per share data has
been computed using the weighted average number of common and common equivalent
shares outstanding each year which amounted to 30,391,000, 30,236,000

28
<PAGE>

and 29,982,000 in 1997, 1996 and 1995 respectively. Common equivalent shares,
which represent shares issuable upon the exercise of outstanding stock options,
were 8,000, 129,000 and 67,000 in 1997, 1996 and 1995, respectively.

Asset impairments

In the fourth quarter of 1995, the Company adopted Financial Accounting
Standards Board Statement No. 121 entitled "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" which was not
significantly different from the Company's previous asset impairment accounting
policy. The Company periodically reviews the carrying value of certain of its
assets in relation to historical results, current business conditions and trends
to identify potential situations in which the carrying value of assets may not
be recoverable. If such reviews indicate that the carrying value of such assets
may not be recoverable, the Company would estimate the undiscounted sum of the
expected future cash flows of such assets to determine if such sum is less than
the carrying value of such assets to ascertain if a permanent impairment exists.
If a permanent impairment exists, the Company would determine the fair value by
using quoted market prices, if available, for such assets, or if quoted market
prices are not available, the Company would discount the expected future cash
flows of such assets.

Stock based compensation plans

On October 23, 1995, the Financial Accounting Standards Board issued FAS No.
123, "Accounting for Stock-Based Compensation," which was effective in 1996.
Statement No. 123 provides a fair value method of accounting for stock-based
compensation arrangements rather than the intrinsic value based method contained
in APB Opinion No. 25. The Statement does not require an entity to adopt the
new fair value based method for purposes of preparing its basic financial
statements. Entities that retain the APB Opinion No. 25 method of accounting
are required to display in the footnotes pro forma net income and earnings per
share information as if the fair value based method had been adopted. The
Company did not adopt the fair value method provided in Statement No. 123.

New accounting pronouncements

In October 1996, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position No. 96-1,
Environmental Remediation Liabilities ("SOP No. 96-1"). SOP No. 96-1 provides
authoritative guidance on the recognition, measurement, presentation, and
disclosure of environmental remediation liabilities. The adoption of SOP No.
96-1 did not have a material effect to the Company's financial position, results
of operations, or cash flows.

Note 2. Impairment of Long-lived Assets

In 1995, in accordance with the Company's asset impairment accounting policy,
the Company performed an analysis for impairment of certain long-lived assets.
As described in the following paragraphs, such evaluation indicated asset
impairments at the Company's East Liverpool landfill facility, technical
environmental services businesses, and transportation operations.

In light of market conditions, regulatory requirements and other business
factors, in 1995 ELLI determined that the significant capital investment
necessary to develop this facility in the foreseeable future was not
economically justified.

As a result of the decision in the fourth quarter of 1995 not to further
develop the facility, the East Liverpool landfill has very limited airspace
available for waste disposal. Therefore, the Company decided to significantly
reduce the quantity of waste accepted for disposal at this facility. As a
result, in accordance with the Company's asset impairment accounting policy and
Financial Accounting Standards Board Statement No. 121, the Company determined
that the assets of the East Liverpool landfill were impaired. Accordingly, in
the fourth quarter of 1995, the Company adjusted the carrying value of the East
Liverpool landfill to reflect the fair value of such assets resulting in an
$11,685,000 write-down. Such amount is included in the Consolidated Statements
of Operations for 1995 under the caption "Write-down of assets." Furthermore,
because the East Liverpool landfill facility has very limited airspace available
for waste disposal, in the fourth quarter of 1995, the Company accrued
additional closure and post-closure monitoring costs amounting to $6,821,000.
This charge is included under the caption "Closure and Post-closure Monitoring
Costs" on the

29
<PAGE>

Consolidated Statements of Operations for 1995. Based upon the limited airspace
available for waste disposal, the Company also adjusted its contingent
obligation to the City of East Liverpool to reflect the Company's estimate of
contingent percentage gross disposal receipt payments and the future costs to be
incurred by the Company to provide free waste disposal to the City in accordance
with its agreement with the City. This adjustment resulted in the recognition of
a gain on the extinguishment of a portion of the aforementioned contingent
obligation which was accounted for as an extraordinary credit, net of tax, of
$2,489,000 in 1995. Such contingent noncurrent liability at December 31, 1997
and December 31, 1996 amounted to $1,236,000 and $1,336,000, respectively.
Future percentage gross disposal receipt payments and the free waste disposal
provided to the City will reduce the carrying amount of such contingent
noncurrent liability.

In 1990, the Company acquired its technical environmental services businesses
and certain transportation operations. The amounts paid by the Company to
purchase these operations were based upon historical financial results, market
conditions and/or expectations at the time they were acquired. Significant
changes have occurred in the environmental industry over the last number of
years and the financial performance of these operations had significantly
deteriorated since their acquisition as a result of, among other things, market
conditions and increased competition. During 1995, in accordance with the
Company's asset impairment accounting policy, the Company evaluated the costs in
excess of fair market value of net assets of the technical services companies
and the transportation operations to determine if the carrying values of such
assets were recoverable.

The costs in excess of fair market value of net assets of the technical
services companies were not identified with any long-lived assets or intangibles
at the time of acquisition. Therefore, the Company evaluated the recoverability
of such costs in accordance with the Company's asset impairment accounting
policy and Accounting Principles Board Opinion No. 17 "Intangible Assets." To
ascertain whether a permanent impairment existed, the Company estimated the
undiscounted sum of the expected future after-tax operating income of the
technical services companies excluding amortization of costs in excess of fair
market value of net assets to determine if such sum was less than the carrying
value of such costs in excess of fair market value of net assets, which had a
remaining useful life of 20 years. The evaluation performed by the Company
indicated the existence of an impairment and the Company determined the fair
value and measured the extent of the impairment by discounting the expected
future after-tax operating income excluding amortization of costs in excess of
fair market value of net assets at the Company's incremental borrowing rate of
8.875%. As a result, in the fourth quarter of 1995 the Company recorded an
adjustment of $10,106,000 to the carrying value of the costs in excess of fair
market value of net assets. The adjustment is included in the Consolidated
Statements of Operations for 1995 under the caption "Write-down of costs in
excess of fair market value of net assets of acquired businesses and other
intangibles."

The recoverability of the costs in excess of fair market value of net assets
of the transportation operations was evaluated in accordance with the Company's
asset impairment accounting policy and Financial Accounting Standards Board
Statement No. 121, because these costs could be identified with long-lived
assets and other intangible assets. To ascertain if a permanent impairment
existed, the Company estimated the undiscounted sum of the expected future cash
flows of the identified assets to determine if such sum was less than the
carrying value of such identified assets. The evaluation performed by the
Company indicated the existence of an impairment and the Company measured the
extent of the impairment by determining the fair value of the long-lived assets
based upon quoted market prices. As a result, in the fourth quarter of 1995,
the Company recorded an adjustment to the carrying value of the costs in excess
of fair market value of net assets and other intangible assets of $2,194,000 and
$720,000, respectively. The adjustments are included in the Consolidated
Statements of Operations for 1995 under the caption "Write-down of costs in
excess of fair market value of net assets of acquired businesses and other
intangibles."

30
<PAGE>

Note 3. Property and Equipment

Property and equipment at December 31, 1997 and 1996 consist of the following
(in thousands)(see Note 2):

1997 1996
------------------
Land and land improvements............................ $ 8,511 $ 8,452
Disposal sites and improvements....................... 74,392 66,781
Buildings and improvements............................ 15,128 15,143
Machinery and equipment............................... 16,733 15,385
Transportation equipment and vehicles................. 17,084 13,051
Office furniture and equipment........................ 5,312 5,014
Construction in progress.............................. 7,263 11,570
------------------
144,423 135,396
Less accumulated depreciation
and amortization.................................... 51,030 45,759
------------------
Property and equipment, net........................... $ 93,393 $ 89,637
------------------

Note 4. Debt

Long-term debt at December 31, 1997 and 1996 is as follows
(in thousands):
1997 1996
------------------
Unsecured revolving credit facility and term
loan agreement, with interest at prime............... $ 7,200 $ 2,600
Equipment loans secured by certain
transportation equipment, payable
monthly through August 1998, with
interest at 8.8%..................................... 124 324
Variable rate loan collateralized by mortgage
on golf course property, payable monthly
through March 2008, with interest rate
ceiling of 8% until March 1998 and
9.5% thereafter...................................... 1,111 1,217
------------------
Total long-term debt.................................. 8,435 4,141
Less current portion.................................. 230 305
------------------
$ 8,205 $ 3,836
------------------

Aggregate annual maturities of the long-term debt total $230,000, $106,000,
$106,000, $2,307,000 and $2,500,000 for the years 1998 through 2002,
respectively.

In December 1994, the Company entered into an $18 million unsecured revolving
credit facility with two banks. Such facility provided for revolving credit
loans during the first three years and/or term loans payable quarterly with a
final maturity date no later than seven years from the date of the agreement.
On December 31, 1996 the Company amended such agreement to extend the revolving
credit loans to December 31, 2000 and the final maturity date on term loans to
no later than seven years from the amendment date. On December 31, 2000 the
Company must convert any outstanding revolving credit loans into term loans
payable quarterly with a final maturity date no later than December 31, 2003.
The agreement also provides for the issuance of letters of credit up to an
aggregate amount of $13 million until December 31, 2000.

Borrowings under the amended agreement bear interest at prime or, at the
Company's option, at a fixed rate above the Eurodollar rate. The agreement
provides for an annual fee of 3/8% on the unused portion of the facility and
requires the Company to maintain certain financial ratios. The amount of
borrowings outstanding under the revolving credit facility at December 31, 1997
and December 31, 1996 was $7,200,000 and $2,600,000, respectively, and the
weighted average interest rate was 8.5% at December 31, 1997. In December 1995
the Company used the unsecured revolving credit facility to prepay a senior
secured note prior to its stated maturity. In doing so, the Company incurred a
prepayment charge of approximately $750,000. Such amount is included in the
Consolidated Statements of Operations for 1995 under the caption "Other income
(expense), net." The Company also had $8.3 million and $8 million in
outstanding letters of credit at December 31, 1997 and December 31, 1996,
respectively. The letters of credit were utilized to capitalize a captive
insurance company, incorporated and licensed under the laws of the State of
Vermont, which issued an insurance policy to provide the required financial
assurances for closure and post-closure monitoring costs to the State of Ohio
for the Company's American and Mahoning landfill facilities and its tire
monofill facility.

Interest costs related to significant projects of landfill development or
expansion and other construction are capitalized. Interest costs capitalized
totaled $461,000, $313,000 and $1,029,000 in 1997, 1996 and 1995, respectively.
Total interest costs incurred by the Company totaled $763,000, $536,000 and
$2,003,000 in 1997, 1996 and 1995, respectively. Interest payments in 1997, 1996
and 1995 were $675,000, $459,000 and $2,056,000, respectively.

31
<PAGE>

Note 5. Income Taxes

Income (loss) before income taxes for each of the three years ended December
31, 1997 was subject to taxation under United States jurisdictions only.

Total income tax expense (benefit) for the year ended December 31, 1995 was
allocated as follows (in thousands):

Income (loss) from continuing operations.................... $(9,823)
--------
Extraordinary item.......................................... 1,339
--------
$(8,484)
--------

The provisions (benefits) for income taxes charged to operations consist of
the following (in thousands):

1997 1996 1995
---------------------------
Current:
Federal..................................... $ (629) $ 438 $(4,814)
State....................................... 59 127 72
---------------------------
(570) 565 (4,742)
---------------------------
Deferred:
Federal..................................... 1,381 1,208 (4,699)
State....................................... (15) (16) (382)
---------------------------
1,366 1,192 (5,081)
---------------------------
$ 796 $1,757 $(9,823)
---------------------------

The tax effects of temporary differences that give rise to significant
portions of the deferred tax (assets) liabilities at December 31, 1997 and 1996
are as follows (in thousands):

1997 1996
-----------------
Deferred tax assets:
Accounts receivable, principally due to
allowance for doubtful accounts..................... $ (186) $ (131)
Reserves not deductible until paid................... (521) (564)
Net operating loss carry-forwards.................... (101) (101)
Alternative minimum tax credit
carry-forwards...................................... (241) (181)
Other................................................ (23) (21)
-----------------
Gross deferred tax assets............................ (1,072) (998)
Less valuation allowance............................. 75 75
-----------------
Net deferred tax assets.............................. (997) (923)
-----------------

Deferred tax liabilities:
Property and equipment............................... 9,874 8,466
Other................................................ 49 17
-----------------
Gross deferred tax liabilities....................... 9,923 8,483
-----------------
Net deferred tax liability........................... $ 8,926 $7,560
-----------------

The provision (benefit) for income taxes differs from the amount of income tax
determined by applying the applicable U.S. statutory federal income tax rate to
income (loss) before income taxes as a result of the following differences (in
thousands):

1997 1996 1995
----------------------------
Income (loss) before income taxes
and extraordinary credit................ $2,718 $4,879 $(41,553)
Federal statutory tax rate.............. 35% 35% 35%
----------------------------
951 1,708 (14,544)
State income taxes, net of federal
income tax benefits..................... 29 72 (250)
Nondeductible amortization
and depreciation........................ 60 60 4,584
Change in the valuation
allowance for deferred tax
assets allocated to income
tax expense............................. -- -- 75
Nonconventional fuel production
tax credits............................. (855) (83) --
Closure reserves........................ 550 -- --
Other, net.............................. 61 -- 312
----------------------------
$ 796 $1,757 $ (9,823)
----------------------------

The Company received income tax refunds, net of payments, of $5,102,000 in
1996. The Company made income tax payments, net of refunds, of $558,000 and
$599,000 in 1997 and 1995, respectively.

Note 6. Retirement Benefits

The Company sponsors a defined contribution profit sharing plan that is a
qualified tax deferred benefit plan under Section 401(k) of the Internal Revenue
Code (the "Plan"). Substantially all employees are eligible to participate in
the Plan. The Plan provides for Company contributions equal to 4% of each
participant's annual compensation. In addition, discretionary contributions may
be made by the Company from time to time in an amount determined by the
Company's Board of Directors. Mandatory contributions are fully vested
immediately while discretionary contributions vest on a graduated basis and
become 100% vested after six years of service. Plan participants may also
contribute a portion of their annual compensation to the Plan, subject to
maximums imposed by the Internal Revenue Code and related regulations. Costs
charged to operations for Company contributions were $592,000, $564,000 and
$566,000 for the years 1997, 1996 and 1995, respectively. The

32
<PAGE>

Company may make all or a portion of its contributions in the form of Class A
Common Stock and 2,500,000 shares have been reserved for this purpose. The
liability for Company contributions for 1996 and 1995 was satisfied by the
contribution of 282,808 shares and 225,874 shares, respectively, of Class A
Common Stock. The contribution of shares for 1996 was made in February 1997 and
the contribution of shares for 1995 was made in February 1996. Such shares were
issued from the authorized but unissued Class A Common Stock of the Company.

Note 7. Stock Option Plans

The 1990 Long-Term Incentive Plan adopted as of August 1, 1990, as amended
(the "1990 Plan"), provides for the granting of options which are either
intended to qualify as "incentive stock options" under the Internal Revenue Code
("ISOs") or are "non-qualified stock options" ("NQSOs"). The Company has
reserved 3,000,000 shares of Class A Common Stock for issuance to employees and
non-employee directors. The Option Plan Committee of the Company's Board of
Directors determines grants to be made with the exception of grants of NQS's to
non-employee directors of the Company which are determined by the Board of
Directors. NQS's may be granted with an exercise price which is not less than
85% of the fair market value of the Class A Common Stock on the date of grant.
ISOs may be granted with an exercise price which is not less than 100% of fair
market value of the Class A Common Stock on the date of grant, except ISOs
granted to an employee who owns 10% or more of the total combined voting power
of all classes of stock of the Company must be at least 110% of the fair market
value at the date of grant. Prior to adopting the 1990 Plan, the company
established the 1990 Stock Option Plan (the "Old Plan") as of January 16, 1990
for the purpose of granting options for Class B Common Stock to salaried
employees of the Company who were neither officers nor directors. Options
granted under the Old Plan had a five-year term from the date of grant. All
such options expired on January 16, 1995. No additional options will be granted
under the Old Plan. The following summarizes the stock option activity for the
three years ended December 31, 1997:

Number Per Share
1990 Plan (Class A Common Stock) of options option price
--------------------------
Outstanding at January 1, 1995............... 1,157,285 $2.00-$12.88
Granted...................................... 15,000 $2.00
Exercised.................................... 3,000 $2.00
Cancelled.................................... 76,090 $2.00-$10.00
--------------------------
Outstanding at December 31, 1995............. 1,093,195 $2.00-$12.88
Granted...................................... 545,000 $2.38
Cancelled.................................... 388,450 $2.00-$10.00
--------------------------
Outstanding at December 31, 1996............. 1,249,745 $2.00-$12.88
Granted...................................... 160,000 $1.63-$2.00
Cancelled.................................... 327,920 $2.00-$12.88
--------------------------
Outstanding at December 31, 1997............. 1,081,825 $1.63-$10.00
Exercisable at December 31, 1997............ 541,025 $2.00-$10.00
----------
Available for grant at
December 31, 1997.......................... 1,918,175
----------

Old Plan (Class B Common Stock)
Outstanding at January 1, 1995............... 182,756 $3.51
Cancelled.................................... 182,756 $3.51
--------------------------
Outstanding at December 31, 1995,
1996 and 1997.............................. --
----------

The Company performed an analysis under the fair value method of accounting
for stock-based compensation arrangements and has determined that the stock-
based compensation would be immaterial to the consolidated financial statements
of the Company. Therefore, no pro forma information is presented.

Note 8. Shareholders' Equity

Each share of Class A Common Stock is entitled to one vote and each share of
Class B Common Stock is entitled to ten votes on all matters submitted to a vote
of the shareholders. Except as required by the provisions of the Company's
Articles of Incorporation or by law, the Class A Common Stock and the Class B
Common Stock vote together as a single class on all matters presented for a vote
of the shareholders. However, with regard to the election of directors, the
holders of the Class A Common Stock, voting as a separate class, will elect the
minimum number of directors as shall constitute at least 25% of the total Board
of Directors and the holders of the Class B Common Stock, voting as a separate
class, will elect the remaining directors for as long as the outstanding Class B
Common Stock has more than 50% of the total outstanding voting power of the
common stock. Thereafter, the holders of the Class A and Class B Common Stock
will vote together as a single class for the election of directors. The holders
of a majority of all outstanding shares of Class A Common Stock or

33
<PAGE>

Class B Common Stock, voting as separate classes, must also approve amendments
to the Articles of Incorporation that adversely affect the shares of their
class. Shares of Class A Common Stock and Class B Common Stock do not have
cumulative voting rights.

Each share of Class B Common Stock is convertible into one share of Class A
Common Stock at any time at the option of the shareholder. Shares of Class B
Common Stock are also automatically converted into shares of Class A Common
Stock on the transfer of such shares to any person other than the Company,
another holder of Class B Common Stock or certain specified permitted
transferees, as defined in the Company's Articles of Incorporation.

The Company's Board of Directors has the authority to issue up to 2,000,000
shares of no par value preferred stock without any further vote or action by the
shareholders. The preferred stock may be issued from time to time in one or
more series and each series will have such voting powers, designations,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions as established by the Board of
Directors at the time of issuance. No preferred stock has been issued.

Note 9. Legal Matters

When the Company concludes that it is probable that a liability has been
incurred with respect to a site, provision will be made in the Company's
financial statements reflecting its best estimate of the liability based on
management's judgment and experience, information available from regulatory
agencies, and the number, financial resources and relative degree of
responsibility of other potentially responsible parties who are jointly and
severally liable for remediation of the site as well as the typical allocation
of costs among such parties. If a range of possible outcomes is estimated and
no amount within the range appears to be a better estimate than any other, then
the Company will provide for the minimum amount within the range, in accordance
with generally accepted accounting principles. As such, the Company accrued a
liability of approximately $941,000 in the fourth quarter of 1995

34
<PAGE>

relating to this matter. Such amount is included in the Consolidated Statements
of Operations for 1995 under the caption "Cost of Operations." The Company's
estimates are revised, as deemed necessary, as additional information becomes
known. The Company anticipates obtaining additional information by reason of,
among other things, having entered into the Participation Agreement.

In addition to the foregoing, in the ordinary course of conducting its
business, the Company also becomes involved in lawsuits, administrative
proceedings and governmental investigations, including those relating to
environmental matters. Any of these proceedings may result in fines, penalties
or judgments being assessed which, from time to time, may have an impact on its
business and financial condition. The Company does not believe that any pending
proceedings, individually, or in the aggregate, would have a material adverse
effect on its business or its financial condition.

Note 10. Closure Costs and Post-Closure Monitoring Costs

The United States Environmental Protection Agency's "Subtitle (D) Regulations"
provide minimum design, construction and operating standards for virtually all
landfills in the United States. Furthermore, regulations promulgated by the
Ohio Environmental Protection Agency ("Ohio EPA") require every Ohio landfill to
utilize the "best available technology" with respect to cell preparation and
lining, leachate collection and treatment, and groundwater monitoring as well as
to provide financial assurances adequate to cover closure costs and post-closure
monitoring costs for a period of up to 30 years after the landfill is closed.
As a result of the above-described requirements, the Company has future
financial obligations with regard to closure costs and post-closure monitoring
costs associated with the disposal sites it operates. Although the precise
amount of these future obligations cannot be determined, the Company has
developed procedures to estimate these total projected costs based on
currently available facts, existing technology and presently enacted laws and
regulations. As of December 31, 1997, the Company estimated that the remaining
total closure costs and post-closure monitoring costs it will incur for all of
its disposal facilities is approximately $30.2 million. In accordance with
Ohio's financial assurance regulations, the Company currently estimates that it
will be required to provide approximately $31.7 million of financial assurances
to the State of Ohio; however, such financial assurances are reduced by actual
expenditures. During 1997 the Company utilized insurance to satisfy the
financial assurance requirements for its American and Mahoning landfill
facilities and its tire monofill facility. The Company uses a trust fund to
satisfy the financial assurance requirements for its East Liverpool facility.
In April 1997 and April 1996 the Company deposited approximately $.3 million
into the trust to fund a portion of the current financial assurance obligation
for that facility. Such fund, which is recorded by the Company at cost which
approximates market value, is included in the Consolidated Balance Sheets under
the caption "Deposits" and amounted to $2.7 million and $2.3 million at December
31, 1997 and December 31, 1996, respectively. The funds in the trust are
invested primarily in short-term securities, commercial paper or certificates of
deposit with investment earnings accruing to the benefit of the Company. The
Company will continue to review and update the underlying assumptions used to
estimate the total projected costs and financial assurance requirements and,
accordingly, such estimates will be subject to periodic revision and adjustment
at least annually. In the third quarter of 1995, as a result of a resolution
reached with the Ohio EPA alleging violations of American Landfill, Inc.'s
("ALI") 1985 permit and related regulations concerning its capacity, ALI
incurred a charge of approximately $9,165,000 to reflect the accrual of closure
and post-closure monitoring costs based upon the remaining capacity of the
landfill. This charge is reflected under the caption "Closure and post-closure
monitoring costs" on the Consolidated Statements of Operations for 1995. During
1995 the Company made a decision not to further develop the East Liverpool
landfill facility and, as a result, the facility has very limited airspace
available for waste disposal. As such, in the fourth quarter of 1995 the
Company accrued additional closure and post-closure monitoring costs amounting
to $6,821,000 (see Note 2). This charge is also included under the caption
"Closure and post-closure monitoring costs" on the Consolidated Statements of
Operations for 1995.

35
<PAGE>

Note 11. Lease Commitments

The Company leases certain office facilities, vehicles, machinery and
equipment. Future commitments under long-term, noncancellable operating leases
at December 31, 1997 are as follows (in thousands):

Year ending December 31,
- ------------------------
1998.......................................................... $1,132
1999.......................................................... 970
2000.......................................................... 903
2001.......................................................... 822
2002.......................................................... 433
After 2002.................................................... 343
------
$4,603
------

Rental expense included in the consolidated statements of operations amounted
to $1,860,000 in 1997, $1,450,000 in 1996 and $1,581,000 in 1995.

Note 12. Business Segment Information

The Company's primary business segment provides integrated waste management
and environmental services, which include the operation of nonhazardous solid
waste landfills for the disposal of special waste and municipal solid waste;
transportation of hazardous and nonhazardous waste; transportation and disposal
brokerage and management services; collection services; and environmental
engineering, site assessments, analytical laboratory and remediation services.
The Company, as part of its transportation operations, also operates a second
business segment; a common carrier of general and bulk commodities within the
United States and several provinces of Canada. Other businesses include the
operation of a public golf course. The Company does not have significant
operations located outside the United States and, accordingly, geographical
segment information is not presented.

Segment operating income reflects the results of operations of each business
segment before income taxes, interest income and expense, and items of a general
nature not readily allocable to a separate segment (see Note 2).

Identifiable assets are the total assets used in the operation of each
business segment. Corporate assets are principally cash and cash equivalents
and certain real estate assets. Business segment information is as follows (in
thousands):

1997 1996 1995
----------------------------
Net operating revenues:
Integrated waste management
and environmental services............... $ 64,718 $ 63,382 $ 67,919
Transportation of general and
bulk commodities......................... 13,214 12,181 12,562
Other businesses........................... 3,518 3,461 3,219
----------------------------
$ 81,450 $ 79,024 $ 83,700
----------------------------
Operating income (loss):
Integrated waste management
and environmental services............... $ 6,997 $ 9,397 $(33,806)
Transportation of general and
bulk commodities......................... 726 618 (1,326)
Other businesses.......................... 578 326 113
----------------------------
Segment operating income (loss)............. 8,301 10,341 (35,019)
Interest expense............................ (302) (223) (974)
Interest income............................. 284 390 665
General corporate expenses.................. (5,565) (5,629) (6,225)
----------------------------
Income (loss) before income taxes
and extraordinary credit................... $ 2,718 $ 4,879 $(41,553)
----------------------------
Depreciation and amortization:
Integrated waste management
and environmental services............... $ 6,760 $ 5,955 $ 7,459
Transportation of general and
bulk commodities......................... 510 529 605
Other businesses........................... 253 247 227
Corporate.................................. 244 244 270
----------------------------
$ 7,767 $ 6,975 $ 8,561
----------------------------
Capital expenditures:
Integrated waste management
and environmental services............... $ 10,802 $ 17,238 $ 9,621
Transportation of general and
bulk commodities......................... 554 864 306
Other businesses........................... 76 90 1,049
Corporate.................................. 132 562 56
----------------------------
$ 11,564 $ 18,754 $ 11,032
----------------------------
Identifiable assets at December 31:
Integrated waste management
and environmental services............... $ 99,915 $ 93,313 $ 93,002
Transportation of general
and bulk commodities..................... 8,673 7,947 5,965
Other businesses........................... 6,412 6,503 6,487
Corporate.................................. 8,382 9,700 10,282
----------------------------
$123,382 $117,463 $115,736
----------------------------

36
<PAGE>

Note 13. Subsequent Event

37
<PAGE>

Note 14. Quarterly Financial Data (Unaudited)

Selected quarterly financial data for each quarter in 1997 and 1996 is as
follows (in thousands except for per share amounts):

<TABLE>
<CAPTION>
Year ended December 31, 1997
--------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
--------------------------------------------
<S> <C> <C> <C> <C> <C>
Net operating revenues......................... $17,498 $19,100 $22,405 $22,447 $81,450
Income (loss) from operations.................. (1,517) 812 1,676 1,037 2,008
Net income (loss).............................. (1,135) 857 1,526 674 1,922
Basic and diluted net income (loss) per share.. $ (.04) $ .03 $ .05 $ .02 $ .06
--------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
Year ended December 31, 1996
--------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
--------------------------------------------
<S> <C> <C> <C> <C> <C>
Net operating revenues......................... $16,696 $19,046 $22,317 $20,965 $79,024
Income from operations......................... 159 1,581 1,895 841 4,476
Net income..................................... 171 1,069 1,278 604 3,122
Basic and diluted net income per share......... $ .01 $ .04 $ .04 $ .02 $ .10
--------------------------------------------
</TABLE>

- --------------------------------------------------------------------------------
Independent Auditors' Report

The Shareholders and Board of Directors of American Waste Services, Inc.

We have audited the accompanying consolidated balance sheets of American Waste
Services, Inc. and subsidiaries as of December 31, 1997 and 1996 and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the years in the three-year period ended December 31, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of American
Waste Services, Inc. and subsidiaries as of December 31, 1997 and 1996 and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1997, in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP

Cleveland, Ohio
February 19, 1998

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

38
<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following information with respect to the Directors and Executive Officers
of the Company is included pursuant to Instruction 3 of Item 401(b) of
Regulation S-K:

<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Sanford B. Ferguson 51 Class A Director
Robert M. Arnoni 52 Class A Director
Stephen L. Gordon 56 Class A Director
Ronald E. Klingle 50 Chairman of the Board, Chief Executive Officer and a Class B Director
Darrell D. Wilson 46 President, Chief Operating Officer and a Class B Director
Michael D. Barwick 42 Executive Vice President, Collection Services and a Class B Director
Charles Boryenace 47 Executive Vice President, Strategic Planning
Mark B. Cawthorne 38 Executive Vice President, Transportation Services and a Class B Director
Timothy C. Coxson 47 Executive Vice President, Finance, Treasurer, Chief Financial
Officer and a Class B Director
Stephen G. Kilper 38 Executive Vice President, Disposal Services and a Class B Director
Kenneth J. McMahon 44 Executive Vice President, Sales and a Class B Director
Jeffrey M. Grinstein 37 Executive Vice President, General Counsel and Secretary
Frances R. Klingle 51 Chief Administrative Officer and Controller
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The above-listed individuals have been elected to the offices set opposite
their names to hold office at the discretion of the Board of Directors of the
Company.
____________________________________________

Sanford B. Ferguson has been a director of the Company since January 1991. He
has been a partner in the law firm of Kirkpatrick & Lockhart LLP since 1981.
Mr. Ferguson received his Bachelor of Arts degree from Dartmouth College, his
Master of Arts degree from Oxford University and his Doctor of Jurisprudence
degree from Yale University.

Robert M. Arnoni is currently President of the Arnoni Development Company,
Inc. From 1985 to August 1996 Mr. Arnoni was President and Chief Executive
Officer of The Arnoni Group, a management company for various, related solid
waste collection, transportation and disposal operations. Mr. Arnoni has over
20 years experience in the solid waste industry.

Stephen L. Gordon has been a partner in the law firm of Beveridge & Diamond,
P.C. since 1982. Mr. Gordon received his Bachelor of Arts degree from Rutgers
University and his Doctor of Jurisprudence degree from the University of
Pennsylvania.

Ronald E. Klingle is a founder of the Company and has been a director,
Chairman of the Board and Chief Executive Officer since December 1988. He has
approximately 27 years of environmental experience and received his Bachelor of
Engineering degree in Chemical Engineering from Youngstown State University.
Mr. Klingle is the spouse of Frances R. Klingle who is the Chief Administrative
Officer and Controller of the Company.

Darrell D. Wilson is a founder of the Company and has been a director and
President since December 1988 and Chief Operating Officer since July 1990. He
has approximately 24 years of environmental experience including service with
governmental regulators as well as the management of several special waste
operations. He received his Bachelor of Science degree in Environmental
Sciences from Ferris State University.

39
<PAGE>

Michael D. Barwick has been Executive Vice President, Collection Services
since January 1997 and a director since April 1997. Prior to joining the
Company, Mr. Barwick owned and operated a private waste company on the West
Coast from November 1989 through April 1995. He received a Bachelor of Arts in
Administration from Hartwell College and is a candidate for a Masters of
Business Administration at Pepperdine University.

Charles Boryenace has been Executive Vice President, Strategic Planning since
May 1995. Mr. Boryenace was Executive Vice President, Finance, Treasurer, and
Chief Financial Officer from January 1991 to May 1995. Mr. Boryenace received
his Bachelor of Business Administration degree in Accounting from Kent State
University.

Mark B. Cawthorne has been a director and Executive Vice President,
Transportation Services since September 1996. He has approximately 15 years of
environmental experience and previously served as Vice President, Disposal Sales
from January 1991 to September 1996 with American Waste Services, Inc. He
received a Bachelor of Arts in Geography and Environmental Studies from the
University of Akron.

Timothy C. Coxson has been a director and Executive Vice President, Finance,
Treasurer, and Chief Financial Officer since May 1995. Mr. Coxson was Vice
President, Corporate Financial Services, from March 1991 to May 1995. He
received a Bachelor of Business Administration degree in Accounting from The
Ohio State University.

Stephen G. Kilper has been a director and Executive Vice President, Disposal
Services, since October 1995. Mr. Kilper was Vice President, Disposal Services,
for the Company and its wholly owned disposal subsidiaries from August 1993 to
October 1995. From January 1992 to August 1993 he was an environmental engineer
for the Company's disposal operations. From February 1990 through December 1991
Mr. Kilper was an engineer with Earth Sciences Consultants, Inc. Mr. Kilper
received his degree in Agricultural Engineering from the University of
Wisconsin-Madison.

Kenneth J. McMahon has been a director and Executive Vice President, Sales
since September 1996. He previously served as Vice President of Corporate Sales
from March 1992 to September 1996 and has approximately 21 years of experience
in sales and marketing. Prior to joining the Company, he was Director of Sales
for an IBM Agent firm, Harker Consulting Services. Mr. McMahon received a
Bachelor of Business Administration Degree in finance and his Masters of
Business Administration from Youngstown State University.

Jeffrey M. Grinstein has been employed by the Company since September 1990 and
has been an Executive Vice President since December 1992. He was Assistant
General Counsel until May 1991, at which time he became General Counsel and
Secretary. He was previously an associate with the Youngstown, Ohio law firm of
Nadler, Nadler & Burdman Co. L.P.A. He received his Bachelor of Business
Administration degree from Emory University and his Doctor of Jurisprudence
degree from The Ohio State University.

Frances R. Klingle has been Chief Administrative Officer and Controller since
July 1991. Ms. Klingle has been Controller for the Company (and predecessor
companies) since June 1986. She received a Bachelor of Arts degree in French
from Kent State University and has completed post-graduate work in accounting at
Youngstown State University. Ms. Klingle is the spouse of Ronald E. Klingle who
is Chairman of the Board, Chief Executive Officer and a director of the Company.

40
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Compensation of Directors

Each of the Company's directors who is not an officer or employee of the
Company is entitled to receive a retainer fee of $20,000 per year for Board of
Directors membership and a fee of $1,000 for attendance at each Board of
Directors meeting (or committee meeting held on a separate day). Officers and
employees who serve as directors are not compensated for their services as
directors. In accordance with the American Waste Services, Inc. 1990 Long-Term
Incentive Plan, non-employee directors are entitled to receive grants of options
to purchase shares of Class A Common Stock as determined by the Board of
Directors. All directors are reimbursed for expenses incurred in attending
Board of Directors meetings and committee meetings. During 1997, the Company
made no other payments to non-employee directors with respect to participation
on the Board of Directors, its committees or with respect to special
assignments.

Compensation of Executive Officers

The following information sets forth the compensation of the Company's Chief
Executive Officer and the Company's four most highly compensated executive
officers other than the Chief Executive Officer who were serving as executive
officers as of December 31, 1997; in each case for services rendered in all
capacities to the Company and its subsidiaries during the fiscal year ended
December 31, 1997. No individual no longer serving as an executive officer as
of December 31, 1997 received compensation in excess of any of the named
executive officers.

SUMMARY COMPENSATION TABLE (1)

<TABLE>
<CAPTION>
Annual Compensation (2) Long Term Compensation
------------------------------- ------------------------------------------
Awards
Other --------------------- Payouts
Annual Restricted Options/ ------- All Other
Compen- Stock SARs LTIP Compen-
Name and Principal Position Year Salary Bonus sation Awards (Shares) Payouts sation(5)
- --------------------------- -------- ---------- ------- ---------- ---------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Ronald E. Klingle 1997 $140,000 $67,384 -- -- -- -- $6,400
Chairman of the Board 1996 140,000 71,475 -- -- -- -- 3,954
and Chief Executive Officer 1995 116,801 24,982 -- -- -- -- 3,920

Darrell D. Wilson 1997 140,000 67,384 -- -- -- -- 6,400
President and Chief 1996 140,000 71,475 -- -- -- -- 6,000
Operating Officer 1995 116,801 24,982 -- -- -- -- 5,671

Timothy C. Coxson (3) 1997 110,000 33,692 -- -- -- -- 5,748
Executive Vice President, 1996 110,000 35,737 -- -- 35,000 -- 5,829
Finance, Treasurer and 1995 91,667 17,807 -- -- -- -- 4,379
Chief Financial Officer

Jeffrey M. Grinstein 1997 110,000 33,692 -- -- -- -- 5,748
Executive Vice President, 1996 110,000 35,737 -- -- 20,000 -- 5,829
General Counsel and
Secretary 1995 110,000 18,737 -- -- -- -- 5,149

Kenneth J. McMahon (4) 1997 110,000 33,692 -- -- -- -- 5,748
Executive Vice President, 1996 86,667 27,210 -- -- 35,000 -- 4,555
Sales 1995 na na na na na na na
- ------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

41
<PAGE>

(1) Does not include the value of certain non-cash compensation to the named
individuals which did not exceed the lesser of $50,000 or 10% of such
individuals' total annual salary and bonus shown in the table.

(2) Includes salary and/or bonuses deferred pursuant to Section 401(k) of the
Internal Revenue Code.

(3) Mr. Coxson became an executive officer during 1995 and $27,500 of the salary
and $17,807 of the bonus reflected in the table for year 1995 reflects
compensation received while not an executive officer.

(4) Mr. McMahon became an executive officer during 1996 and $50,000 of the
salary, $9,746 of the bonus and 10,000 options reflected in the table for
year 1996 reflects compensation received while not an executive officer.

(5) Reflects nondiscretionary contributions made on behalf of the named
executive officer pursuant to the provisions of the Company's 401(k) Plan.

The following table sets forth certain information concerning the value of
unexercised options held on December 31, 1997 by executive officers named in the
table under the caption "Summary Compensation Table." No options under the Plan
were exercised in 1997 by executive officers.

FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
Number of
Securities Underlying
Unexercised Options Value of Unexercised
at Fiscal Year-End In-the-Money Options
(Shares) at Fiscal Year-End (1)
------------------------- -------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------------------- -------------------------
<S> <C> <C>
Ronald E. Klingle (2) 17,000/20,000 $0/$0
Darrell D. Wilson 12,000/0 0/ 0
Timothy C. Coxson 19,000/31,000 0/ 0
Jeffrey M. Grinstein 28,000/22,000 0/ 0
Kenneth J. McMahon 19,000/31,000 0/ 0
- --------------------------
</TABLE>
(1) Based on closing price of $1.625 per share of Class A Common Stock as of
December 31, 1997.

(2) Mr. Klingle's exercisable options at fiscal year-end include 5,000 options
exercisable by Mr. Klingle's spouse. Mr. Klingle's unexercisable options at
fiscal year-end include 20,000 options unexercisable by Mr. Klingle's
spouse.

42
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

Except for the election of the Company's Directors and as otherwise required
by the provisions of the Company's Articles of Incorporation or by law, holders
of the Class A Common Stock and Class B Common Stock will vote or consent as a
single class on all matters with each share of Class A Common Stock having one
vote per share and each share of Class B Common Stock having ten votes per
share. The holders of Class A Common Stock are entitled, as a class, to elect
three of the Company's Directors ("Class A Directors") and the holders of Class
B Common Stock are entitled, as a class, to elect the remaining seven Directors
("Class B Directors," and together with the Class A Directors are collectively
referred to as the "Directors"). In the event that the outstanding shares of
Class B Common Stock constitute less than 50% of the total voting power of the
issued and outstanding shares of Class A Common Stock and Class B Common Stock,
the holders of the Class A Common Stock and Class B Common Stock will vote as a
single class for the election of Directors. At the close of business on March
2, 1998, the Company had outstanding 25,300,608 shares of Class A Common Stock
entitling the holders thereof to 25,300,608 votes in the aggregate and 5,124,558
shares of Class B Common Stock entitling the holders thereof to 51,245,580 votes
in the aggregate.

Each share of Class B Common Stock is convertible at any time, at the option
of the shareholder, into one share of Class A Common Stock. Shares of Class B
Common Stock are also automatically converted into shares of Class A Common
Stock on the transfer of such shares to any person other than the Company,
another holder of Class B Common Stock or a "Permitted Transferee" as defined in
the Company's Articles of Incorporation. The Class A Common Stock is not
convertible.

The following table sets forth information with respect to beneficial
ownership of the Class A Common Stock and Class B Common Stock by each person
known to the Company to be the beneficial owner of more than five percent of
either class of Common Stock. This information is as of February 9, 1998,
unless noted that it is based upon Schedules 13-G filed with the Securities and
Exchange Commission (the "Commission"), in which event such information is as of
December 31, 1997.

<TABLE>
<CAPTION>
Beneficially Owned as of February 9, 1998
-------------------------------------------------------------
Class A Common Stock Class B Common Stock Percent Percent
-------------------- -------------------- of all of Total
Number Percent Number Percent Common Voting
Name of Shares of Class of Shares of Class Stock Power
- ------------------------- --------- -------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Ronald E. Klingle(1)(3) 35,546 * 2,652,473 51.8% 8.8% 34.7%
Darrell D. Wilson(2)(3) 19,376 * 2,236,602 43.6% 7.4% 29.2%
- --------------------------
</TABLE>
* Less than one percent.

(1) Includes 114,371 shares of Class B Common Stock owned by Mr. Klingle's
spouse, the beneficial ownership of which is disclaimed. Includes 17,000
shares of Class A Common Stock subject to options exercisable within 60 days
of February 9, 1998 (including 5,000 shares of Class A Common Stock
exercisable within 60 days of February 9, 1998, held by Mr. Klingle's
spouse, the beneficial ownership of which Mr. Klingle disclaims). Includes
8,546 shares of Class A Common Stock held by Mr. Klingle in the American
Waste Services, Inc. Participating Companies Profit Sharing Plan and Trust
(including 3,179 shares held by Mr. Klingle's spouse, the beneficial
ownership of which Mr. Klingle disclaims). Mr. Klingle has sole voting
power and sole investment power over 27,367 shares of Class A Common Stock
and 2,538,102 shares of Class B Common Stock.

(2) Includes 12,000 shares of Class A Common Stock subject to options
exercisable within 60 days of February 2, 1998. Includes 7,376 shares of
Class A Common Stock held by Mr. Wilson in the American Waste Services, Inc.
Participating Companies Profit Sharing Plan and Trust. Mr. Wilson has sole
voting power and sole investment power over all of the shares listed.

(3) Each named person is an employee, executive officer and director of the
Company. The address for Messrs. Klingle and Wilson is c/o American Waste
Services, Inc., One American Way, Warren, Ohio 44484-5555.

43
<PAGE>

STOCK OWNERSHIP OF MANAGEMENT

The following table sets forth information as of February 9, 1998, with
respect to beneficial ownership of the Class A Common Stock and Class B Common
Stock by: (i) the Company's directors, and (ii) all executive officers and
directors, as a group. See "Voting Securities and Principal Holders Thereof."

<TABLE>
<CAPTION>
Beneficially Owned as of February 9, 1998
-------------------------------------------------------------------
Class A Common Stock Class B Common Stock Percent Percent
---------------------- ---------------------- of all of Total
Name of Individual or Number Percent Number Percent Common Voting
Number of Persons in Group of Shares of Class of Shares of Class Stock Power
- -------------------------------------------- --------- ------------ ----------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>

Ronald E. Klingle (1)(2)(3)(5) 35,546 * 2,652,473 51.8% 8.8% 34.7%
Darrell D. Wilson (1)(2)(5) 19,376 * 2,236,602 43.6 7.4 29.2
Mark B. Cawthorne (1)(2)(5) 22,684 * -- -- * *
Timothy C. Coxson (1)(2) 22,200 * -- -- * *
Stephen G. Kilper (1)(2)(5) 24,362 * -- -- * *
Kenneth J. McMahon (1)(2)(5) 22,538 * -- -- * *
Sanford B. Ferguson -- -- -- -- -- --
Michael D. Barwick (1)(2) 10,000 * -- -- * *
Robert M. Arnoni 200 * -- -- * *
Stephen L. Gordon -- -- -- -- -- --
All executive officers and directors
as a group
(13 persons) (1)(4)(5) 262,993 1.0% 4,933,446 96.3% 17.1% 64.8%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Less than one percent.

(1) Includes shares of Class A Common Stock subject to options exercisable
within 60 days of February 9, 1998, as follows: Mr. Klingle 17,000 shares
(including 5,000 shares of Class A Common Stock exercisable within 60 days
of February 9, 1998 held by Mr. Klingle's spouse, the beneficial ownership
of which Mr. Klingle disclaims); Mr. Wilson, 12,000 shares; Mr. Cawthorne,
19,000 shares; Mr. Coxson, 19,000 shares; Mr. Kilper, 19,000 shares; Mr.
McMahon, 19,000 shares; Mr. Barwick, 10,000 shares; and "All executive
officers and directors as a group," 171,000 shares. In determining the
number of shares held by executive officers and directors as a group, shares
beneficially owned by more than one executive officer or director have been
counted only once.

(2) Each of these individuals is an employee, executive officer and director of
the Company.

(3) Includes 114,371 shares of Class B Common Stock owned by Mr. Klingle's
spouse, the beneficial ownership of which is disclaimed.

(4) In determining the number of shares held by executive officers and directors
as a group, shares beneficially owned by more than one executive officer or
director have been counted only once.

(5) Includes shares of Class A Common Stock held within employee accounts under
the American Waste Services, Inc. Participating Companies Profit Sharing
Plan and Trust, as follows: Mr. Klingle, 8,546 shares (including 3,179
shares held by Mr. Klingle's spouse, the beneficial ownership of which Mr.
Klingle disclaims); Mr. Wilson, 7,376 shares; Mr. Cawthorne, 3,534 shares;
Mr. Kilper, 5,362 shares; Mr. McMahon, 3,538 shares; and "All executive
officers and directors as a group," 35,143 shares. In determining the
number of shares held by executive officers and directors as a group, shares
beneficially owned by more than one executive officer or director have been
counted only once.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Legal Services

Sanford B. Ferguson, a director of the Company, is a partner of the
Pittsburgh, Pennsylvania, office of the law firm of Kirkpatrick & Lockhart LLP,
which has rendered legal services to the Company during the last fiscal year.

44
<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

1. Financial Statements and Independent Auditors' Opinion (See Part II, Item 8
of this report).

2. Financial Statement Schedules required to be filed by Item 8 and Paragraph
(d) of Item 14.

The following financial statement schedule, which is applicable for years
ended December 31, 1997, 1996 and 1995, should be read in conjunction with the
previously referenced financial statements.

Independent Auditors' Report on Financial Statement Schedule

Schedule II - Valuation and Qualifying Accounts

Such independent auditors' report and financial statement schedule are at page
48 and page 49 of this report. The other schedules are omitted because of the
absence of conditions under which they are required or because the information
required is shown in the consolidated financial statements or the notes thereto.

3. Exhibits

Registrant will furnish to any shareholder, upon written request, any of the
following exhibits upon payment by such shareholder of the Registrant's
reasonable expenses in furnishing any such exhibit.

Exhibit No.
- -----------

3.1 Amended and Restated Articles of Incorporation of the Company,
incorporated herein by reference to American Waste Services, Inc.
Registration Statement on Form S-1 (No. 33-36308), Exhibit 3.1.

3.2 Amended and Restated Code of Regulations of the Company, incorporated
herein by reference to American Waste Services, Inc. Registration
Statement on Form S-1 (No. 33-36308), Exhibit 3.2.

4.1 Form of certificate evidencing ownership of Class A Common Stock of
the Company, incorporated herein by reference to American Waste
Services, Inc. Registration Statement on Form S-1 (No. 33-36308),
Exhibit 4.1.

10.14 1990 Stock Option Plan, incorporated herein by reference to American
Waste Services, Inc. Registration Statement on Form S-1 (No. 33-
36308), Exhibit 10.14.

*10.15 1990 Long-Term Incentive Plan as amended and restated on February
17, 1997, incorporated herein by reference to American Waste Services,
Inc. Form 10-K for the year ended December 31, 1996, Exhibit 10.15.

10.37 Agreement Regarding the Sale and Purchase of the East Liverpool
Landfill, between East Liverpool Landfill, Inc. and the City of East
Liverpool, Ohio, dated February 2, 1990, incorporated herein by
reference to American Waste Services, Inc. Registration Statement on
Form S-1 (No. 33-36308), Exhibit 10.37.

10.39 Finders Agreement between East Liverpool Landfill, Inc. and Whan,
Inc., dated as of August 6, 1990, incorporated herein by reference to
American Waste Services, Inc. Registration Statement on Form S-1 (No.
33-36308), Exhibit 10.39.

10.56 American Waste Services, Inc. Participating Companies Profit Sharing
Plan and Trust, as amended and restated effective January 1, 1993 in
accordance with the Nonstandardized Adoption Agreement and Prototype
Cash or Deferred Profit-Sharing Plan and Trust/Custodial Account,
incorporated herein by reference to American Waste Services, Inc. Form
10-K for the year ended December 31, 1992, Exhibit 10.56.

45
<PAGE>

Exhibit No.
- ----------

10.57 Agreed Judgment Entry of Consolidation, Settlement and Dismissal
dated August 29, 1994, modifying Agreement Regarding the Sale and
Purchase of the East Liverpool Landfill, referenced as Exhibit 10.57
to the registrant's Form 10-K for the year ended December 31, 1993,
Exhibit 10.57.

10.60 Loan Agreement dated as of December 23, 1994, among American Waste
Services, Inc., NBD Bank, N.A., The Second National Bank of Warren,
and NBD Bank, N.A., as Agent, incorporated herein by reference to
American Waste Services, Inc. Form 10-K for the year ended December
31, 1994, Exhibit 10.60.

10.61 First Amendment to Loan Agreement dated October 19, 1995 among
American Waste Services, Inc., NBD Bank, The Second National Bank of
Warren, and NBD Bank, as Agent, referenced as Exhibit 10.61 to the
registrant's Form 10-Q for the period ended September 30, 1995.

10.62 Second Amendment to Loan Agreement dated February 19, 1996 among
American Waste Services, Inc., NBD Bank, The Second National Bank of
Warren, and NBD Bank, as Agent, incorporated herein by reference to
American Waste Services, Inc. Form 10-K in the year ended December 31,
1995, Exhibit 10.62.

10.63 Third amendment to Loan Agreement dated December 31, 1996 among
American Waste Services, Inc., NBD Bank, The Second National Bank of
Warren, and NBD Bank, as Agent, incorporated herein by reference to
American Waste Services, Inc. Form 10-K for the year ended December
31, 1996, Exhibit 10.63.

10.64 Fourth Amendment to Loan Agreement dated July 15, 1997, among
American Waste Services, Inc., NBD Bank, The Second National Bank of
Warren, and NBD Bank, as agent, incorporated herein by reference to
American Waste Services, inc. Form 10-Q for the period ended June 30,
1997, Exhibit 10.64.

10.70 Agreement and Plan of Merger By and Among USA Waste Services, Inc.,
C&S Ohio Corp. and American Waste Services, Inc., referenced as
Exhibit 10.70 to the registrant's Form 8-K filed on February 13, 1998.

21.1 Subsidiaries of the Company.

27 Financial Data Schedule.

* Represents management contract or compensatory plan or arrangement required
to be filed or incorporated by reference, as an exhibit to this report
pursuant to Part IV, Item 14(c).

______________________________________________

(b) No Form 8-K reports were filed during the last quarter of the period covered
by this report.

On February 13, 1998 the Company filed an 8-K regarding the Agreement and
Plan of Merger By and Among USA Waste Services, Inc., C&S Ohio Corp. and
American Waste Services, Inc.

(d) Reference is made to Item 14 (a)(2) above for the index to the financial
statements and financial statement schedules.

46
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized, on the 23rd day of March,
1998.

AMERICAN WASTE SERVICES, INC.
(Registrant)

By /s/ TIMOTHY C. COXSON
--------------------------
Timothy C. Coxson - Executive Vice
President, Finance, Treasurer and Chief
Financial Officer
__________________________

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, on the 23rd day of March, 1998.

Signatures Title
---------- -----
<S> <C>
/s/ RONALD E. KLINGLE Chairman of the Board, Chief
- ---------------------------------------- Executive Officer and Director
Ronald E. Klingle

/s/ DARRELL D. WILSON President, Chief Operating Officer
- ---------------------------------------- and Director
Darrell D. Wilson

/s/MARK B. CAWTHORNE Executive Vice President, Transportation
- ---------------------------------------- Services and Director
Mark B. Cawthorne

/s/ MICHAEL D. BARWICK Executive Vice President, Collection Services
- ---------------------------------------- and Director
Michael D. Barwick

/s/ TIMOTHY C. COXSON Executive Vice President, Finance, Treasurer,
- ---------------------------------------- Chief Financial Officer and Director
Timothy C. Coxson (Principal Financial and Accounting Officer)

/s/ STEPHEN G. KILPER Executive Vice President, Disposal
- ---------------------------------------- Services and Director
Stephen G. Kilper

/s/ KENNETH J. McMAHON Executive Vice President, Sales and Director
- ----------------------------------------
Kenneth J. McMahon

/s/ SANFORD B. FERGUSON Director
- ----------------------------------------
Sanford B. Ferguson

/s/ ROBERT M. ARNONI Director
- ---------------------------------------
Robert M. Arnoni

/s/STEPHEN L. GORDON Director
- ---------------------------------------
Stephen L. Gordon

</TABLE>

47
<PAGE>

Independent Auditors' Report
----------------------------

The Shareholders and Board of Directors
of American Waste Services, Inc.:

Under date of February 19, 1998, we reported on the consolidated balance sheets
of American Waste Services, Inc. and subsidiaries as of December 31, 1997 and
1996, and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1997, as contained in the annual report on Form 10-K for the year
1997. In connection with our audits of the aforementioned consolidated
financial statements, we also have audited the related financial statement
schedule as listed in the accompanying index. The financial statement schedule
is the responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.

KPMG Peat Marwick, LLP

Cleveland, Ohio
February 19, 1998

48
<PAGE>

AMERICAN WASTE SERVICES, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(thousands of dollars)

----------------------------------------------------------------------------------------------------------
Balance at Additions
DESCRIPTION Beginning ---------------------------------- Deductions Balance at End
of Year Charged to Costs Charged to Other (1) of Year
and Expenses Accounts
- -----------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
Allowance for Doubtful Accounts:

Year ended December 31,

1997......................... $506 $905 $ -- $761 $650
==== ==== ==== ==== ====

1996......................... $778 $(85) $ -- $187 $506
==== ==== ==== ==== ====

1995......................... $991 $610 $ -- $823 $778
==== ==== ==== ==== ====

</TABLE>

(1) Receivables written-off as uncollectible, net of recoveries.

49
<PAGE>

AMERICAN WASTE SERVICES, INC. AND SUBSIDIARIES

EXHIBIT INDEX
_________________________

Exhibit
-------

21.1 Subsidiaries of the Company

27 Financial Data Schedule

<PAGE>

EXHIBIT 21.1

AMERICAN WASTE SERVICES, INC. AND SUBSIDIARIES

SUBSIDIARIES OF THE COMPANY

The following is a list of the Company's subsidiaries except for unnamed
subsidiaries which considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary.

Subsidiary Name State of Incorporation
--------------- ----------------------

. American Landfill Gas Company, Inc. Ohio
. American Landfill, Inc. Ohio
. American Landfill Management, Inc. Ohio
. American Waste, Inc Ohio
. American Waste of Mahoning Valley, Inc. Ohio
. American Waste of Northeast Ohio, Inc. Ohio
. American Waste Management Services, Inc. Ohio
. Antech Ltd. Pennsylvania
. Avalon Lakes Golf, Inc. Ohio
. Avalon Travel, Inc. Ohio
. TBG, Inc. Ohio
. AWS Remediation, Inc. Pennsylvania
. DartAmericA, Inc. Ohio
. Dart Trucking Company, Inc. Ohio
- Dart Realty, Inc. Ohio
- Dart Services, Inc. Ohio
. TRB National Systems, Inc. Ohio
. Eagle Fidelity Insurance Company Vermont
. Earth Sciences Consultants, Inc. Pennsylvania
. Earth Sciences Consultants of Colorado, Inc. Colorado
. East Liverpool Landfill, Inc. Ohio
. Envirco Transportation, Inc. Ohio
. Envirco Transportation Management, Inc. Ohio
. Mahoning Landfill, Inc. Ohio
. S.L.F. Development, Inc. Ohio

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

Parent/subsidiary relationships are indicated by indentations. In each case,
100% of the voting securities of each of the subsidiaries is owned by the
indicated parent of such subsidiary.

<PAGE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM YEAR END
1997 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,080
<SECURITIES> 0
<RECEIVABLES> 17,654
<ALLOWANCES> 650
<INVENTORY> 0
<CURRENT-ASSETS> 23,869
<PP&E> 144,423
<DEPRECIATION> 51,030
<TOTAL-ASSETS> 123,382
<CURRENT-LIABILITIES> 12,913
<BONDS> 0
0
0
<COMMON> 65,047
<OTHER-SE> 8,372
<TOTAL-LIABILITY-AND-EQUITY> 123,382
<SALES> 81,450
<TOTAL-REVENUES> 81,450
<CGS> 66,777
<TOTAL-COSTS> 79,442
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 302
<INCOME-PRETAX> 2,718
<INCOME-TAX> 796
<INCOME-CONTINUING> 1,922
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,922
<EPS-PRIMARY> .06
<EPS-DILUTED> .06

</TABLE>