AMERICAN DISPOSAL SERVICES INC, S-3, 1997-09-25

AMERICAN DISPOSAL SERVICES INC
S-3, 1997-09-25
REFUSE SYSTEMS

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 25, 1997

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------

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

<TABLE>
<S> <C> <C>
DELAWARE 4953 13-3858494
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

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

745 MCCLINTOCK DRIVE
SUITE 230
BURR RIDGE, ILLINOIS 60521
(630) 655-1105
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
--------------------------

ANN L. STRAW, ESQ.
AMERICAN DISPOSAL SERVICES, INC.
745 MCCLINTOCK DRIVE
SUITE 230
BURR RIDGE, ILLINOIS 60521
(630) 655-1105
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------

Copies to:

<TABLE>
<S> <C>
STEPHEN W. RUBIN, ESQ. HOWARD L. SHECTER, ESQ.
PROSKAUER ROSE LLP MORGAN, LEWIS & BOCKIUS LLP
1585 BROADWAY 101 PARK AVENUE
NEW YORK, NEW YORK 10036 NEW YORK, NEW YORK 10178
(212) 969-3000 (212) 309-6000
</TABLE>

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

Approximate date of commencement of proposed sale of securities to the
public: As soon as possible after the Registration Statement becomes effective.
--------------------------

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED SHARE(1) OFFERING PRICE(1) FEE(1)
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share 6,325,000 $31.25 $197,656,250.00 $59,896.00
</TABLE>

(1) The price stated is estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457(c) under the Securities Act of 1933
based on the average of the high and low prices reported for the Common
Stock on the Nasdaq National Market on September 19, 1997
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 25, 1997

5,500,000 SHARES

[LOGO]

COMMON STOCK
------------------

Of the 5,500,000 shares of Common Stock offered hereby, 3,500,000 shares are
being issued and sold by American Disposal Services, Inc. (the "Company") and
2,000,000 shares are being sold by certain selling stockholders (the "Selling
Stockholders"). See "Principal and Selling Stockholders." The Company will not
receive any of the proceeds from the sale of shares by the Selling Stockholders.
The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "ADSI." On September 24, 1997, the last sale price of the Common Stock as
reported by the Nasdaq National Market was $32.50 per share. See "Price Range of
Common Stock."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN RISK
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OF
COMMON STOCK OFFERED HEREBY.
------------------------

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

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
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<S> <C> <C> <C> <C>
Per Share...................... $ $ $ $
Total(3)....................... $ $ $ $
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</TABLE>

(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other information.

(2) Before deducting expenses of the offering payable by the Company estimated
at $ .

(3) The Underwriters have been granted an option by the Company (or under
certain circumstances by the Selling Stockholders), exercisable within 30
days from the date hereof, to purchase up to 825,000 additional shares of
Common Stock, at the Price to Public per share, less the Underwriting
Discount, for the purpose of covering over-allotments, if any. If the
Underwriters exercise such option in full from the Company, the total Price
to Public, Underwriting Discount and Proceeds to Company will be
$ , $ and $ , respectively. See "Use of Proceeds"
and "Underwriting."
------------------------

The shares of Common Stock are offered by the Underwriters when, as and if
delivered to and accepted by them, subject to their right to withdraw, cancel or
reject orders in whole or in part and subject to certain other conditions. It is
expected that delivery of the certificates representing the shares will be made
against payment on or about , 1997, at the offices of
Oppenheimer & Co., Inc., Oppenheimer Tower, World Financial Center, New York,
New York 10281.
------------------------

JOINT BOOK-RUNNING MANAGERS

OPPENHEIMER & CO., INC. DONALDSON, LUFKIN & JENRETTE
SECURITIES
CORPORATION
CREDIT SUISSE FIRST BOSTON

The date of this Prospectus is September , 1997.
<PAGE>
[MAP]

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

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK
OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE
SHORT COVERING TRANSACTIONS, PENALTY BIDS AND PASSIVE MARKET MAKING. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS (INCLUDING THE
NOTES THERETO) APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE
INDICATED, ALL FINANCIAL INFORMATION, SHARE AND PER SHARE DATA IN THIS
PROSPECTUS: (I) GIVE EFFECT TO AN EXCHANGE OF THE COMPANY'S COMMON STOCK, PAR
VALUE $.01 PER SHARE ("COMMON STOCK"), IN CONNECTION WITH THE FORMATION OF A
HOLDING COMPANY, EFFECTIVE AS OF JANUARY 1, 1996; (II) GIVE EFFECT TO A 13.5 FOR
1 STOCK SPLIT CONSUMMATED ON MAY 31, 1996; (III) EXCLUDE 1,554,214 SHARES OF
COMMON STOCK OF THE COMPANY ISSUABLE UPON EXERCISE OF OUTSTANDING WARRANTS AND
STOCK OPTIONS; AND (IV) ASSUME NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT
OPTION. AS USED IN THIS PROSPECTUS, THE TERMS "COMPANY" AND "AMERICAN DISPOSAL
SERVICES" REFER COLLECTIVELY TO AMERICAN DISPOSAL SERVICES, INC. AND ITS
SUBSIDIARIES, UNLESS THE CONTEXT OTHERWISE REQUIRES.

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

THE COMPANY

American Disposal Services is a regional, integrated, non-hazardous solid
waste services company that provides solid waste collection, transfer and
disposal services primarily in the Midwest and in the Northeast. The Company
owns eight solid waste landfills and owns, operates or has exclusive contracts
to receive waste from 17 transfer stations. The Company's operations cover six
primary operating regions and its landfills and transfer stations are supported
by 12 collection divisions, which currently serve over 305,000 residential,
commercial and industrial customers. The Company has adopted an
acquisition-based growth strategy and intends to continue its expansion,
generally in its existing and proximate markets. Since January 1993, the Company
has acquired 55 solid waste businesses, including seven solid waste landfills
and 49 solid waste collection companies.

The Company began its operations in the Midwest and currently has operations
in Arkansas, Connecticut, Illinois, Indiana, Kansas, Kentucky, Massachusetts,
Missouri, Ohio, Oklahoma, Pennsylvania and Rhode Island. The Company's objective
is to build a large profitable fully-integrated solid waste services company
with an established market presence in secondary markets. The Company expects
the current consolidation trends in the solid waste industry to continue as many
independent landfill and collection operators lack the capital resources,
management skills and technical expertise necessary to operate in compliance
with stringent environmental and other governmental regulations.

The Company's operating program generally involves a four-step process: (i)
acquiring solid waste landfills in markets that are within approximately 125
miles of significant metropolitan centers; (ii) securing captive waste streams
for its landfills through the acquisition or development of transfer stations
serving those markets, through acquisitions of collection companies and by
entering into long-term contracts directly with customers or collection
companies; (iii) making "tuck-in" acquisitions of collection companies to
further penetrate its target markets; and (iv) integrating these businesses into
the Company's operations to achieve operating efficiencies and economies of
scale. As part of its acquisition program, the Company has, and in the future
may, as specific opportunities arise, evaluate and pursue acquisitions in the
solid waste collection and disposal industry that do not strictly conform to the
Company's four-step operating program.

The Company's operating strategy emphasizes the integration of its solid
waste collection and disposal operations and the internalization of waste
collected. One of the Company's goals is to maximize the captive waste streams
(which includes waste from the Company's collection operations and third-party
haulers operating under long-term collection contracts) disposed of at each of
its landfills. During the six months ended June 30, 1997, the Company's captive
waste constituted an average of approximately 71% of the solid waste disposed of
at Company-owned landfills. In addition, 87% of the total tonnage collected by
the Company during such period was disposed of at Company-owned landfills. The
Company plans to continue to pursue its acquisition-based growth strategy to
increase the internalization of waste collected and expand its presence in its
existing and proximate markets.

3
<PAGE>
RECENT DEVELOPMENTS

Since the consummation of its offering of Common Stock in May 1997 (the "May
Offering"), the Company has expanded and strengthened its market presence in its
six operating regions through 16 acquisitions, which included the acquisition of
two landfills, 16 collection companies and four transfer stations.

As part of its acquisition strategy, on September 10, 1997, the Company
acquired all of the outstanding shares of capital stock of Illinois Bulk
Handlers, Inc. ("Bulk Handlers"), Shred-All Recycling Systems, Inc.
("Shred-All"), Fred B. Barbara Trucking Co., Inc. ("Trucking") and Environtech,
Inc. ("Environtech," collectively the "Barbara Companies") (the "Acquisition").
The Barbara Companies provide hauling, transfer, recycling and disposal services
in the greater Chicago metropolitan area and include a collection company (with
a fleet of 150 vehicles), a transfer station and recycling facility (capable of
processing traditional recyclables, as well as tires, cement, wood pallets,
aluminum scrap and other bulk materials), and a landfill consisting of
approximately 326 acres (of which approximately 78 acres are permitted), having
approximately 23 years of remaining site life at current average disposal
volumes. The Company believes that the Acquisition provides it with a
significant opportunity to improve its internalization rates, expand the
Company's acquisition platform and provide fully integrated waste services in
its Illinois Region.

In addition, since the May Offering, the Company has continued to expand its
presence in its New England Region which the Company entered in September 1996.
Since May, the Company has acquired four additional collection operations and
one transfer station in Rhode Island and an integrated collection and transfer
station operation in Connecticut. The Company believes that as a result of its
acquisitions in the region, it currently owns and operates the largest
collection operation in Rhode Island and has strategically positioned itself to
expand its market share in the New England Region.

Since the May Offering, the Company increased its credit facility with ING
(U.S.) Capital Corporation, as administrative agent, from $125 million to $200
million (the "Credit Facility"). The Credit Facility provides the Company with a
term loan of $60 million and an expansion facility of $140 million to be used
for acquisitions (of which $20 million may be used for working capital and
letter of credit purposes). At September 15, 1997, the outstanding debt under
the Credit Facility was $118.9 million, up from $61.4 million at June 30, 1997,
primarily as a result of recent acquisitions.

The Company's principal executive offices are located at 745 McClintock
Drive, Suite 230, Burr Ridge, Illinois 60521, and its telephone number is (630)
655-1105.

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by:
The Company................................ 3,500,000 shares
The Selling Stockholders................... 2,000,000 shares
Total.................................. 5,500,000 shares
Common Stock outstanding after the 18,304,542 shares(1)
Offering...................................
Use of proceeds.............................. To repay outstanding indebtedness under the
Credit Facility and other obligations. The
Company will not receive any of the proceeds
from the sale of shares by the Selling
Stockholders. See "Use of Proceeds."
Nasdaq National Market symbol................ ADSI
</TABLE>

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

(1) Does not include 1,554,214 shares of Common Stock issuable upon the exercise
of warrants and stock options outstanding as of September 15, 1997, at a
weighted average exercise price of $12.50 per share.

4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA SIX MONTHS ENDED SIX MONTHS
YEARS ENDED DECEMBER 31, YEAR ENDED JUNE 30, ENDED
---------------------------------- DECEMBER 31, ---------------------- JUNE 30,
1994 1995 1996 1996(1) 1996 1997 1997(1)
---------- ---------- ---------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues........................ $ 18,517 $ 30,004 $ 56,804 $ 100,508 $ 25,177 $ 46,274 $ 62,316
Cost of operations.............. 12,647 17,286 30,376 55,491 13,170 25,080 33,730
Selling, general and
administrative expenses....... 4,910 5,882 8,328 12,931 4,048 6,357 8,007
Depreciation and amortization
expense....................... 3,226 6,308 12,334 18,207 5,663 9,056 11,138
---------- ---------- ---------- ------------ ---------- ---------- -----------
Operating income (loss)......... (2,266) 528 5,766 13,879 2,296 5,781 9,441
Interest expense................ (1,497) (3,030) (5,745) -- (3,057) (3,458) --
Interest income................. 2 189 260 -- -- -- --
Other income.................... -- -- 179 179 37 109 109
---------- ---------- ---------- ------------ ---------- ---------- -----------
Income (loss) before income
taxes and extraordinary item.. (3,761) (2,313) 460 14,058 (724) 2,432 9,550
Income tax benefit (expense).... 1,372 (332) (245) (5,290) 155 (750) (3,452)
---------- ---------- ---------- ------------ ---------- ---------- -----------
Income (loss) before
extraordinary item............ (2,389) (2,645) 215 $ 8,768 (569) 1,682 $ 6,098
------------ -----------
------------ -----------
Extraordinary item -- loss on
early retirement of debt...... -- (908) (476) (476) --
---------- ---------- ---------- ---------- ----------
Net income (loss)............... (2,389) (3,553) (261) (1,045) 1,682
Preferred stock dividend........ -- (190) (109) (109) --
---------- ---------- ---------- ---------- ----------
Net income (loss) to common
stockholders.................. $ (2,389) $ (3,743) $ (370) $ (1,154) $ 1,682
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Net income (loss) per share of
common stock.................. $ (0.99) $ (1.06) $ (0.05) $ (0.20) $ 0.15
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Weighted average common stock
and common stock equivalent
shares........................ 2,411,381 3,527,688 7,063,928 5,864,078 10,884,592
Pro forma net income per share
of common stock............... $ 0.54 $ 0.34
------------ -----------
------------ -----------
Pro forma weighted average
common stock and common stock
equivalent shares............. 16,258,771 18,187,492

OTHER DATA:
Net cash provided by (used in)
operating activities.......... $ (1,124) $ 5,601 $ 11,705 $ 2,610 $ 11,337
Net cash used in investing
activities.................... (6,180) (68,374) (39,032) (9,706) (77,639)
Net cash provided by financing
activities.................... 5,718 68,608 23,245 2,211 66,167
EBITDA(2)....................... 960 6,836 18,100 32,086 7,959 14,837 20,579
EBITDA margin(3)................ 5.2% 22.8% 31.9% 31.9% 31.6% 32.1% 33.0%
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------
ACTUAL AS ADJUSTED(4)
--------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................................... $ 2,166 $ 2,166
Working capital......................................................................... 5,344 5,344
Property and equipment, net............................................................. 128,035 140,635
Total assets............................................................................ 224,573 285,588
Long-term obligations, net of current portion........................................... 63,817 1,879
Total stockholders' equity.............................................................. 129,872 251,060
</TABLE>

5
<PAGE>
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(1) The pro forma information for the year ended December 31, 1996 and the six
months ended June 30, 1997 gives effect to the acquisition of Liberty
Disposal, Inc. and the Evansville, Indiana Operations of Waste Management of
Indiana, LLC, the May Offering, the Acquisition, this Offering and the
application of the estimated proceeds therefrom, as described in "Use of
Proceeds," as if each of the foregoing had occurred or been in effect on
January 1, 1996 and January 1, 1997, respectively.
(2) EBITDA represents operating income plus depreciation and amortization. While
EBITDA data should not be construed as a substitute for operating income,
net income (loss) or cash flows from operations in analyzing the Company's
operating performance, financial position and cash flows, the Company has
included EBITDA data (which are not a measure of financial performance under
generally accepted accounting principles) because it understands that such
data are commonly used by certain investors to evaluate a company's
performance in the solid waste industry. EBITDA, as measured by the Company,
might not be comparable to similarly titled measures reported by other
companies. Funds depicted by the EBITDA measure are not available for
management's discretionary use due to required debt service and other
commitments or uncertainties.
(3) EBITDA margin represents EBITDA expressed as a percentage of revenues.
(4) Adjusted to give effect to the Acquisition, this Offering and the
application of the estimated proceeds therefrom, as described in "Use of
Proceeds," as if each of the foregoing had occurred on June 30, 1997. See
"Use of Proceeds." Long-term obligations, net of current portion, of $63,817
was adjusted to give effect to borrowings of $44,625 to fund the Acquisition
and the application of the estimated net proceeds of $106,563 from this
Offering to arrive at the as adjusted balance of $1,879. Long-term
obligations, net of current portion, as adjusted of $1,879 does not include
additional borrowings of $12,850 used to fund additional acquisitions
occurring from July 1, 1997 to September 15, 1997.

6
<PAGE>
RISK FACTORS

AN INVESTMENT IN THE SHARES OF COMMON STOCK BEING OFFERED BY THIS PROSPECTUS
INVOLVES A HIGH DEGREE OF RISK. IN ADDITION, THIS PROSPECTUS CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. DISCUSSIONS
CONTAINING SUCH FORWARD-LOOKING STATEMENTS MAY BE FOUND IN THE MATERIAL SET
FORTH UNDER "PROSPECTUS SUMMARY," "RISK FACTORS," AND "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AS WELL AS IN THE
PROSPECTUS GENERALLY. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS, INCLUDING THOSE SET FORTH IN THE FOLLOWING RISK FACTORS AND ELSEWHERE
IN THIS PROSPECTUS. ACCORDINGLY, PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY
THE FOLLOWING RISK FACTORS, IN ADDITION TO THE OTHER INFORMATION CONCERNING THE
COMPANY AND ITS BUSINESS CONTAINED IN THIS PROSPECTUS, BEFORE PURCHASING THE
SHARES OF COMMON STOCK OFFERED HEREBY.

ABILITY TO MANAGE GROWTH

The Company's goal is to increase the scale of its operations significantly
through the acquisition of other solid waste businesses and through internal
growth. Consequently, the Company may experience periods of rapid growth with
significantly increased staffing level requirements. Such growth could place a
significant strain on the Company's management and on its operational, financial
and other resources. The Company's ability to maintain and manage its growth
effectively will require it to expand its management information systems
capabilities and improve its operational and financial systems and controls.
Moreover, the Company will need to attract, train, motivate, retain and manage
its senior managers, technical professionals and other employees. Any failure to
expand its management information system capabilities, to implement and improve
its operational and financial systems and controls or to recruit appropriate
additional personnel in an efficient manner at a pace consistent with the
Company's business growth would have a material adverse effect on the Company's
business, financial condition and results of operations.

AVAILABILITY OF ADDITIONAL ACQUISITION TARGETS

The Company's ongoing acquisition program is a key element of its
acquisition-based growth strategy for expanding its solid waste management
services. Consequently, the future growth of the Company depends in large part
upon the successful continuation of this acquisition program. The Company may
encounter substantial competition in its efforts to acquire landfills, transfer
stations and collection companies. There can be no assurance that the Company
will succeed in locating or acquiring appropriate acquisition candidates at
price levels and on terms and conditions that the Company considers appropriate.

INTEGRATION OF ACQUISITIONS

The financial position and results of operations of the Company will depend
to a large extent on the Company's ability to integrate effectively the
operations of the companies it has acquired to date, and expects to acquire in
the future, and to realize expected efficiencies and economies of scale from
such acquisitions. There can be no assurance that the Company's efforts to
integrate these operations will be effective, that expected efficiencies and
economies of scale will be realized or that the Company will be able to
successfully consolidate its operations. The failure to achieve any of these
results could have a material adverse effect on the Company's business,
financial condition and results of operations.

HIGHLY COMPETITIVE INDUSTRY

The solid waste collection and disposal business is highly competitive and
requires substantial amounts of capital. The Company competes with numerous
solid waste management companies, many of which are significantly larger and
have greater financial resources than the Company. The Company also competes
with those counties, municipalities and solid waste districts that maintain
their own waste collection and disposal operations. These counties,
municipalities and solid waste districts may have

7
<PAGE>
financial advantages due to the availability to them of user fees, charges or
tax revenues and the greater availability to them of tax-exempt financing. In
addition, competitors may reduce the price of their services in an effort to
expand market share or to win competitively bid municipal contracts. There can
be no assurance that the Company will be able to compete successfully.

FUNDING OF FUTURE CAPITAL REQUIREMENTS; HISTORY OF LOSSES AND WORKING CAPITAL
DEFICITS

The Company's acquisition-based growth strategy has resulted in a steady
increase in its capital requirements, and such increase may continue in the
future as the Company pursues its strategy. The Company has recorded net losses
to common stockholders of approximately $2.4 million, $3.7 million and $370,000
during the fiscal years ended December 31, 1994, 1995 and 1996, respectively. In
addition, the Company has incurred working capital deficits in the past, and
there can be no assurance that its available working capital will be sufficient
in the future as it pursues its growth strategy. Furthermore, in connection with
the Acquisition, the Company may be obligated to make significant contingent
payments over the next nine years if certain business development projects are
achieved by the Barbara Companies. See "Business--Recent Developments." To the
extent that internally generated cash and cash available under the Credit
Facility, as defined below, are not sufficient to provide the cash required for
future operations, capital expenditures, acquisitions, earn-out and contingent
payments, debt repayment obligations and financial assurance obligations, the
Company will require additional equity or debt financing in order to provide
such cash. There can be no assurance, however, that such financing will be
available or, if available, will be on terms satisfactory to the Company. Where
appropriate, the Company may seek to minimize the use of cash to finance its
acquisitions by using capital stock, assumption of indebtedness or notes.
However, there can be no assurance the owners of the businesses the Company may
wish to acquire will be willing to accept non-cash consideration in whole or in
part.

USE OF LEVERAGE

Historically, the Company has incurred significant debt obligations in
connection with financing its acquisitions and business growth. The Company has
a $200 million Credit Facility with ING (U.S.) Capital Corporation, as
administrative agent, Morgan Guaranty Trust Company of New York, as syndication
agent, Union Bank of California, N.A., as documentation agent, BHF-Bank
Aktiengesellschaft, as co-agent, and Bank of America Illinois, as co-agent. As
of June 30, 1997, the Company's consolidated indebtedness was $65.1 million, its
consolidated total assets were $224.6 million and its stockholders' equity was
$129.9 million. At September 15, 1997, the Company's consolidated indebtedness
had increased to approximately $122.2 million primarily as a result of recent
acquisitions. See "Business--Recent Developments." Following the completion of
the Offering and the application of the net proceeds to the Company for the
repayment of the Credit Facility, it is anticipated that the Company's
consolidated indebtedness would be approximately $15.6 million. The Company
anticipates incurring significant indebtedness in the future in order to fund
all or a portion of the purchase price of future acquisitions. The Company's
ability to meet its debt service obligations will depend upon its future
performance, which, in turn, will be subject to general economic conditions and
to financial, business and other factors affecting the operations of the
Company, many of which are beyond the Company's control. If the Company fails to
generate sufficient cash flow to repay its debt, the Company may be required to
refinance all or a portion of its existing debt or to obtain additional
financing. There can be no assurance that such refinancing or any additional
financing could be obtained on terms favorable to the Company or at all.

LIMITATIONS ON INTERNAL EXPANSION

The Company's operating program depends on its ability to expand and develop
its landfills, transfer stations and collection operations. The process of
obtaining required permits and approvals to operate or expand solid waste
management facilities, including landfills and transfer stations, has become
increasingly difficult and expensive, often taking several years, requiring
numerous hearings and compliance with

8
<PAGE>
zoning, environmental and other regulatory requirements, and often being subject
to resistance from citizen or other groups. There can be no assurance that the
Company will be successful in obtaining the permits it requires or that such
permits will not contain onerous terms and conditions. An inability to receive
such permits and approvals could have a material adverse effect on the Company's
business, financial condition and results of operations. See "--Extensive
Environmental and Land Use Laws and Regulations." In some areas, suitable land
may be unavailable for new landfill sites. There can be no assurance that the
Company will be successful in obtaining new landfill sites or expanding the
permitted capacity of its current landfills once its landfill capacity has been
consumed. In such event, the Company could be forced to dispose of collected
waste at landfills operated by its competitors, which could have a material
adverse effect on the Company's landfill revenues and collection expenses.

DEPENDENCE ON THIRD PARTY COLLECTION OPERATIONS

A portion of the solid waste delivered to the Company's landfills is
delivered by third party collection companies under informal arrangements or
without long-term contracts. If these third parties discontinued their
arrangements with the Company and if the Company were unable to replace these
third party arrangements, the Company's business, financial condition and
results of operations might be materially adversely affected.

EXTENSIVE ENVIRONMENTAL AND LAND USE LAWS AND REGULATIONS

The Company is subject to extensive and evolving environmental and land use
laws and regulations, which have become increasingly stringent in recent years
as a result of greater public interest in protecting and cleaning up the
environment. These laws and regulations affect the Company's business in many
ways, including as set forth below.

EXTENSIVE PERMITTING REQUIREMENTS. In order to develop and operate a
landfill or other solid waste management facility, it is necessary to obtain and
maintain in effect one or more facility permits and other governmental
approvals, including those related to zoning, environmental and land use. In
addition, the Company may be required to obtain similar permits and approvals in
order to expand its existing landfill and solid waste management operations.
These permits and approvals are difficult and time consuming to obtain and are
frequently subject to community opposition, opposition by various local elected
officials or citizens and other uncertainties. In addition, after an operating
permit for a landfill or other facility is obtained, the permit may be subject
to modification or revocation by the issuing agency, and it may be necessary to
obtain periodically a renewal of the permit, which may reopen opportunities for
opposition to the permit. Moreover, from time to time, regulatory agencies may
delay the review or grant of these required permits or approvals or may modify
the procedures or increase the stringency of the standards applicable to its
review or grant of such permits or approvals. In addition, the Company may not
be able to ensure that its landfill operations are included and remain in the
solid waste management plan of the state or county in which such operations are
conducted. The Company may also have difficulty obtaining host agreements with
counties or local communities, or existing host communities may demand
modifications of existing host agreements in connection with planned expansions,
either of which could adversely affect the Company's operations and increase the
Company's costs and reduce its margins. There can be no assurance that the
Company will be successful in obtaining and maintaining in effect the permits
and approvals required for the successful operation and growth of its business,
including permits or approvals required for planned landfill expansions, and the
failure by the Company to obtain or maintain in effect a permit significant to
its business could materially adversely affect the Company's business, financial
condition and results of operations.

DESIGN, OPERATION AND CLOSURE REQUIREMENTS. The design, operation and
closure of landfills are subject to extensive regulations. These regulations
include, among others, the regulations (the "Subtitle D Regulations")
establishing minimum federal requirements adopted by the United States
Environmental Protection Agency (the "EPA") in October 1991 under Subtitle D of
the Resource Conservation and

9
<PAGE>
Recovery Act of 1976 ("RCRA"). The Subtitle D Regulations generally became
effective on October 9, 1993 (except for more stringent financial assurance
requirements, which became effective April 9, 1997). The Subtitle D Regulations
require all states to adopt regulations regarding landfill design, operation and
closure requirements that are as stringent as, or more stringent than, the
Subtitle D Regulations. All states in which the Company's landfills are located
have in place extensive landfill regulations consistent with the Subtitle D
requirements. These federal and state regulations require the Company to design
the landfill in accordance with stringent technical requirements, monitor
groundwater, post financial assurances, and fulfill landfill closure and
post-closure obligations. These regulations could also require the Company to
undertake investigatory, remedial and monitoring activities, to curtail
operations or to close a landfill temporarily or permanently. Furthermore,
future changes in these regulations may require the Company to modify,
supplement, or replace equipment or facilities at costs which may be
substantial.

LEGAL AND ADMINISTRATIVE PROCEEDINGS. In the ordinary course of its
business, the Company may become involved in a variety of legal and
administrative proceedings relating to land use and environmental laws and
regulations. These may include proceedings by federal, state or local agencies
seeking to impose flow control requirements, civil or criminal penalties on the
Company for violations of such laws and regulations, or to impose liability on
the Company under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 ("CERCLA") or comparable state statutes, or to revoke or
deny renewal of a permit; actions brought by citizens' groups, adjacent
landowners or governmental entities opposing the issuance of a permit or
approval to the Company or alleging violations of the permits pursuant to which
the Company operates or laws or regulations to which the Company is subject; and
actions seeking to impose liability on the Company for any environmental damage
at its landfill sites or that its landfills or other properties may have caused
to adjacent landowners or others, or at sites to which it transported waste,
including groundwater or soil contamination. The Company could incur substantial
legal expenses during the course of the aforementioned proceedings, and the
adverse outcome of one or more of these proceedings could materially adversely
affect the Company's business, financial condition and results of operations.

During the ordinary course of its operations, the Company has from time to
time received, and expects that it may in the future receive, citations or
notices from governmental authorities that its operations are not in compliance
with its permits or certain applicable environmental or land use laws and
regulations. The Company generally seeks to work with the authorities to resolve
the issues raised by such citations or notices. There can be no assurance,
however, that the Company will always be successful in this regard, and the
failure to resolve a significant issue could result in one or more of the
adverse consequences to the Company described below under "Potential
Liabilities."

POTENTIAL LIABILITIES. There may be various adverse consequences to the
Company in the event that a facility owned or operated by the Company (or a
predecessor owner or operator whose liabilities the Company may have acquired
expressly or under successor liability theories) causes environmental damage, in
the event that waste transported by the Company (or a predecessor) causes
environmental damage at another site, in the event that the Company fails (or a
predecessor failed) to comply with applicable environmental and land use laws
and regulations or the terms of a permit or outstanding consent order or in the
event the Company's owned or operated facility or the soil or groundwater
thereunder is or becomes contaminated. These may include the imposition of
substantial monetary penalties on the Company; the issuance of an order
requiring the curtailment or termination of the operations involved or affected;
the revocation or denial of permits or other approvals necessary for continued
operation or landfill expansion; the imposition of liability on the Company in
respect of any environmental damage (including groundwater or soil
contamination) at its landfill sites or that its landfills or other facilities
or other Company-owned or operated facilities caused to adjacent landowners or
others or environmental damage at another site associated with waste transported
by the Company; the imposition of liability on the Company under CERCLA or under
comparable state laws; and criminal liability for the Company or its officers.
Any of the

10
<PAGE>
foregoing could materially adversely affect the Company's business, financial
condition and results of operations.

As described under "Business--Environmental Regulations," CERCLA and
analogous state laws impose retroactive strict joint and several liability on
various parties that are, or have been, associated with a site from which there
has been, or is threatened, a release of any hazardous substance (as defined by
CERCLA) into the environment. Liability under RCRA, CERCLA and analogous state
laws may include responsibility for costs of site investigations, site cleanup,
site monitoring, natural resources damages and property damages. Liabilities
under RCRA, CERCLA and analogous state laws can be very substantial and, if
imposed upon the Company, could materially adversely affect the Company's
business, financial condition and results of operations.

In the ordinary course of its landfill and waste management operations and
in connection with its review of landfill and other operations to be acquired,
the Company has discovered at one landfill, and may in the future discover at
other landfills or waste management facilities, indications of groundwater
contamination. In such events, the Company would seek or be required to
determine the magnitude and source of the problem and, if appropriate or
required by applicable regulations, to design and implement measures to remedy,
or halt the spread of, the contamination. There can be no assurance, however,
that contamination discovered at a landfill or at other Company sites will not
result in one or more of the adverse consequences to the Company described
above.

TYPE, QUANTITY AND SOURCE LIMITATIONS. Certain permits and approvals may
limit the types of waste that may be accepted at a landfill or the quantity of
waste that may be accepted at a landfill during a given time period. In
addition, certain permits and approvals, as well as certain state and local
regulations, may limit a landfill to accepting waste that originates from
specified geographic areas or seek to restrict the importation of out-of-state
waste or otherwise discriminate against out-of-state waste. Generally,
restrictions on the importation of out-of-state waste have not withstood
judicial challenge. However, from time to time federal legislation is proposed
which would allow individual states to prohibit the disposal of out-of-state
waste or to limit the amount of out-of-state waste that could be imported for
disposal and would require states, under certain circumstances, to reduce the
amounts of waste exported to other states. Although such legislation has not yet
been adopted by Congress, if this or similar legislation is enacted, states in
which the Company operates landfills could act to limit or prohibit the
importation of out-of-state waste. Such state actions could materially adversely
affect landfills within those states that receive a significant portion of waste
originating from out-of-state.

In addition, certain states and localities may for economic or other reasons
restrict the exportation of waste from their jurisdiction or require that a
specified amount of waste be disposed of at facilities within their
jurisdiction. In 1994, the United States Supreme Court held unconstitutional,
and therefore invalid, a local ordinance that sought to impose flow controls on
taking waste out of the locality. However, certain state and local jurisdictions
continue to seek to enforce such restrictions and, in certain cases, the Company
may elect not to challenge such restrictions based upon various considerations.
In addition, the aforementioned proposed federal legislation, if adopted, could
allow states and localities to impose certain flow control restrictions. These
restrictions could result in the volume of waste going to landfills being
reduced in certain areas, which may materially adversely affect the Company's
ability to operate its landfills at their full capacity and/or affect the prices
that can be charged for landfill disposal services. These restrictions may also
result in higher disposal costs for the Company's collection operations. If the
Company were unable to pass such higher costs through to its customers, the
Company's business, financial condition and results of operations could be
materially adversely affected.

POTENTIAL LIABILITIES ASSOCIATED WITH ACQUISITIONS

The businesses acquired by the Company may have liabilities that the Company
did not discover or may have been unable to discover during its pre-acquisition
investigations, including liabilities arising from

11
<PAGE>
environmental contamination or non-compliance by prior owners with environmental
laws or regulatory requirements, and for which the Company, as a successor owner
or operator, may be responsible. Any indemnities or warranties, due to their
limited scope, amount, or duration, the financial limitations of the indemnitor
or warrantor or other reasons, may not fully cover such liabilities.

DEPENDENCE ON SENIOR MANAGEMENT

The Company is highly dependent on its senior management team. The loss of
the services of any member of senior management may have a material adverse
effect on the Company's business, financial condition and results of operations.
In an effort to minimize this risk, the Company has entered into employment
contracts with certain members of senior management. The Company does not
maintain "key man" life insurance with respect to members of senior management
except for a $2.0 million policy maintained on the Company's President and Chief
Executive Officer.

LIMITS ON INSURANCE COVERAGE

There can be no assurance that the Company's pollution liability insurance
will provide sufficient coverage in the event an environmental claim were made
against the Company or that the Company will be able to maintain in place such
insurance at reasonable costs. An uninsured or underinsured claim of sufficient
magnitude could have a material adverse effect on the Company's business,
financial condition and results of operations.

INCURRENCE OF CHARGES RELATED TO CAPITALIZED EXPENDITURES

In accordance with generally accepted accounting principles, the Company
capitalizes certain expenditures and advances relating to acquisitions, pending
acquisitions and landfill development and expansion projects. Indirect
acquisition costs, such as executive salaries, general corporate overhead,
public affairs and other corporate services, are expensed as incurred. The
Company's policy is to charge against earnings any unamortized capitalized
expenditures and advances (net of any portion thereof that the Company estimates
will be recoverable, through sale or otherwise) relating to any operation that
is permanently shut down, any pending acquisition that is not consummated, and
any landfill development or expansion project that is not or not expected to be
successfully completed. Therefore, the Company may be required to incur a charge
against earnings in future periods, which charge, depending upon the magnitude
thereof, could materially adversely affect the Company's business, financial
condition and results of operations.

USE OF ALTERNATIVES TO LANDFILL DISPOSAL

Alternatives to landfill disposal, such as recycling and composting, are
increasingly being used. In addition, incineration is an alternative to landfill
disposal in certain of the Company's markets. There also has been an increasing
trend at the state and local levels to mandate recycling and waste reduction at
the source and to prohibit the disposal of certain type of wastes, such as yard
wastes, at landfills. These developments may result in the volume of waste going
to landfills being reduced in certain areas, which may affect the Company's
ability to operate its landfills at their full capacity or affect the prices
that can be charged for landfill disposal services. For example, Illinois, Ohio
and Pennsylvania, states in which the Company operates landfills, have adopted
bans on the disposal of yard waste or leaves in landfills located in those
states, and all of the states in which the Company operates landfills have
adopted rules restricting or limiting disposal of tires at landfills. In
addition, each of the states in which the Company operates landfills has adopted
plans or requirements which set goals for specified percentages of certain solid
waste items to be recycled. These recycling goals are being phased in over the
next few years. These alternatives, if and when adopted and implemented, may
have a material adverse effect on the business, financial condition and results
of operations of the Company.

12
<PAGE>
ABILITY TO MEET FINANCIAL ASSURANCE OBLIGATIONS

The Company is required to post a performance bond or a bank letter of
credit or to provide other forms of financial assurance in connection with
closure and post-closure obligations with respect to landfills or its other
solid waste management operations and may be required to provide such financial
assurance in connection with municipal residential collection contracts. If the
Company were unable to obtain surety bonds in sufficient amounts, or to provide
other required forms of financial assurance, it would be unable to remain in
compliance with the Subtitle D Regulations or comparable state requirements and,
among other things, might be precluded from entering into certain municipal
collection contracts and obtaining or holding landfill operating permits.

SEASONALITY

The Company's revenues tend to be somewhat lower in the winter months. This
is primarily attributable to the fact that: (i) the volume of waste relating to
construction and demolition activities tends to increase in the spring and
summer months; and (ii) the volume of industrial and residential waste in the
regions where the Company operates tends to decrease during the winter months.
In addition, particularly harsh weather conditions may delay the development of
landfill capacity and otherwise result in the temporary suspension of certain of
the Company's operations and could materially adversely affect the Company's
overall business, financial condition and results of operations.

ANTI-TAKEOVER PROVISIONS

The Board of Directors may issue up to 5,000,000 shares of Preferred Stock
in the future without stockholder approval upon such terms as the Board of
Directors may determine. The rights of the holders of Common Stock will be
subject to, and may be adversely affected by, the rights of the holders of any
Preferred Stock that may be issued in the future. The issuance of Preferred
Stock, while providing flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of delaying or preventing a
change in control of the Company without further action by the stockholders. The
Company has no present plans to issue any shares of Preferred Stock. See
"Description of Capital Stock-- Undesignated Preferred Stock." In addition, the
Company is subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law, which prohibits the Company from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
The application of Section 203 also could have the effect of delaying or
preventing a change of control of the Company.

SHARES ELIGIBLE FOR FUTURE SALES; POSSIBLE ADVERSE EFFECT ON FUTURE MARKET PRICE

Sale of substantial amounts of shares in the public market or the prospect
of such sales could adversely affect the market price of the Company's Common
Stock. Upon completion of the Offering, the Company will have outstanding
18,304,542 shares of Common Stock, of which approximately 14,678,432 shares will
be freely tradeable. The Company's officers and directors and Charterhouse
Environmental Holdings L.L.C., Charterhouse Equity Partners II, L.P. and CDI
Equity, LLC who, following the Offering, will beneficially own an aggregate of
3,460,283 shares of Common Stock or options or warrants to purchase shares of
Common Stock, have agreed not to sell, offer to sell, distribute, pledge, grant
any option for the sale of, or otherwise dispose of, directly or indirectly, or
encumber or exercise registration rights with respect to such securities for 180
days after the date of this Prospectus without the prior written consent of
Oppenheimer & Co., Inc. and Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ"). Certain additional stockholders of the Company who beneficially own an
aggregate of 274,573 shares of Common Stock have agreed to similar restrictions
for a period of 90 days. In addition, the Company has registered 2,500,000
shares of Common Stock under the Securities Act pursuant to a shelf registration
statement for use in connection with future acquisitions, of which 1,184,068
shares of Common Stock have not yet been

13
<PAGE>
issued as of September 15, 1997. Once issued, these shares generally will be
freely tradeable by persons not affiliated with the Company; however, the
Company has agreed to use its best efforts to restrict such persons from selling
such shares during the 90-day period following the effective date of the
Registration Statement of which this Prospectus is a part. In their sole
discretion and at any time without notice, Oppenheimer & Co., Inc. and DLJ may
release all or any portion of the shares subject to lock-up agreements. In
addition, following 180 days after the Offering, the holders of 3,023,371 shares
of Common Stock and warrants to purchase 168,905 shares of Common Stock have
demand and "piggy-back" rights with respect to the registration of such shares
of Common Stock for sale to the public. If such holders, by exercising their
registration rights, cause a large number of shares to be sold in the public
market, such sales could have an adverse effect on the market price for the
Company's Common Stock. Furthermore, if the Company is required to include such
shares in Company-initiated registration statements, this could have an adverse
effect on the Company's ability to raise needed capital. See "Shares Eligible
for Future Sales" and "Underwriting." As of September 15, 1997, there were
outstanding options to purchase a total of 1,385,309 shares of Common Stock and
warrants to purchase a total of 168,905 shares of Common Stock.

ABSENCE OF DIVIDENDS

The Company has never declared or paid dividends on its Common Stock and
does not anticipate paying dividends in the foreseeable future.

14
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 3,500,000 shares of Common
Stock offered by the Company hereby are estimated to be $106.6 million ($132.0
million if the Underwriters' over-allotment option is exercised in full from the
Company). The Company intends to apply all of the net proceeds of the Offering
to repay a portion of the amounts outstanding under the Credit Facility and
other obligations. The Credit Facility provides for a term loan of $60 million
and an expansion facility of $140 million to be used for acquisitions (of which
$20 million may be used for working capital and letter of credit purposes). The
various loans under the Credit Facility bear interest at rates per annum equal
to, at the Company's discretion, either (i) the higher of (a) the federal funds
rate plus 0.5% and (b) the prime rate, plus an applicable margin or (ii) the
London Interbank Offered Rate ("LIBOR") plus an applicable margin, and have
maturities ranging from 2002 to 2004. As of September 15, 1997, the Company had
borrowed $118.9 million under the Credit Facility. As of such date, the interest
rates on the various loans and lines of credit under the Credit Facility ranged
from 6.69% to 8.50%. The Company intends to draw down on the Credit Facility
from time to time in order to fund future acquisitions in whole or in part. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources." The net proceeds from the sale of
the 2,000,000 shares of Common Stock offered hereby by the Selling Stockholders,
will be paid directly to the Selling Stockholders. The Company will not receive
any proceeds from such sale. See "Principal and Selling Stockholders." In
connection with the Offering, the Company has granted the Underwriters an
over-allotment option. Presently, the Company does not have a sufficient number
of shares of Common Stock authorized in the event the Underwriters' over-
allotment option is exercised. However, a Special Meeting of Stockholders to
approve an increase in the authorized shares of Common Stock is scheduled for
October 7, 1997. In the event the stockholders of the Company do not approve the
increase in authorized shares of Common Stock, the Selling Stockholders will
grant the over-allotment option to the Underwriters, and accordingly, will
receive the proceeds therefrom.

PRICE RANGE OF COMMON STOCK

The Common Stock of the Company has been quoted on the Nasdaq National
Market under the symbol ("ADSI") since July 26, 1996, the date of the
commencement of the Company's initial public offering. The following table sets
forth, for the periods indicated, the high and low closing prices of the Common
Stock as reported on the Nasdaq National Market:

<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
1996
3rd Quarter.............................................................................. $ 18.25 $ 9.00
4th Quarter.............................................................................. $ 18.50 $ 15.50
1997
1st Quarter.............................................................................. $ 18.00 $ 16.50
2nd Quarter.............................................................................. $ 25.06 $ 16.38
3rd Quarter (through September 24, 1997)................................................. $ 33.75 $ 21.00
</TABLE>

On September 24, 1997, the last reported sales price of the Common Stock was
$32.50 per share.

DIVIDEND POLICY

The Company has never declared or paid any dividends on its Common Stock.
The Company and its Board of Directors currently intend to retain any earnings
for use in the operation and expansion of the Company's business and do not
anticipate paying any dividends on the Common Stock for the foreseeable future.
The Credit Facility prohibits the payment of cash dividends without prior bank
approval. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."

15
<PAGE>
CAPITALIZATION

The following table sets forth: (i) the current portion of long-term
obligations and the actual capitalization of the Company at June 30, 1997; and
(ii) "As Adjusted" amounts to reflect (a) additional borrowings under the Credit
Facility of $44.625 million and issuance of 539,917 shares of Common Stock in
conjunction with the Acquisition and (b) the sale of 3,500,000 shares of Common
Stock offered hereby and the application of the estimated net proceeds of the
Offering to repay amounts outstanding under the Credit Facility and to fund
costs of the Offering. See "Use of Proceeds."

<TABLE>
<CAPTION>
JUNE 30, 1997
----------------------
AS
ACTUAL ADJUSTED
---------- ----------
(DOLLARS IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
Current portion of long-term debt and capital lease obligations...................... $ 1,286 $ 1,286
---------- ----------
---------- ----------
Long-term debt and capital lease obligations, net of current portion (1)............. $ 63,817 $ 1,879
Stockholders' equity (2):
Preferred stock; 5,000,000 shares authorized; no shares issued or outstanding...... -- --
Common stock; 20,000,000 shares authorized; 13,472,501 shares issued and
outstanding; 17,512,418 shares issued and outstanding as adjusted.................. 135 175
Warrants outstanding............................................................... 107 107
Additional paid-in capital......................................................... 136,217 257,365
Accumulated deficit................................................................ (6,587) (6,587)
---------- ----------
Total stockholders' equity....................................................... 129,872 251,060
---------- ----------
Total capitalization........................................................... $ 193,689 $ 252,939
---------- ----------
---------- ----------
</TABLE>

(1) Long-term obligations, net of current portion, of $63,817 was adjusted to
give effect to borrowings of $44,625 to fund the Acquisition and the
application of the estimated proceeds of $106,563 from this Offering to
arrive at the as adjusted balance of $1,879. Long-term obligations, net of
current portion, as adjusted of $1,879 does not include additional
borrowings of $12,850 used to fund additional acquisitions occurring from
July 1, 1997 to September 15, 1997

(2) Excludes (i) 825,000 additional shares of Common Stock that may be sold
pursuant to the Underwriters' over-allotment option, and (ii) 1,369,212
shares of Common Stock reserved for issuance pursuant to stock options and
outstanding warrants.

16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following table presents selected consolidated statement of operations,
balance sheet, other data and pro forma financial data of the Company for the
periods presented. See the Notes to Consolidated Financial Statements and pro
forma financial data included elsewhere herein for information concerning the
basis of presentation. The following selected consolidated financial data as of
December 31, 1995 and 1996 and for each of the three years ended December 31,
1996 have been derived from the audited consolidated financial statements of the
Company included elsewhere in this Prospectus and should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations." The selected consolidated financial data as of December 31, 1994 is
derived from audited consolidated financial statements that are not included
herein. The interim consolidated financial information furnished herein is
unaudited and reflects all adjustments (consisting only of normal recurring
adjustments), which are, in the opinion of management, necessary for a fair
presentation of the consolidated financial information for these periods. The
pro forma financial data for the year ended December 31, 1996 and as of and for
the six months ended June 30, 1997 has been derived from the pro forma
consolidated financial statements included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SIX MONTHS PRO FORMA
PRO FORMA ENDED SIX MONTHS
YEARS ENDED DECEMBER 31, YEAR ENDED JUNE 30, ENDED
------------------------------- DECEMBER 31, ---------------------- JUNE 30,
1994 1995 1996 1996 (1) 1996 1997 1997 (1)
--------- --------- --------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Revenues............................ $ 18,517 $ 30,004 $ 56,804 $ 100,508 $ 25,177 $ 46,274 $ 62,316
Cost of operations.................. 12,647 17,286 30,376 55,491 13,170 25,080 33,730
Selling, general and administrative
expenses.......................... 4,910 5,882 8,328 12,931 4,048 6,357 8,007
Depreciation and amortization
expense........................... 3,226 6,308 12,334 18,207 5,663 9,056 11,138
--------- --------- --------- ------------ ---------- ---------- -----------
Operating income (loss)............. (2,266) 528 5,766 13,879 2,296 5,781 9,441
Interest expense.................... (1,497) (3,030) (5,745) (3,057) (3,458) --
Interest income..................... 2 189 260 -- -- -- --
Other income........................ -- -- 179 179 37 109 109
--------- --------- --------- ------------ ---------- ---------- -----------
Income (loss) before income taxes
and extraordinary item............ (3,761) (2,313) 460 14,058 (724) 2,432 9,550
Income tax benefit (expense)........ 1,372 (332) (245) (5,290) 155 (750) (3,452)
--------- --------- --------- ------------ ---------- ---------- -----------
Income (loss) before extraordinary
item.............................. (2,389) (2,645) 215 $ 8,768 (569) 1,682 $ 6,098
------------ -----------
------------ -----------
Extraordinary item--loss on early
retirement of debt................ -- (908) (476) (476) --
--------- --------- --------- ---------- ----------
Net income (loss)................... (2,389) (3,553) (261) (1,045) 1,682
Preferred stock dividend............ -- (190) (109) (109) --
--------- --------- --------- ---------- ----------
Net income (loss) to common
stockholders...................... $ (2,389) $ (3,743) $ (370) $ (1,154) $ 1,682
--------- --------- --------- ---------- ----------
--------- --------- --------- ---------- ----------
Per share of common stock:
Income (loss) before extraordinary
item.............................. $ (0.99) $ (0.80) $ 0.02 $ (0.12) $ 0.15
Extraordinary item.................. -- (0.26) (0.07) (0.08) --
--------- --------- --------- ---------- ----------
Net income (loss)................... $ (0.99) $ (1.06) $ (0.05) $ (0.20) $ 0.15
--------- --------- --------- ---------- ----------
--------- --------- --------- ---------- ----------
Pro forma net income per share of
common stock...................... $ 0.54 $ 0.34
------------ -----------
------------ -----------
Weighted average common stock and
common stock equivalent shares.... 2,411,381 3,527,688 7,063,928 5,864,078 10,884,592

Pro forma weighted average common
stock and common stock equivalent
shares............................ 16,258,771 18,187,492
OTHER DATA:
Net cash provided by (used in)
operating activities.............. $ (1,124) $ 5,601 $ 11,705 $ 2,610 $ 11,337
Net cash used in investing
activities........................ (6,180) (68,374) (39,032) (9,706) (77,639)
Net cash provided by financing
activities........................ 5,718 68,608 23,245 2,211 66,167
EBITDA(2)........................... 960 6,836 18,100 32,086 7,959 14,837 20,579
EBITDA margin(3).................... 5.2% 22.8% 31.9% 31.9% 31.6% 32.1% 33.0%
</TABLE>

17
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1997
------------------------------- --------------------------
1994 1995 1996 ACTUAL AS ADJUSTED(4)
--------- --------- --------- --------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA(5):
Cash and cash equivalents........................... $ 548 $ 6,383 $ 2,301 $ 2,166 $ 2,166
Working capital (deficit)........................... (2,237) (8,819) 1,219 5,344 5,344
Property and equipment, net......................... 17,062 81,250 93,692 128,035 140,635
Total assets........................................ 37,557 114,693 144,986 224,573 285,588
Long-term debt and capital
lease obligations, net of current portion......... 18,487 48,789 65,445 63,817 1,879
Redeemable preferred stock.......................... -- 1,908 -- -- --
Stockholders' equity................................ 12,132 33,855 58,097 129,872 251,060
</TABLE>

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

(1) The pro forma information for the year ended December 31, 1996 and the six
months ended June 30, 1997 gives effect to the acquisitions of Liberty
Disposal, Inc. and the Evansville, Indiana Operations of Waste Management of
Indiana, LLC, the May Offering, this Offering and the application of the
estimated proceeds therefrom, as described in "Use of Proceeds," as if each
of the foregoing had occurred or been in effect on January 1, 1996 and
January 1, 1997, respectively.

(2) EBITDA represents operating income plus depreciation and amortization. While
EBITDA data should not be construed as a substitute for operating income,
net income (loss) or cash flows from operations in analyzing the Company's
operating performance, financial position and cash flows, the Company has
included EBITDA data (which are not a measure of financial performance under
generally accepted accounting principles) because it understands that such
data are commonly used by certain investors to evaluate a company's
performance in the solid waste industry. EBITDA, as measured by the Company,
might not be comparable to similarly titled measures reported by other
companies. Funds depicted by the EBITDA measure are not available for
management's discretionary use due to required debt service and other
commitments or uncertainties.

(3) EBITDA margin represents EBITDA expressed as a percentage of revenues.

(4) Adjusted to give effect to the Acquisition, this Offering and the
application of the estimated proceeds therefrom, as described in "Use of
Proceeds," as if each of the foregoing had occurred on June 30, 1997. See
"Use of Proceeds." Long-term obligations, net of current portion, of $63,817
was adjusted to give effect to borrowings of $44,625 to fund the Acquisition
and the application of the estimated net proceeds of $106,563 from this
Offering to arrive at the as adjusted balance of $1,879. Long-term
obligations, net of current portion, as adjusted of $1,879 does not include
additional borrowings of $12,850 used to fund additional acquisitions
occurring from July 1, 1997 to September 15, 1997.

(5) The Company has not declared or paid dividends on Common Stock in any of the
periods presented. The Credit Facility prohibits the payment of cash
dividends without prior bank approval.

18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the "Selected
Consolidated Financial Data," the Company's Consolidated Financial Statements
and the notes thereto, the Company's Unaudited Pro Forma Consolidated Financial
Statements and the notes thereto, and the Barbara Companies' Financial
Statements and the notes thereto included elsewhere herein.

INTRODUCTION

The Company has adopted an acquisition-based growth strategy that focuses
principally on: (i) the identification and acquisition of solid waste landfills
located in secondary markets that are within approximately 125 miles of
significant metropolitan centers; and (ii) securing dedicated waste streams for
such landfills by the acquisition or development of transfer stations and the
acquisition of collection companies. The Company has completed 55 acquisitions
since January 1993. All of these acquisitions were accounted for under the
purchase method of accounting for business combinations. Accordingly, the
amortization of goodwill and landfill airspace reflects the fair market value of
the Company's assets at the time of their acquisition rather than their
historical cost basis, and the results of operations for such acquired
businesses are included in the Company's financial statements only from the
applicable date of acquisition. As a result, the Company believes its historical
results of operations for the periods presented are not directly comparable.

There are several other aspects of the Company's growth strategy that cause
management to believe that the Company's historical results of operations may
not be consistent with future performance, including the following:

- CONCENTRATION OF LANDFILL ASSETS. Historically, the mix of the Company's
assets has been concentrated in landfills, as opposed to collection and
transfer station operations. As a result of goodwill associated with the
Company's acquisitions and the amortization expense associated with its
landfill assets and closure obligations, the amount of depreciation and
amortization as a percentage of the Company's revenues for the year ended
December 31, 1996 was relatively high (21.7%) as compared to other solid
waste companies. As of the six months ended June 30, 1997, depreciation
and amortization as a percentage of the Company's revenue was 19.6%.
Management believes that this percentage will continue to decline as the
Company further penetrates the market in its Illinois, southwestern
Indiana, Missouri, Ohio, western Pennsylvania and New England regions by
acquiring or developing transfer stations, acquiring collection operations
and making "tuck-in" acquisitions of collection companies.

- ESTABLISHED MANAGEMENT TEAM. Since 1993, the Company has assembled a
management team with substantial experience in the solid waste industry.
The Company believes that its senior management team has the ability to
manage the Company's operations as they expand. Therefore, the Company
believes that the amount of selling, general and administrative expenses
is likely to decline as a percentage of revenues as the Company grows.

- CELL DEVELOPMENT COSTS. Cells developed to date at certain acquired
landfills have been constructed with double liner composite systems.
However, in September 1996, the Livingston, Illinois landfill received a
permit to construct cells utilizing a single liner composite system. The
Company continues to explore the possibility of using alternative design
systems at its Ohio landfill, which should result in lower cell
development costs.

Consistent with its operating program, the Company believes acquisitions of
solid waste companies will have a positive impact on its future results of
operations and, accordingly, believes that the Company's historical results
should be considered in conjunction with the Unaudited Pro Forma Consolidated
Financial Statements and the notes thereto included elsewhere herein.
Additionally, neither the historical

19
<PAGE>
nor the pro forma results of operations fully reflect the operating efficiencies
and improvements that are expected to be achieved by integrating acquired
businesses, internalizing waste flows to the Company's landfills and realizing
other synergies. See "Business--Strategy."

GENERAL

REVENUES. The Company's revenues are attributable primarily to fees charged
to customers for waste collection, transfer and disposal services. The Company's
collection services are generally provided under direct agreements with its
customers or pursuant to contracts with municipalities. Commercial and municipal
contract terms, where used, generally range from one to five years and commonly
have automatic renewal options. A relatively small portion of such agreements
also provide for the prepayment of certain fees, which fees are reflected as
deferred revenues.

The table below shows, for the periods indicated, the percentage of the
Company's total revenues attributable to services provided. The Company's
revenue derived from landfill operations increased substantially with the
acquisition of the Clarion, Wyandot and Livingston landfills in separate
closings in June, August, and November 1995 (collectively, the "CDI
Acquisition"). Since the CDI Acquisition, the Company has acquired
proportionately more collection operations than landfill operations, resulting
in a decreasing overall percentage of revenues attributable to landfill
operations.

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

(1) The portion of collection revenues attributable to disposal charges for
waste collected by the Company and disposed of at the Company's landfills
has been excluded from collection revenues and included in landfill
revenues.

A component of the Company's business strategy is to maximize
internalization of waste it collects and thereby realize higher margins from its
operations. By disposing of waste at Company-owned landfills, the Company
retains the margin generated through disposal operations that would otherwise be
earned by third-party landfills. During the six months ended June 30, 1997, the
Company's captive waste (which includes waste from the Company's collection
operations and third-party haulers operating under long-term collection
contracts) constituted an average of approximately 71% of the solid waste
disposed of at its landfills. In addition, 87% of the total tonnage collected by
the Company was disposed of at Company-owned landfills.

EXPENSES. Cost of operations include labor, maintenance and repairs,
equipment and facility rent, utilities and taxes, the costs of ongoing
environmental compliance, safety and insurance, disposal costs and costs of
independent haulers transporting Company waste to disposal sites. Disposal costs
include certain landfill taxes, host community fees, landfill site maintenance,
fuel and other equipment operating expenses and provision for post-closure
expenses, consisting of cap maintenance, groundwater monitoring, methane gas
control and recovery and leachate treatment/disposal, anticipated to be incurred
in the future.

20
<PAGE>
Selling, general and administrative ("SG&A") expenses include management,
clerical and administrative compensation, overhead, sales costs, community
relations expenses, provisions for estimated uncollectible accounts receivable
and unrealizable acquisition costs and management fees paid to an affiliate of
Charterhouse (which terminated upon closing of the Company's initial public
offering in July 1996).

Depreciation and amortization expense includes depreciation of fixed assets,
closure costs and amortization of landfill airspace, goodwill, other intangibles
and loan origination fees. The amount of landfill amortization expense related
to airspace consumption can vary materially from landfill to landfill depending
upon the purchase price, landfill configuration and cell development costs.

Certain direct landfill development costs, such as engineering, upgrading,
construction and permitting costs, are capitalized and amortized based on
airspace consumed. All of the Company's capitalized expenditures relating to
cell development and landfill expansion work are in connection with cells for
which the Company holds a permit for development. The Company believes that the
costs associated with engineering, owning and operating landfills will increase
in the future as a result of federal, state and local regulations and a growing
community awareness of the landfill permitting process. Although there can be no
assurance, the Company believes that it will be able to implement price
increases sufficient to offset these increased expenses. All indirect landfill
development costs, such as executive salaries, general corporate overhead,
public affairs and other corporate services, are expensed as incurred.

The Company capitalizes engineering, legal, accounting and other direct
costs incurred in connection with potential acquisitions, accounted for using
the purchase method for business combinations. The Company, however, routinely
evaluates such capitalized costs and expenses those costs related to
acquisitions not likely to occur. Indirect acquisition costs, such as executive
salaries, general corporate overhead and other corporate services, are expensed
as incurred.

Accrued closure and post-closure costs represent an estimate of the current
value of the future obligations associated with closure and post-closure
monitoring of non-hazardous solid waste landfills currently owned by the
Company. Site specific closure and post-closure engineering cost estimates are
prepared annually for landfills owned by the Company. Estimated costs are
accrued based on accepted tonnage as landfill airspace is consumed. The Company
periodically updates its estimates of future closure and post-closure costs.
These changes are accounted for on a prospective basis. The Company expects its
closure and post-closure costs per ton to decrease as it expands landfill
capacity and as such costs are amortized over greater airspace.

The Company has estimated that, as of December 31, 1996, closure costs
expected to occur during the operating lives of these facilities and expensed
over these facilities' useful lives will approximate $35.2 million. In addition,
the Company has estimated that, as of December 31, 1996, total costs for
post-closure activities, including cap maintenance, groundwater monitoring,
methane gas control and recovery and leachate treatment/disposal for up to 30
years after closure in certain cases, will be approximately $10.9 million. The
accruals reflect relatively young landfills with estimated remaining lives,
based on current waste flows, that range from approximately three to 50 years,
and an estimated average remaining life of greater than 20 years.

THE ACQUISITION

On September 10, 1997, the Company acquired all of the outstanding shares of
capital stock of the Barbara Companies. See "Prospectus Summary--Recent
Developments." The revenues of the Barbara Companies are attributable primarily
to fees charged to customers for solid waste collection, contract waste hauling
services, transfer and disposal services.

The collection services of the Barbara Companies are generally provided
either directly to waste generators or pursuant to contracts with
municipalities, including the City of Chicago. Commercial and municipal
contracts, where applicable, generally range from one to three years and
commonly have

21
<PAGE>
automatic renewal options. For the six months ended June 30, 1997 and the years
ended December 31, 1996, 1995 and 1994, City of Chicago contract revenues
accounted for 30%, 33%, 62% and 65% of the revenues of the Barbara Companies,
respectively. Prior to the Acquisition, the Barbara Companies used similar
accounting policies to the Company, except that the Barbara Companies used
accelerated depreciation methods and did not capitalize costs related to
inventory, parts and supplies. Subsequent to the Acquisition, the accounting
policies of the Barbara Companies will be conformed to those of the Company.
However, the description below is based on historical results.

Revenues for the year ended December 31, 1996 were $23.7 million, which
represents a decrease from $37.2 million for the year ended December 31, 1995.
The decrease in revenue in 1996 was primarily due to a significant loss of
volume under a residential waste contract with the City of Chicago. The volume
under the contract was diverted by the City to four newly constructed materials
recycling facilities operated by a competitor which were built to implement the
City's recently promulgated recycling regulations. Revenues of $10.5 million for
the six months ended June 30, 1997 are consistent with the prior year results of
the Company's core business operations.

Cost of operations for the year ended December 31, 1996 was $14.4 million as
compared to $20.2 million for the year ended December 31, 1995. As a percentage
of revenues, the Barbara Companies' cost of operations increased to 60.7% from
54.4% in 1995 due to lower revenues from the City of Chicago and a change in the
mix of business resulting in a lower proportion of transfer station revenues,
which generally have lower operating costs. For the six months ended June 30,
1997, cost of operations for the Barbara Companies was $6.0 million,
representing 57.7% as a percentage of revenues.

SG&A expenses for the year ended December 31, 1996 were $5.4 million
compared to $5.4 million for the year ended December 31, 1995. SG&A expenses for
the six months ended June 30, 1997 were $1.2 million. Included in SG&A expenses
for the years ended 1996, 1995 and 1994 are owner-related, year-end compensation
payments amounting to $2.5 million, $3.2 million and $3.2 million, respectively.

RESULTS OF OPERATIONS

The following table sets forth items in the Company's consolidated statement
of operations as a percentage of revenues for the periods indicated.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------
Revenues................................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of operations...................................... 68.3 57.6 53.5 52.3 54.2
Selling, general and administrative expenses............ 26.5 19.6 14.6 16.1 13.7
Depreciation and amortization expenses.................. 17.4 21.0 21.7 22.5 19.6
--------- --------- --------- --------- ---------
Operating income (loss)................................. (12.2) 1.8 10.2 9.1 12.5
Interest expense, net................................... (8.1) (9.5) (9.7) (12.1) (7.5)
Other income............................................ -- -- 0.3 0.1 0.2
Income tax benefit (expense)............................ 7.4 (1.1) (0.5) 0.6 (1.6)
Extraordinary loss, net of income tax................... -- (3.0) (0.8) (1.9) --
--------- --------- --------- --------- ---------
Net income (loss)................................... (12.9% (11.8% (0.5% (4.2% 3.6%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
EBITDA margin(1)........................................ 5.2% 22.8% 31.9% 31.6% 32.1%
</TABLE>

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

(1) EBITDA margin represents EBITDA expressed as a percentage of revenues.

22
<PAGE>
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

REVENUES. Revenues for the six months ended June 30, 1997 were $46.3
million compared to $25.2 million for the six months ended June 30, 1996. Of the
increase in revenues, $16.7 million is due primarily to the effects of companies
acquired during 1996, the operations of which were included in the Company's
financial results for the full six months ended June 30, 1997 and the additional
impact of acquisitions completed during the six months ended June 30, 1997.
Approximately $4.4 million is attributable to increases in revenues in
operations acquired prior to 1996.

COST OF OPERATIONS. Cost of operations for the six months ended June 30,
1997 was $25.1 million compared to $13.2 million for the six months ended June
30, 1996. This increase was attributable primarily to the increase in revenues
described above. As a percentage of revenues, cost of operations was 54.2% in
the 1997 period compared to 52.3% in the 1996 period. The increased costs as a
percentage of the Company's overall revenues are due to the impact of more
substantial collection versus landfill operations in the 1997 period compared to
the same period in 1996, in accordance with the Company's acquisition-based
growth strategy.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses increased to
$6.4 million for the six months ended June 30, 1997 compared to $4.0 million for
the six months ended June 30, 1996. As a percentage of revenues, SG&A expenses
decreased to 13.7% in the 1997 period from 16.1% in the 1996 period. The
decrease in SG&A expenses as a percentage of revenues is due primarily to a
significant increase in revenue producing assets, while corporate and other
related administrative expenses increased moderately.

DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense for the six months ended June 30, 1997 was $9.1 million compared to $5.7
million for the six months ended June 30, 1996. The increase in depreciation and
amortization expense is due primarily to increases in the Company's revenues
described above. As a percentage of revenues, depreciation and amortization
expense was 19.6% and 22.5% for the six months ended June 30, 1997 and 1996,
respectively. The decline as a percentage of revenues in the June 1997 period
compared to the June 1996 period is due primarily to the diminished
concentration of landfill assets, which typically have higher depreciation and
amortization expense than collection operations.

NET INTEREST EXPENSE. Net interest expense was $3.5 million for the six
months ended June 30, 1997 compared to $3.1 million for the six months ended
June 30, 1996. This increase is attributable to additional debt incurred to
complete certain 1997 acquisitions.

INCOME TAXES. The Company recorded an income tax provision of $750,000 for
the six months ended June 30, 1997 compared to an income tax benefit of $155,000
for the same period in the prior year.

YEARS ENDED DECEMBER 31, 1996 AND 1995

REVENUES. Revenues in 1996 were $56.8 million compared to $30.0 million in
1995. Approximately $17.1 million of the increase was attributable to the impact
of the full year contribution from the CDI Acquisition. In addition, the Company
completed 16 acquisitions in 1996, which accounted for approximately $6.3
million of the increase in revenues.

COST OF OPERATIONS. Cost of operations in 1996 was $30.4 million compared
to $17.3 million in 1995, an increase corresponding primarily to the Company's
revenue growth described above. As a percentage of revenues, cost of operations
declined to 53.5% in 1996 from 57.6% in 1995, due primarily to the following
factors. The Company's proportion of landfill operations, which generally have
lower operating costs than collection operations, has increased as a result of
the full year contribution of the CDI Acquisition. In addition, operating cost
savings occurred as a result of the consolidation of the acquired Missouri
collection operations and the full year impact of the new transfer stations
opened in the Missouri region.

23
<PAGE>
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. SG&A expenses were $8.3
million in 1996 compared to $5.9 million in 1995. The increase in the SG&A
expenses resulted from the full year impact of the CDI Acquisition as well as
increased expenses from the 16 acquisitions completed in 1996. As a percentage
of revenues, SG&A expenses declined to 14.6% in 1996 from 19.6% in 1995. The
decrease in SG&A expense as a percentage of revenues was due primarily to a
significant increase in revenue, while corporate and other related
administrative expenses increased moderately. In 1996, the Company terminated a
management agreement with an affiliate of its principal shareholder, pursuant to
which a management fee of $466,000 was paid in 1996.

DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense for 1996 was $12.3 million compared to $6.3 million in 1995. The
increase is due primarily to the CDI Acquisition which significantly increased
landfill airspace amortization and provision for closure costs, and to a lesser
extent, the capital expenditures and goodwill associated with acquisitions
consummated in 1996. As a percentage of revenues, depreciation and amortization
expense was 21.7% during 1996 versus 21.0% in 1995. The relatively high
percentages are primarily due to the configuration of the Wheatland landfill in
1995 and the high concentration of the Company's assets in landfills following
the CDI Acquisition in 1996. Depreciation and amortization expense is expected
to decline as a percentage of revenues in future periods as the concentration of
the Company's assets in landfills diminishes due to the full year impact of the
1996 collection company acquisitions and as the Company reduces future cell
development cost. Net fixed assets increased to $93.7 million in 1996 from $81.3
million in 1995 and goodwill, net of accumulated amortization expense, increased
to $31.2 million in 1996 from $15.7 million in 1995.

NET INTEREST EXPENSE. Net interest expense was $5.5 million in 1996
compared to $2.8 million in 1995. This increase is attributable to the full year
impact of additional debt incurred to complete the CDI Acquisition and the 16
acquisitions completed in 1996.

INCOME TAXES. The Company recorded an income tax provision of $245,000 and
$332,000 for 1996 and 1995, respectively. The 1996 provision reflects the
Company having consolidated taxable income of $460,000. Although the Company
recorded a net loss in 1995, the Company recorded an income tax provision
because the Company's subsidiaries were not then consolidated and CDI reported a
profit.

EXTRAORDINARY LOSS. In 1996, the Company recognized an extraordinary loss
of $476,000, representing the write-off of unamortized debt issuance costs in
connection with the refinancing of its prior credit facility.

YEARS ENDED DECEMBER 31, 1995 AND 1994

REVENUES. Revenues in 1995 were $30.0 million compared to $18.5 million in
1994. The increase in revenues was due primarily to the effects of the CDI
Acquisition and, to a lesser extent, price and volume increases attributable to
existing operations. Revenues of $10.1 million in 1995 were generated from
companies acquired during 1995, while increases in revenue attributable to
operations acquired prior to 1996 amounted to $1.3 million.

COST OF OPERATIONS. Cost of operations in 1995 was $17.3 million compared
to $12.6 million in 1994. This increase in costs was attributable primarily to
increases in the Company's revenues described above. As a percentage of
revenues, cost of operations was 57.6% in 1995 compared to 68.3% in 1994. This
decrease was due primarily to operating efficiencies and improvements from the
Company's development of its Missouri region and the impact of the CDI
Acquisition, which shifted the relative proportion of the Company's assets
toward landfills that typically operate at higher margins than collection
operations.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses were $5.9
million in 1995 compared to $4.9 million in 1994. The increase was a result of
expenses associated with the CDI Acquisition, expenses incurred in connection
with the Company's increase in personnel and other expenses related to the

24
<PAGE>
anticipated expansion of the Company's operations. SG&A expenses as a percentage
of revenues were 19.6% in 1995 compared to 26.5% in 1994.

DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense in 1995 was $6.3 million compared to $3.2 million in 1994. The increase
in depreciation and amortization expense is due to the acquisition of the CDI
landfills, with their relatively higher depreciation and amortization expense
compared to depreciation and amortization expense of collection operations,
depreciation of increased capital expenditures and a one time write-off of
$505,000 following the Company's election in 1995 not to pursue the enforcement
of several covenants not to compete. Net fixed assets increased to $81.3 million
in 1995 from $17.1 million in 1994 and goodwill, net of accumulated amortization
expense, increased to $15.7 million in 1995 from $13.6 million in 1994.

NET INTEREST EXPENSE. Net interest expense increased to $2.8 million in
1995 from $1.5 million in 1994. This increase primarily reflects increased
indebtedness incurred in connection with acquisitions and capital expenditures.

INCOME TAXES. Although the Company recorded a net loss in 1995, the Company
recorded an income tax expense of $332,000 in 1995 because the Company's
subsidiaries were not then consolidated and CDI reported a profit in 1995. The
Company recorded an income tax benefit of $1.4 million in 1994. See Note 6 of
the Notes to Consolidated Financial Statements included elsewhere herein.

EXTRAORDINARY LOSS. In 1995, the Company recognized an extraordinary loss
of $908,000, representing unamortized deferred debt issuance cost in connection
with the extinguishment of debt outstanding under a prior credit facility.

LIQUIDITY AND CAPITAL RESOURCES

Due to the capital intensive nature of the solid waste industry and the
Company's focus on an acquisition-based growth strategy, the Company has used,
and expects to continue using, substantially all cash generated from operations
to fund acquisitions, capital expenditures and landfill development.
Historically, the Company has satisfied its acquisition, capital expenditure and
working capital needs primarily through equity and bank financings. There can be
no assurance that such financing will continue to be available.

Net cash provided by operating activities for the six months ended June 30,
1997 increased to $11.3 million compared to $2.6 million for the same period in
1996. The increase was primarily due to acquisition related activities which
resulted in an increase in accounts payable and accrued expenses of $6.8 million
between the six months ended June 30, 1997 and the six months ended June 30,
1996, an increase in depreciation and amortization of $3.4 million over the
prior period, an improvement in net income to $1.7 million for the six months
ended June 30, 1997 compared to a loss of $1.2 million in the prior year, offset
by an increase in accounts receivable and prepaid expenses of $4.5 million
between the six months ended June 30, 1997 and the six months ended June 30,
1996.

Net cash used in investing activities increased to $77.6 million in the six
months ended June 30, 1997 from $9.7 million in the prior year period. The
increase was due primarily to payments for acquisitions of $68.2 million
completed in the six months ended June 30, 1997 and an increase of $2.8 million
in capital expenditures for the six months ended June 30, 1997 compared to June
30, 1996. The Company's capital expenditure requirements have increased
significantly, reflecting the Company's rapid growth by acquisition and
development of additional revenue producing assets, and will increase further as
the Company continues to pursue its acquisition-based growth strategy. During
the six months ended June 30, 1997, the Company spent $9.4 million in capital
expenditures, of which $4.5 million was for cell development. In fiscal year
1997, the Company expects to spend approximately $20.0 million for capital
expenditures, of which $9.0 million is anticipated to be used for cell
development.

25
<PAGE>
Under the Company's Credit Facility, net cash provided by financing
activities totalled $66.2 million for the six months ended June 30, 1997,
compared to $2.2 million for the six months ended June 30, 1996 reflecting
borrowings of $70.9 million in 1997 under the Company's Credit Facility to fund
acquisitions. Repayments under the Company's Credit Facility totalled $73.9
million, funded primarily by the net proceeds of $70.1 million from the May
Offering.

In May 1997, the Company increased the amount of its Credit Facility with
ING (U.S.) Capital Corporation, as Administrative Agent, and certain other
financial institutions as Lenders, from $125 million to $200 million. The Credit
Facility provides the Company with a term loan of $60 million and an expansion
facility of $140 million to be used for acquisitions (of which $20 million may
be used for working capital and letter of credit purposes). The various loans
and lines of credit under the Credit Facility bear interest at rates per annum
equal to, at the Company's discretion, either: (i) the higher of the prime rate,
plus an applicable margin or (ii) the London Interbank Offered Rate ("LIBOR"),
plus an applicable margin, and have maturities ranging from 2001 to 2004. As of
September 15, 1997, the Company had borrowed $118.9 million under the Credit
Facility. As of such date, the interest rates on the various loans and lines of
credit under the Credit Facility ranged from 6.69% to 8.50% and the total unused
availability under the Credit Facility was approximately $81 million. The
Company will use substantially all of the net proceeds from the Offering to
repay indebtedness outstanding under the Credit Facility which may be reborrowed
in the future. The Company intends to satisfy its interest obligations as well
as future capital expenditures and working capital requirements, with cash flows
from operations and borrowings under the Credit Facility.

INFLATION AND PREVAILING ECONOMIC CONDITIONS

To date, inflation has not had a significant impact on the Company's
operations. Consistent with industry practice, most of the Company's contracts
provide for a pass through of certain costs, including increases in landfill
tipping fees and, in some cases, fuel costs. The Company therefore believes it
should be able to implement price increases sufficient to offset most cost
increases resulting from inflation. However, competitive factors may require the
Company to absorb at least a portion of these cost increases, particularly
during periods of high inflation. The Company is unable to determine the future
impact of a sustained economic slowdown.

SEASONALITY

26
<PAGE>
BUSINESS

INTRODUCTION

The Company's principal growth strategy is to identify and acquire solid
waste landfills located in markets that are within approximately 125 miles of
significant metropolitan centers and to secure dedicated waste streams for such
landfills by acquisition or development of transfer stations and acquisition of
collection companies.

RECENT DEVELOPMENTS

Since the May Offering, the Company has expanded and strengthened its market
presence in its six operating regions through 16 acquisitions, which included
the acquisition of two landfills, 16 collection companies and four transfer
stations.

As part of the Acquisition, the Company acquired all of the outstanding
shares of capital stock of Bulk Handlers, Shred-All, Trucking and Environtech
from Fred B. Barbara ("Mr. Barbara") and certain related persons. The Barbara
Companies provide hauling, transfer, recycling and disposal services in the
greater

27
<PAGE>
Chicago metropolitan area and include a collection company (with a fleet of 150
vehicles), a transfer station and recycling facility (capable of processing
traditional recyclables, as well as tires, cement, wood pallets, aluminum scrap
and other bulk materials), and a landfill consisting of approximately 326 acres
(of which approximately 78 acres are permitted), having approximately 23 years
of remaining site life at current average disposal volumes.

In 1976, Mr. Barbara started his own solid waste business after leaving his
family's solid waste business, which has had a presence in the Chicago solid
waste market since 1951. In connection with the Acquisition, Mr. Barbara entered
into employment and non-competition agreements with the Company having an
initial term of five years, under which he would focus on business development
opportunities within the Illinois Region. In addition, Mr. Barbara may receive
additional contingent payments of up to approximately $50 million over the next
nine years if certain ongoing business development projects are achieved by the
Barbara Companies. The Company believes that the Acquisition provides it with a
significant opportunity to improve its internalization rates, expand the
Company's aquisition platform and provide fully integrated waste services in its
Illinois Region.

In addition, since the May Offering, the Company has continued to expand its
presence in its New England Region, which the Company entered in September 1996.
Since May, the Company has acquired four additional collection operations and
one transfer station in Rhode Island, and an integrated collection and transfer
station operation in Connecticut. The Company believes that as a result of its
acquisitions in the region, it currently owns and operates the largest
collection operation in Rhode Island and has strategically positioned itself to
expand its market share in the New England Region.

Since the May Offering, the Company increased its Credit Facility from $125
million to $200 million. The Credit Facility provides the Company with a term
loan of $60 million and an expansion facility of $140 million to be used for
acquisitions (of which $20 million may be used for working capital and letter of
credit purposes). At September 15, 1997, the outstanding debt under the Credit
facility was $118.9 million, up from $61.4 million at June 30, 1997, primarily
as a result of recent acquisitions.

INDUSTRY BACKGROUND

In the United States, landfilling is at present the most common means of
disposing of non-hazardous municipal solid waste ("MSW"), which consists
primarily of refuse and garbage from households and commercial establishments.
The Company believes that in recent years there has been a trend towards
consolidation of landfill ownership and that a similar trend is emerging in the
solid waste collection industry, which historically has been characterized by
numerous small companies. The Company believes that these trends will continue
and are the result of several factors: (i) environmental regulations, including
Subtitle D Regulations and related state regulations and programs have
significantly increased the amount of capital and the technical expertise
required in order to own and operate a landfill; (ii) a number of municipalities
are electing to privatize the operations of their municipal landfills as an
alternative to funding the changes to these landfills that are required in order
to comply with the Subtitle D Regulations and related state regulations and
programs; (iii) as a result of heightened sensitivity to environmental concerns
by many communities, it is becoming increasingly desirable in many markets for
collection companies to provide waste reuse and reduction programs, such as
recycling and composting, in addition to conventional waste collection services.
Due in part to these trends, the Company believes that significant opportunities
exist to expand and further integrate its operations in each of its existing
markets, as well as in new markets that meet the Company's acquisition criteria.

STRATEGY

The Company's objective is to build a large, profitable, fully-integrated
solid waste services company with an established market presence in secondary
markets. The Company's strategy for achieving this objective is to establish a
market presence generally anchored by its landfills; to increase volume in its
markets through "tuck-in" acquisitions of collection companies and marketing to
new customers; to provide a high level of customer service; to implement
selective price increases; and to continue to

28
<PAGE>
implement strict cost controls and reduce corporate overhead as a percentage of
revenues. The Company believes that this strategy of building an integrated
entity should provide it with competitive cost advantages in its targeted
regional markets. The Company's ability to implement its strategy is enhanced by
the experience of its senior managers and their knowledge of the solid waste
industry. There can be no assurance, however, that the Company will be
successful in the execution of its strategy. See "Risk Factors."

The Company targets acquisitions in geographic areas characterized by one or
more of the following criteria: (i) the availability of permitted and
underutilized landfill capacity located outside of, but within 125 miles of, a
significant metropolitan center; (ii) the absence of a dominant competitor in
the area which would preclude the Company from implementing its business
strategy; (iii) anticipated economic and population growth; and (iv) near- or
medium-term scheduled closures of competing landfills.

The Company has adopted the following four-step operating program in
executing its business strategy:

1. LANDFILL ACQUISITIONS. Once the Company identifies an area that
qualifies under its target market criteria, the Company seeks to establish a
market presence, generally by acquiring one or more landfills in that area
that can be accessed economically from the metropolitan center or from the
regional market area, either through direct hauling or through strategically
located transfer stations. In evaluating a landfill acquisition, the Company
considers, among others, the following factors: (i) current disposal costs
together with transportation costs to the targeted landfill relative to
transportation and disposal costs of potential competitors; (ii) expected
landfill life; (iii) opportunities for landfill expansion; and (iv)
projected short-term ability to secure a minimum of 500 tons per day of
disposal volume.

2. SECURE CAPTIVE WASTE VOLUMES. After the Company has acquired a
landfill, it seeks to build a market presence and increase the utilization
of the landfill by securing captive waste streams, which includes developing
and acquiring transfer stations, entering into waste collection contracts
and acquiring waste collection companies. Generally, the Company pursues the
acquisition of collection companies that: (i) have well-established
residential or commercial collection routes and accounts; (ii) own and
operate transfer stations; or (iii) do not own landfills and are vulnerable
to volatile disposal pricing, which the Company believes it can minimize
through landfill ownership.

3. 'TUCK-IN" ACQUISITIONS. The Company acquires service rights,
obligations, machinery and equipment in "tuck-in" acquisitions of collection
companies to: (i) increase the waste stream directed to its landfills; (ii)
maximize its market presence; and (iii) take advantage of economies of scale
which should increase earnings and return on capital.

4. INTEGRATION AND EXPANSION OF OPERATIONS. Immediately upon closing
any acquisition, the Company integrates the acquired company into its
operations by: (i) instituting strict cost control procedures; (ii)
consolidating and rationalizing collection routes and pricing; (iii)
implementing Company operating policies and procedures (including programs
designed to improve employee productivity and equipment utilization); (iv)
establishing a sales and marketing force; and (v) converting the acquired
company to the Company's accounting, data processing and management
reporting systems. During the transition period following acquisitions, the
Company retains the management of certain companies it acquires in order to
benefit from management's local operating knowledge and the goodwill it has
developed. Additionally, on a selective basis, the Company seeks to expand
the capacity of its landfills to accommodate increasing waste volumes and
improve profitability.

In addition, the Company may, as specific opportunities arise, evaluate and
pursue acquisitions in the solid waste collection and disposal industry that do
not strictly conform to the Company's four-step operating program.

29
<PAGE>
ACQUISITION PROGRAM

The Company has assembled an experienced acquisition team comprised of
operations, environmental, engineering, legal, financial and accounting
personnel, each engaged in identifying and evaluating
acquisition opportunities in order to execute its operating program. The Company
has established pre-acquisition review procedures for acquisition candidates,
including legal, financial, engineering, operational and environmental reviews.
The environmental review includes, where appropriate, investigation of geologic,
hydrogeologic and other site conditions, past and current operations (including
types of waste deposited), design and construction records, permits, regulatory
compliance history, regulatory agency records and available soil sampling,
groundwater and air monitoring results. The Company uses regional managers to
assist in the acquisition process by identifying suitable candidates and
performing pre-acquisition review and evaluation tasks.

In considering whether to proceed with an acquisition, in addition to
determining whether the candidate meets the Company's criteria described above,
the Company evaluates a number of factors, including: (i) the acquisition
candidate's historical and projected financial results; (ii) any expected
synergies with one or more of the Company's existing operations; (iii) the
proposed purchase price and the Company's expected resultant internal rate of
return on investment and the expected impact on the Company's earnings per
share; (iv) whether the candidate will enhance the Company's ability to effect
other acquisitions in the vicinity; (v) the candidate's customer service
reputation and relationships with the local communities; (vi) the composition
and size of the candidate's customer base; (vii) the types of services provided
by the candidate; and (viii) whether the candidate has definable and
controllable liabilities, including potential environmental liabilities. The
Company believes that significant opportunities exist to acquire new landfills
and to develop its existing markets, and reviews acquisition opportunities on an
ongoing basis.

COMPLETED ACQUISITIONS

The Company has completed 55 acquisitions of solid waste companies in 12
states since January 1993, which are summarized in the table below.

<TABLE>
<CAPTION>
COMPANY BUSINESS PRINCIPAL LOCATION DATE ACQUIRED
- --------------------------- --------------------------- --------------------------- ---------------------------
<S> <C> <C> <C>
MISSOURI REGION:
Wheatland Landfill Scammon, KS January 1993
Pittsburg Sanitation Collection Pittsburg, KS January 1993
Ozark Sanitation Collection Carthage, MO January 1993
Trashmaster Collection Joplin, MO January 1993
A-1 Trash Service Collection Verona/Aurora, MO April 1993
Tate's Transfer Transfer Station Verona/Aurora, MO April 1993
Renfro Sanitation Collection Branson, MO June 1993
B&B Trash Collection Pittsburg, KS July 1993
B&B Refuse Collection Neosho, MO December 1993
Apex Sanitation Collection Grove, OK and December 1993
Green Forest, AR
Epps Sanitation Collection Branson, MO December 1993
Cummings Sanitation Collection Nixa, MO May 1994
Light Hauling Collection Branson, MO August 1994
Poole's Sanitation Collection Bentonville, AR August 1994
Southwest Waste Collection Springfield, MO July 1996
Nesvold Sanitation Collection Seneca, MO December 1996
Sparky's Waste Control Collection Springfield, MO January 1997
Cupp Disposal Collection Joplin, MO June 1997
Sunset Disposal Landfill and Collection Coffeyville, KS August 1997
L. B. Smith Collection Springfield, MO August 1997
Supreme Sanitation Collection Pittsburg, KS August 1997
</TABLE>

30
<PAGE>
<TABLE>
<CAPTION>
COMPANY BUSINESS PRINCIPAL LOCATION DATE ACQUIRED
- --------------------------- --------------------------- --------------------------- ---------------------------
<S> <C> <C> <C>
ILLINOIS REGION:
Livingston Landfill Pontiac, IL November 1995
Barbara Companies Landfill, Collection, Chicago, IL September 1997
Beneficial Reuse
and Transfer Station
SOUTHWESTERN INDIANA
REGION:
WMX-Evansville Landfill, Collection and Evansville, IN April 1997
Transfer Station
Action Trash & Disposal Collection Vincennes, IN July 1997
T&G Container Collection and Transfer Washington, IN July 1997
Station
Mother Earth Collection, Beneficial Louisville, KY August 1997
Reuse
and Transfer Station
OHIO REGION:
Wyandot Landfill Upper Sandusky, OH August 1995
Environmental Collection Findlay, OH May 1996
Transportation and
Management
R&R Waste Disposal Collection Findlay, OH May 1996
Jerry's Rubbish Collection Findlay, OH June 1996
Seneca Disposal Collection Tiffin, OH June 1996
Ross Bros. Waste & Collection and Transfer Mt. Vernon, OH September 1996
Recycling Station
D&L Hauling Collection Findlay, OH October 1996
Rutledge Trucking Collection Delaware, OH November 1996
Morrow Sanitary Company Collection Mt. Gilead, OH November 1996
Bowers-Phase II Collection and Transfer Vickery, OH December 1996
Station
Cargo Services Collection Mt. Gilead, OH December 1996
Rumpke Waste (routes) Collection Fostoria, OH December 1996
Christiansen's Collection Sandusky, OH May 1997
D&R Refuse Collection Kenton, OH July 1997
Geyer Sanitation Collection Galion, OH July 1997
WESTERN PENNSYLVANIA
REGION:
Clarion Landfill and Collection Leeper, PA June 1995
Mauthe Sanitation Collection Strattanville, PA March 1996
Allied Waste Systems Collection Youngstown, OH February 1997
Horodyski Collection Warren, OH April 1997
Township Garbage Collection Warren, OH July 1997
NEW ENGLAND REGION:
T&J Trucking Collection Johnston, RI September 1996
American Disposal Services, Collection Johnston, RI September 1996
Inc./N.E.E.D.
A-1 Container Collection Rehoboth, MA January 1997
BFI--Derby District Collection and Transfer Seymour, CT May 1997
Station
Liberty Disposal Collection Providence, RI May 1997
A. Macera Collection Johnston, RI August 1997
Macera Bros. Collection and Transfer Cranston, RI August 1997
Station
R.D. Compactor Collection Providence, RI September 1997
</TABLE>

MISSOURI REGION. The Company established a market presence in the Missouri
Region in January 1993 with the acquisition of its Wheatland landfill. The
Company is in the later stages of its operating program in the Missouri Region.
Since purchasing the Wheatland landfill, the Company has acquired one transfer
station and independently developed three transfer stations. The Company also
has exclusive contracts to accept waste from two other transfer stations.
Additionally, the Company acquired 19 collection companies, including the three
operations purchased simultaneously with the Wheatland landfill. The collection
operations and transfer stations have been consolidated into three divisions.
The Company has integrated acquired companies by consolidating and rationalizing
routes and pricing, reducing overhead through consolidating an acquired
company's operations, implementing the Company's cost controls and operating
procedures, converting acquired companies to the Company's management

31
<PAGE>
reporting systems and implementing a sales and marketing team. The Company
continues to pursue "tuck-in" acquisitions of collection companies to increase
its per ton margins through internalizing waste streams. The Company also seeks
to expand its operations by taking advantage of the economic efficiencies
provided by its integrated operations and is in the process of developing
another transfer station. Since the acquisition of its Wheatland landfill, the
Company has increased the waste volume at its landfill by approximately 1,000
tons per day. Acquisition activity since the May Offering has included the
acquisition of one landfill and four collection companies. Such activity has
expanded the service area of the Company within the region.

ILLINOIS REGION. The Company established a market presence in north-central
Illinois in November 1995 with the acquisition of its Livingston landfill, which
is located approximately 90 miles from downtown Chicago. The acquisition of the
Livingston landfill was particularly attractive to the Company's management
because of the expected closing of two competing landfills that accepted an
aggregate of approximately 15,000 tons per day and the management team's
experience with the Chicago market. Since the acquisition of the Livingston
landfill, one of the competing landfills in the Chicago metropolitan area has
closed and the other is expected to close in 1998. Since the acquisition of the
Livingston landfill, the Company has increased the waste volume at this landfill
by approximately 4,000 tons per day through intensified sales and marketing
efforts. Approximately 71% of the waste volume at the Livingston landfill is
captive waste.

In September 1997, the Company acquired the Barbara Companies, which provide
solid waste collection, transportation, hauling, transfer and disposal services
in northern Illinois. In addition, as part of the Acquisition, the Company
acquired the Environtech landfill, which services the Chicago metropolitan area.
The Acquisition provides the Company with a significant opportunity to expand
and strengthen its presence in the Illinois Region.

SOUTHWESTERN INDIANA REGION. In April 1997, the Company acquired the
Blackfoot landfill, two collection companies, an exclusive transfer station
contract and a permit to develop a new transfer station, all located in the
southwestern Indiana Region (which includes western Kentucky). These
acquisitions provided the Company with the opportunity to enter the southwestern
Indiana Region and to secure a significant market share position in that region
through the acquisition of a single, fully integrated solid waste management
operation. The Company plans to pursue additional "tuck-in" acquisitions of
collection companies to increase its per ton margins through internalizing waste
streams. Since the May Offering, the Company has acquired three additional
collection companies and two transfer stations and has expanded its regional
presence into the Louisville, Kentucky market.

OHIO REGION. The Company established a market presence in north-central
Ohio in August 1995 with the acquisition of its Wyandot landfill, which is
located within approximately 125 miles of Cleveland, Ohio and within
approximately 75 miles of Toledo and Columbus, Ohio. The Company is in the later
stages of its operating program in the Ohio Region. To date, the Company has
acquired 14 collection companies and has acquired, developed or secured
exclusive contracts with four transfer stations in the Ohio Region. Since the
acquisition of the Wyandot landfill, the Company has increased the waste volume
at this landfill by approximately 300 tons per day, primarily through the
acquisition of collection companies, new operating contracts with two transfer
stations and implementation of a new sales focus. To further expand its
operations, the Company is seeking to increase capacity at the Wyandot landfill.
See "Business-- Operations--Landfills." As part of its ongoing strategy in the
Ohio Region, the Company seeks to continue to increase its volume of
internalized waste through additional "tuck-in" acquisitions in order to
increase per ton margins. Since the May Offering, the Company has acquired three
collection companies in the region.

32
<PAGE>
WESTERN PENNSYLVANIA REGION. The Company entered the western Pennsylvania
Region in June 1995 with the acquisition of its Clarion landfill and an
affiliated collection company. The Clarion landfill is located within 80 miles
of both Pittsburgh and Erie, Pennsylvania. The Company began the second phase of
its operating program in the western Pennsylvania Region (which includes eastern
Ohio) in March 1996 by acquiring a second collection company. Since the
acquisition of the Clarion landfill, the Company has increased deliveries to
this landfill by approximately 300 tons per day to the maximum daily limit,
primarily through the acquisition of collection companies. As a result of this
acquisition, the volume of the Company's internalized waste has increased in the
western Pennsylvania Region. As part of its ongoing strategy in the western
Pennsylvania market, the Company seeks to continue to increase its volume of
internalized waste through additional "tuck-in" acquisitions in order to
increase per ton margins.

NEW ENGLAND REGION. The Company began operating in the New England Region
in September 1996 with the acquisition of two collection companies in Rhode
Island. The Company was attracted to the New England Region because it was
largely an unconsolidated market where no existing operator had a competitive
advantage since the State of Rhode Island owns and operates the sole landfill in
the state. As a result, the Company has focused its acquisition strategy on
collection companies. Since May, the Company has acquired four collection
companies and one transfer station in Rhode Island and an integrated collection
and transfer station operation in Connecticut. The Company believes that as a
result of its acquisitions in the region, it currently owns and operates the
largest collection operation in Rhode Island and has strategically positioned
itself to expand its market share in the New England Region.

OPERATIONS

The Company's waste management operations include the ownership and
operation of solid waste landfills, transfer stations and waste collection
services. The Company believes that all of its landfills and transfer stations
comply with or exceed the requirements mandated by the Subtitle D Regulations
and the applicable state regulations. The Company regularly monitors incoming
waste at its landfills to determine if such wastes are in compliance with its
permits.

LANDFILLS

The Company currently owns eight landfill operations permitted to receive
solid waste. These landfill operations are located in Illinois, Indiana, Ohio,
Pennsylvania, Kansas and Oklahoma.

Each of the Company's landfill operations is located on land owned by the
Company. The permitted waste streams at each of these landfills include both MSW
and certain special waste (the type of special waste varying from landfill to
landfill). During the six months ended June 30, 1997, the Company's captive
waste (including the Company's collection operations and third party haulers
operating under long-term contracts) constituted an average of approximately 71%
of the solid waste disposed of at its landfills.

33
<PAGE>
The table and landfill descriptions below provide certain additional
information, as of September 15, 1997 regarding the eight landfills that the
Company owns and operates.

<TABLE>
<CAPTION>
APPROXIMATE ACREAGE APPROXIMATE
---------------------------- UNUSED PERMITTED
LANDFILLS LOCATION TOTAL PERMITTED (1) AIRSPACE (2)
- ------------------------------- ------------------------------- --------- ----------------- ---------------------------
<S> <C> <C> <C> <C>
(IN MILLIONS OF
CUBIC YARDS)
Wheatland...................... Scammon, KS 68 55 1.0
Resource Recovery.............. Cherryvale, KS 282 37 2.6
Pittsburg County............... McAlester, OK 76 30 1.4
Livingston..................... Pontiac, IL 556 255 29.0
Environtech.................... Morris, IL 326 78 6.3
Blackfoot...................... Evansville, IN 379 166 17.8
Wyandot(3)..................... Upper Sandusky, OH 344 87 5.9
Clarion........................ Leeper, PA 606 60 3.8
--------- --- ---
Total...................... 2,637 768 67.8
--------- --- ---
--------- --- ---
</TABLE>

- ------------------------
(1) Permitted acreage, as used in this table and in this Prospectus, represents
the portion of the total acreage on which disposal cells and supporting
facilities have been constructed (including any that may have been filled or
capped) or may be constructed based upon an approval issued by the state
generally authorizing the development or siting of a landfill on the
acreage. Prior to actually constructing and/or operating each new disposal
cell on the permitted acreage, it may be necessary, depending upon the
regulatory requirements of the particular state, for the Company to obtain
additional authorizations with respect to such cell. The portion of total
acreage that is not currently permitted acreage is not currently available
for waste disposal.

(2) Unused permitted airspace represents in cubic yards the estimated portion of
the permitted acreage that has not yet been used for waste disposal but may
be available for waste disposal after certain approvals are secured and, in
some instances, new disposal cells are constructed. Prior to actually
constructing and/or operating a new disposal area or cell on permitted
acreage, it may be necessary, depending upon the regulatory requirements of
the particular state or locality, for the Company to obtain additional
authorizations.

(3) The Company has applied for a permit to increase the permitted acreage and
permitted cubic airspace at the Wyandot landfill by approximately 98 acres
and approximately 19.1 million cubic yards, respectively.

The Company monitors the available permitted in-place disposal capacity at
each of its landfills on an ongoing basis and evaluates whether to seek to
expand this capacity. In making this evaluation, the Company considers various
factors, including the volume of waste projected to be disposed of at the
landfill, the size of the unpermitted acreage included in the landfill, the
likelihood that the Company will be successful in obtaining the necessary
approvals and permits required for the expansion and the costs that would be
involved in developing the expanded capacity. The Company also considers on an
ongoing basis the extent to which it is advisable, in light of changing market
conditions and/or regulatory requirements, to seek to expand or change the
permitted waste streams at a particular landfill or to seek other permit
modifications. Set forth below is certain information concerning certain of the
new permits, permit modifications and approvals that the Company is currently
seeking to enable it to expand its disposal capacity. There can be no assurance
that the Company will succeed in obtaining any of such permits, permit
modifications or approvals, or that additional permits, permit modifications or
approvals will not be required or that additional requirements will not be
imposed by regulatory agencies. See "Risk Factors--Limitations on Internal
Expansion" and "--Extensive Environmental Land Use Laws and Regulations."

WHEATLAND. The Wheatland landfill consists of approximately 68 acres, and
the Company has an option to purchase up to approximately 800 additional acres
in the vicinity. Approximately 55 of the owned acres are permitted acres and
there are approximately 1.0 million cubic yards of unused permitted airspace.
The Company anticipates that after a planned expansion, the Wheatland landfill
would have approximately six years of total site life at current average
disposal levels (two years if such expansion is not approved by the Cherokee
County Board of Commissioners). In addition, the Company has an option to
purchase an undeveloped parcel in Missouri, which has been granted a permit to
develop a landfill.

34
<PAGE>
RESOURCE RECOVERY. The Resource Recovery landfill consists of approximately
282 acres, of which approximately 37 are permitted. There are approximately 2.6
million cubic yards of unused permitted airspace. The Resource Recovery landfill
has approximately 20 years of total site life at current average disposal
levels.

PITTSBURG COUNTY. The Pittsburg County landfill consists of approximately
76 acres, of which approximately 30 are permitted acres. There are approximately
1.4 million cubic yards of unused permitted airspace. The Pittsburg County
landfill would have approximately 25 years of total site life at current average
disposal levels.

LIVINGSTON. The Livingston landfill consists of approximately 556 acres, of
which approximately 255 are permitted acres. There are approximately 29.0
million cubic yards of unused permitted airspace. Previously, cells developed at
the Livingston landfill have been constructed with double composite liner
systems. In September 1996, the Livingston landfill received a permit to
construct cells using a single liner composite system. In February 1997,
Livingston received a significant modification permit from the Illinois
Environmental Protection Agency for a major lateral and vertical expansion and
re-permitting of the site. This significant modification permit includes
authorization to expand the residual waste monofill into a facility capable of
accepting various special wastes and MSW, and thereby increased the permitted
acreage by approximately 200 acres to approximately 255 acres and increased the
site's available capacity from approximately 6.0 million cubic yards to an
estimated available capacity of approximately 29.0 million cubic yards. The
Livingston landfill has approximately 13 years of total site life at current
average disposal levels, which have increased substantially since its
acquisition by the Company.

ENVIRONTECH. The Environtech landfill consists of approximately 326 acres
of which 78 acres have received local siting approval and/or state permitting.
There are approximately 6.3 million cubic yards of unused airspace, 6.1 million
cubic yards of which have received local siting approval and awaiting approval
by the Illinois Environmental Protection Agency (the "Illinois EPA"). The
application for approval by Illinois EPA was submitted in September, 1996 and
the Company believes it will receive Illinois EPA approval by the end of 1997.
Environtech has approximately 23 years of total site life at current average
disposal levels.

BLACKFOOT. The Blackfoot landfill in Evansville, Indiana consists of
approximately 379 acres, of which approximately 166 are permitted acres. The
site recently received a permit which increases the available capacity to
approximately 17.8 million cubic yards of airspace. The Blackfoot landfill has
approximately 42 years of total site life at current average disposal levels.

WYANDOT. The Wyandot landfill consists of approximately 344 acres in three
proximate locations, and the Company has an option to purchase up to
approximately 94 adjacent additional acres in the vicinity. Approximately 87 of
the owned acres are permitted, and there are approximately 5.9 million cubic
yards of unused permitted airspace. Cells developed to date at the Wyandot
landfill have been constructed with double composite liner systems. The Company
has applied for a permit from applicable regulatory authorities to use a single
composite liner in constructing new cells, which the Company believes should
reduce cell development costs. In addition, the Company has applied for a permit
from the Ohio Environmental Protection Agency to expand its landfill capacity by
using the valley between two of the hills that are currently permitted for waste
disposal, as well as the option acreage. The Company anticipates that if it
exercised its option, obtained the required permits and constructed the
additional landfill areas, the Wyandot landfill would have approximately 50
years of total site life at current disposal levels. Currently, however, the
Wyandot landfill has approximately 10 years of total site life at current
average disposal levels.

CLARION. The Clarion landfill consists of approximately 606 acres, of which
approximately 60 are permitted acres. There are approximately 3.8 million cubic
yards of unused permitted airspace. Cells developed at the Clarion landfill have
been, and due to regulatory requirements will continue to be,

35
<PAGE>
constructed with double liner systems. The Clarion landfill has approximately 10
years of total site life at current average disposal levels.

TRANSFER STATIONS

The Company has an active program to acquire, develop, own, operate and
contract to receive waste volumes from transfer stations in markets which are
proximate to its operations. The use of transfer stations reduces the Company's
costs associated with the transportation of its collected waste and also
increases the market area served by the Company's landfills. Presently, the
Company owns, operates or has exclusive contracts to receive waste from a total
of 17 transfer stations, including six in the Missouri Region, two in the
Illinois Region, three in the southwestern Indiana Region, four in the Ohio
Region and two in the New England Region. Typically, the Company acquires
transfer stations that will service its Company-owned landfills.

COLLECTION OPERATIONS

The Company collects solid waste from over 305,000 residential, commercial
and industrial customers through its own collection operations and through
brokerage arrangements with other haulers. The Company's collection operations
are conducted generally within a 50-mile radius of either its transfer stations
or landfills, which allows the Company to serve a geographic area within a
radius of approximately 125 miles from its landfills. The Company also contracts
with local generators of solid waste and directs the waste to either its own
landfill or to a third-party landfill or for additional handling at one of its
transfer stations. During the six months ended June 30, 1997, the Company's
captive waste constituted an average of approximately 71% of the solid waste
disposed of at Company-owned landfills. In addition, 87% of the total tonnage
collected by the Company was disposed of at Company-owned landfills.

Fees for the Company's commercial and industrial collection services are
determined by such factors as collection frequency, type of equipment and
containers furnished, the type, volume and weight of the waste collected, the
distance to the disposal or processing facility and the cost of disposal or
processing. A majority of the Company's commercial and industrial waste
collection services are performed under contracts. Substantially all of the
Company's municipal solid waste collection services are performed under
contracts with municipalities. These contracts grant the Company exclusive
rights to service all or a portion of the residential homes in a specified
community or provide a central repository for residential waste drop-off. As of
September 15, 1997, the Company had approximately 65 municipal contracts in
place. Municipal contracts in the Company's market areas are typically awarded,
at least initially, on a competitive bid basis and usually range in duration
from one to five years. Fees are based primarily on the frequency and type of
service, the distance to the disposal or processing facility and the cost of
disposal or processing. Municipal collection fees are usually paid either by the
municipalities from tax revenues or through direct service charges to the
residents receiving the service. The Company also provides subscription
residential collection services directly to households.

SALES AND MARKETING

The Company has a coordinated marketing strategy which is formulated at the
corporate level and implemented at the regional level. In addition to
competitive pricing, the Company's marketing strategy emphasizes quality service
particularly with respect to rapid turnaround time at its landfills. Each
manager implements the Company's marketing strategy, which is overseen by senior
management. Depending upon the size of the region and its customer mix, each
manager may focus on commercial, industrial, residential or municipal accounts
to a varying degree. The Company maintains periodic contact with all of its
accounts to increase customer retention. Company salespersons call on
prospective customers in a specified geographic territory.

36
<PAGE>
Since the Company acquires its waste collection operations primarily from
entrepreneurs who generally do not have independent sales forces, the Company
often retains these entrepreneurs during the transition period following the
acquisition of such operations to acquaint the Company's sales force with the
acquired companies' customer base.

The Company has a diverse customer base, with no single customer accounting
for more than 10% of the Company's revenues during the six months ended June 30,
1997. The Company does not believe that the loss of any single customer would
have a material adverse effect on the Company's results of operations.

COMPETITION

The solid waste collection and disposal business is highly competitive and
requires substantial amounts of capital. The Company competes with numerous
local and regional companies and, in selected areas, with the large national
waste management companies. The industry is led by several national waste
management companies, such as Waste Management, Inc., Browning-Ferris
Industries, Inc., USA Waste Services, Inc., Republic Industries, Inc. and Allied
Waste Industries, Inc., and includes numerous local and regional companies of
varying sizes and competitive resources such as Superior Services, Inc., Eastern
Environmental Services, Inc. and Waste Industries, Inc. The large national
companies, as well as a number of the regional companies, are significantly
larger and have greater financial resources than the Company. The Company also
competes with those counties and municipalities that maintain their own waste
collection and disposal operations. These counties and municipalities may have
financial advantages due to the availability to them of tax revenues and tax
exempt financing. The Company competes primarily by charging competitive prices
and offering quality service. Competitors may reduce the price of their services
in an effort to expand market share or to win competitively bid municipal
contracts.

The solid waste collection and disposal industry is currently undergoing
significant consolidation, and the Company encounters competition in its efforts
to acquire landfills and collection operations. Accordingly, it may become
uneconomical for the Company to make further acquisitions or the Company may be
unable to locate or acquire suitable acquisition candidates at price levels and
on terms and conditions that the Company considers appropriate, particularly in
markets the Company does not already serve.

Competition in the disposal industry may also be affected by the increasing
national emphasis on recycling and other waste reduction programs, which may
reduce the volume of waste deposited in landfills. See "Risk Factors--Highly
Competitive Industry and "--Use of Alternatives to Landfill Disposal."

LIABILITY INSURANCE AND BONDING

The Company carries a broad range of insurance for the protection of its
assets and operations that it believes is customary to the waste management
industry, including pollution liability coverage. Specifically, each of the
Company's eight landfills has pollution liability coverage of $10 million per
occurrence or $10 million in the aggregate subject to a $10,000 deductible.
Nevertheless, if the Company were to incur liability for environmental damage
which exceeds coverage limits or is not covered by insurance, its business,
financial condition and results of operations could be materially adversely
affected.

The Company is required to post a performance bond or a bank letter of
credit or to provide other forms of financial assurance in connection with
closure and post-closure obligations with respect to landfills and its other
solid waste management operations and may be required to provide such financial
assurance in connection with municipal residential collection contracts. As of
June 30, 1997, the Company had outstanding approximately $33.2 million of
performance bonds. If the Company were unable to obtain surety bonds or letters
of credit in sufficient amounts, or to provide other required forms of financial
assurance, it would be unable to remain in compliance with the Subtitle D
Regulations or comparable state requirements and, among other things, might be
precluded from entering into certain municipal collection contracts and
obtaining or holding landfill operating permits.

37
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information concerning the Company's
executive officers and directors as of September 15, 1997:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
David C. Stoller..................................... 46 Chairman; Director
Richard De Young..................................... 43 President; Chief Executive Officer; Director
Richard Kogler....................................... 38 Vice President; Chief Operating Officer
Stephen P. Lavey..................................... 36 Vice President; Chief Financial Officer
Ann L. Straw......................................... 44 Vice President; General Counsel and Secretary
Lawrence R. Conrath, Sr.............................. 41 Vice President; Controller
John J. McDonnell.................................... 42 Vice President--Engineering
Mary T. Ryan......................................... 44 Vice President--Corporate Affairs
Merril M. Halpern.................................... 62 Director
A. Lawrence Fagan (1)................................ 67 Director
Richard T. Henshaw, III (2).......................... 58 Director
G.T. Blankenship (2)................................. 68 Director
Norman Steisel (1)................................... 54 Director
</TABLE>

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

(1) Member of audit committee

(2) Member of compensation committee

DAVID C. STOLLER has been Chairman and a director of the Company since
January 1, 1996. He has served in the same capacities for ADS, Inc. ("ADS")
since January 1993 and County Disposal, Inc. ("CDI") since May 1995; both ADS
and CDI were predecessor entities of the Company. Since January 1997, he has
been a Managing Director of Charterhouse, which is a private investment firm
specializing in leveraged buy-out acquisitions. From August 1992 through
December 1996, Mr. Stoller served as the Chairman of Charterhouse Environmental
Capital Group, Inc. ("Charterhouse Environmental Capital"), which provided
management and consulting services to companies with environmental operations
including the Company. Charterhouse Environmental Capital is an affiliate of
Charterhouse. Mr. Stoller was a partner at the law firm of Milbank, Tweed,
Hadley & McCloy (where he remains as "Of Counsel") from January 1989 through
July 1992.

RICHARD DE YOUNG has been Chief Executive Officer since September 4, 1997
and President and a director of the Company since January 1, 1996. He has also
served as President of ADS since April 1994 and as a director since September
1993 and was the Chief Operating Officer and Vice President for ADS from January
1993 through April 1994. Mr. De Young has been a director of CDI since May 1995,
and its President since July 31, 1996. From June 1982 through January 1993 he
was employed by Waste Management of North America, a subsidiary of WMX
Technologies, Inc. ("WMX"), most recently as a Regional Operations Vice
President, with responsibility for landfill and collection operations in the
Midwest region.

RICHARD KOGLER has been a Vice President and the Chief Operating Officer of
the Company since January 1, 1996. He previously served in the same capacities
for ADS since May 1995 and as President of CDI between May 1995 and July 1996.
He has been Vice President of CDI since July 31, 1996. From October 1984 through
May 1995 Mr. Kogler was employed by WMX, most recently as a Regional Operations
Vice President.

STEPHEN P. LAVEY has been a Vice President and the Chief Financial Officer
of the Company since February 1997. He was previously employed by Bank of
America from June 1990 through January 1997,

38
<PAGE>
most recently as a Vice President in its Environmental Services Lending Group,
specializing in the solid waste, environmental engineering and water
purification industries. Mr. Lavey is also a Certified Public Accountant.

ANN L. STRAW has been a Vice President and the General Counsel of the
Company since the Exchange. She previously served in the same capacities for ADS
(since June 1995) and for CDI (since June 1995). She has been the Secretary of
the Company since January 1, 1996, and of ADS and CDI since July 31, 1995. From
1986 through May 1995 she was employed by WMX, most recently as a Group Counsel
for WMX's Midwest Group.

LAWRENCE R. CONRATH, SR. has been Controller of the Company since the
Exchange and a Vice President since May 1996. He previously served as Controller
for ADS since May 1994. Prior to joining the Company, Mr. Conrath spent two
years with United Waste Systems, Inc., as Regional Controller of its Michigan
region. From 1978 through 1990, Mr. Conrath was employed by WMX in several
financial positions, most recently as Director of Accounting for the WMX Urban
Services Group. Mr. Conrath is also a Certified Public Accountant.

JOHN J. MCDONNELL has been a Vice President--Engineering of the Company
since the Exchange. He previously served as Environmental Engineer for ADS
(since February 1993) and CDI (since June 1995). From 1985 through February
1993, Mr. McDonnell was employed by WMX, most recently as an Engineering
Manager.

MARY T. RYAN has been a Vice President--Corporate Affairs since March 1997
after joining the Company in November 1996. From May 1996 to November 1996, she
was employed by Ketchum Public Relations as Senior Vice President, Corporate
Issues. From July 1984 to April 1995 she was employed by WMX Technologies, Inc.,
most recently as Vice President, Management Services.

MERRIL M. HALPERN has served as a director of the Company since January 1,
1996. Since October 1984, Mr. Halpern has served as Chairman of the Board of
Charterhouse. From 1973 to October 1984, Mr. Halpern served as President and
Chief Executive Officer of Charterhouse. Mr. Halpern is also a director of
Designer Holdings Ltd., a developer and marketer of designer sportswear lines
("Designer Holdings"); Insignia Financial Group, Inc., a real estate management
firm; and Microwave Power Devices, Inc., a manufacturer of highly linear power
amplifiers primarily for the wireless telecommunications market ("MPD").

A. LAWRENCE FAGAN has served as a director of the Company since January 1,
1996. He has been President of Charterhouse since January 1997 and formerly
served as Executive Vice President of Charterhouse since 1984. Mr. Fagan is also
a director of Designer Holdings and MPD.

RICHARD T. HENSHAW, III has been a director of the Company since January 1,
1996. He has served as a director of ADS (since January 1993) and CDI (since May
1995). Mr. Henshaw has been a Managing Director of Charterhouse since January
1997 and formerly served as a Senior Vice President of Charterhouse since 1991.
Prior thereto he was a Senior Vice President of The Bank of New York. Mr.
Henshaw is also a director of Cornell Corrections, Inc., a provider of
privatized correctional services.

G.T. BLANKENSHIP has been a director of the Company since January 1, 1996.
He previously served as a director of ADS (since January 1991). Mr. Blankenship
has been a self-employed private investor since 1990.

NORMAN STEISEL has been a director of the Company since July 1996. He has
been the President of EnEssCo Strategies, a strategic consulting services firm
specializing in government regulated markets, since January 1994. From January
1990 through December 1993, Mr. Steisel was the First Deputy Mayor of the City
of New York. Prior to 1990, he was a Senior Vice President at Lazard Freres &
Co., specializing in environmental, corporate and municipal finance.

39
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of September 15, 1997 and after
completion of this Offering, by: (i) each person known by the Company to be the
beneficial owner of more than 5% of the Company's Common Stock; (ii) each of the
Company's directors; (iii) the Company's Chief Executive Officer and each of the
Company's other current executive officers; and (iv) the Company's directors and
executive officers as a group.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING SHARES TO AFTER OFFERING (1)
----------------------- BE SOLD IN -----------------------
NAME AND ADDRESS OF BENEFICIAL OWNERS NUMBER PERCENT THE NUMBER PERCENT
- -------------------------------------------------------- ---------- ----------- OFFERING ---------- -----------
-----------
<S> <C> <C> <C> <C> <C>
Charterhouse Environmental Holdings, L.L.C. (2)......... 1,867,289 12.6% 740,000 1,127,289 6.2%
Charterhouse Equity Partners II, L.P. (3)............... 2,511,973 17.0% 1,000,000 1,511,973 8.3%
CDI Equity, LLC (4)..................................... 644,109 4.4% 260,000 384,109 2.1%
David C. Stoller (5)(6)................................. 124,171 * -- 124,171 *
Richard De Young (5)(7)................................. 124,587 * -- 124,587 *
Stephen P. Lavey........................................ -- -- -- --
Merril M. Halpern (6)................................... -- -- -- --
A. Lawrence Fagan (6)................................... -- -- -- --
Richard T. Henshaw, III (6)............................. -- -- -- --
G.T. Blankenship (8).................................... 100,935 * -- 100,935 *
Norman Steisel.......................................... -- -- -- -- --
Richard Kogler (5)...................................... 17,755 * -- 17,755 *
Ann L. Straw (5)(9)..................................... 12,080 * -- 12,080 *
John J. McDonnell (5)(10)............................... 29,958 * -- 29,958 *
Lawrence R. Conrath (5)(11)............................. 20,426 * -- 20,426 *
Mary T. Ryan (12)....................................... 7,000 * -- 7,000 *
All directors and executive officers as a group (13
persons)(5)........................................... 436,912 2.9% 436,912 2.4%
</TABLE>

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

* Less than one percent.

(1) Assumes no exercise of the Underwriters' over-allotment option to purchase
up to 825,000 additional shares of Common Stock. See "Use of Proceeds" and
"Underwriting."

(2) The address of Charterhouse Environmental Holdings, L.L.C. ("Charter
Environmental") is c/o Charterhouse Group International, Inc., 535 Madison
Avenue, New York, New York 10022. Charterhouse Equity Partners, L.P. ("CEP")
and StollerCo Partners, L.P. ("StollerCo") are the members of Charter
Environmental, with a majority of the ownership interests being held by CEP.
The general partner of CEP is CHUSA Equity Investors, L.P., whose general
partner is Charterhouse Equity, Inc., a wholly-owned subsidiary of
Charterhouse. As a result of the foregoing, all of the shares of Common
Stock held by Charter Environmental would, for purposes of Section 13(d) of
the Securities Exchange Act of 1934, be considered to be beneficially owned
by Charterhouse. Mr. Stoller is a partner of StollerCo and disclaims
beneficial ownership of shares of Common Stock held of record by Charter
Environmental.

(3) The address of Charterhouse Equity Partners II, L.P. ("CEP II") is c/o
Charterhouse Group International, Inc., 535 Madison Avenue, New York, New
York 10022. The general partner of CEP II is CHUSA Equity Investors II,
L.P., whose general partner is Charterhouse Equity II, Inc., a wholly-owned
subsidiary of Charterhouse. As a result of the foregoing, all of the shares
of Common Stock held by CEP II would, for purposes of Section 13(d) of the
Securities Exchange Act of 1934, be considered to be beneficially owned by
Charterhouse.

40
<PAGE>
(4) The address of CDI Equity, LLC ("CDI Equity") is c/o Aetna Life Insurance
Company, Conveyor RC21, 151 Farmington Avenue, Hartford, Connecticut 06156.
The member interests in CDI Equity, LLC are held as follows: 99% by Aetna
Life Insurance Company, which is a wholly-owned subsidiary of Aetna
Services, Inc., which is a wholly-owned subsidiary of Aetna, Inc., and 1% by
CDI Equity, Inc., a wholly-owned subsidiary of Aetna Life Insurance Company.

(5) Includes options exercisable within 60 days of September 15, 1997 to
purchase 124,171, 122,120, 17,755, 28,962, 19,528 and 11,880 shares granted
under the American Disposal Services, Inc. 1996 Stock Option Plan to Messrs.
Stoller, De Young, Kogler, McDonnell and Conrath and Ms. Straw,
respectively. For purposes of computing the percentage of outstanding shares
beneficially held by each person or group of persons named above on a given
date, any security which such person or persons has the right to acquire
within 60 days after such date is deemed to be beneficially owned for the
purpose of computing the percentage ownership of such person or group of
persons, but is not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person.

(6) Merril M. Halpern and A. Lawrence Fagan are executive officers, directors
and stockholders of Charterhouse and Richard T. Henshaw, III and David C.
Stoller are executive officers of Charterhouse. Messrs. Halpern, Fagan,
Henshaw and Stoller each disclaim beneficial ownership of the shares of
Common Stock beneficially owned by Charterhouse.

(7) Includes 2,467 shares held jointly by Mr. De Young and his wife.

(8) Includes 7,995 shares held by Mr. Blankenship's wife, of which Mr.
Blankenship disclaims beneficial ownership.

(9) Includes 200 shares held by Ms. Straw's minor children.

(10) Includes 996 shares held by Mr. McDonnell's minor children.

(11) Includes 498 shares held jointly by Mr. Conrath and his wife and 400 shares
held in an IRA for the benefit of Mr. Conrath.

(12) Includes 6,000 shares held in an IRA for the benefit of Ms. Ryan and 1,000
shares held jointly by Ms. Ryan and her husband.

41
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 20,000,000 shares of
Common Stock, par value $.01 per share, and 5,000,000 shares of Preferred Stock,
par value $.01 per share (the "Preferred Stock"). A Special Meeting of
Stockholders to approve an increase in the authorized shares to 100,000,000
shares of Common Stock is scheduled for October 7, 1997. The discussions of the
Common Stock and Preferred Stock here and elsewhere in this Prospectus are
qualified in their entirety by reference to: (i) the Certificate of
Incorporation of the Company, as amended, a copy of which has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part; and
(ii) the applicable Delaware law.

COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Stockholders casting a plurality of votes of the stockholders entitled
to vote in an election of directors may elect all of the directors standing for
election. Holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared by the Board of Directors out of funds
legally available therefor, subject to any preferential dividend rights of
Preferred Stock that may be issued at such future time or times. Upon the
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to receive ratably the net assets of the Company after the
payment of all debts and other liabilities and subject to the prior rights of
Preferred Stock that may be outstanding at such time. Holders of Common Stock
have no preemptive, subscription, redemption or conversion rights. The
outstanding shares of Common Stock are, and the shares of Common Stock offered
by the Company in the Offering will be, when issued and paid for, fully paid and
nonassessable. The rights, preferences and privileges of holders of Common Stock
are subject to the rights of the holders of shares of any series of Preferred
Stock which the Company may designate and issue in the future.

As of September 15, 1997, there were 14,804,542 shares of Common Stock
outstanding.

UNDESIGNATED PREFERRED STOCK

The Company's Certificate of Incorporation authorizes 5,000,000 shares of
Preferred Stock. The Board of Directors has the authority to issue the Preferred
Stock in one or more series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption, redemption prices, liquidation preferences and the
number of shares constituting any series or the designation of such series,
without further vote or action by the stockholders. The issuance of Preferred
Stock may have the effect of delaying, deferring or preventing a change in
control of the Company without further action by the stockholders and may
adversely affect the voting and other rights of the holders of Common Stock. The
issuance of Preferred Stock with voting and conversion rights may adversely
affect the voting power of the holders of Common Stock, including the loss of
voting control of others. At present, the Company has no plans to issue any of
the Preferred Stock.

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS

The Company is subject to Section 203 of the Delaware General Corporation
Law ("Section 203") which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such stockholder
became an interested stockholder, unless: (i) prior to such date, the board of
directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder; (ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced (for the purposes of determining the number of shares
outstanding, under Delaware law, those shares owned (x) by persons

42
<PAGE>
who are directors and also officers and (y) by employee stock plans in which
employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer
are excluded from the calculation); or (iii) on or subsequent to such date, the
business combination is approved by the board of directors and authorized at an
annual or special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the interested stockholder.

Section 203 defines a business combination to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii) any
sale, transfer, pledge or other disposition of 10% or more of the assets of the
corporation involving the interested stockholder; (iii) subject to certain
exceptions, any transaction which results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder; (iv)
any transaction involving the corporation which has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder, or (v) the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation. In
general, Section 203 defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.

Certain provisions of the Company's Certificate of Incorporation and
Delaware law may have a significant effect in delaying, deferring or preventing
a change in control of the Company and may adversely affect the voting and other
rights of other holders of Common Stock. In particular, the ability of the Board
of Directors to issue Preferred Stock without further stockholder approval may
have the effect of delaying, deferring or preventing a change in control of the
Company and may adversely affect the voting and other rights of other holders of
Common Stock.

REGISTRATION RIGHTS

After the Offering, the holders of 3,023,371 shares of Common Stock and
warrants to purchase 168,905 shares of Common Stock are entitled to certain
rights with respect to the registration of such shares under the Securities Act.
Under the terms of the agreements between the Company and the holders of such
registrable securities, if the Company proposes to register any of its
securities under the Securities Act, either for its own account or for the
account of other security holders exercising registration rights, such holders
are entitled to notice of such registration and are entitled to include shares
of Common Stock therein. The holders of such registrable securities may also
require the Company on two separate occasions to file a registration statement
under the Securities Act at the Company's expense with respect to their shares
of Common Stock, and the Company is required to use its diligent reasonable
efforts to effect such registration. These rights are subject to certain
conditions and limitations, among them the right of the underwriters of an
offering to limit the number of shares included in such registration.

TRANSFER AGENT

The Transfer Agent for the Common Stock is the Continental Stock Transfer &
Trust Company, 2 Broadway, New York, New York 10004. Its telephone number is
(212) 509-4000.

43
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have approximately
18,304,542 shares of Common Stock outstanding (assuming no exercise of the
Underwriters' overallotment option). Of these shares, approximately 14,678,432
shares will be freely transferable without restriction or registration under the
Securities Act, except for any shares purchased by an existing "affiliate" of
the Company, as that term is defined by the Securities Act (an "Affiliate"),
which shares will be subject to the resale limitations of Rule 144 adopted under
the Securities Act.

After the Offering, the holders of 3,023,371 shares of Common Stock, and
warrants to purchase 168,905 shares of Common Stock, will be entitled to certain
rights with respect to the registration of such shares under the Securities Act.
See "Description of Capital Stock--Registration Rights." Registration of such
shares under the Securities Act would result in such shares becoming freely
tradeable without restriction under the Securities Act (except for shares
purchased by Affiliates) immediately upon the effectiveness of such
registration.

The Company's officers and directors and Charter Environmental, CEP II and
CDI Equity, who, following the Offering, will beneficially own an aggregate of
3,460,283 shares of Common Stock or options or warrants to purchase shares of
Common Stock, have agreed not to sell, offer to sell, distribute, pledge, grant
any option for the sale of, or otherwise dispose of, directly or indirectly, or
encumber, or exercise any registration rights with respect to, any shares of
Common Stock, any options or warrants to purchase any shares of Common Stock, or
any securities convertible into or exchangeable for shares of Common Stock now
owned by them or hereafter acquired or with respect to which they have acquired
or hereafter acquire the power of disposition for a period of 180 days after the
date of this Prospectus, without the prior written consent of Oppenheimer & Co.,
Inc. and DLJ. Certain additional stockholders of the Company who beneficially
own an aggregate of 274,573 shares of Common Stock have agreed to similar
restrictions for a period of 90 days. Additionally, the Company has agreed not
to sell, offer to sell, distribute, pledge, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, or encumber, or exercise
registration rights with respect to, any shares of Common Stock, any options or
warrants to purchase any shares of Common Stock, or any securities convertible
into or exchangeable for shares of Common Stock now owned by them or hereafter
acquired or with respect to which they have acquired or hereafter acquire the
power of disposition for a period 180 days after the date of this Prospectus,
without the prior written consent of Oppenheimer & Co., Inc., and DLJ subject to
certain limited exceptions.

In addition, the Company has registered 2,500,000 shares of Common Stock
under the Securities Act pursuant to a shelf registration statement for use in
connection with future acquisitions, of which 1,184,068 shares of Common Stock
have not yet been issued as of September 15, 1997. Once issued, these shares
generally will be freely tradeable by persons not affiliated with the Company;
however, the Company has agreed to use its best efforts to restrict such persons
from selling such shares during the 90-day period following the effective date
of the Registration Statement of which this Prospectus is a part.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who owns shares that were purchased from the
Company (or any Affiliate) at least one year previously, including persons who
may be deemed Affiliates of the Company, is entitled to sell within any
three-month period a number of shares that does not exceed the greater of 1% of
the then outstanding shares of the Company's Common Stock or the average weekly
trading volume of the Company's Common Stock in the Nasdaq National Market
during the four calendar weeks preceding the date on which notice of the sale is
filed with the Securities and Exchange Commission (the "Commission"). Sales
under Rule 144 are also subject to certain manner of sale provisions, notice
requirements and the availability of current public information about the
Company. Any person (or persons whose shares are aggregated) who is not deemed
to have been an Affiliate of the Company at any time during the 90 days
preceding a sale, and who owns shares within the definition of "restricted
securities" under Rule 144 under the Securities Act that were purchased from the
Company (or any Affiliate) at least two years previously, would be entitled to
sell such shares under Rule 144(k) without regard to the volume limitations,
manner of sale provisions, public information requirements or notice
requirements.

44
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company and the Selling Stockholders have agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Oppenheimer &
Co., Inc., Donaldson, Lufkin & Jenrette Securities Corporation and Credit Suisse
First Boston Corporation are acting as Representatives, has severally agreed
with the Company and the Selling Stockholders, subject to the terms and
conditions of the Underwriting Agreement, to purchase from the Company and the
Selling Stockholders, the respective number of shares of Common Stock set forth
opposite the name of such underwriter below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
UNDERWRITER COMMON STOCK
- ---------------------------------------------------------------------------------------- --------------
<S> <C>
Oppenheimer & Co., Inc..................................................................
Donaldson, Lufkin & Jenrette Securities Corporation.....................................
Credit Suisse First Boston Corporation..................................................

--------------
Total............................................................................... 5,500,000
--------------
--------------
</TABLE>

The Representatives have advised the Company and the Selling Stockholders
that the Underwriters propose to offer the shares of Common Stock directly to
the public at the public offering price set forth on the cover page of this
Prospectus and in part to certain securities dealers at such price less a
concession of $ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share of certain brokers and
dealers. After the shares of Common Stock are released for sale to the public,
the offering price and other selling terms may from time to time be changed by
the Representatives. The Underwriters are obligated to take and pay for all of
the shares of Common Stock offered hereby (other than those covered by the
over-allotment option described below) if any are taken.

The Company, or in certain instances the Selling Stockholders, has granted
the Underwriters an option, exercisable for up to 30 days after the date of this
Prospectus, to purchase up to an aggregate of 825,000 additional shares of
Common Stock to cover over-allotments, if any. If the Underwriters exercise such
option, the Underwriters have severally agreed, subject to certain conditions,
to purchase approximately the same percentage thereof that the number of shares
to be purchased by each of them as shown in the foregoing table bears to the
number shares of Common Stock offered hereby. The Underwriters

45
<PAGE>
may exercise such option only to cover over-allotments made in connection with
the sale of the shares of Common Stock offered hereby.

The Company and the Selling Stockholders have agreed to indemnify the
representatives of the Underwriters and the several Underwriters against certain
liabilities, including, without limitation liabilities under the Securities Act.

The Company's officers and directors and Charter Environmental, CEP II and
CDI Equity, who, following the Offering, will beneficially own an aggregate of
3,460,283 shares of Common Stock or options or warrants to purchase shares of
Common Stock after the Offering, have agreed not to sell, offer to sell,
distribute, pledge, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, or encumber, or exercise registration rights with
respect to, any shares of Common Stock, any options or warrants to purchase any
shares of Common Stock, or any securities convertible into or exchangeable for
shares of Common Stock now owned by them or hereafter acquired or with respect
to which they have acquired or hereafter acquire the power of disposition for a
period of 180 days after the date of this Prospectus without the prior written
consent of Oppenheimer & Co., Inc. and DLJ. Certain additional stockholders of
the Company who beneficially own an aggregate of 274,573 shares of Common Stock
have agreed to similar restrictions for a period of 90 days. The Company has
also agreed not to sell, offer to sell, distribute, pledge, grant any option for
the sale of, or otherwise dispose of, directly or indirectly, or encumber, or
exercise registration rights with respect to, any shares of Common Stock, any
options or warrants to purchase any shares of Common Stock, or any securities
convertible into or exchangeable for shares of Common Stock now owned by them or
hereafter acquired or with respect to which they have acquired or hereafter
acquire the power of disposition for a period of 180 days after the date of this
Prospectus, without the prior written consent of Oppenheimer & Co., Inc. and
DLJ, subject to certain limited exceptions. In addition, the Company has
registered 2,500,000 shares of Common Stock under the Securities Act pursuant to
a shelf registration statement for use in connection with future acquisitions,
of which 1,184,068 shares of Common Stock have not yet been issued as of
September 15, 1997. Once issued, these shares generally will be freely tradeable
by persons not affiliated with the Company; however, the Company has agreed to
use its best efforts to restrict such persons from selling such shares during
the 90-day period following the effective date of the Registration Statement of
which this Prospectus is a part. See "Shares Eligible for Future Sale."

Alliance Capital Management L.P. ("Alliance") holds approximately 4.9% of
the Common Stock of the Company on behalf of its client discretionary investment
advisory accounts, including pooling vehicles such as mutual funds and group
trust portfolios. Alliance is approximately 58% owned by The Equitable Companies
Incorporated, which directly and indirectly owns approximately 77% of DLJ, one
of the Representatives.

The Representatives, on behalf of the Underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions,
penalty bids and "passive" market making in accordance with Regulation M under
the Securities Act of 1934, as amended (the "Exchange Act"). Over-allotment
involves syndicate sales in excess of the offering size, which creates a
syndicate short position. Stabilizing transactions permit bids to purchase the
underlying security so long as the stabilizing bids do not exceed a specified
maximum. Syndicate covering transactions involve purchases of the Common Stock
in the open market after the distribution has been completed in order to cover
syndicate short positions. In "passive" market making, market makers in the
Common Stock who are Underwriters or prospective underwriters may, subject to
certain limitations, make bids for or purchases of the Common Stock until the
time, if any, at which a stablizing bid is made. Penalty bids permit the
Representatives to reclaim a selling concession from a syndicate member when the
Common Stock originally sold by such syndicate member is purchased in a
syndicate covering transaction to cover syndicate short positions. Such
stabilizing transactions, syndicate covering transactions, penalty bids and
passive market making may cause the price of the Common Stock to be higher than
it would otherwise be in the absence of such transactions. These transactions
may be effected on the Nasdaq National Market or otherwise and, if commenced,
may be discontinued at any time.

46
<PAGE>
LEGAL MATTERS

The legality of the Common Stock offered hereby will be passed upon for the
Company by Proskauer Rose LLP, 1585 Broadway, New York, New York 10036. Certain
legal matters will be passed upon for the Underwriters by Morgan, Lewis &
Bockius LLP, 101 Park Avenue, New York, New York 10178.

EXPERTS

The Consolidated Financial Statements of the Company at December 31, 1994,
1995 and 1996 and for each of the three years in the period ended December 31,
1996, appearing in this Prospectus and the Registration Statement of which this
Prospectus forms a part, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein or
incorporated by reference and in the Registration Statement, and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.

The Consolidated Financial Statements of the Barbara Companies at December
31, 1995 and 1996 and for each of the three years in the period ended December
31, 1996, and at June 30, 1997 and for the six months ended June 30, 1997
appearing in this Prospectus and the Registration Statement of which this
Prospectus forms a part, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein and in
the Registration Statement, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder, and in accordance therewith, files reports
and other information with the Securities and Exchange Commission (the
"Commission"). These reports and other information concerning the Company may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Commission located at Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661 and at Suite 1300, 7 World Trade Center, New
York, New York 10048. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 upon payment of the fees prescribed by the Commission.
Reports, proxy, information statements and other information regarding the
Company filed electronically with the Commission are available on the
Commission's web site (http://www.sec.gov).

The Company has filed with the Commission a Registration Statement on Form
S-3 (which term shall encompass any amendments and exhibits thereto) under the
Securities Act with respect of the Shares offered hereby. This Prospectus, which
forms a part of such Registration Statement, does not contain all the
information set forth in such Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document referred to are not necessarily complete; with respect to each
such contract, agreement or other document filed as an exhibit to such
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference. Any interested parties may inspect
such Registration Statement, without charge, at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and may obtain copies of all or any part of it from the Commission upon payment
of the fees prescribed by the Commission. Neither the delivery of this
Prospectus or any Prospectus Supplement nor any sales made hereunder or
thereunder shall under any circumstances create any implication that the
information contained herein or therein is correct as of any time subsequent to
the date hereof or thereof or that there has been no change in the affairs of
the Company since the date hereof or thereof.

47
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are incorporated by reference and made
a part of this Prospectus: (i) the Company's Annual Report on Form 10-K/A for
the fiscal year ended December 31, 1996; (ii) the Company's Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1997 and June 30, 1997; (iii) all
other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since
December 31, 1996, specifically including the Company's Current Reports on Form
8-K dated April 15, 1997, May 29, 1997 and September 10, 1997; and (iv) the
Company's Proxy Statement dated April 21, 1997 relating to the 1997 Annual
Meeting of Stockholders held on May 28, 1997.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the Offering shall be deemed to be incorporated by reference
in this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document or information incorporated or
deemed to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document that also is, or is
deemed to be, incorporated herein by reference, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

The making of a modifying or superseding statement shall not be deemed an
admission that the modified or superseded statement, when made, constituted a
misrepresentation, an untrue statement or a material fact or an omission to
state a material fact that is required to be stated or that is necessary to make
statement not misleading in light of the circumstances in which it was made.

THE COMPANY UNDERTAKES TO PROVIDE, WITHOUT CHARGE, TO EACH PERSON, INCLUDING
ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, UPON THE
WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY AND ALL OF THE DOCUMENTS
OR INFORMATION REFERRED TO ABOVE THAT HAS BEEN OR MAY BE INCORPORATED BY
REFERENCE IN THE PROSPECTUS (EXCLUDING EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH
EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE). REQUESTS SHOULD BE
DIRECTED TO ANN L. STRAW, SECRETARY, AMERICAN DISPOSAL SERVICES, INC., 745
MCCLINTOCK DRIVE, SUITE 230, BURR RIDGE, ILLINOIS 60521, TELEPHONE: (630)
655-1105.

48
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
AMERICAN DISPOSAL SERVICES, INC. AND SUBSIDIARIES:
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors........................................................................... F-2
Consolidated Balance Sheets at December 31, 1996 and 1995................................................ F-3
Consolidated Statements of Operations for the years ended December 31, 1996, 1995 and 1994............... F-4
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1996, 1995 and 1994..... F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994............... F-6
Notes to Consolidated Financial Statements............................................................... F-7
Condensed Consolidated Balance Sheet at June 30, 1997 (Unaudited)........................................ F-20
Condensed Consolidated Statements of Operations for the six months ended June 30, 1997 and 1996
(Unaudited)............................................................................................ F-21
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 1997 and 1996
(Unaudited)............................................................................................ F-22
Notes to Condensed Consolidated Financial Statements (Unaudited)......................................... F-23

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Consolidated Financial Statements (Unaudited).................................................. F-26
Pro Forma Condensed Consolidated Balance Sheet at June 30, 1997 (Unaudited).............................. F-27
Pro Forma Consolidated Income Statement for the year ended December 31, 1996 (Unaudited)................. F-28
Notes to Pro Forma Consolidated Income Statement for the year ended December 31, 1996 (Unaudited)........ F-29
Pro Forma Consolidated Income Statement for the six months ended June 30, 1997 (Unaudited)............... F-32
Notes to Pro Forma Consolidated Income Statement for the six months ended June 30, 1997 (Unaudited)...... F-33

FRED B. BARBARA COMPANIES:
COMBINED FINANCIAL STATEMENTS
Report of Independent Auditors........................................................................... F-36
Combined Balance Sheets at June 30, 1997 and at December 31, 1996 and 1995............................... F-37
Combined Statements of Income for the six months ended June 30, 1997 and for the years ended December 31,
1996, 1995 and 1994.................................................................................... F-38
Combined Statements of Stockholders' Equity for the six months ended June 30, 1997 and for the years
ended December 31, 1996, 1995 and 1994................................................................. F-39
Combined Statements of Cash Flows for the six months ended June 30, 1997 and for the years ended December
31, 1996, 1995 and 1994................................................................................ F-40
Notes to Combined Financial Statements................................................................... F-41
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS

The Board of Directors
American Disposal Services, Inc.

We have audited the accompanying consolidated balance sheets of American
Disposal Services, Inc. as of December 31, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of American
Disposal Services, Inc. at December 31, 1996 and 1995, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles.

ERNST & YOUNG LLP

Chicago, Illinois
February 26, 1997, except as to

Note 5 for which the

date is March 21, 1997 and
except as to Note 10
for which the date is
March 25, 1997

F-2
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
<S> <C> <C>
1996 1995
---------- ----------
Current assets:
Cash and cash equivalents............................................................... $ 2,301 $ 6,383
Cash held in escrow..................................................................... -- 156
Trade receivables--Net of allowance for doubtful accounts of $473 and $476.............. 9,741 6,331
Prepaid expenses........................................................................ 1,248 686
Inventory............................................................................... 354 312
---------- ----------
Total current assets...................................................................... 13,644 13,868

Property and equipment, net............................................................... 93,692 81,250

Other assets:
Cost over fair value of net assets of acquired businesses, net of accumulated
amortization of $1,374 and $823....................................................... 31,237 15,739
Other intangible assets, net of accumulated amortization of $439 and $305............... 1,610 1,081
Debt issuance costs, net of accumulated amortization of $204 and $71.................... 2,392 815
Other................................................................................... 2,411 1,940
---------- ----------
$ 144,986 $ 114,693
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................................................ $ 3,359 $ 3,185
Accrued liabilities..................................................................... 4,249 2,360
Deferred revenues....................................................................... 2,245 1,202
Current portion of long-term debt and capital lease obligations......................... 2,572 3,440
Note payable to stockholder............................................................. -- 12,500
---------- ----------
Total current liabilities................................................................. 12,425 22,687

Long-term debt and capital lease obligations, net of current portion...................... 65,445 48,789
Accrued environmental and landfill costs.................................................. 7,603 6,214
Deferred income taxes..................................................................... 1,416 1,240

Redeemable preferred stock................................................................ -- 1,908

Stockholders' equity:
Common stock, $.01 par value, 20,000,000 shares authorized; shares issued and
outstanding; 1996--8,872,381; 1995--5,662,865......................................... 89 57
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued and
outstanding in 1996 and 1995.......................................................... -- --
Warrants outstanding...................................................................... 107 107
Additional paid-in capital................................................................ 66,170 41,590
Accumulated deficit....................................................................... (8,269) (7,899)
---------- ----------
58,097 33,855
---------- ----------
$ 144,986 $ 114,693
---------- ----------
---------- ----------
</TABLE>

See accompanying notes.

F-3
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
<S> <C> <C> <C>
1996 1995 1994
---------- ---------- ----------
Revenues................................................................... $ 56,804 $ 30,004 $ 18,517
Cost of operations......................................................... 30,376 17,286 12,647
Selling, general, and administrative expenses.............................. 8,328 5,882 4,910
Depreciation and amortization.............................................. 12,334 6,308 3,226
---------- ---------- ----------
Operating income (loss).................................................... 5,766 528 (2,266)
Interest expense........................................................... (5,745) (3,030) (1,497)
Interest income............................................................ 260 189 2
Other income............................................................... 179 -- --
---------- ---------- ----------
Income (loss) before income taxes and extraordinary item................... 460 (2,313) (3,761)
Income tax benefit (expense)............................................... (245) (332) 1,372
---------- ---------- ----------
Income (loss) before extraordinary item.................................... 215 (2,645) (2,389)
Extraordinary item -- loss on early retirement of debt..................... (476) (908) --
---------- ---------- ----------
Net loss................................................................... (261) (3,553) (2,389)
Preferred stock dividend................................................... (109) (190) --
---------- ---------- ----------
Net loss applicable to common stockholders................................. $ (370) $ (3,743) $ (2,389)
---------- ---------- ----------
---------- ---------- ----------
Per common share:
Income (loss) before extraordinary item.................................. $ .02 $ (.80) $ (.99)
Extraordinary item....................................................... (.07) (.26) --
---------- ---------- ----------
Net loss................................................................. $ (.05) $ (1.06) $ (.99)
---------- ---------- ----------
---------- ---------- ----------
Weighted average common stock and common stock equivalent shares
outstanding.............................................................. 7,063,928 3,527,688 2,411,381
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

See accompanying notes.

F-4
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
----------------------- WARRANTS PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT OUTSTANDING CAPITAL DEFICIT EQUITY
---------- ----------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance -- December 31, 1993......... 2,099,952 $ 21 $ 107 $ 14,170 $ (1,767) $ 12,531
Issuance of common stock, net of
issuance costs..................... 282,393 3 -- 1,987 -- 1,990
Net loss............................. -- -- -- -- (2,389) (2,389)
---------- --- ----- ----------- ------------ ------------
Balance -- December 31, 1994......... 2,382,345 24 107 16,157 (4,156) 12,132
Issuance of common stock, net of
issuance costs..................... 3,280,520 33 -- 25,433 -- 25,466
Net loss............................. -- -- -- -- (3,553) (3,553)
Dividends on preferred stock......... -- -- -- -- (190) (190)
---------- --- ----- ----------- ------------ ------------
Balance -- December 31, 1995......... 5,662,865 57 107 41,590 (7,899) 33,855
Issuance of common stock, net of
issuance costs..................... 3,162,500 32 -- 24,573 -- 24,605
Exercise of common stock warrants and
options............................ 47,016 -- -- 7 -- 7
Dividends on preferred stock......... -- -- -- -- (109) (109)
Net loss............................. -- -- -- -- (261) (261)
---------- --- ----- ----------- ------------ ------------
Balance at December 31, 1996......... 8,872,381 $ 89 $ 107 $ 66,170 $ (8,269) $ 58,097
---------- --- ----- ----------- ------------ ------------
---------- --- ----- ----------- ------------ ------------
</TABLE>

See accompanying notes.

F-5
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
<S> <C> <C> <C>
1996 1995 1994
---------- ---------- ---------
OPERATING ACTIVITIES
Net loss........................................................................ $ (261) $ (3,553) $ (2,389)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Extraordinary item, net....................................................... 476 908 --
Depreciation and amortization................................................. 12,334 6,308 3,226
Provision for environmental and landfill costs................................ 571 292 48
Deferred income taxes......................................................... 176 47 (1,372)
Gain on sale of fixed assets.................................................. (98) -- --
Changes in operating assets and liabilities, net of effects from acquisitions:
Trade receivables........................................................... (2,600) (340) (625)
Prepaid expenses, cash held in escrow and other assets...................... (1,029) (33) (361)
Inventory................................................................... (42) (128) (96)
Accounts payable, accrued liabilities and accrued environmental and landfill
costs..................................................................... 1,522 1,846 235
Deferred revenue............................................................ 656 254 210
---------- ---------- ---------
Net cash provided by (used in) operating activities............................. 11,705 5,601 (1,124)

INVESTING ACTIVITIES
Capital expenditures............................................................ (14,003) (6,173) (5,600)
Cost of acquisitions............................................................ (25,029) (62,201) (580)
---------- ---------- ---------
Net cash used in investing activities........................................... (39,032) (68,374) (6,180)

FINANCING ACTIVITIES
Net proceeds from issuances of common stock..................................... 24,605 25,466 1,990
Exercise of stock options and warrants.......................................... 7 -- --
Redemption of preferred stock................................................... (1,950) -- --
Net proceeds from issuance of preferred stock................................... -- 1,908 --
Preferred stock dividend........................................................ (109) (190) --
Proceeds from issuance of long-term debt........................................ 66,950 32,568 6,319
Repayments of indebtedness...................................................... (51,162) (2,698) (2,511)
Proceeds from (payment of) note payable to stockholder.......................... (12,500) 12,500 --
Debt issuance costs............................................................. (2,596) (946) (80)
---------- ---------- ---------
Net cash provided by financing activities....................................... 23,245 68,608 5,718
---------- ---------- ---------
Net increase (decrease) in cash and cash equivalents............................ (4,082) 5,835 (1,586)
Cash and cash equivalents, at beginning of year................................. 6,383 548 2,134
---------- ---------- ---------
Cash and cash equivalents, at end of year....................................... $ 2,301 $ 6,383 $ 548
---------- ---------- ---------
---------- ---------- ---------

Supplemental cash flow information:
Cash paid for interest.......................................................... $ 6,222 $ 2,515 $ 1,426
Cash (refunds) paid for income taxes............................................ (159) 478 --
</TABLE>

See accompanying notes.

F-6
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1996, 1995 AND 1994

1. FORMATION AND BASIS OF PRESENTATION

ADS, Inc. (ADS) was organized January 15, 1991, to acquire, develop, and
operate non-hazardous municipal solid waste disposal, collection, and transfer
operations and provide non-hazardous solid waste disposal management services to
commercial, industrial, and residential customers. During 1993, an affiliate of
Charterhouse Equity Partners, L.P. (CEP) purchased a controlling interest in
ADS.

County Disposal, Inc. (County) was incorporated by Charterhouse Equity
Partners II, L.P. (CEPII) on April 27, 1995, for the purpose of acquiring
certain net assets of Envirite Corporation (Envirite). On April 28, 1995,
Envirite and County entered into an Asset Purchase Agreement whereby County
agreed to purchase from Envirite certain landfill facilities and waste
transportation and collection equipment located in Livingston County, Illinois,
and Wyandot County, Ohio; all of the issued and outstanding capital stock of
County Environmental Services, Inc., a wholly-owned subsidiary of Envirite,
which owned and operated a landfill facility and waste transportation and
collection equipment located in Clarion County, Pennsylvania; and certain
related assets and assumption of certain liabilities.

Effective January 1, 1996, the stockholders of ADS and County exchanged
their shares for shares of a newly created holding company by the name of
American Disposal Services, Inc. (the Company). This share exchange (the
Exchange) qualifies as a transfer of companies under common control as
affiliates of Charterhouse Group International, Inc. are the general partners
and in control of CEP and CEPII and, accordingly, the transaction has been
accounted for at historical cost in a manner similar to pooling of interests
accounting. The financial statements have been prepared as if this Exchange had
occurred as of December 31, 1993.

In July 1996, the Company issued 3,162,500 shares of common stock at $9.00
per share in its initial public offering. Proceeds from the offering, net of
underwriting commissions and related expenses, were $24.6 million. Immediately
following the offering, the Company had 8,825,365 common stock shares issued and
outstanding. The offering proceeds were used to finance acquisitions and paydown
a portion of the debt facility.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany balances and transactions
have been eliminated.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentration
of credit risks consist primarily of trade receivables. Credit risk on trade
receivables is minimized as a result of the large and diverse nature of the
Company's customer base. No single group or customer represents greater than 10%
of total accounts receivable. The Company maintains an allowance for losses
based on the expected collectibility of accounts receivable. Credit losses have
been within management's expectations.

F-7
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS

Trade receivables, trade payables, and debt obligations are carried at cost
which approximates fair value.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents represent cash in banks and liquid investments
with original maturities of three months or less.

CASH HELD IN ESCROW

Cash held in escrow represents cash held in banks restricted to fund
obligations incurred in acquiring businesses.

INVENTORY

Inventory is stated at the lower of cost (first in, first out method) or
market and consists principally of equipment parts, materials, and supplies.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation of equipment is
computed using the straight-line method over the estimated useful lives of the
respective assets as follows:

<TABLE>
<S> <C>
Vehicles and equipment..................... 3 to 12 years

25 to 30
Buildings.................................. years
</TABLE>

Expenditures for major renewals are capitalized, and expenditures for
routine maintenance and repairs are charged to expense as incurred.

INTANGIBLE ASSETS

The cost over fair value of tangible net assets of acquired businesses
represents long-lived intangible assets including routes, tradenames and
goodwill and is amortized on a straight-line method over periods

F-8
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
not exceeding 40 years. Other intangible assets, substantially all of which are
covenants not to compete and customer lists, are amortized on the straight-line
method over their estimated lives, typically no more than 12 years. Amortization
expense for fiscal years 1996, 1995, and 1994 related to intangible assets was
approximately $1.0 million, $1.4 million, and $600,000, respectively. In 1995,
the Company determined not to enforce certain covenants not to compete which
arose from 1993 transactions with the net book value of such covenants of
$505,000, was fully written-off and included in 1995 amortization expense.

The Company continually evaluates the value and future benefits of its
intangibles. The Company assesses recoverability from future operations using
income from operations of the related acquired business as a measure. Under this
approach, the carrying value would be reduced if it becomes probable that the
Company's best estimate for expected future cash flows of the related business
would be less than the carrying amount of the intangible over the remaining
amortization period. For the three year period ended December 31, 1996, there
were no adjustments to the carrying amounts of intangibles resulting from these
evaluations.

DEFERRED ACQUISITION COSTS

The Company capitalizes engineering, legal, accounting, and other direct
costs paid to outside parties that are incurred in connection with potential
acquisitions. The Company, however, routinely evaluates such capitalized costs
and charges to expense those relating to abandoned acquisition candidates.
Indirect acquisition costs, such as executive salaries, general corporate
overhead, and other corporate services are expensed as incurred. Net deferred
acquisition costs, included in other intangible assets, were approximately
$545,000 and $370,000 at December 31, 1996 and 1995, respectively.

ACCRUED ENVIRONMENTAL AND LANDFILL COSTS

Accrued environmental and landfill costs represent landfill accruals which
are provided for environmental compliance costs and closure and post-closure
costs. These accruals are based on accounting estimates by management determined
primarily from the results of engineering studies and reviews and on
interpretation of the technical standards of the Environmental Protection
Agency's Subtitle D regulations, or the approved state counterpart, and recently
promulgated air emissions standards under the Clean Air Act, as they apply on a
state-by-state basis. The Company typically provides accruals for these costs as
permitted airspace of such facilities is consumed. Closure and post-closure
monitoring and maintenance costs represent the costs related to cash
expenditures yet to be incurred when a landfill facility ceases to accept waste
and closes. Certain of these accrued environmental and landfill costs,
principally capping, leachate collection and removal, and methane gas control
and recovery, are operating and maintenance costs to be incurred during the
30-year period after the facility closes, but are accrued during the operating
life of the site in accordance with the landfill operation requirements of
Subtitle D and the EPA's recently promulgated air emissions standards. An
environmental and landfill cost accrual is provided as a liability assumed for
purchased landfill operations based on permitted airspace consumed prior to the
acquisition date and is included in the purchase price allocation (see Note 3).
The Company has estimated that, as of December 31, 1996, post-closure expenses,
including cap maintenance, groundwater monitoring, methane gas control and
recovery and leachate treatment/disposal for up to 30 years after closure in
certain cases, will approximate $10.9 million. In addition, the Company has
estimated that, as of December 31, 1996, closure costs expected to occur during
the operating lives of these facilities' useful lives will approximate

F-9
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
$35.2 million. These accruals are reviewed by management periodically and
revised prospectively for any significant changes in future cost estimates.

INCOME TAXES

Deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.

REVENUE RECOGNITION

Landfill revenues are recorded at the date of actual waste disposal.
Revenues billed prior to the performance of services are deferred and recorded
as income in the period in which the related services are rendered, generally
over a three-month period.

EARNINGS PER SHARE

Earnings per share is based on the weighted average number of common stock
and common stock equivalent shares outstanding during each year and incremental
shares from the assumed exercise of options and warrants granted and computed
using the treasury stock method.

STOCK-BASED COMPENSATION

The Company typically grants stock options for a fixed number of shares to
employees with an exercise price equal to the fair value of the shares at the
date of grant. The Company accounts for such stock option grants in accordance
with Accounting Principles Board Opinion No. 25 "Accounting for Stock Options
Issued to Employees" (APB 25), and, accordingly, typically recognizes no
compensation expense for these stock option grants.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In March 1995, the Financial Accounting Standards Board issued Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of ("SFAS No. 121"), which requires impairment losses to
be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amount. SFAS No. 121 also
addressees the accounting for long-lived assets that are expected to be disposed
of. SFAS No. 121 is effective for the Company's fiscal year ended December 31,
1996. The adoption of this Statement did not have a material effect on the
Company's financial position or results of operations.

In October 1996, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
("SOP") 96-1, "Environmental Remediation Liabilities." The SOP is effective for
fiscal years beginning after December 15, 1996, and provides that enviromental
remediation liabilities should be accrued when the criteria of FAS 5,
"Accounting for Contingencies," are met. Included in the SOP are benchmarks to
aid in the determination of when such criteria are met and environmental
liabilities should be recognized. It also provides that the accrual for such
liabilities should include future costs of those employees expected to devote a
significant amount of

F-10
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
time directly to the remediation effort. The Company does not believe that the
adoption of SOP 96-1 will have a material impact on its financial statements.

3. ACQUISITIONS

The acquisitions below have been accounted for using the purchase method of
accounting and, accordingly, the results of their operations have been included
in the Company's results of operations from their respective acquisition dates.
The purchase prices have been allocated to the assets acquired and liabilities
assumed based on their fair values at their respective acquisition dates with
the residual allocated to cost over fair value of net assets acquired.

During 1996 the Company acquired 16 non-hazardous solid waste businesses,
consisting of 16 collection operations and two transfer stations. As described
in Note 1, the Company acquired three non-hazardous solid waste landfills and a
solid waste collection operation (the Envirite Acquisition) during 1995.

The Company has not completed its valuation of certain of its 1996 purchases
and the purchase price allocations are subject to change when additional
information concerning asset and liability valuations is completed.

The purchase prices allocated to the net assets acquired are as follows (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1996 1995
--------- ---------
Property and equipment.................................................. $ 8,425 $ 62,288
Accounts receivable and inventory....................................... 810 3,363
Other assets............................................................ 785 1,664
Cost over fair value of net assets acquired............................. 15,642 3,060
Total liabilities assumed............................................... (633) (8,174)
--------- ---------
Total cash paid......................................................... $ 25,029 $ 62,201
--------- ---------
--------- ---------
</TABLE>

The pro forma unaudited results of operations for the years ended December
31, 1996 and 1995, assuming each acquisition above had occurred on January 1,
1995, are as follows (in thousands, except per share data):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
----------------------
<S> <C> <C>
1996 1995
---------- ----------
Revenues............................................................ $ 64,356 $ 56,371
Operating income (loss)............................................. 5,966 (1,106)
Net loss applicable to common stockholders.......................... (370) (8,500)
Pro forma loss per share of common stock............................ (.05) (2.41)
Weighted average common stock and common stock equivalent shares
outstanding....................................................... 7,063,928 3,527,688
</TABLE>

F-11
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

3. ACQUISITIONS (CONTINUED)
The pro forma results do not purport to be indicative of the results of
operations which actually would have resulted had the acquisitions occurred on
January 1, 1995 nor are they necessarily indicative of future operating results.

4. PROPERTY AND EQUIPMENT

Property and equipment are summarized as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
<S> <C> <C>
1996 1995
---------- ---------
Land................................................................... $ 5,417 $ 5,038
Landfills.............................................................. 78,547 66,529
Buildings.............................................................. 3,285 2,695
Vehicles and equipment................................................. 23,977 14,335
---------- ---------
111,226 88,597
Less: Accumulated depreciation and amortization........................ (17,534) (7,347)
---------- ---------
$ 93,692 $ 81,250
---------- ---------
---------- ---------
</TABLE>

F-12
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

5. OBLIGATIONS

Obligations, which approximate fair value, are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1996 1995
--------- ---------
Long-term debt:
Acquisition loan, ING Capital Corporation................................................. $ 41,506 $ --
Term loan, ING Capital Corporation........................................................ 24,750 --
Other borrowings, with interest rates ranging from 7.0% to 11.0%.......................... 1,101 1,285
Term loan, Bank of America................................................................ -- 20,000
Revolving loan, Bank of America........................................................... -- 10,847
Term loan A, ING Capital Corporation...................................................... -- 12,525
Term loan B, ING Capital Corporation...................................................... -- 4,000
Revolving loan, ING Capital Corporation................................................... -- 2,423
Capital lease obligations:
Capital lease obligations with interest and principal due monthly through 1999, at various
interest rates ranging from 6.0% to 9.5%, secured by equipment.......................... 660 1,149
--------- ---------
68,017 52,229
Less: Current portion....................................................................... 2,572 3,440
--------- ---------
Long-term obligations, net of current portion............................................... $ 65,445 $ 48,789
--------- ---------
--------- ---------
</TABLE>

In May 1996, the Company entered into a credit agreement with Internationale
Nederlanden (US) Capital Corporation (ING), as administrative agent, and Morgan
Guaranty Trust Company of New York, as document agent, that provided for
borrowings of up to $87 million to finance acquisitions and provide working
capital (Credit Facility), which was used to repay the existing credit
agreements with Bank of America and ING, as well as the note payable to
stockholder and the redeemable preferred stock. In August 1996, this Credit
Facility was amended to provide for borrowings up to $110 million. The Credit
Facility consists of a $25 million term loan, $10 million revolving loan, and
$75 million acquisition facility. The various loans and lines of credit under
the Credit Facility bear interest at rates per annum equal to, at the Company's
discretion either: (i) the higher of (a) the federal funds rate plus 0.5% and
(b) the prime rate, plus an applicable margin ranging from 0% to 1.5%; or (ii)
the London Interbank Offered Rate (LIBOR), plus an applicable margin ranging
from 1.50% to 3.25%, and have maturities ranging from 2001 to 2003. The term
loan had an interest rate of 8.88% at December 31, 1996 and the acquisition
facility had an interest rate of 8.68% at December 31, 1996. The Credit Facility
is secured by substantially all of the assets of the Company. Under terms of the
Credit Facility, the Company is subject to various debt covenants, including
maintenance of certain financial ratios and other restrictions. The Credit
Facility requires the Company to use 50% of the proceeds of any equity offering
to repay a portion of the term loans. Effective March 21, 1997, the Company
amended the Credit Facility (i) to expand the borrowing capacity to $125
million, (ii) to waive the term loan repayment requirement of any offering
proceeds and (iii) to permit the reborrowing of any amounts under the expansion
facility which may be repaid in connection with an equity offering consummated
in 1997. In connection with refinancings during 1996 and 1995, the Company
recognized an extraordinary loss, net of income tax benefit, of $476,000 and
$908,000, respectively, representing unamortized deferred debt issuance costs.

F-13
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

5. OBLIGATIONS (CONTINUED)
At December 31, 1996, maturities of obligations (excluding capital lease
obligations) are as follows (in thousands):

<TABLE>
<S> <C>
1997............................................................... $ 2,207
1998............................................................... 6,507
1999............................................................... 8,890
2000............................................................... 12,920
2001 and thereafter................................................ 36,833
---------
$ 67,357
---------
---------
</TABLE>

6. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the amount of assets and liabilities for financial reporting and income
tax purposes. Significant components of the Company's deferred tax assets and
liabilities were as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1996 1995
--------- ---------
Deferred tax assets arising from:
Net operating loss carryforwards........................................................... $ 2,938 $ 3,111
Closure and post-closure costs............................................................. 421 421
Amortization of intangibles................................................................ 881 550
Other...................................................................................... 26 41
--------- ---------
Total deferred tax assets.................................................................... 4,266 4,123

Valuation allowance.......................................................................... (2,280) (2,323)
--------- ---------
Net deferred tax assets...................................................................... 1,986 1,800

Deferred tax liabilities arising from:
Property and equipment..................................................................... 2,855 2,898
Amortization of intangibles and landfill................................................... 472 84
Capital leases............................................................................. 32 32
Other...................................................................................... 43 26
--------- ---------
Total deferred tax liabilities............................................................... 3,402 3,040
--------- ---------
Net deferred tax liability................................................................... $ 1,416 $ 1,240
--------- ---------
--------- ---------
</TABLE>

At December 31, 1996, the Company had net operating loss (NOL) carryforwards
of approximately $8.0 million for federal income tax purposes that expire in
years 2006 to 2010. The utilization of the NOL carryforwards is limited by
future taxable earnings generated at the subsidiary level. The Company recorded
a valuation allowance to reflect uncertainty as to the utilization of such NOL
carryforwards for financial reporting purposes. The maximum annual utilization
of such NOL carryforwards are limited under the Internal Revenue Code as a
result of changes in ownership that have occurred.

F-14
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

6. INCOME TAXES (CONTINUED)
Significant components of the income tax expense (benefits) were as follows
(in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1996 1995 1994
--------- --------- ---------
Current:
Federal........................................................................... $ 99 $ 141 $ --
State............................................................................. (30) 144 --
--------- --------- ---------
69 285 --

Deferred:
Federal........................................................................... 146 38 (1,205)
State............................................................................. 30 9 (167)
--------- --------- ---------
176 47 (1,372)
--------- --------- ---------
Total provision..................................................................... $ 245 $ 332 $ (1,372)
--------- --------- ---------
--------- --------- ---------
</TABLE>

A reconciliation from the statutory income tax rate to the effective income
tax rate was as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1996 1995 1994
--------- --------- ---------
Federal statutory income tax rate.................................................... 34.0% (34.0)% (34.0)%
Effect of:
State taxes, net of federal tax effect............................................. -- 3.1 (2.9)
Nondeductible goodwill............................................................. 15.5 -- --
Net operating loss with no benefit................................................. -- 39.6 0.1
Other, net......................................................................... 3.8 1.6 0.3
--- --------- ---------
Effective tax rate................................................................... 53.3% 10.3% (36.5)%
--- --------- ---------
--- --------- ---------
</TABLE>

7. RELATED PARTY TRANSACTIONS

The Company had entered into a management agreement with a stockholder for
certain services to be rendered to the Company in exchange for annual management
fees. The management agreement was terminated in connection with the initial
public offering during July 1996. Management fees of approximately $466,000,
$659,000, and $515,000 were incurred in 1996, 1995, and 1994, respectively.

At December 31, 1995, the Company had a $12,500,000 unsecured note payable
outstanding to a stockholder, which was issued on November 16, 1995 and was due
November 16, 1996, bearing an annual interest rate of prime plus 3%. The Company
repaid the note payable to the stockholder in May 1996. Interest expense
relating to this note payable was approximately $621,000 and $180,000 in 1996
and 1995, respectively.

F-15
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

8. COMMITMENTS AND CONTINGENCIES

ENVIRONMENTAL AND REGULATORY REQUIREMENTS

The business and activities of the Company are, and may become more,
extensively regulated by, among others, the federal Environmental Protection
Agency, the Department of Transportation, the Interstate Commerce Commission,
and various state and local environmental and transportation regulatory
authorities. The Company is subject to various statutes and regulations which
include, but are not limited to, the Resource Conservation and Recovery Act of
1976, the Federal Water Pollution Control Act, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Clean Air Act, and
numerous state and local laws and regulations. The full impact of these laws and
regulations and the possible adoption of new statutes and regulations with
respect to the Company's facilities and operations is uncertain and could have
material adverse effects on the Company's business, results of operations, and
financial condition in that the Company: (i) could be required to incur
additional expenses in compliance efforts, (ii) might be unable to comply,
forcing the Company to cease operations, and (iii) could incur additional
liability for past operation(s) of acquired assets. These regulations may also
impose restrictions on the Company's operations, such as limiting the expansion
of disposal facilities, limiting or banning the disposal of out-of-state waste
or certain other categories of waste, or mandating the disposal of local refuse.

Although the Company believes it is in substantial compliance with current
regulatory requirements, because of heightened political and public concern over
environmental issues, companies in the waste disposal industry, including the
Company, may become subject to judicial and administrative proceedings involving
federal, state, or local agencies in the normal course of business.

The Company has obtained some levels of pollution liability insurance
covering certain claims for sudden or gradual onset environmental damage at its
landfill sites. The Company carries a comprehensive general liability insurance
policy which management considers adequate to protect its assets and operations
from other risks.

The Company also may be subject to claims for personal injury or property
damage arising out of motor vehicle accidents involving its trucks. The Company
currently carries insurance with policy limits which management believes to be
sufficient to cover these risks. If the Company were to incur liabilities
outside of or in excess of its insurance limits, its financial condition could
be adversely affected.

In connection with the Company's existing landfills, the Company has
provided financial assurance bonds for approximately $15.2 million at December
31, 1996 from a financial institution to provide financial assurance that
closure and postclosure expenses will be met in the event that the Company is
not able to fulfill its closure and postclosure obligations.

F-16
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

8. COMMITMENTS AND CONTINGENCIES (CONTINUED)
At December 31, 1996, future minimum lease payments under noncancelable
lease obligations are as follows (in thousands):

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
----------- -----------
<S> <C> <C>
1997......................................................................................... $ 431 $ 1,151
1998......................................................................................... 192 930
1999......................................................................................... 104 667
2000......................................................................................... -- 298
2001 and thereafter.......................................................................... -- 437
----- -----------
Total minimum lease payments................................................................. 727 $ 3,483
-----------
-----------
Less: Amount representing interest........................................................... 67
-----
Present value of net minimum lease payments.................................................. $ 660
-----
-----
</TABLE>

Rental expense in 1996, 1995, and 1994 was approximately $1.3 million,
$793,000, $132,000, respectively.

REDEEMABLE PREFERRED STOCK

On March 28, 1995, ADS issued 1,950 shares of its Series A Preferred Stock
and 46,550 warrants to purchase shares of common stock of the Company, for
$1,950,000. The holder of the warrants can purchase one common share for each
warrant held at the exercise price of $.10 per share on or before December 31,
2002. The Company redeemed the outstanding preferred stock in May 1996, and paid
any accrued dividends related to the preferred stock. The warrants were redeemed
for shares of common stock in 1996.

9. STOCKHOLDERS' EQUITY

STOCK OPTIONS

The Company's Board of Directors adopted the American Disposal Services,
Inc. 1996 Stock Option Plan effective January 1, 1996. As of December 31, 1996,
the plan permits grants of options up to an aggregate of 1,100,000 shares of
common stock to employees and certain consultants of the Company, on such terms
as the Company's compensation committee (or a stock option subcommittee thereof)
determines. Options granted under the plan as of January 1, 1996 replaced
existing stock options granted by ADS and County in connection with the
Exchange. The stock options vest over three and five year periods and are
exercisable over a ten year period from the original grant dates. All vesting is
subject to acceleration under specified circumstances.

Options to purchase an aggregate of 63,601 shares were granted outside the
plan to a former employee and were fully vested as of January 1, 1996. Such
shares have an exercise price of $7.17 per share, increasing at 25% per annum
from the date of original grant of the ADS stock options they replace.

F-17
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

9. STOCKHOLDERS' EQUITY (CONTINUED)
A summary of stock option information follows:

<TABLE>
<CAPTION>
1996 1995 1994
---------------------- ---------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year................ 869,617 $ 7.36 186,444 $ 7.17 144,900 $ 7.17
Granted....................................... 68,270 9.00 683,173 7.41 41,544 7.17
Exercised..................................... 467 7.17 0 -- 0 --
Forfeited..................................... (2,506) 7.64 0 -- 0 --
--------- ----- --------- ----- --------- -----
Outstanding at end of year...................... 934,914 $ 7.47 869,617 $ 7.36 186,444 $ 7.17
--------- ----- --------- ----- --------- -----
--------- ----- --------- ----- --------- -----
Exercisable at end of year...................... 434,553 105,223 0
Available for future grant...................... 228,220 293,984 977,157
Weighted average value of options granted during
the year....................................... $ 4.33 $ 1.88
</TABLE>

As of December 31, 1996, the Company had outstanding 934,914 options with
exercise prices between $7.17 and $9.00 per share and weighted average remaining
lives of 8.2 years.

The Company has elected to follow APB 25 and related Interpretations in
accounting for its employee stock options because, as discussed below, the
alternative fair value accounting provided for under Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" (FAS 123), requires
use of option valuation models that were not developed for use in valuing stock
options. Under APB 25, because the exercise price of the Company's employee
stock options equals the market price of the underlying stock on the date of
grant, no compensation expense is recognized.

Disclosure of pro forma information regarding net loss and net loss per
share is required by FAS 123, and has been determined as if the Company had
accounted for its stock options granted in 1996 and 1995 under the fair value
method. The options granted in 1996 were valued using the Black-Scholes option
pricing model. The options granted in 1995, as a non-public company, were valued
using the minimum value method. The Black-Scholes option valuation model
requires the input of highly subjective assumptions and, because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the model cannot necessarily provide a single measure of
the fair value of its stock options. The following assumptions were utilized in
the valuation:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C> <C> <C>
1996 1995
--------- ---------

Risk-free interest rate................................................. 6.65% 5.85%
Expected dividend yield................................................. 0% 0%
Expected stock price volatility......................................... 44.4% n/a
Expected life of options................................................ 5 years 5 years
</TABLE>

F-18
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996, 1995 AND 1994

9. STOCKHOLDERS' EQUITY (CONTINUED)
Had compensation cost for the Company's stock options granted in 1996 and
1995 been determined based on the fair value at the dates of grants, the
Company's net loss and net loss per share would have been increased to the pro
forma amounts indicated:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C> <C> <C>
1996 1995
--------- ---------
Pro forma net loss (in thousands of dollars)............................. ($ 687) ($ 3,807)
Pro forma net loss per share applicable to common shareholders........... ($ 0.10) ($ 1.08)
</TABLE>

The pro forma effect for 1996 and 1995 is not representative of the pro
forma effect in future years as the pro forma disclosures reflect only the fair
value of stock options granted in 1996 and 1995 and do not reflect the fair
value of outstanding options granted prior to 1995.

STOCK WARRANTS

In connection with obtaining various credit agreements, the Company issued
warrants to purchase 168,905 shares of common stock with exercise prices ranging
from $4.72 to $7.41 per share. The Company recorded the fair value of the
warrants as a component of equity and recognized debt issuance cost of $106,666.
The warrants expire 10 years from date of issuance.

In connection with the Exchange, 5,000,000 shares of new preferred stock of
the Company were authorized with none issued at December 31, 1996 and 1995.

10. SUBSEQUENT EVENTS

Subsequent to December 31, 1996, the Company acquired substantially all the
assets of Sparky's Waste Control and A-1 Container, and acquired the stock of
Allied Waste Systems, Inc. In addition, the Company entered into definitive
asset purchase agreements on March 24, 1997 and March 25, 1997 to acquire
substantially all the assets of Liberty Disposal, Inc. and the Evansville,
Indiana operations of Waste Management of Indiana, LLC, respectively.

F-19
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(DOLLARS IN THOUSANDS)

(UNAUDITED)

<TABLE>
<CAPTION>
JUNE 30,
1997
-----------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................................................... $ 2,166
Restricted cash held in escrow..................................................................... 2,900
Trade receivables, net............................................................................. 18,217
Prepaid expenses and other......................................................................... 1,872
Inventory.......................................................................................... 541
-----------
Total current assets................................................................................. 25,696
Property, plant, and equipment, net.................................................................. 128,035
Other assets:
Cost over fair value of net assets of acquired businesses, net of accumulated amortization of
$1,966........................................................................................... 64,484
Other intangible assets, net of accumulated amortization of $555................................... 1,862
Debt issuance costs, net of accumulated amortization of $425....................................... 3,144
Other assets....................................................................................... 1,352
-----------
$ 224,573
-----------
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable................................................................................... $ 6,161
Accrued liabilities................................................................................ 9,165
Deferred revenues.................................................................................. 3,740
Current portion of long-term debt and capital lease obligations.................................... 1,286
-----------
Total current liabilities............................................................................ 20,352

Long-term debt and capital lease obligations, net of current portion................................. 63,817
Accrued environmental and landfill costs............................................................. 9,116
Deferred income taxes................................................................................ 1,416

Total stockholders' equity (13,472,501 shares of common stock issued and outstanding)................ 129,872
-----------
$ 224,573
-----------
-----------
</TABLE>

See accompanying notes.

F-20
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1997 1996
------------ ----------
<S> <C> <C>
Revenues............................................................................... $ 46,274 $ 25,177
Cost of operations..................................................................... 25,080 13,170
Selling, general and administrative expenses........................................... 6,357 4,048
Depreciation and amortization.......................................................... 9,056 5,663
------------ ----------
Operating income..................................................................... 5,781 2,296
Interest expense, net.................................................................. 3,458 3,057
Other income........................................................................... 109 37
------------ ----------
Income (loss) before income taxes and extraordinary loss............................. 2,432 (724)
Income tax benefit (expense)........................................................... (750) 155
------------ ----------
Income (loss) before extraordinary loss.............................................. 1,682 (569)
Extraordinary loss, net of income tax benefit.......................................... -- (476)
------------ ----------
Net income (loss).................................................................... 1,682 (1,045)
Preferred stock dividend............................................................... -- (109)
------------ ----------
Net income (loss) applicable to common stockholders.................................. $ 1,682 $ (1,154)
------------ ----------
------------ ----------
Net income (loss) per share:
Income (loss) before extraordinary loss.............................................. $ 0.15 $ (0.12)
Extraordinary loss, net of income tax benefit........................................ -- (0.08)
------------ ----------
Net income (loss) applicable to common stockholders.................................. $ 0.15 $ (0.20)
------------ ----------
------------ ----------
Weighted average common stock and common stock equivalent shares outstanding........... 10,884,592 5,864,078
------------ ----------
------------ ----------
</TABLE>

See accompanying notes.

F-21
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
1997 1996
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss)......................................................................... $ 1,682 $ (1,154)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
activites:
Depreciation and amortization........................................................... 9,056 5,663
Provision for environmental and landfill costs.......................................... 263 264
Extraordinary loss...................................................................... -- 476
Changes in operating assets and liabilities, net of effects from acquisitions:
Trade receivables..................................................................... (5,112) (1,292)
Prepaid expenses, restricted cash held in escrow and other assets..................... (2,559) (1,842)
Accounts payable, accrued liabilities and accrued environmental and landfil costs..... 7,099 251
Deferred revenue...................................................................... 908 244
---------- ----------
Net cash provided by operating activities................................................. 11,337 2,610
---------- ----------
INVESTING ACTIVITIES
Capital expenditures.................................................................... (9,429) (6,610)
Cost of acquisitions.................................................................... (68,210) (3,096)
---------- ----------
Net cash used in investing activities..................................................... (77,639) (9,706)
---------- ----------
FINANCING ACTIVITIES
Net proceeds from issuance of common stock.............................................. 70,093 --
Redemption of preferred stock........................................................... -- (1,950)
Preferred stock dividend................................................................ -- (85)
Proceeds from issuance of long-term debt................................................ 70,946 71,245
Repayments of indebtedness.............................................................. (73,899) (52,866)
Payment of note payable to stockholder.................................................. -- (12,500)
Debt issuance costs..................................................................... (973) (1,081)
Other................................................................................... -- (552)
---------- ----------
Net cash provided by financing activities................................................. 66,167 2,211
---------- ----------
Net decrease in cash and cash equivalents................................................. (135) (4,885)
Cash and cash equivalents, at beginning of period......................................... 2,301 6,383
---------- ----------
Cash and cash equivalents, at end of period............................................... $ 2,166 $ 1,498
---------- ----------
---------- ----------
</TABLE>

See accompanying notes.

F-22
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 1997 AND 1996

(UNAUDITED)

1. FORMATION AND BASIS OF PRESENTATION

ADS, Inc. (ADS) was organized on January 15, 1991, to acquire, develop, and
operate non-hazardous municipal solid waste disposal, collection, and transfer
operations and provide non-hazardous solid waste disposal management services to
commercial, industrial, and residential customers. During 1993, an affiliate of
Charterhouse Equity Partners, L.P. (CEP) purchased a controlling interest in
ADS.

Effective January 1, 1996, the stockholders of ADS and County exchanged
their shares for shares of a newly created holding company by the name of
American Disposal Services, Inc. (the Company). This share exchange (the
Exchange) qualified as a transfer of companies under common control as
affiliates of Charterhouse Group International, Inc. are the general partners
and in control of CEP and CEPII and, accordingly, the transaction was accounted
for at historical cost in a manner similar to pooling of interests accounting.

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six month period ended June 30, 1997
are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 1997. These financial statements should be read
in conjunction with the consolidated financial statements, including the notes
thereto, for the fiscal year ended December 31, 1996 included in the Company's
Annual Report on Form 10-K/A.

2. RELATED PARTY INTEREST EXPENSE

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1997 1996
--------- ---------
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
Charterhouse Equity Partners II, L.P. $ -- $ 621
--------- ---------
--------- ---------
</TABLE>

F-23
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1997 AND 1996

(UNAUDITED)

3. ENVIRONMENTAL MATTERS

See the Company's Annual Report on Form 10-K/A for a description of
environmental matters.

4. PUBLIC OFFERING

Effective May 13, 1997 the Company completed a public offering of 4,600,000
shares (including the underwriters' over-allotment option) at $16.50 per share
resulting in net proceeds to the Company of approximately $70.1 million.
Immediately following the offering, the Company had 13,472,501 shares of common
stock outstanding.

5. ACQUISITIONS

During the first six months of 1997, the Company acquired nine non-hazardous
solid waste businesses, consisting of nine collection operations, two transfer
stations, and one landfill. During 1996, the Company acquired sixteen
non-hazardous solid waste businesses, consisting of sixteen collection
operations and two transfer stations.

The Company has not completed its valuation of certain of its 1997 and 1996
purchases and the purchase price allocations are subject to change when
additional information concerning asset and liability valuations is completed.

The pro forma unaudited results of operations for the six months ended June
30, 1997 and 1996 include all acquisitions which have closed as of June 30, 1997
and assuming each acquisition and the public offering completed in May 1997 had
occurred on January 1, 1996, are as follows (in thousands, except per share
data):

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1997 1996
--------- ---------
<S> <C> <C>
Revenues $ 55,421 $ 46,038
Operating income 7,377 5,264
Net income applicable to common
stockholders before extraordinary loss 3,169 1,651
Pro forma income per share of
common stock 0.22 0.16
Weighted average common stock and
common stock equivalent shares
outstanding 14,148 10,464
</TABLE>

F-24
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1997 AND 1996

(UNAUDITED)

5. ACQUISITIONS (CONTINUED)
The pro forma results do not purport to be indicative of the results of
operations which actually would have resulted had the acquisitions occurred on
January 1, 1996 nor are they necessarily indicative of future operating results.

6. RECENTLY ISSUED ACCOUNTING STANDARD

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, EARNINGS PER SHARE, which is required to be adopted in the fourth
quarter of 1997; earlier adoption is not allowed. At that time, the Company will
be required to change the method currently used to compute earnings per share
and to restate all prior periods. Under the new requirements for calculating
basic earnings per share, the dilutive effect of stock options will be excluded.
The impact of Statement 128 on the calculation of primary and fully diluted
earnings per share for the three and six months ended June 30, 1997 and 1996 is
not material.

F-25
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following unaudited Pro Forma Consolidated Financial Statements (Pro
Forma Financial Data) are based on the historical Consolidated Financial
Statements of the Company, Fred B. Barbara Companies, Liberty Disposal, Inc. and
Evansville, Indiana Operations of Waste Management, Inc. (collectively the Pro
Forma Acquisitions) included elsewhere herein or incorporated by reference,
adjusted to give effect to the Pro Forma Acquisitions, the May Offering and this
Offering.

The Pro Forma Condensed Consolidated Balance Sheet gives effect to the
acquisition of Fred B. Barbara Companies and this Offering as if they had
occurred as of June 30, 1997. The Pro Forma Consolidated Income Statement for
the year ended December 31, 1996 gives effect to the Pro Forma Acquisitions, the
May Offering and this Offering as if they had occurred on January 1, 1996. The
Pro Forma Consolidated Income Statement for the six months ended June 30, 1997
gives effect to the Pro Forma Acquisitions, the May Offering and this Offering
as if they had occurred on January 1, 1997. The Pro Forma Financial Data does
not purport to represent what the Company's results would actually have been had
the Pro Forma Acquisitions in fact occurred on such date or to project the
Company's results of operations and financial position for any future period or
date. The Pro Forma Financial Data does not give effect to any transactions
other than the Pro Forma Acquisitions, the May Offering and this Offering, as
discussed in the notes to the Pro Forma Financial Data set forth below.

The Pro Forma Acquisitions were accounted for using the purchase method of
accounting. Under purchase accounting, tangible and identifiable intangible
assets acquired and liabilities assumed are recorded at their respective fair
values.

The pro forma adjustments are based on available information and upon
certain assumptions that management of the Company believes are reasonable under
the circumstances. The Pro Forma Financial Data and accompanying notes should be
read in conjunction with the historical Consolidated Financial Statements of the
Company, Fred B. Barbara Companies, Liberty Disposal, Inc. and including the
notes thereto, and other financial information pertaining to the Company
included elsewhere herein or incorporated by reference.

F-26
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FRED B. BARBARA COMPANIES
ADJUSTED
ACQUISITION FRED B. BARBARA
COMPANY -------------------------- COMPANIES THE COMPANY
HISTORICAL HISTORICAL ADJUSTMENTS ACQUISITION(A) OFFERING(C) PRO FORMA
----------- ----------- ------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................. $ 2,166 $ 4,114 ($ 4,114) $ -- $ -- $ 2,166
Cash held in escrow....................... 2,900 511 (511) -- -- 2,900
Trade receivables......................... 18,217 3,137 (3,137) -- -- 18,217
Prepaids and other current assets......... 2,413 249 (249) -- -- 2,413

<CAPTION>
----------- ----------- ------------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total current assets...................... 25,696 8,011 (8,011) -- -- 25,696

Property and equipment, net................. 128,035 12,374 226 12,600 -- 140,635

Cost over fair value of net assets acquired,
net....................................... 64,484 -- 48,340 48,340 -- 112,824
Other intangible and deferred assets, net... 5,006 -- 75 75 -- 5,081
Other assets................................ 1,352 -- -- -- -- 1,352
----------- ----------- ------------- ------- ----------- -----------
Total assets........................ $ 224,573 $ 20,385 $ 40,630 $ 61,015 $ -- $ 285,588
<CAPTION>
----------- ----------- ------------- ------- ----------- -----------
----------- ----------- ------------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loans with banks.......................... $ -- $ 610 $ (610) $ -- $ -- $ --
Advances from stockholder................. -- 70 (70) -- -- --
Accounts payable.......................... 6,161 485 (485) -- -- 6,161
Accrued liabilities....................... 9,165 585 (585) -- -- 9,165
Deferred revenues......................... 3,740 90 (90) -- -- 3,740
Current portion of long term debt and
capital lease obligations.............. 1,286 -- -- -- -- 1,286
<CAPTION>
----------- ----------- ------------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total current liabilities................... 20,352 1,840 (1,840) -- -- 20,352

Long-term debt and capital lease
obligations, net of current portion....... 63,817 -- 44,625 44,625 (106,563) 1,879
Accrued environmental and landfill costs.... 9,116 1,765 -- 1,765 -- 10,881
Deferred income taxes....................... 1,416 -- -- -- -- 1,416
Total stockholders' equity.................. 129,872 16,780 (2,155) 14,625(b) 106,563 251,060
<CAPTION>
----------- ----------- ------------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total liabilities and stockholders'
equity................................. $ 224,573 $ 20,385 $ 40,630 $ 61,015 $ -- $ 285,588
<CAPTION>
----------- ----------- ------------- ------- ----------- -----------
----------- ----------- ------------- ------- ----------- -----------
</TABLE>

(a) Reflects the acquisition of Fred B. Barbara Companies accounted for using
the purchase method. Pursuant to the Purchase Agreement, only property and
equipment and accrued environmental and landfill costs were acquired. The
Company has not yet determined the final allocation of the purchase price as
current information regarding the fair value of assets to be acquired is not
available and accordingly, the amounts shown below may differ from the
amounts ultimately determined.

Allocation of purchase price based upon preliminary estimated values:

<TABLE>
<CAPTION>
Land and landfill permit $ 7,200
<S> <C>
Other property and equipment 5,400
---------
Property and equipment 12,600
Cost over fair value of assets acquired 48,340
Identifiable intangible assets 75
---------
$ 61,015
---------
---------
</TABLE>

(b) Reflects the portion of the purchase price for the acquisition of Fred B.
Barbara Companies in the form of Company common stock.

(c) Reflects proceeds of this offering less underwriting discounts and estimated
expenses, using a price per share of $32.50, and the application of net
proceeds therefrom.

F-27
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.
PRO FORMA CONSOLIDATED INCOME STATEMENT
YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
(UNAUDITED)
<TABLE>
<CAPTION>
FRED B.
BARBARA
LIBERTY DISPOSAL WMX-EVANSVILLE COMPANIES
ACQUISITION ACQUISITION ACQUISITION
-------------------------------- ------------------------------- ------------
COMPANY HISTORICAL HISTORICAL HISTORICAL
HISTORICAL (A) ADJUSTMENTS (B) (C) ADJUSTMENTS (D) (E)
----------- ------------- ----------------- ------------ ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues................ $ 56,804 $ 7,003 $ -- $ 12,985 $ -- $ 23,716
Cost of operations...... 30,376 4,607 (4) 6,830 (291) 14,384
Selling, general
and administrative
expenses.............. 8,328 1,534 (695) 1,517 (246) 5,368
Depreciation and
amortization.......... 12,334 559 331 2,467 (430) 2,303
----------- ------------- ------ ------------ ------ ------------
Operating income...... 5,766 303 368 2,171 967 1,661

Interest expense, net... 5,485 84 (84) -- -- (183)
Other income............ 179 -- -- -- -- --
----------- ------------- ------ ------------ ------ ------------
Income before income
taxes................. 460 219 452 2,171 967 1,844
Income tax expense
(i)................... 245 -- 200 -- 947 55
----------- ------------- ------ ------------ ------ ------------
Net income.............. $ 215 $ 219 $ 252 $ 2,171 $ 20 $ 1,789
----------- ------------- ------ ------------ ------ ------------
----------- ------------- ------ ------------ ------ ------------
Pro forma net income
per share of
common stock..........
Pro forma weighted
average common stock
and common stock
equivalent shares
outstanding (j).......

THE
MAY THE
OFFERING OFFERING COMPANY
ADJUSTMENTS (F) (G) (H) PRO FORMA
--------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Revenues................ $ -- $ -- $ -- $ 100,508
Cost of operations...... (411) -- -- 55,491
Selling, general
and administrative
expenses.............. (2,875) -- -- 12,931
Depreciation and
amortization.......... 643 -- -- 18,207
------- ----------- ----------- -------------
Operating income...... 2,643 -- -- 13,879
Interest expense, net... 183 (2,129) (3,356) --
Other income............ -- -- -- 179
------- ----------- ----------- -------------
Income before income
taxes................. 2,460 2,129 3,356 14,058
Income tax expense
(i)................... 1,682 830 1,331 5,290
------- ----------- ----------- -------------
Net income.............. $ 778 $ 1,299 $ 2,025 $ 8,768
------- ----------- ----------- -------------
------- ----------- ----------- -------------
Pro forma net income
per share of
common stock.......... $ 0.54
-------------
-------------
Pro forma weighted
average common stock
and common stock
equivalent shares
outstanding (j)....... 16,258,771
-------------
-------------
</TABLE>

F-28
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO PRO FORMA CONSOLIDATED INCOME STATEMENT

YEAR ENDED DECEMBER 31, 1996

(DOLLARS IN THOUSANDS)
(UNAUDITED)

(a) Reflects the historical income statement for Liberty Disposal, Inc. for the
year ended December 31, 1996 incorporated by reference.

(b) Adjustments to reflect the historical amounts for the Liberty Disposal, Inc.
acquisition noted in footnote (a) as follows:

<TABLE>
<S> <C>
Reduction in cost of operations due to:
Incremental rental expense as set forth in the purchase
agreement........................................................ $ 88
Reduction in wage expense per employment agreements................ (92)
---------
Net reduction in cost of operations.................................. $ (4)
---------
---------
Reduction in selling, general and administrative expenses due to:
Reduction in officer's salary per employment agreement............. $ (417)
Reduction in office employee wages per employment agreements....... (278)
---------
Net reduction in selling, general and administrative expenses........ $ (695)
---------
Incremental depreciation and amortization due to:
Incremental depreciation of assets acquired assuming a composite
life of 4.6 years................................................ $ 16
Amortization of excess purchase price over forty years............. 295
Amortization of identifiable intangible assets over five years..... 20
---------
Net incremental depreciation and amortization........................ $ 331
---------
---------
Reduction in interest expense to reflect the debt not acquired....... $ (84)
---------
---------
</TABLE>

(c) Reflects the historical statement of revenues and direct operating expenses
for Evansville, Indiana Operations of Waste Management, Inc. for the year
ended December 31, 1996 incorporated by reference.

(d) Adjustments to reflect the historical amounts for the Evansville, Indiana
Operations of Waste Management, Inc. acquisition noted in footnote (c) as
follows:

<TABLE>
<S> <C>
Reduction in cost of operations due to reclassification to conform to
the Company's financial presentation............................... $ (291)
---------
---------
Reduction in selling, general and administrative salaries of
employees terminated prior to the WMX Evansville acquisition....... $ (246)

Reduction in depreciation and amortization due to:
Reduction in depreciation and amortization of assets acquired as a
result of preliminary purchase price allocation assuming a
composite life of 8 years for property and equipment and 45 years
for the landfill................................................. $ (932)
Incremental amortization of excess purchase price over forty
years............................................................ 191
Incremental amortization of identifiable intangible assets over
five years....................................................... 20
Reclassification to conform to the Company's financial
presentation..................................................... 291
---------
Net reduction in depreciation and amortization....................... $ (430)
---------
---------
</TABLE>

F-29
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO PRO FORMA CONSOLIDATED INCOME STATEMENT (CONTINUED)

YEAR ENDED DECEMBER 31, 1996

(DOLLARS IN THOUSANDS)
(UNAUDITED)

(e) Reflects the historical income statement for Fred B. Barbara Companies for
the year ended December 31, 1996, included herein.

(f) Adjustments to reflect the historical amounts for the Fred B. Barbara
Companies acquisition noted in footnote (e) as follows:

<TABLE>
<S> <C>
Reduction in cost of operations due to:
Reduction in rental expense as set forth in the purchase
agreement...................................................... ($ 396)
Reduction in wage expense per employment agreement............... (15)
---------
Net Reduction in cost of operations................................ ($ 411)
---------
---------
Reduction in selling, general and administrative expenses:
Reduction in officer's salary per employment agreement........... ($ 2,573)
Reduction in office employee wages per employment agreements..... (302)
---------
Net Reduction in selling, general and administrative expenses...... ($ 2,875)
---------
---------
Incremental reduction in depreciation and amortization due to:
Reduction in depreciation and amortization of assets acquired as
a result of preliminary purchase price allocation assuming a
composite life of 6.5 years for property and equipment and 23.5
for landfill................................................... (581)
Amortization of excess purchase price over forty years........... 1,209
Amortization of identifiable intangible assets over five years... 15
---------
Net incremental depreciation and amortization...................... $ 643
---------
---------
Reduction in interest income to reflect working capital not
acquired......................................................... $ 183
---------
---------
</TABLE>

(g) Reduction in interest expense to reflect the use of proceeds resulting from
the Company's May 13, 1997 offering as follows:

<TABLE>
<S> <C>
Net offering proceeds............................................. $ 70,093
Funding of Liberty Disposal acquisition........................... (15,675)
Funding of WMX Evansville acquisition............................. (29,228)
---------
Net proceeds available to pay down acquisition facility........... 25,190
Average 1995 interest rate on acquisition facility................ 8.45%
---------
Reduction in interest expense..................................... $ 2,129
---------
---------
</TABLE>

F-30
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO PRO FORMA CONSOLIDATED INCOME STATEMENT (CONTINUED)

YEAR ENDED DECEMBER 31, 1996

(DOLLARS IN THOUSANDS)
(UNAUDITED)

(h) Reduction in interest expense to reflect the use of proceeds of this
Offering as follows:

<TABLE>
<S> <C>
Net offering proceeds............................................. $ 106,563
Funding of Fred B. Barbara Companies.............................. (44,625)
---------
Net proceeds available to pay down acquisition facility........... 61,938
Average 1996 interest rate on acquisition facility................ 8.45%
---------
Reduction in interest expense..................................... 5,234
Less adjustment to limit the amount of interest expense recovered
to the actual interest expense realized......................... (1,878)
---------
$ 3,356
---------
---------
</TABLE>

(i) Adjusted to reflect the income tax effect of the pro forma adjustments based
on an estimated marginal tax rate of 39% limited by the utilization of the
net operating loss (NOL) carryforwards. The maximum annual utilization of
such NOL carryforwards are limited under the Internal Revenue Code as a
result of changes in ownership that have occurred.

(j) Weighted average common stock and common stock equivalent shares outstanding
at December 31, 1996 gives effect to the issuance of 4.6 million shares in
the May Offering, the 3.5 million shares in this Offering, and the issuance
of common stock in connection with the Fred B. Barbara Companies acquisition
as if such transactions had occurred as of January 1, 1996.

F-31
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.
PRO FORMA CONSOLIDATED INCOME STATEMENT
SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
(UNAUDITED)
<TABLE>
<CAPTION>
FRED B.
BARBARA
LIBERTY DISPOSAL WMX-EVANSVILLE ACQUISITION
ACQUISITION ACQUISITION -------------
COMPANY -------------------------------- ---------------------------------- HISTORICAL
HISTORICAL HISTORICAL (A) ADJUSTMENTS (B) HISTORICAL (A) ADJUSTMENTS (C) (D)
----------- --------------- --------------- --------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues.............. $ 46,274 $ 2,569 $ -- $ 3,021 $ -- $ 10,452
Cost of operations.... 25,080 1,484 18 1,470 (70) 6,033
Selling, general and
administrative
expenses............ 6,357 320 (43) 437 (69) 1,161
Depreciation and
amortization........ 9,056 193 143 586 (202) 1,050
----------- ------ ------- ------ ----- -------------
Operating income.... 5,781 572 (118) 528 341 2,208

Interest expense,
net................. 3,458 24 (24) -- -- (28)
Other income.......... 109 -- -- -- -- --
----------- ------ ------- ------ ----- -------------
Income before income
taxes............... 2,432 548 (94) 528 341 2,236

Income tax expense
(h)................. 750 -- 177 -- 339 43
----------- ------ ------- ------ ----- -------------
Net income............ $ 1,682 $ 548 $ (271) $ 528 $ 2 $ 2,193
----------- ------ ------- ------ ----- -------------
----------- ------ ------- ------ ----- -------------
Pro forma net income
per share of common
stock...............
Pro forma weighted
average common stock
and common stock
equivalent shares
outstanding (i).....

THE
MAY
OFFERING THE COMPANY
ADJUSTMENTS (E) (F) OFFERING (G) PRO FORMA
----------------- ----------- ------------- ----------
<S> <C> <C> <C> <C>
Revenues.............. $ -- $ -- $ -- $ 62,316
Cost of operations.... (285) -- -- 33,730
Selling, general and
administrative
expenses............ (156) -- -- 8,007
Depreciation and
amortization........ 312 -- -- 11,138
----- ----------- ------------- ----------
Operating income.... 129 -- -- 9,441
Interest expense,
net................. 28 (1,039) (2,419) --
Other income.......... -- -- -- 109
----- ----------- ------------- ----------
Income before income
taxes............... 101 1,039 2,419 9,550
Income tax expense
(h)................. 793 407 943 3,452
----- ----------- ------------- ----------
Net income............ $ (692) $ 632 $ 1,476 $ 6,098
----- ----------- ------------- ----------
----- ----------- ------------- ----------
Pro forma net income
per share of common
stock............... $ 0.34
----------
----------
Pro forma weighted
average common stock
and common stock
equivalent shares
outstanding (i)..... 18,187,492
----------
----------
</TABLE>

F-32
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO PRO FORMA CONSOLIDATED INCOME STATEMENT

SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)

(a) Reflects the historical income statements for Evansville, Indiana Operations
of Waste Management, Inc. and Liberty Disposal, Inc. from the period of
January 1, 1997 through the dates of acquisitions as follows incorporated by
reference:

<TABLE>
<S> <C>
Evansville, Indiana Operations of Waste Management, Inc..... April 1, 1997
Liberty Disposal, Inc....................................... May 15, 1997
</TABLE>

(b) Adjustments to reflect the historical amounts for the Liberty Disposal, Inc.
acquisition noted in footnote (a) as follows:

<TABLE>
<S> <C>
Incremental cost of operations due to:
Incremental rental expense as set forth in the purchase
agreement..................................................... $ 52
Reduction in wage expense per employment agreements............. (34)
-----
Net incremental cost of operations................................ $ 18
-----
-----
Reduction in selling, general and administrative expenses due to:
Reduction in officer's salary per employment agreement.......... $ (31)
Reduction in office employee wages per employment agreements.... (12)
Reduction in office employee wages per employment agreements.... (12)
-----
Net reduction in selling, general and administrative expenses..... (43)
-----
-----
Incremental depreciation and amortization due to:
Incremental depreciation of assets acquired assuming a composite
life of 4.6 years............................................. $ 29
Amortization of excess purchase price over forty years.......... 107
Amortization of identifiable intangible assets over five
years......................................................... 7
-----
Net incremental depreciation and amortization..................... $ 143
-----
-----
Reduction in interest expense to reflect the debt not acquired.... $ (24)
-----
-----
</TABLE>

(c) Adjustments to reflect the historical amounts for the Evansville, Indiana
Operations of Waste Management, Inc. acquisition noted in footnote (a) as
follows:

<TABLE>
<S> <C>
Reduction in cost of operations due to reclassification to conform
to the Company's financial presentation......................... $ (70)
-----
-----
Reduction in selling, general and administrative salaries of
employees terminated prior to the acquisition................... $ (69)
-----
-----
Reduction in depreciation and amortization due to:
Reduction in depreciation and amortization of assets acquired as
a result of preliminary purchase price allocation assuming a
composite life of 8 years for property and equipment and 45
years for the landfill........................................ $ (321)
Incremental amortization of excess purchase price over forty
years......................................................... 44
Incremental amortization of identifiable intangible assets over
five years.................................................... 5
Reclassification to conform to the Company's financial
presentation.................................................. 70
-----
Net reduction in depreciation and amortization.................... $ (202)
-----
-----
</TABLE>

F-33
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO PRO FORMA CONSOLIDATED INCOME STATEMENT (CONTINUED)

SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)

(d) Reflects the historical income statement for Fred B. Barbara Companies for
the six months ended June 30, 1997 included herein.

(e) Adjustments to reflect the historical amounts for the Fred B. Barbara
Companies acquisition noted in footnote (d) as follows:

<TABLE>
<S> <C>
Reduction in cost of operations due to:
Reduction in rental expenses as set forth in the purchase $ (280)
agreement.....................................................
Reduction in wage expense per employment agreement.............. (5)
-----
Net Reduction in cost of operations............................... $ (285)
-----
-----
Reduction in selling, general and administrative expenses:
Reduction in officer's salary per employment agreement.......... $ (110)
Reduction in office employee wages per employment agreements.... (46)
-----
Net Reduction in selling, general and expenses.................... $ (156)
-----
-----
Incremental reduction in depreciation and amortization due to:
Reduction in depreciation and amortization of assets acquired as $ (300)
a result of preliminary purchase price allocation assuming a
composite life of 6.5 years for property and equipment and
23.5 for landfill.............................................
Amortization of excess purchase price over forty years.......... 605
Amortization of identifiable intangible assets over five 7
years.........................................................
-----
Net incremental depreciation and amortization..................... $ 312
-----
-----
Reduction in interest income to reflect working capital not $ 28
acquired........................................................
-----
-----
</TABLE>

(f) Reduction in interest expense to reflect the use of proceeds resulting from
the Company's May 13, 1997 offering as follows:

<TABLE>
<S> <C>
Net offering proceeds............................................. $ 70,093
Funding of Liberty Disposal acquisition........................... (15,675)
Funding of WMX Evansville acquisition............................. (29,228)
---------
Net proceeds available to pay down acquisition facility........... 25,190
Average 1997 interest rate on acquisition facility................ 8.25%
---------
Annual reduction in interest expense.............................. $ 2,078
---------
Reduction in interest expense through June 30, 1997............... $ 1,039
---------
---------
</TABLE>

F-34
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.

NOTES TO PRO FORMA CONSOLIDATED INCOME STATEMENT (CONTINUED)

SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)

(g) Reduction in interest expense to reflect the use of proceeds of this
Offering as follows:

<TABLE>
<S> <C>
Net offering proceeds............................................. $ 106,563
Funding of Fred B. Barbara Companies.............................. (44,625)
---------
Net proceeds available to pay down acquisition facility........... 61,938
Average 1997 interest rate on acquisition facility................ 8.25%
---------
Annual reduction in interest expense.............................. $ 5,110
---------
Reduction in interest expense through June 30, 1997............... $ 2,555
---------
Less adjustment to limit the amount of interest expense recovered
to the actual interest expense realized......................... (136)
---------
$ 2,419
---------
---------
</TABLE>

(h) Adjusted to reflect the income tax effect on the pro forma adjustments based
on an estimated marginal tax rate of 39% limited by the utilization of the
net operating loss (NOL) carryforwards. The maximum annual utilization of
such NOL carryforwards are limited under the Internal Revenue Code as a
result of changes in ownership that have occurred.

(i) Weighted average common stock and common stock equivalent shares outstanding
at June 30, 1997 gives effect to the issuance of 4.6 million shares in the
May 13, 1997 offering, the 3.5 million shares in this Offering, and the
issuance of common stock in connection with the Fred B. Barbara Companies
acquisition as if such transactions had occurred as of January 1, 1997.

F-35
<PAGE>
REPORT OF INDEPENDENT AUDITORS

The Board of Directors

Fred B. Barbara Companies

We have audited the accompanying combined balance sheets of Fred B. Barbara
Companies (the Combined Companies) as of June 30, 1997, December 31, 1996 and
December 31, 1995, and the related combined statements of income, stockholders'
equity, and cash flows for the six months ended June 30, 1997, and for each of
the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Combined Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Fred B. Barbara
Companies as of June 30, 1997, December 31, 1996 and December 31, 1995, and the
combined results of its operations and its cash flows for the six months ended
June 30, 1997, and for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.

Ernst & Young LLP

Chicago, Illinois
August 1, 1997

F-36
<PAGE>
FRED B. BARBARA COMPANIES

COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, --------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents...................................................... $ 4,114 $ 2,834 $ 3,342
Cash held in escrow............................................................ 511 496 455
Trade receivables less allowance for doubtful accounts of $147, $147, and
$128......................................................................... 3,137 4,383 5,613
Prepaid expenses and other assets.............................................. 249 203 487
--------- --------- ---------
Total current assets............................................................. 8,011 7,916 9,897
Property and equipment, net...................................................... 12,374 13,021 11,966
--------- --------- ---------
$ 20,385 $ 20,937 $ 21,863
--------- --------- ---------
--------- --------- ---------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Loan with banks................................................................ $ 610 $ 850 $ --
Advances from stockholder...................................................... 70 70 1,645
Accounts payable............................................................... 485 1,090 1,483
Accrued liabilities............................................................ 585 741 756
Deferred revenues.............................................................. 90 85 66
--------- --------- ---------
Total current liabilities........................................................ 1,840 2,836 3,950
Accrued environmental and landfill costs......................................... 1,765 1,707 1,063
Stockholders' equity:
Common stock................................................................... 1 1 1
Additional paid-in capital..................................................... 6,559 6,559 6,450
Retained earnings.............................................................. 10,220 9,834 10,399
--------- --------- ---------
16,780 16,394 16,850
--------- --------- ---------
$ 20,385 $ 20,937 $ 21,863
--------- --------- ---------
--------- --------- ---------
</TABLE>

See accompanying notes.

F-37
<PAGE>
FRED B. BARBARA COMPANIES

COMBINED STATEMENTS OF INCOME

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -------------------------------
1997 1996 1995 1994
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues............................................................ $ 10,452 $ 23,716 $ 37,212 $ 36,171
Cost of operations.................................................. 6,033 14,384 20,228 21,151
Selling, general, and administrative expenses....................... 1,161 5,368 5,385 5,160
Depreciation and amortization....................................... 1,050 2,303 2,417 2,298
----------- --------- --------- ---------
Operating income.................................................... 2,208 1,661 9,182 7,562
Interest expense.................................................... 26 32 45 256
Interest income..................................................... 54 215 127 66
----------- --------- --------- ---------
Income before state income taxes.................................... 2,236 1,844 9,264 7,372
State income taxes.................................................. 43 55 133 109
----------- --------- --------- ---------
Net income.......................................................... $ 2,193 $ 1,789 $ 9,131 $ 7,263
----------- --------- --------- ---------
----------- --------- --------- ---------
</TABLE>

See accompanying notes.

F-38
<PAGE>
FRED B. BARBARA COMPANIES

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED STOCKHOLDERS'
STOCK CAPITAL EARNINGS EQUITY
------------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Balance--December 31, 1993........................................ $ 1 $ 6,450 $ 7,235 $ 13,686
Stockholder distributions....................................... -- -- (5,489) (5,489)
Net income...................................................... -- -- 7,263 7,263
--
----------- --------- ------------
Balance--December 31, 1994........................................ 1 6,450 9,009 15,460
Stockholder distributions....................................... -- -- (7,741) (7,741)
Net income...................................................... -- -- 9,131 9,131
--
----------- --------- ------------
Balance--December 31, 1995........................................ 1 6,450 10,399 16,850
Capital contribution of land.................................... -- 109 -- 109
Stockholder distributions....................................... -- -- (2,354) (2,354)
Net income...................................................... -- -- 1,789 1,789
--
----------- --------- ------------
Balance--December 31, 1996........................................ 1 6,559 9,834 16,394
Stockholder distributions....................................... -- -- (1,807) (1,807)
Net income...................................................... -- -- 2,193 2,193
--
----------- --------- ------------
Balance--June 30, 1997............................................ $ 1 $ 6,559 $ 10,220 $ 16,780
--
--
----------- --------- ------------
----------- --------- ------------
</TABLE>

See accompanying notes.

F-39
<PAGE>
FRED B. BARBARA COMPANIES

COMBINED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -------------------------------
1997 1996 1995 1994
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income.............................................................. $ 2,193 $ 1,789 $ 9,131 $ 7,263
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization......................................... 1,050 2,303 2,417 2,298
Provision for environmental and landfill costs........................ 58 644 758 35
Changes in current assets and liabilities:
Trade receivables................................................... 1,246 1,230 555 (1,039)
Prepaid expenses, cash in escrow, and other assets.................. (61) 243 (438) 79
Accounts payable, accrued liabilities, and deferred revenue......... (756) (389) (552) 507
----------- --------- --------- ---------
Net cash provided by operating activities............................... 3,730 5,820 11,871 9,143

INVESTING ACTIVITIES
Capital expenditures.................................................... (403) (3,588) (4,218) (1,550)
----------- --------- --------- ---------
Net cash used in investing activities................................... (403) (3,588) (4,218) (1,550)

FINANCING ACTIVITIES
Distributions to principal stockholder.................................. (1,807) (2,015) (7,741) (5,489)
Advances from (payments to) principal stockholder, net.................. -- (1,575) 307 1,322
Proceeds from issuance of debt.......................................... -- 1,000 -- 2,300
Repayments of indebtedness.............................................. (240) (150) (1,115) (2,200)
----------- --------- --------- ---------
Net cash used in financing activities................................... (2,047) (2,740) (8,549) (4,067)
----------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents.................... 1,280 (508) (896) 3,526
Cash and cash equivalents at beginning of year.......................... 2,834 3,342 4,238 712
----------- --------- --------- ---------
Cash and cash equivalents at end of year................................ $ 4,114 $ 2,834 $ 3,342 $ 4,238
----------- --------- --------- ---------
----------- --------- --------- ---------

Supplemental cash flow information:
Cash paid for interest................................................ $ 26 $ 32 $ 45 $ 256
Cash paid for income taxes............................................ 48 205 62 50

Supplemental disclosure of noncash investing and financing activities:
Contribution of land from principal stockholder....................... $ -- $ 109 $ -- $ --
Distribution of property to principal stockholder..................... -- 339 -- --
</TABLE>

See accompanying notes.

F-40
<PAGE>
FRED B. BARBARA COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 1997 AND
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

1. FORMATION AND BASIS OF PRESENTATION

The combined financial statements include the accounts of: (i) Fred B.
Barbara Trucking Co., Inc.; (ii) Shred-All Recycling Services, Inc.; (iii)
Illinois Bulk Handlers, Inc.; and (iv) Environtech, Inc., (the Combined
Companies) all companies under the majority ownership of Fred B. Barbara (the
Principal Shareholder) and members of the Barbara family. The Combined Companies
operate primarily in the Chicago, Illinois, metropolitan area.

Fred B. Barbara Trucking Co., Inc., an Illinois corporation, was
incorporated in 1979 and is involved in transporting non-hazardous solid wastes.

Shred-All Recycling Systems, Inc., an Illinois corporation, was incorporated
in 1988 and is involved in the collection, transfer, sorting, and recycling of
non-hazardous solid wastes.

Illinois Bulk Handlers, Inc., an Illinois corporation, was incorporated in
1985 and is involved in the rental of heavy equipment, primarily for
non-hazardous solid waste management activities and municipal sludge processing
and disposal. Illinois Bulk Handlers, Inc., represented less than 1% of combined
revenues for all periods presented.

Environtech, Inc., a Delaware corporation, was incorporated in 1986 and is a
disposal facility for non-hazardous solid wastes.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF COMBINATION

The combined financial statements include the accounts of each of the
entities comprising the Combined Companies. All significant intercompany
balances and transactions have been eliminated.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Combined Companies to
concentrations of credit risk consist primarily of trade receivables. The
Combined Companies perform ongoing credit evaluations of their customers and
maintain an allowance for losses based on the expected collectibility of
accounts receivable. Credit losses have been within management's expectations.
Generally, the Combined Companies do not require collateral from their
customers.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Trade receivables, accounts payables, and debt obligations are carried at
cost which approximates fair value.

USE OF ESTIMATES

F-41
<PAGE>
FRED B. BARBARA COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

SIX MONTHS ENDED JUNE 30, 1997 AND
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS

Cash and cash equivalents represent cash in banks and liquid investments
with original maturities of three months or less.

CASH HELD IN ESCROW

Cash held in escrow represents amounts held by banks restricted to fund
obligations for closure and post-closure costs.

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost. Depreciation of equipment is
computed using accelerated methods over the estimated useful lives of the
respective assets as follows:

<TABLE>
<S> <C>
Vehicles and equipment....................................... 3 to 10 years
10 to 39
Buildings.................................................... years
</TABLE>

Expenditures for major renewals are capitalized and expenditures for routine
maintenance and repairs are charged to expense as incurred.

Capitalized landfill costs include expenditures for land and related
airspace, permitting costs and preparation costs. Landfill permitting and
preparation costs represent only direct costs related to these activities,
including legal, engineering, construction of landfill improvements, cell
development costs, and the direct costs of the Combined Companies personnel
dedicated for these purposes. Management routinely reviews the realizability of
the Combined Companies investment in its operating landfills. The disposal site
is carried at cost and to the extent this exceeds end-use realizable value, such
excess is amortized over the estimated remaining life of the disposal site.
Preparation costs for individual secure land disposal cells are recorded in
property and equipment and amortized as the airspace is filled.

ACCRUED ENVIRONMENTAL AND LANDFILL COSTS

Accrued environmental and landfill costs represent landfill accruals which
are provided for environmental compliance costs and closure and post-closure
reserves. These accruals are based on accounting estimates by management
determined primarily from the results of engineering studies and reviews and on
interpretation of the technical standards of the Environmental Protection
Agency's Subtitle D regulations, or the approved state counterpart, and the
proposed air emissions standards under the Clean Air Act as they are being
applied on a state-by-state basis. The Combined Companies typically provide
accruals for these costs as permitted airspace of such facilities is consumed.
Closure and post-closure monitoring and maintenance costs represent the costs
related to cash expenditures yet to be incurred when a landfill facility ceases
to accept waste and closes. Certain of these accrued environmental and landfill
costs, principally capping, leachate collection and removal, and methane gas
control and recovery, are operating and maintenance costs to be incurred during
the 30-year period after the facility closes, but are accrued during the
operating life of the site in accordance with the landfill operation
requirements of Subtitle D and the proposed air emissions standards. The
Combined Companies have estimated that, as of

F-42
<PAGE>
FRED B. BARBARA COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

SIX MONTHS ENDED JUNE 30, 1997 AND
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
June 30, 1997, closure/post-closure expenses will approximate $4.9 million.
These accruals are reviewed by management periodically and revised prospectively
for any significant changes in future cost estimates.

REVENUE RECOGNITION

Revenues are recorded at the date of actual waste disposal. Revenues billed
prior to the performance of services are deferred and recorded as income in the
period in which the related services are rendered, generally over a two-month
period.

3. PROPERTY AND EQUIPMENT

Property and equipment are summarized as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, --------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Land......................................................... $ 1,316 $ 1,316 $ 1,191
Landfills.................................................... 9,110 9,110 9,073
Buildings.................................................... 2,617 2,617 950
Vehicles and equipment....................................... 18,309 17,914 16,374
--------- --------- ---------
31,352 30,957 27,588
Less: Accumulated depreciation and amortization.............. 18,978 17,936 15,622
--------- --------- ---------
$ 12,374 $ 13,021 $ 11,966
--------- --------- ---------
--------- --------- ---------
</TABLE>

4. ACCRUED LIABILITIES

Accrued liabilities are summarized as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, --------------------
1997 1996 1995
----------- --------- ---------
<S> <C> <C> <C>
Landfill............................................................ $ 146 $ 161 $ 232
Real estate taxes................................................... 155 200 209
State income taxes.................................................. 163 169 200
Other............................................................... 121 211 115
----- --------- ---------
$ 585 $ 741 $ 756
----- --------- ---------
----- --------- ---------
</TABLE>

5. LOANS WITH BANKS

The Combined Companies entered into a $1 million term loan agreement with
Amalgamated Bank of Chicago on September 23, 1996 for working capital purposes.
The term loan bore interest at a per annum 6.30% rate and was due on January 2,
1997. On January 2, 1997, the term loan was renewed for $850,000 at a per annum
of 6.35% rate and was due on July 3, 1997.

F-43
<PAGE>
FRED B. BARBARA COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

SIX MONTHS ENDED JUNE 30, 1997 AND
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

5. LOANS WITH BANKS (CONTINUED)
The term loan was renewed on July 3, 1997 for $610,000 and bears interest at
a per annum rate of 6.65%. Interest is due monthly and the principal balance is
due in full on January 5, 1998. Additionally, the term loan is secured through a
personal guarantee by the Principal Stockholder.

In 1994 and 1993, the Combined Companies borrowed $2.3 million and $900,000,
respectively, under separate bank term loan agreements. Both of these loans bore
interest at 6.0%, were due in monthly installments, and were fully paid in 1995.

6. INCOME TAXES

No provision for federal income taxes was required for the six months ended
June 30, 1997, or for the fiscal years 1996, 1995, and 1994, as a result of the
Combined Companies' elections to be treated as S corporations under the Internal
Revenue Code. However, the Combined Companies are subject to certain state
income taxes. Generally, the income of the Combined Companies is to be reported
on the individual income tax returns of its stockholders.

7. RELATED PARTIES

Fred B. Barbara Trucking Co., Inc., on occasion, uses subcontractors to haul
non-hazardous solid wastes. As part of this subcontracting, a company owned by
the Principal Stockholder's brother is used. Hauling fees to this related party
subcontractor approximated $49,000, $118,000, $172,000, and $135,000, for the
six months ended June 30, 1997 and for fiscal years 1996, 1995, and 1994,
respectively.

The Combined Companies rent their main office facility and certain equipment
on a month-to-month basis, from the Principal Stockholder. Rent expense to the
Principal Stockholder approximated $240,000 for the six months ended June 30,
1997 and $480,000 for each of the three years in the period ended December 31,
1996.

8. COMMITMENTS AND CONTINGENCIES

ENVIRONMENTAL AND REGULATORY REQUIREMENTS

The business and activities of the Combined Companies are or may become
heavily regulated by the Environmental Protection Agency, the Department of
Transportation, the Interstate Commerce Commission, and various state
environmental and transportation regulatory authorities. The Combined Companies
are subject to various statutes and regulations which include, but are not
limited to, the Resource Conservation and Recovery Act of 1976, the Federal
Water Pollution Control Act, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Clean Air Act, and various state
regulations. The full impact of these laws and regulations and adoption of new
statutes and regulations with respect to the Combined Companies' facilities and
operations is uncertain and could have material adverse effects on the Combined
Companies' business, results of operations, and financial condition in that the
Combined Companies: (i) could be required to incur additional expenses in
compliance efforts; (ii) might be unable to comply, forcing the Combined
Companies to cease operations; and (iii) could incur additional liability for
past operation of acquired assets. These regulations may also impose
restrictions on the Combined Companies' operations, such as limiting the
expansion of disposal facilities, limiting or banning the disposal of
out-of-state waste or certain other categories of waste, or mandating the
disposal of local refuse.

F-44
<PAGE>
FRED B. BARBARA COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

SIX MONTHS ENDED JUNE 30, 1997 AND
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

8. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Although the Combined Companies believe they are in substantial compliance
with current regulatory requirements, because of heightened political and public
concern over environmental issues, companies in the waste disposal industry,
including the Combined Companies, may become subject to judicial and
administrative proceedings involving federal, state, or local agencies in the
normal course of business.

The Combined Companies carry a comprehensive general liability insurance
policy which management considers adequate to protect the Combined Companies'
assets and operation from other risks.

The Combined Companies also may be subject to claims for personal injury or
property damage arising out of motor vehicle accidents involving its trucks. The
Combined Companies currently carry insurance with policy limits which management
believes to be sufficient to cover these risks. If the Combined Companies were
to incur liabilities in excess of its insurance limits, its financial condition
could be adversely affected.

In connection with the Combined Companies' landfill, the Combined Companies
have provided $305,000 in letters of credit from a financial institution to
provide financial assurance that closure and post-closure expenses will be met
in the event that the Combined Companies are not able to fulfill its closure and
post-closure obligations.

At June 30, 1997, future minimum lease payments for processing facilities
under noncancelable lease obligations are as follows (IN THOUSANDS):

<TABLE>
<S> <C>
Remainder of fiscal year 1997........................................ $ 25
1998................................................................. 50
1999................................................................. 50
2000................................................................. 50
2001 and thereafter.................................................. 275
---------
Total minimum lease payments......................................... $ 450
---------
---------
</TABLE>

Rental expense was approximately $423,000, $675,000, $624,000 and $700,000
for the six months ended June 30, 1997, and for fiscal years 1996, 1995, and
1994, respectively.

9. SIGNIFICANT CUSTOMERS

One customer accounted for 30%, 33%, 62%, and 65% of the revenues of the
Combined Companies for the six months ended June 30, 1997, and for fiscal years
1996, 1995, and 1994, respectively. Another customer accounted for 28%, 24%,
12%, and 4% of the revenues of the Combined Companies for the six months ended
June 30, 1997 and for fiscal years 1996, 1995, and 1994, respectively.

F-45
<PAGE>
FRED B. BARBARA COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

SIX MONTHS ENDED JUNE 30, 1997 AND
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

10. STOCKHOLDERS' EQUITY

Stockholders' equity is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, --------------------
1997 1996 1995
----------- --------- ---------
<S> <C> <C> <C>
Fred B. Barbara Trucking Co., Inc.
Common stock, no par value, 100,000 shares authorized; 1,000 shares issued and
outstanding..................................................................... $ -- $ -- $ --
Additional paid-in capital........................................................ 1 1 1
Shred-All Recycling Services, Inc.
Common stock, no par value, 100 shares authorized and issued and outstanding...... -- -- --
Additional paid-in capital........................................................ 10 10 10
Illinois Bulk Handlers, Inc.
Common stock, no par value, 100 shares authorized and issued and outstanding...... -- -- --
Additional paid-in capital........................................................ 10 10 10
Environtech, Inc.
Common stock, $1 par value, 1,000 shares authorized; 804 shares
issued and outstanding.......................................................... 1 1 1
Additional paid-in capital........................................................ 6,538 6,538 6,429
Total common stock.................................................................. $ 1 $ 1 $ 1
----------- --------- ---------
Total additional paid-in capital.................................................... $ 6,559 $ 6,559 $ 6,450
----------- --------- ---------
----------- --------- ---------
</TABLE>

11. SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Selling, general, and administrative expenses include incentive compensation
charges of $0 in 1997, $2,450,000 in 1996, $3,175,000 in 1995, and $3,185,000 in
1994.

F-46
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, ANY SELLING STOCKHOLDER OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER TO SELL OR SOLICITATION IS NOT AUTHORIZED,
OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 7
Use of Proceeds........................................................... 15
Price Range of Common Stock............................................... 15
Dividend Policy........................................................... 15
Capitalization............................................................ 16
Selected Consolidated Financial Data...................................... 17
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 19
Business.................................................................. 27
Management................................................................ 38
Principal and Selling Stockholders........................................ 40
Description of Capital Stock.............................................. 42
Shares Eligible for Future Sale........................................... 44
Underwriting.............................................................. 45
Legal Matters............................................................. 47
Experts................................................................... 47
Available Information..................................................... 47
Incorporation of Certain Documents by Reference........................... 48
Index to Financial Statements............................................. F-1
</TABLE>

5,500,000 SHARES

[LOGO]

COMMON STOCK

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

PROSPECTUS

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

OPPENHEIMER & CO., INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

CREDIT SUISSE FIRST BOSTON

, 1997

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table shows the expenses, other than underwriting discounts,
which the Company expects to incur in connection with the issuance and
distribution of the securities being registered under this registration
statement. All expenses are estimated except for the Securities and Exchange
Commission registration fee and the NASD filing fee.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................ $59,896.00
NASD filing fee................................................................ 20,266.00
Blue Sky fees and expenses..................................................... *
Legal fees and expenses........................................................ *
Accounting fees and expenses................................................... *
Miscellaneous.................................................................. *
----------
Total.................................................................... $ *
----------
----------
</TABLE>

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

* To be filed by amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the General Corporation Law of the State of Delaware
("Section 145") permits a Delaware corporation to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee, or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.

In the case of an action by or in the right of the corporation, Section 145
permits the corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee, or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation. No indemnification may be made in respect of any claim, issue, or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.

To the extent that a director, officer, employee, or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit,
or proceeding referred to in the preceding two paragraphs, Section 145 requires
that he be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.

II-1
<PAGE>
Section 145 provides that expenses (including attorneys' fees) incurred by
an officer or director in defending any civil, criminal, administrative, or
investigative action, suit, or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit, or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in Section 145.

Article Fifth of the Company's Certificate of Incorporation eliminates the
personal liability of the directors of the Company to the Company or its
stockholders for monetary damages for breach of fiduciary duty as directors,
with certain exceptions, and Article Sixth requires indemnification of directors
and officers of the Company, and for advancement of litigation expenses to the
fullest extent permitted by Section 145. Article Sixth of the Company's By-laws
provides for indemnification of the Company's officers and directors to the
fullest extent permitted by Section 145 and other applicable laws as currently
in effect and as they may be amended in the future.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Underwriting Agreement*
4.1 Specimen Common Stock Certificate (1)
5.1 Opinion of Proskauer Rose LLP*
23.1 Consent of Ernst & Young LLP
23.2 Consent of Proskauer Rose LLP (included in exhibit 5.1)
24.1 Powers of Attorney are set forth on the signature pages hereof
</TABLE>

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

* To be filed by amendment.

(1) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (333-4889).

(b) Financial Statement Schedules

NONE

ITEM 17. UNDERTAKINGS.

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.

(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the provisions described above in Item 15 or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful defense of any action,
suit, or proceeding) is asserted against the Registrant by such director,
officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.

II-2
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Burr Ridge,
State of Illinois, on September 24, 1997.

<TABLE>
<S> <C> <C>
AMERICAN DISPOSAL SERVICES, INC.

By: /s/ RICHARD DE YOUNG
-----------------------------------------
Richard De Young
PRESIDENT
</TABLE>

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the persons whose signatures appear
below each severally constitutes and appoints Richard De Young, Stephen P. Lavey
and Ann L. Straw, and each of them, as true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for them in their
name, place and stead, in any and all capacities, to sign any and all amendments
(including pre-effective and post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
they might or could do in person, hereby ratifying and confirming all which said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do, or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registrant's registration statement has been signed by the following
persons in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------

/s/ DAVID C. STOLLER
- ------------------------------ Chairman and Director September 24, 1997
David C. Stoller

/s/ RICHARD DE YOUNG
- ------------------------------ President, Chief Executive September 24, 1997
Richard De Young Officer and Director

/s/ STEPHEN P. LAVEY Chief Financial Officer
- ------------------------------ (principal financial September 24, 1997
Stephen P. Lavey officer)

/s/ LAWRENCE R. CONRATH, SR. Vice President and
- ------------------------------ Controller (principal September 24, 1997
Lawrence R. Conrath, Sr. accounting officer)

/s/ MERRIL M. HALPERN
- ------------------------------ Director September 24, 1997
Merril M. Halpern

/s/ A. LAWRENCE FAGAN
- ------------------------------ Director September 24, 1997
A. Lawrence Fagan

II-3
<PAGE>

SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ RICHARD T. HENSHAW, III
- ------------------------------ Director September 24, 1997
Richard T. Henshaw, III

/s/ G. T. BLANKENSHIP
- ------------------------------ Director September 24, 1997
G. T. Blankenship

/s/ NORMAN STEISEL
- ------------------------------ Director September 24, 1997
Norman Steisel

II-4

<PAGE>
EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated August 1, 1997 with respect to the financial
statements of Fred B. Barbara Companies and our report dated February 26, 1997
(except as to Note 5 for which the date is March 21, 1997 and except as to Note
10 for which the date is March 25, 1997) with respect to the financial
statements of American Disposal Services, Inc. in the Registration Statement on
Form S-3 and the related Prospectus of American Disposal Services, Inc. for the
registration of up to 6,325,000 shares of its common stock.

We also consent to the incorporation by reference therein of our report
dated March 17, 1997 with respect to the financial statements of Liberty
Disposal, Inc. for the years ended December 31, 1995 and 1996 included in the
Current Report on Form 8-K dated May 29, 1997 filed with the Securities and
Exchange Commission.

/s/ Ernst & Young LLP

Chicago, Illinois
September 24, 1997