SEC Filing | Republic Services, Inc.

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Filed Pursuant to Rule 424(B)(1)
Registration No. 333-52505
PROSPECTUS

55,000,000 SHARES

REPUBLIC SERVICES, INC. (LOGO)

CLASS A COMMON STOCK
------------------------

All of the 55,000,000 shares of Class A Common Stock offered hereby are
being sold by Republic Services, Inc. (the "Company"). Of the 55,000,000 shares
of Class A Common Stock offered hereby, 11,000,000 shares are being offered for
sale initially outside the United States and Canada by the International
Managers and 44,000,000 shares are being offered for sale initially in a
concurrent offering in the United States and Canada by the U.S. Underwriters.
The initial public offering price and the underwriting discount per share will
be identical for both Offerings. See "Underwriting."

Prior to the Offerings, there has been no public market for the Class A
Common Stock. For a discussion relating to the factors considered in determining
the initial public offering price, see "Underwriting." The Class A Common Stock
has been approved for listing on the New York Stock Exchange under the symbol
"RSG," subject to official notice of issuance.

The Company is currently a wholly owned subsidiary of Republic Industries,
Inc. ("Parent"). Upon completion of the Offerings, the Company will have two
classes of authorized common stock consisting of Class A Common Stock, which is
being offered hereby, and Class B Common Stock. See "Description of Capital
Stock." Holders of Class A Common Stock will be entitled to one vote per share
and holders of Class B Common Stock will be entitled to five votes per share on
all matters submitted to a vote of stockholders. All of the outstanding shares
of Class B Common Stock will be owned by Parent. Upon completion of the
Offerings, Parent will own approximately 68.6% of the outstanding shares of
Common Stock (63.9% if the Underwriters exercise their over-allotment options in
full), which will represent approximately 90.1% of the combined voting power of
all of the outstanding shares of Class A Common Stock and Class B Common Stock
(88.7% if the Underwriters exercise their over-allotment options in full).
Parent has announced its intention, subject to satisfaction of certain
conditions, to divest its ownership interest in the Company in 1999 by means of
a tax-free distribution to its stockholders. See "Risk Factors," "Background of
the Offerings" and "Certain Transactions."

SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE CLASS A 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.

========================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ------------------------------------------------------------------------------------------------------------------------

Per Share................................. $24.00 $1.20 $22.80
- ------------------------------------------------------------------------------------------------------------------------
Total(3).................................. $1,320,000,000 $66,000,000 $1,254,000,000
========================================================================================================================

(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including certain liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $7,500,000.
(3) The Company has granted the International Managers and the U.S. Underwriters
options to purchase up to an additional 1,650,000 shares and 6,600,000
shares of Class A Common Stock, respectively, in each case exercisable
within 30 days after the date hereof, solely to cover over-allotments, if
any. If such options are exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $1,518,000,000,
$75,900,000 and $1,442,100,000, respectively. See "Underwriting."
------------------------

The shares of Class A Common Stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Class A Common Stock will be made in New York, New
York on or about July 7, 1998.
------------------------

MERRILL LYNCH INTERNATIONAL
DEUTSCHE BANK
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
COMMERZBANK AKTIENGESELLSCHAFT LOMBARD ODIER INTERNATIONAL UNDERWRITERS LIMITED
ING BARINGS SCOTIA CAPITAL MARKETS
------------------------

The date of this Prospectus is June 30, 1998.
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REPUBLIC SERVICES, INC.

(Map of Continental United States highlighting the markets in which the
Company does business appears here)

Landfill
Transfer Station
Collection

Certain persons participating in the Offerings may engage in transactions
that stabilize, maintain or otherwise affect the price of the Class A Common
Stock. Such transactions may include stabilizing, the purchase of Class A Common
Stock to cover syndicate short positions and the imposition of penalty bids. For
a description of these activities, see "Underwriting."

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(Photo of fleet of solid waste collection vehicles)
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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial data and notes
thereto appearing elsewhere in this Prospectus. Unless otherwise indicated, all
information contained in this Prospectus assumes that the Underwriters' over-
allotment options are not exercised. See "Underwriting." Except where the
context otherwise requires, references to the terms "Republic Services, Inc."
and the "Company" include the historical operating results and activities of,
and assets and liabilities of, the solid waste services businesses and
operations of Parent which comprise Republic Services, Inc. and its subsidiaries
as of the date hereof. Except where the context otherwise requires, references
to the term "Parent" mean Republic Industries, Inc. and its subsidiaries other
than the Company.

This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in such forward-looking statements. Factors that might cause
differences include, but are not limited to, those discussed in "Risk Factors."

THE COMPANY

Republic Services, Inc. is a leading provider of non-hazardous solid waste
collection and disposal services in the United States. Based on revenue for the
year ended December 31, 1997, the Company is the fourth largest company in the
domestic non-hazardous solid waste management industry. The Company provides
solid waste collection services for commercial, industrial, municipal and
residential customers through 96 collection companies in 24 states. The Company
also owns or operates 54 transfer stations and 42 solid waste landfills.

The Company had revenue of $1,127.7 million and $953.3 million and
operating income of $201.3 million and $105.6 million for the years ended
December 31, 1997 and 1996, respectively. The $174.4 million (or 18.3%) increase
in revenue and the $95.7 million (or 90.6%) increase in operating income are
primarily attributable to the successful execution of the Company's growth and
operating strategies described below. In 1997, the Company's revenue was
generated primarily from its solid waste collection operations (73.8%), with the
remainder comprised of revenue from landfill disposal services (12.4%) and other
operations (13.8%).

Since 1995, the Company has acquired over 100 solid waste companies with an
aggregate of over $1.0 billion in annual revenue. The Company believes that it
is well positioned to continue to increase its revenue and operating income
through acquisitions and internal growth. The Company's acquisition growth
strategy is focused on the approximately $8.0 billion of revenue that was
generated by over 5,000 privately-held solid waste companies in 1997. The
Company believes that its ability to acquire many of these privately-held
companies is enhanced by increasing competition in the solid waste industry,
increasing capital requirements as a result of changes in solid waste regulatory
requirements and the limited number of exit strategies for such companies'
owners and principals. The Company's internal growth strategy is supported by
its presence in high-growth markets throughout the Sunbelt, including Florida,
Georgia, Nevada, Southern California and Texas, and other domestic markets that
have experienced higher than average population growth during the past several
years. The Company believes that its presence in such markets positions it to
experience growth at rates that are generally higher than the industry's overall
growth rate.

INDUSTRY OVERVIEW

Based on analyst reports and industry trade publications, the Company
believes that the United States non-hazardous solid waste services industry
generated revenue of approximately $35.0 billion in 1997, of which approximately
44% was generated by publicly-owned waste companies, 23% was generated by
privately-held waste companies and 33% was generated by municipal and other
local governmental authorities. The substantial majority of the publicly-owned
companies' total revenue of approximately $15.4 billion was generated by only
five companies, of which the Company was the fourth largest at year-end 1997.
However, according to industry data, the domestic non-hazardous waste industry
remains highly fragmented as the

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privately-held companies' total revenue of approximately $8.0 billion was
generated by more than 5,000 companies.

GROWTH STRATEGY

- - ACQUISITION GROWTH. As a result of the highly fragmented nature of the solid
waste industry, the Company has been able to grow significantly through
acquisitions. Since 1995, the Company has acquired over 100 solid waste
companies with an aggregate of over $1.0 billion in annual revenue. The
Company's acquisition growth strategy is to (i) acquire companies positioned
for growth in existing and new markets, (ii) acquire well-managed companies
and retain local management, (iii) expand its operations in existing markets
by completing "tuck-in" acquisitions and (iv) acquire operations and
facilities from municipalities that are privatizing.

Acquire Companies Positioned for Growth. In making acquisitions, the
Company principally targets high quality businesses that will allow it to
be, or provide it favorable prospects of becoming, a leading provider of
integrated solid waste services in markets with favorable demographic
growth. The Company generally has acquired, and will continue to seek to
acquire, solid waste collection, transfer and disposal companies that (i)
have strong operating margins, (ii) are in growth markets, (iii) are among
the largest or have a significant presence in their local markets and (iv)
have long-term contracts or franchises with municipalities and other
customers. Although the Company continuously reviews possible acquisition
candidates and is in discussions from time to time with one or more of such
candidates, it currently has not entered into any agreements with respect
to any significant acquisitions.

Expand Operations Through "Tuck-In" Acquisitions. Once it gains a
foothold in a particular market, the Company focuses on acquiring smaller
companies that also operate in that market and surrounding markets. By
acquiring smaller "tuck-in" companies that operate in markets already
serviced by the Company, the Company not only is able to grow its revenue
and increase its market share, but also is able to integrate operations and
consolidate duplicative facilities and functions to maximize cost
efficiencies and economies of scale.

- - INTERNAL GROWTH. The Company's internal growth strategy is to take advantage
of the higher than average population growth in the markets in which the
Company operates by obtaining long-term exclusive franchise agreements and
expanding its well-managed sales and marketing activities.

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OPERATING STRATEGY

- - LEAD WITH EXPERIENCED EXECUTIVE MANAGEMENT TEAM. The Company believes that it
has one of the most experienced executive management teams among
publicly-traded companies in the solid waste industry.

H. Wayne Huizenga, the Company's Chairman and Chief Executive Officer,
co-founded Waste Management, Inc. ("Waste Management") in 1971, and served in
various executive positions with Waste Management until 1984, which had by
then become the world's largest integrated solid waste services company. From
1987 until 1994, Mr. Huizenga served as Chairman and Chief Executive Officer
of Blockbuster Entertainment Corporation ("Blockbuster"), leading its growth
from 19 stores to the world's largest video rental company. In August 1995, he
became Chairman and Chief Executive Officer of Parent and, in less than three
years, Parent's Solid Waste Group acquired businesses with an aggregate of
over $1.0 billion in annual revenue.

Harris W. Hudson, the Company's Vice Chairman, worked closely with Mr.
Huizenga, from 1964 until 1982, at Waste Management and at the private waste
hauling firms they operated prior to the formation of Waste Management. In
1983, Mr. Hudson founded Hudson Management Corporation ("Hudson Management"),
a solid waste collection company in Florida, and served as its Chairman and
Chief Executive Officer until it merged with Parent in August 1995. By that
time, Hudson Management had grown to over $50.0 million in annual revenue,
becoming one of Florida's largest privately-held solid waste collection
companies based on revenue. Since August 1995, Mr. Hudson has served in
various executive officer positions for Parent, including President and Vice
Chairman.

James H. Cosman, the Company's President and Chief Operating Officer, has
served as President of Parent's Solid Waste Group since January 1997. Prior to
joining Parent, Mr. Cosman was employed by Browning-Ferris Industries, Inc.
("Browning-Ferris"), a leading national integrated solid waste management
company, for over 24 years. During that time, he served in various management
positions, including Regional Vice President -- Northern Region.

The other officers with responsibility for operational affairs of the
Company have an average of over 15 years of management experience in the solid
waste industry.

Prior to the Distribution, Mr. Huizenga intends to resign as Chief
Executive Officer of the Company as soon as the Company is able to appoint a
successor, although Mr. Huizenga intends to remain as Chairman of the Board.
It is currently anticipated that Messrs. Hudson and Cosman and such other
officers will devote substantially all of their time to the management of the
Company.

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in," of smaller acquired businesses into larger existing operations reduces
costs by decreasing capital and expenses used in routing, personnel, equipment
and vehicle maintenance, inventories and back-office administration. The
Company has reduced its selling, general and administrative expenses from
17.1% of consolidated revenue in 1995 to 10.4% of consolidated revenue in
1997.

- - ACHIEVE HIGH LEVELS OF CUSTOMER SATISFACTION. The Company complements its
operating strategy with a goal of maintaining high levels of customer
satisfaction. The Company's personalized sales process of periodically
contacting commercial, industrial and municipal customers is intended to
maintain relationships and ensure service is being properly provided.

The Company is currently a wholly owned subsidiary of Parent. The Company
is a Delaware corporation with its principal executive offices located at The
Republic Tower, 110 S.E. Sixth Street, Fort Lauderdale, Florida 33301, and its
telephone number at that address is (954) 769-6000.

BACKGROUND

Since 1995, Parent has acquired and developed numerous businesses in
several industries, which currently are operated in three broad business
segments, consisting of automotive retail, vehicle rental and solid waste
services. In May 1998, Parent announced its intention to separate the Company,
which constitutes the solid waste services businesses and operations of Parent,
and the associated assets and liabilities of such solid waste businesses and
operations, from Parent's other businesses and operations (the "Separation").
Parent also announced its intention to complete the Offerings (as defined
below), and to complete the Separation by the distribution to Parent's
stockholders in 1999, subject to certain conditions and consents, of all of
Parent's remaining interest in the Company (the "Distribution"). See "Background
of the Offerings -- Conditions to the Distribution." The Company and Parent have
entered into certain agreements providing for the Separation and Distribution
and governing various interim and ongoing relationships between the companies
after completion of the Offerings and the Distribution, including an agreement
between the Company and Parent providing for the purchase by the Company of
certain services from Parent. See "Background of the Offerings" and "Certain
Transactions."

The Company's authorized and outstanding capital stock currently consists
of a single class of common stock, all of which is held by Parent. Prior to
consummation of the Offerings (the "Offerings Closing Date"), the Company will
amend and restate its Certificate of Incorporation, as amended to date (the
"Certificate"), to authorize two classes of common stock consisting of Class A
Common Stock, $.01 par value per share ("Class A Common Stock"), and Class B
Common Stock, $.01 par value per share ("Class B Common Stock," which together
with the Class A Common Stock is sometimes referred to herein as "Common
Stock"). The Class A Common Stock and Class B Common Stock will be identical in
all respects, except that holders of Class A Common Stock will be entitled to
one vote per share while holders of Class B Common Stock will be entitled to
five votes per share on all matters submitted to a vote of stockholders. Shares
of Class B Common Stock may convert into shares of Class A Common Stock in
certain circumstances. See "Description of Capital Stock." Prior to the
Offerings Closing Date, all outstanding shares of common stock of the Company
held by Parent will be converted into shares of Class B Common Stock, which will
constitute 100% of the outstanding shares of Class B Common Stock.

In order to achieve part of the overall business purpose of the
Distribution, which is to raise capital for Parent's future acquisitions of
automotive retail operations and other corporate purposes in the most cost
efficient manner, the Company declared and paid a $2.0 billion dividend in April
1998 in the form of a series of promissory notes payable by the Company to
Parent (the "Company Notes"). The amount of the dividend was determined based on
Parent's need for capital to fund future acquisitions and the Company's
borrowing capacity. The Company Notes bear interest at a rate of LIBOR plus 30
basis points per annum and mature April 12, 1999. As of June 29, 1998, the
amount of the Company Notes outstanding equaled approximately $1,977.1 million.
In addition, the Company has other obligations, consisting of amounts due to
Parent (the "Affiliate Payable") which equaled approximately $139.5 million as
of June 30, 1998, and certain intercompany borrowings payable to an affiliate of
Parent, Republic Resources Company, Inc. ("Resources"), which equaled
approximately $165.4 million as of June 30, 1998 net of an intercompany loan
receivable from Resources due to the Company (the "Resources Note Receivable")
in the amount of approximately $90.5

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million as of June 30, 1998. Excluding the Resources Note Receivable as an
offset, amounts owed to Resources equaled approximately $255.9 million as of
June 30, 1998 (the "Resources Notes Payable"). On June 30, 1998, the Company
prepaid $542.5 million of the Company Notes with certain assets received from a
dividend declared and paid by Resources to the Company (the "Resources
Dividend") and with the Resources Note Receivable. Prior to the Offerings
Closing Date, the Company will repay in full the Affiliate Payable and the
Resources Notes Payable through issuance by the Company of 16.5 million shares
of Class A Common Stock. All of the net proceeds of the Offerings will
immediately be used by the Company to prepay $1,246.5 million of the Company
Notes payable to Parent. The remaining $188.1 million of the Company Notes will
be prepaid in full within 31 days after the Offerings Closing Date through the
issuance by the Company of shares of Class A Common Stock to Parent based on the
initial public offering price per share, to the extent that the net proceeds, if
any, from the exercise of the Underwriters' over-allotment options are not
sufficient to prepay all such remaining amounts. The Company will pay interest
that accrues on the Company Notes out of its cash flow from operations until all
remaining amounts outstanding of the Company Notes are prepaid in full. The
Company has granted Parent certain registration rights with respect to shares of
Class A Common Stock and Class B Common Stock to be held by Parent and its
wholly owned subsidiaries following the Offerings Closing Date. See "Certain
Transactions -- Separation and Distribution Agreement -- Registration Rights."

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THE OFFERINGS

The offering of 44,000,000 shares of the Class A Common Stock, par value
$.01 per share, in the United States and Canada (the "U.S. Offering") and the
offering of 11,000,000 shares of the Class A Common Stock outside the United
States and Canada (the "International Offering") are collectively referred to
herein as the "Offerings."

Class A Common Stock offered by the Company................. 55,000,000 shares
Common Stock to be outstanding after the Offerings:
Class A Common Stock...................................... 79,311,917 shares(1)(2)
Class B Common Stock...................................... 95,688,083 shares(1)
Total..................................................... 175,000,000 shares(1)(2)
Use of Proceeds............................................. All of the net proceeds to be received
by the Company from the Offerings will
immediately be used to prepay in part
certain outstanding amounts of the
Company Notes payable to Parent. See
"Use of Proceeds."
Voting Rights; Conversion................................... The holders of Class A Common Stock and
Class B Common Stock have identical
rights, including as to dividends and
liquidation preferences, except that
holders of Class A Common Stock are
entitled to one vote per share and
holders of Class B Common Stock are
entitled to five votes per share.
Holders of Class A Common Stock and
Class B Common Stock generally vote
together as a single class, except as
otherwise required by Delaware law.
Under certain circumstances, Class B
Common Stock converts into Class A
Common Stock. See "Description of
Capital Stock."
New York Stock Exchange ("NYSE") Symbol for Class A Common
Stock..................................................... "RSG"

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

(1) Includes 16,474,417 shares of Class A Common Stock that will be issued by
the Company prior to the Offerings Closing Date to repay in full the
Affiliate Payable and the Resources Notes Payable which equaled an
aggregate of $395.4 million as of June 30, 1998. Also includes 7,837,500
shares of Class A Common Stock that will be issued by the Company within 31
days immediately following the Offerings Closing Date to prepay the
remaining $188.1 million of the Company Notes outstanding after the
Resources Dividend and the application of the net proceeds to the Company
from the Offerings, and assuming that the Underwriters' over-allotment
options are not exercised. To the extent the Company receives proceeds from
the exercise of the Underwriters' over-allotment options to purchase up to
8,250,000 shares of Class A Common Stock, the Company will use the net
proceeds from the exercise to prepay the balance of the Company Notes and
the number of shares of Class A Common Stock issued to

Footnotes continued on following page

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Parent will be reduced accordingly. If the Underwriters' over-allotment
options are exercised in full, then the total number of shares of Class A
Common Stock and of Common Stock outstanding after the Offerings will be
79,724,417 and 175,412,500, respectively. Also includes 95,688,083 shares
of Class B Common Stock issued by the Company to Parent upon the
recapitalization of the existing 100 shares of common stock held by Parent.
(2) Does not include shares of Class A Common Stock that will be issuable upon
the exercise of outstanding employee stock options, not all of which will
be immediately exercisable, and which will be issued at the time of the
Distribution under the Company's 1998 Stock Incentive Plan in substitution
for certain Parent stock options held by employees of the Company. See
"Management -- Stock Incentive Plan" and "Certain Transactions -- Employee
Benefits Agreement." The Company intends to reserve 20.0 million shares of
Class A Common Stock for issuance pursuant to options to be granted under
such plan.

RISK FACTORS

Purchasers of Class A Common Stock in the Offerings should carefully
consider the risk factors set forth under the caption "Risk Factors" and the
other information included in this Prospectus prior to making an investment
decision. See "Risk Factors."

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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(IN MILLIONS, EXCEPT RATIOS AND PER SHARE DATA)

Set forth below is summary historical and pro forma financial and operating
data of the Company for the periods indicated. The pro forma statement of
operations and balance sheet data give effect to the transactions and events
described in "Unaudited Condensed Consolidated Pro Forma Financial Statements."
The summary consolidated historical and pro forma financial data set forth below
should be read in conjunction with the Company's Consolidated Financial
Statements and notes thereto included elsewhere in this Prospectus, "Unaudited
Condensed Consolidated Pro Forma Financial Statements" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations." See
Notes 3, 7, 10, 11 and 13 of Notes to Consolidated Financial Statements for a
discussion of business combinations, investment by Parent, restructuring and
other charges, discontinued operations and subsequent events and their effect on
comparability of year-to-year data. The summary historical and pro forma
financial data set forth below is not necessarily indicative of the results of
operations or financial position which would have resulted had the Separation
and the Offerings occurred during the periods presented.

THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------------------- --------------------------------------------
PRO FORMA PRO FORMA
1998 1998 1997 1997 1997 1996 1995
--------- -------- --------- ----------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
--------------------------------

STATEMENT OF OPERATIONS DATA:
Revenue......................................... $ 300.8 $ 300.8 $ 263.2 $1,127.7 $1,127.7 $ 953.3 $ 805.0
Expenses:
Cost of operations............................. 209.7 209.7 190.3 809.1 809.1 703.6 570.1
Selling, general and administrative............ 32.1 32.1 31.9 117.3 117.3 135.3 137.7
Restructuring and other charges................ -- -- -- -- -- 8.8 3.3
-------- -------- --------- -------- -------- -------- --------
Operating income................................ 59.0 59.0 41.0 201.3 201.3 105.6 93.9
Interest expense................................ (0.6) (5.4) (7.6) (5.7) (25.9) (29.7) (19.1)
Interest and other income, net.................. 0.8 0.8 3.0 6.7 6.7 13.9 6.2
-------- -------- --------- -------- -------- -------- --------
Income from continuing operations before income
taxes.......................................... 59.2 54.4 36.4 202.3 182.1 89.8 81.0
Provision for income taxes...................... 21.4 19.6 13.2 73.4 65.9 38.0 31.6
-------- -------- --------- -------- -------- -------- --------
Income from continuing operations............... 37.8 34.8 23.2 128.9 116.2 51.8 49.4
Loss from discontinued operations............... -- -- -- -- -- -- (24.8)
-------- -------- --------- -------- -------- -------- --------
Net income...................................... $ 37.8 $ 34.8 $ 23.2 $ 128.9 $ 116.2 $ 51.8 $ 24.6
======== ======== ========= ======== ======== ======== ========
Pro forma net income per share basic and
diluted(a)..................................... $ 0.22 $ 0.74
======== ========
Pro forma weighted average shares
outstanding(b)................................. 175.0 175.0
======== ========
OTHER OPERATING DATA:
EBITDA(c)....................................... $ 82.8 $ 82.8 $ 60.0 $ 287.4 $ 287.4 $ 180.9 $ 156.9
EBITDA margin(d)................................ 27.5% 27.5% 22.8% 25.5% 25.5% 19.0% 19.5%
Depreciation and amortization................... $ 23.8 $ 23.8 $ 19.0 $ 86.1 $ 86.1 $ 75.3 $ 63.0
Capital expenditures............................ 29.0 29.0 35.2 165.3 165.3 146.9 147.9
Cash flows from operating activities............ 80.3 80.3 73.1 279.4 279.4 143.5 125.4
Cash flows from investing activities............ (21.2) (21.2) (39.0) (168.1) (168.1) (175.7) (110.7)
Cash flows from financing activities............ (59.1) (59.1) (12.5) (135.5) (135.5) 20.3 2.8

PRO FORMA DECEMBER 31,
MARCH 31, MARCH 31, ---------------------------------
1998 1998(e) 1997 1996 1995
--------- --------- -------- -------- -----------
(UNAUDITED) (UNAUDITED)
--------------------

BALANCE SHEET DATA:
Total assets................................................ $1,492.6 $1,488.2 $1,348.0 $1,090.3 $ 838.9
Due to affiliate............................................ -- 114.8 107.8 49.3 86.3
Notes payable to Resources.................................. -- 130.9 158.3 205.6 38.7
Total debt, net of current maturities....................... 61.4 61.4 64.3 109.5 124.8
Total shareholders' equity.................................. 1,137.4 887.3 750.8 494.5 372.2

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(a) Historical net income per share has not been presented because it would not
be meaningful. Prior to the Offerings Closing Date, the Company had only 100
shares of common stock outstanding, all of which were owned by Parent.
Unaudited pro forma net income per common share is calculated based on net
income divided by the number of shares of Class A Common Stock and Class B
Common Stock to be outstanding after the Offerings Closing Date.

(b) Does not include outstanding options to purchase common stock of Parent held
by employees of the Company which may be converted into stock options
relating to the Company's Class A Common Stock at the Distribution Date. See
"Certain Transactions -- Employee Benefits Agreement" for a description of
the stock option substitution methodology.

(c) EBITDA represents operating income plus depreciation and amortization. While
EBITDA data should not be construed as a substitute for operating income, net
income or cash flows from operations in analyzing the Company's operating
performance, financial position and cash flows, the Company has included
EBITDA data (which is not a measure of financial performance under generally
accepted accounting principles ("GAAP")) because it believes that such data
is commonly used by certain investors to evaluate a company's performance in
the solid waste industry. Due to the fact that not all companies calculate
non-GAAP measures in the same manner, the EBITDA presentation herein may not
be comparable to similarly titled measures reported by other companies.

(d) EBITDA margin represents EBITDA divided by revenue.

(e) The pro forma effect of the $2.0 billion dividend declared in April 1998 on
the Company's March 31, 1998 financial position, assuming it occurred on
March 31, 1998, would have been to issue Company Notes payable to Parent in
the amount of $2.0 billion and to decrease shareholder's equity by $2.0
billion resulting in a shareholder's deficit of $1.1 billion.

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RISK FACTORS

Prospective purchasers of the Class A Common Stock offered hereby should
consider carefully all of the information set forth in this Prospectus, and, in
particular, should evaluate the following risks in connection with an investment
in the Class A Common Stock.

RISK OF NONCOMPLETION OF THE DISTRIBUTION; FAILURE TO OBTAIN FAVORABLE LETTER
RULING

Parent has announced that, subject to certain conditions, following the
Offerings, Parent intends to distribute to its stockholders in 1999 all of the
Common Stock owned by Parent. See "Background of the Offerings -- Conditions to
the Distribution" and "Certain Transactions -- Separation and Distribution
Agreement." One of the conditions to the Distribution is that Parent obtains a
private letter ruling from the Internal Revenue Service ("IRS") to the effect
that, among other things, the Distribution will qualify as a tax-free
distribution for federal income tax purposes under Section 355 of the Internal
Revenue Code of 1986, as amended (the "Code"), in form and substance
satisfactory to Parent (the "Letter Ruling"). Parent intends to apply for such a
Letter Ruling and to promptly take all necessary steps to complete such a
tax-free distribution within three months after satisfaction or waiver of all of
the conditions to the Distribution, including obtaining the Letter Ruling.
Parent does not plan to distribute its shares of Common Stock to Parent's
stockholders without such a favorable Letter Ruling, including a ruling
satisfactory to Parent that the general acquisition growth strategies of Parent
and the Company would not cause the Distribution to be taxable and that such
acquisition growth strategies would not be impeded by completing the
Distribution. Due to recent changes in the tax law and other factors, there is
no assurance that Parent will receive the Letter Ruling, or that it will receive
it within the time frame contemplated, and, consequently, there is no assurance
that the Distribution will occur or will occur within the time frame
contemplated. The Distribution also is subject to the condition that no events
or developments occur following the Offerings Closing Date that, in the sole
judgment of the Board of Directors of Parent (the "Parent Board"), would or
could result in the Distribution having a material adverse effect on Parent or
Parent's stockholders. In addition, as a condition to the Distribution, Parent
will be required to obtain certain consents from governmental authorities and
other third parties. There can be no assurance that any of such conditions, or
any other conditions to the Distribution, will be satisfied, or that the
Distribution will occur in the time frame contemplated or at all. The failure of
the Distribution to occur in the time frame contemplated or at all could
materially adversely affect the Company and the market price of the Class A
Common Stock. See "Background of the Offerings -- Separation and Distribution"
and "Certain Transactions -- Tax Indemnification and Allocation Agreement."

CONTROL OF THE COMPANY

Prior to the Offerings Closing Date, the Company has been a wholly owned
subsidiary of Parent. On the Offerings Closing Date, Parent will own
approximately 68.6% of the outstanding shares of Common Stock (63.9% if the
Underwriters exercise their over-allotment options in full), which will
represent approximately 90.1% of the combined voting power of all of the
outstanding shares of Class A Common Stock and Class B Common Stock (88.7% if
the Underwriters exercise their over-allotment options in full). As a result,
Parent will be able to control virtually all matters requiring approval of the
stockholders of the Company, including the election of all of the Company's
directors. The Company's Board of Directors (the "Board") currently consists of
two members, both of whom serve concurrently as members of the Parent Board.
Parent currently intends to maintain ownership of at least 80% of the combined
voting power of the Class A Common Stock and Class B Common Stock until the
Distribution can be completed. There can be no assurance that Parent will
complete the Distribution of the Common Stock held by it to Parent's
stockholders. If the Distribution is not effected, Parent could maintain a
controlling interest in the Company indefinitely, which may materially adversely
affect the Company and the market price of the Class A Common Stock. In
addition, for so long as Parent maintains a significant interest in the Company,
the market price of the Class A Common Stock may be adversely affected by events
relating to Parent which are unrelated to the Company.

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POTENTIAL ADVERSE EFFECT FROM DISPARATE VOTING RIGHTS

The holders of Class A Common Stock and Class B Common Stock have identical
rights except that holders of Class A Common Stock are entitled to one vote per
share while holders of Class B Common Stock are entitled to five votes per share
on all matters submitted to a vote of the stockholders. The differential in the
voting rights could adversely affect the value of the Class A Common Stock to
the extent that investors or any potential future purchaser of the Company views
the superior voting rights of the Class B Common Stock to have value. The
existence of two separate classes of Common Stock could result in less liquidity
for either class of Common Stock than if there were only one class of Common
Stock.

DEPENDENCE OF THE COMPANY ON PARENT FOR CERTAIN SERVICES

The Company historically has been dependent upon Parent for various
services including accounting, auditing, cash management, corporate
communications, corporate development, financial and treasury, human resources
and benefit plan administration, insurance and risk management, legal,
purchasing and tax services. The Company and Parent have entered into an
agreement under which Parent will continue to provide these services to the
Company in exchange for fees payable by the Company to Parent, for an initial
term expiring one year following the Offerings Closing Date. After the initial
term of such agreement, the Company will need to extend the term of such
agreement, engage others to perform such services or perform such services
internally. No assurance can be given that Parent will continue to provide the
Company with such services after the initial term of the agreement, or that the
cost of such services will not be significantly higher if the Company purchases
such services from unaffiliated providers or employs staff to handle such
functions internally. See "Certain Transactions -- Services Agreement."

INTERCOMPANY AGREEMENTS NOT SUBJECT TO ARM'S LENGTH NEGOTIATIONS

Parent and the Company have entered into certain intercompany agreements,
including agreements pursuant to which Parent will provide various services to
the Company that are material to the conduct of the Company's business. Because
the Company was a wholly owned subsidiary of Parent at the time these agreements
were entered into, none of these agreements resulted from arm's-length
negotiations and, therefore, there is no assurance that the terms and conditions
of such agreements are as favorable to the Company as could have been obtained
by the Company from unaffiliated third parties. See "Certain Transactions."

CONFLICTS OF INTEREST

Three of the executive officers of Parent are executive officers of the
Company and all of the members of the Board are members of the Parent Board. In
addition, certain executive officers and directors of the Company hold shares of
common stock, par value $.01 per share, of Parent ("Parent Common Stock"), and
options and warrants to acquire shares of Parent Common Stock. Accordingly,
there is a potential that such individuals may have conflicts of interest with
respect to certain decisions which may arise in the ordinary course of the
business of Parent or the Company, including with respect to relationships
between Parent and the Company under intercompany agreements and whether to
complete the Distribution. See "Certain Transactions." No formal procedures have
been established to resolve any conflicts that may confront the Company and such
other persons, and the Company intends to resolve such conflicts on a
case-by-case basis.

LIMITED ABILITY TO ISSUE COMMON STOCK PRIOR TO DISTRIBUTION

In order for the Distribution to be tax-free to Parent and Parent's
stockholders, among various other requirements, Parent must distribute to
Parent's stockholders on the date of the Distribution (the "Distribution Date")
(a) stock of the Company possessing at least 80% of the total combined voting
power of all classes of voting stock of the Company and (b) 80% of the total
number of shares of each class of non-voting stock of the Company (the "Required
Distribution Percentage"). If Parent were not able to distribute to its
stockholders shares of stock of the Company constituting the Required
Distribution Percentage, the Distribution would not be tax-free and would not
occur. Accordingly, the Company has agreed in the Separation and Distribution
Agreement (as defined below) not to issue additional shares of Common Stock,
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or any other class of stock including preferred stock, without the consent of
Parent if such issuance would, or could, dilute or otherwise reduce Parent's
ownership of Common Stock, or any other such class of stock, below the Required
Distribution Percentage or otherwise prevent the Distribution from receiving
tax-free status. The Separation and Distribution Agreement will terminate if the
Distribution does not occur on or prior to December 31, 1999, unless extended by
Parent and the Company. Prior to the Distribution Date, these restrictions may
impede the ability of the Company to issue equity securities, including Common
Stock, to raise necessary equity capital or to complete acquisitions using
equity securities, including Common Stock, as acquisition currency and thereby
prevent the Company from realizing its business and growth strategies prior to
the Distribution Date. See "Certain Transactions -- Separation and Distribution
Agreement."

TAX INDEMNIFICATION OBLIGATION

As a condition to Parent effecting the Distribution, the Company has agreed
to indemnify Parent for any tax liability suffered by Parent arising out of
actions by the Company after the Distribution that would cause the Distribution
to lose its qualification as a tax-free distribution for federal income tax
purposes under Section 355 of the Code. For example, the Company may be required
to refrain from taking certain actions after the Distribution, such as issuing
an additional amount of its capital stock in a single transaction or series of
transactions related to the Distribution which, when combined with the Class A
Common Stock issued in the Offerings and any shares of Common Stock sold by
Parent prior to the Distribution, could cause a 50% or greater change in the
vote or value of the outstanding capital stock of the Company. In the event that
the Company is required to indemnify and reimburse Parent for any tax liability
incurred by Parent arising out of the Distribution, such indemnification and
reimbursement would have a material adverse effect on the business, financial
condition, results of operations and prospects of the Company. See "Certain
Transactions -- Tax Indemnification and Allocation Agreement."

LIMITED RELEVANCE OF HISTORICAL FINANCIAL INFORMATION

The financial information included herein may not necessarily reflect the
results of operations, financial position and cash flows of the Company in the
future or what the results of operations, financial position and cash flows
would have been had the Company been a separate, stand-alone entity during the
periods presented. The historical financial information included herein does not
reflect many significant changes that will occur in the funding and operations
of the Company as a result of the Separation, the Offerings, and the
Distribution. See "Certain Transactions," "Unaudited Condensed Consolidated Pro
Forma Financial Statements," including the discussion of the assumptions
reflected therein, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

FUTURE CAPITAL REQUIREMENTS; ABSENCE OF PARENT FUNDING

The Company's working capital requirements and cash flow provided by
operating activities can vary from quarter to quarter, depending on the timing
of capital expenditures, acquisitions and other factors. The Company is not
currently operated as a stand-alone company. In the past, the Company's needs
for working capital and general corporate purposes, including acquisitions, have
been satisfied pursuant to Parent's corporate-wide cash management policies.
However, immediately after the Offerings Closing Date, Parent will not be
required to provide funds to finance the Company's operations or acquisitions.
The Company expects that it will incur long-term debt as well as short-term
debt, and that it may not be able to obtain financing with interest rates or
repayment terms as favorable as those historically enjoyed by Parent, with the
result that the Company's cost of capital may be higher than that reflected in
its historical financial statements. The Company has obtained commitments from
Bank of America National Trust and Savings Association, The Chase Manhattan
Bank, The First National Bank of Chicago, NationsBank, N.A. and other lenders
for a $1.0 billion revolving credit facility. The closing of such revolving
credit facility is expected to occur after the Offerings Closing Date, but there
can be no assurance that such financing will occur. If such financing does not
occur, there can be no assurance that the Company will be able to obtain other
debt financing on terms as favorable to the Company as currently proposed or as
its existing indebtedness. Parent's bank credit facilities restrict the ability
of Parent and its subsidiaries to incur indebtedness, incur liens, consummate
certain asset sales, make certain investments, or enter into certain
transactions with affiliates,

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subject in each case to exceptions, and require Parent to maintain certain
consolidated financial ratios. While the Company remains a subsidiary of Parent,
these restrictive covenants and financial ratios could adversely affect the
Company and the market price of the Class A Common Stock. Parent has amended its
credit facilities to permit the Company to incur unsecured indebtedness in
excess of $1.0 billion. If the Company is unable to obtain financing in the
amounts desired and on acceptable terms, the Company may be required to reduce
significantly the scope of its presently anticipated acquisition growth
strategy, which could have a material adverse effect on the Company's growth
prospects and the market price of the Class A Common Stock. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

COMPETITIVE ENVIRONMENT

The Company's business operates in a highly competitive environment. In
addition, the solid waste industry is changing as a result of rapid
consolidation. The future success of the Company will be affected by such
changes, the nature of which cannot be forecast with certainty. There can be no
assurance that such developments will not create additional competitive
pressures on the Company's business. Certain of the Company's competitors have
significantly larger operations, and may have significantly greater financial
resources, than the Company. In addition to national and regional firms and
numerous local companies, the Company may compete with those municipalities that
maintain waste collection or disposal operations. These municipalities may have
a financial advantage relative to the Company due to the availability of tax
revenue and tax-exempt financing. In each market in which it owns or operates a
landfill, the Company competes for solid waste volume on the basis of disposal
fees (commonly known as "tipping fees"), geographical location and quality of
operations. The Company's ability to obtain solid waste volume may be limited by
the fact that some major collection companies also own or operate landfills to
which they send their waste. The Company competes for collection accounts
primarily on the basis of price and the quality of its services. From time to
time, competitors may reduce the price of their services in an effort to expand
market share or to win a competitively bid municipal contract. See
"Business -- Competition."

DEPENDENCE ON ACQUISITIONS FOR GROWTH

The Company's ability to execute its growth strategy depends in large part
on its ability to identify and acquire desirable acquisition candidates. In
addition, the implementation of its growth strategy will depend on the Company's
ability to successfully integrate the acquired companies' operations and to
increase the market share of such businesses. The consolidation of operations of
acquired companies with those of the Company, the integration of systems,
procedures, personnel and facilities, the relocation of staff, and the
achievement of anticipated cost savings, economies of scale and other business
efficiencies present significant challenges to management, particularly if
several acquisitions proceed at the same time. There can be no assurance that
the Company will be able to continue to identify desirable acquisition
candidates, that any identified candidates will be acquired, that acquired
companies will be effectively integrated to fully realize expected cost savings,
economies of scale and business efficiencies, or that any such acquisitions will
prove to be profitable or accretive to the Company's earnings. The acquisition
of companies requires the expenditure of significant amounts of capital, and the
intense competition among companies, particularly publicly-owned competitors of
the Company, pursuing the same acquisition candidates may further increase such
capital requirements. In addition, the inability of the Company to account for
acquisitions under the pooling of interests method of accounting for a period
ending two years following the Distribution may impede its ability to complete
certain transactions. Furthermore, in order not to adversely impact the tax-free
status of the Distribution following the Distribution, the Company may be
required to refrain from issuing additional shares of its capital stock in a
single transaction or series of transactions related to the Distribution which,
when combined with the Class A Common Stock issued in the Offerings and any
shares of Common Stock sold by Parent prior to the Distribution, could cause a
50% or greater change in the vote or value of the outstanding capital stock of
the Company. In the event that acquisition candidates are not identifiable or to
the extent that acquisitions are prohibitively costly or dilutive to projected
earnings, the Company may be forced to alter its growth strategy. As the Company
continues to pursue its acquisition strategy in the future, its financial
condition, results of operations and prospects and the market price of the Class
A Common Stock may fluctuate significantly.

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UNDISCLOSED LIABILITIES OF ACQUIRED BUSINESSES

There may be liabilities that the Company fails or is unable to discover in
the course of performing due diligence investigations on each company or
business it seeks to acquire, including liabilities arising from non-compliance
with certain federal, state or local environmental laws by prior owners and for
which the Company, as a successor owner, may be responsible. The Company
generally seeks to minimize its exposure to such liabilities by obtaining
indemnification from each seller of the acquired companies, which
indemnification obligation may be supported by deferring payment of a portion of
the purchase price. However, there can be no assurance that such
indemnifications, even if obtainable, will be enforceable, collectible or
sufficient in amount, scope or duration to fully offset the possible liabilities
arising from the acquisitions.

MANAGEMENT OF GROWTH

The Company's growth has placed, and execution of its growth strategy is
expected to continue to place, significant demands on its financial, operational
and management resources. In order to meet expected growth and to operate
independently of Parent as a stand-alone company, the Company will need to add
administrative and other personnel, and make additional investments in
operations and systems. There can be no assurance that the Company will be able
to find and train qualified personnel, or do so on a timely basis, or expand its
operations and systems to the extent and in the time required.

DEPENDENCE ON KEY PERSONNEL

The Company's future success depends to a significant extent on certain key
executive officers. None of the Company's executive officers have employment
agreements and the Company does not maintain key man life insurance policies on
any of its executive officers. In addition, as a result of the Separation, the
Company will need to employ additional personnel for certain functions that were
previously performed by employees of Parent. Moveover, certain executive
officers of the Company intend to resign their positions with the Company prior
to the Distribution and new executives will need to be hired by the Company to
replace them. The loss of the services of key employees (whether such loss is
through resignation or other causes) or the inability to attract additional
qualified personnel could have a material adverse effect on the Company's
financial condition, results of operations and prospects and the market price of
the Class A Common Stock. See "Management."

ENVIRONMENTAL REGULATION

It may be necessary to expend considerable time, effort and capital to keep
the Company's existing and acquired facilities in compliance with applicable
federal, state and local requirements which regulate health, safety,
environment, zoning and land use. In addition, certain of the Company's waste
operations that traverse state boundaries could be adversely affected if the
federal government or the state or locality in which such operations are located
limits or prohibits, imposes discriminatory fees on or otherwise seeks to
discourage the transportation or disposal of solid waste. If environmental laws
become more stringent, the Company's environmental capital expenditures and
costs for environmental compliance may increase in the future. In addition, due
to the possibility of unanticipated events, including regulatory developments,
the amounts and timing of future environmental expenditures could vary
substantially from those currently anticipated. By virtue of the nature of its
operations, the Company has in the past and may in the future be named as a
potentially responsible party in connection with the investigation or
remediation of environmental conditions. There can be no assurance that the
resolution of such matters will not have a material adverse effect on the
financial condition, results of operations and prospects of the Company. The
Company currently provides for accrued environmental and landfill costs which
include landfill site closure and post-closure costs. At December 31, 1997,
assuming that all available landfill capacity is used, approximately $280.0
million of such costs are expected to be expensed over the remaining lives of
these facilities. There can be no assurance that the Company's reserves for
environmental and landfill costs will be adequate to cover requirements under
existing or new environmental regulations, future changes or interpretations of
existing regulations or the identification of adverse environmental conditions
previously unknown to the Company. See "Business --

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Regulation" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Environmental and Landfill Matters."

RISKS OF LEGAL PROCEEDINGS

The Company generally is and will continue to be involved in various
administrative and legal proceedings in the ordinary course of business. No
assurance can be given with respect to the outcome of these proceedings or the
effect such outcomes may have on the Company, or that the Company's insurance
coverages or reserves with respect thereto are adequate. Citizen's groups have
become increasingly active in challenging the grant or renewal of permits and
licenses for landfills and other waste facilities, and responding to such
challenges has further increased the costs and extended the time associated with
establishing new facilities or expanding existing facilities. A significant
judgment against the Company, the loss of significant permits or licenses, or
the imposition of a significant fine could have a material adverse effect on the
Company's financial condition, results of operations and prospects.

Except for routine litigation incidental to the business of the Company,
there are no pending material legal proceedings to which the Company is a party
or to which any of its property is subject. However, unfavorable resolution of
any proceedings to which the Company is a party could affect the consolidated
results of operations, or cash flows for the quarterly period in which they are
resolved.

SEASONALITY

The Company's operations can be adversely affected by periods of inclement
weather which could delay the collection and disposal of waste, reduce the
volume of waste generated or delay the construction or expansion of the
Company's landfill sites and other facilities.

SHARES ELIGIBLE FOR FUTURE SALE

Subject to applicable law and to the contractual restriction with the
Underwriters described below, Parent may sell any and all of the shares of
Common Stock it owns after completion of the Offerings. The Separation and
Distribution Agreement provides that Parent will have the right in certain
circumstances to require the Company to use its best efforts to register for
resale shares of Common Stock held by Parent and its wholly owned subsidiaries.
See "Certain Transactions -- Separation and Distribution Agreement." Parent
intends to exercise its right to cause the Company to register for resale,
subject to the 180-day lock-up period described below, shares of Class A Common
Stock held by Parent and its wholly owned subsidiaries in order to sell such
shares for cash prior to the Distribution. In addition, prior to the
Distribution, Parent may acquire additional solid waste companies and contribute
them to the Company in exchange for additional shares of Common Stock and,
subject to the Company's lock-up described below, Parent may otherwise make
investments in the Company prior to the Distribution. The planned Distribution
would involve the distribution of an aggregate of approximately 95.7 million
shares of Class B Common Stock and approximately 24.3 million shares of Class A
Common Stock (16.5 million shares of Class A Common Stock if the Underwriters
exercise their over-allotment options in full) to the stockholders of Parent in
1999 (assuming that no additional shares of Common Stock are disposed of or
acquired by Parent between the Offerings Closing Date and the Distribution
Date). Shares of Class B Common Stock may convert into shares of Class A Common
Stock in certain circumstances. See "Description of Capital Stock."
Substantially all of the shares of Common Stock to be distributed to Parent's
stockholders in the Distribution will be eligible for immediate resale in the
public market. The Company is unable to predict whether substantial amounts of
Common Stock will be sold in the open market in anticipation of, or following,
the Distribution. Any sales of substantial amounts of Common Stock in the public
market, or the perception that such sales might occur, whether as a result of
the Distribution or otherwise, could materially adversely affect the market
price of the Class A Common Stock. The Company and Parent have agreed, for a
period of 90 days and 180 days, respectively, after the date of this Prospectus,
not to offer or sell any shares of Common Stock, subject to certain exceptions
(including the Distribution), without the prior written consent of Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") on behalf of the
Underwriters; provided that the Company may at any time and from time to time
(i) issue shares of Class A Common Stock to third parties as consideration for
the Company's acquisition from such third parties of non-hazardous solid waste
businesses, (ii) grant options to purchase

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shares of Common Stock under the Company's 1998 Stock Incentive Plan and (iii)
issue shares of Common Stock to Parent in connection with the prepayment of the
Affiliate Payable, the Resources Notes Payable and the remaining amounts
outstanding of the Company Notes and as consideration for the Company's
acquisition from Parent of a non-hazardous solid waste business, in each case
without the prior consent of Merrill Lynch. See "Shares Eligible for Future
Sale." Following the Offerings Closing Date, the Company may issue shares of
Class A Common Stock in connection with acquisitions, subject to the Company's
agreement with Parent not to issue any shares of capital stock that would reduce
Parent's ownership below the Required Distribution Percentage. See "Certain
Transactions -- The Separation and Distribution Agreement -- The Distribution."
In addition, the Company may also from time to time file registration statements
covering the issuance and/or resale of shares of Class A Common Stock which may
be issued in potential future acquisitions.

IMMEDIATE AND SUBSTANTIAL DILUTION

Based on the initial public offering price of $24.00 per share, purchasers
of shares of Class A Common Stock in the Offerings will incur immediate and
substantial dilution of $20.17 per share in the net tangible book value of their
purchased shares of Class A Common Stock. See "Dilution." Investors may also
experience additional dilution as a result of shares of Common Stock being
issued in connection with future business acquisitions and as a result of the
issuance and exercise of employee stock options. See "Management -- Stock
Incentive Plan," "Certain Transactions -- Employee Benefit Agreement" and
"Shares Eligible for Future Sale."

NO DIVIDENDS

Following the Offerings Closing Date, the Company intends to retain all
earnings for the foreseeable future for use in the operation and expansion of
its business. Consequently, the Company does not anticipate paying any cash
dividends on its Common Stock to its stockholders for the foreseeable future. In
addition, it is probable that debt financing agreements to be entered into by
the Company will contain restrictions on the Company's ability to declare
dividends. See "Dividend Policy."

ABSENCE OF PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offerings, there has been no public market for the Class A
Common Stock. Although the Class A Common Stock has been approved for listing on
the NYSE, subject to official notice of issuance, there can be no assurance that
an active trading market for the Class A Common Stock will develop or be
sustained following the Offerings or that the market price of the Class A Common
Stock will not decline below the initial public offering price. The initial
public offering price was determined by negotiation among the Company and the
Underwriters based upon several factors and may not be indicative of future
market prices or indicative of total shareholders' equity as reflected on its
balance sheet. The price at which the Class A Common Stock will trade will
depend upon a number of factors, including, but not limited to, the Company's
historical and anticipated operating results, announcements by the Company or
its competitors, and general market and economic conditions, some of which
factors are beyond the Company's control. In addition, the stock market has from
time to time experienced extreme price and volume fluctuations. These broad
market fluctuations may adversely affect the market price of the Class A Common
Stock. See "Underwriting."

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BACKGROUND OF THE OFFERINGS

SEPARATION AND DISTRIBUTION

Since 1995, Parent has acquired and developed numerous businesses in
several industries, which currently are operated in three broad business
segments, consisting of automotive retail, vehicle rental and solid waste
services. Parent has announced that, subject to certain conditions, Parent
intends to separate the Company, which owns and operates the Parent's solid
waste services business, from Parent's other operations and businesses, to
complete the Offerings, and to distribute to its stockholders in 1999 all of the
Common Stock then owned by Parent. See "Risk Factors -- Risk of Noncompletion of
the Distribution; Failure to Obtain Favorable Letter Ruling."

As a part of Parent, the solid waste companies that now comprise the
Company on a consolidated basis historically have operated as a group of
subsidiaries wholly owned, directly and indirectly, by the Company. The
Separation will establish the Company as a stand-alone entity with objectives
separate from those of Parent. The Company intends to focus its resources and
management emphasis on the operations and markets it views as critical to its
long-term success as a stand-alone entity.

Prior to the Offerings Closing Date and after effecting the Resources
Dividend, Parent will effect the Separation in part by causing all of the common
stock of Resources to be distributed by the Company to Parent. Resources is a
subsidiary of the Company and substantially all of its assets and liabilities
relate to Parent's automotive retail businesses, and do not relate to the
Company's solid waste services businesses. The Company's financial statements
exclude the accounts of Resources. In addition, prior to the Offerings Closing
Date, certain subsidiaries engaged in the solid waste services business and
wholly owned, directly and indirectly, by the Company will be reorganized
internally within the Company's consolidated group of subsidiaries. Prior to the
Distribution, certain subsidiaries engaged in automotive operations and wholly
owned, directly or indirectly, by Parent will be reorganized internally within
Parent's consolidated group of automotive subsidiaries, which will require
certain approvals from third parties. The Company and Parent have entered into a
Separation and Distribution Agreement (the "Separation and Distribution
Agreement") and certain other agreements providing for the Separation, the
Offerings, the Distribution and the provision by Parent of certain interim
services to the Company, and addressing employee benefit arrangements, and tax
and other matters. See "Certain Transactions." Other than as discussed in
"Certain Transactions," the Company and Parent have no present plan or intention
to enter into any transactions or contracts with each other.

On the Offerings Closing Date, Parent will own approximately 68.6% of the
outstanding Common Stock (63.9% if the Underwriters exercise their
over-allotment options in full), which will represent approximately 90.1% of the
combined voting power of all of the outstanding shares of Class A Common Stock
and Class B Common Stock (88.7% if the Underwriters exercise their
over-allotment options in full). Following the Offerings Closing Date, Parent
and the Company will take all reasonable steps necessary and appropriate to
cause all conditions to the Distribution to be satisfied and to effect the
Distribution of the Common Stock held by Parent to Parent's stockholders. See
"Certain Transactions -- Separation and Distribution Agreement -- The
Distribution." Prior to the Distribution Date, Parent and its wholly owned
subsidiaries may sell, subject to its lock-up agreement with the Underwriters,
shares of Class A Common Stock to raise cash. In that regard, the Company has
granted to Parent and its wholly owned subsidiaries certain registration rights
with respect to shares of Common Stock held by Parent and its wholly owned
subsidiaries. Prior to the Distribution Date, Parent may convert shares of Class
B Common Stock into shares of Class A Common Stock in order to resell such
shares to raise cash. However, Parent currently intends to retain enough shares
of Common Stock such that the Distribution will qualify as a tax-free
distribution under Section 355 of the Code. Parent is required to retain at
least 80% of the total voting interest in the Company in order to meet one of
the conditions to obtaining a Letter Ruling and therefore Parent intends to
retain at least approximately 89.2 million shares of Class B Common Stock
(assuming a total of 175.0 million shares of Common Stock are issued and
outstanding following the Offerings Closing Date) until the Distribution is
completed. At the time of the Distribution, Parent intends to distribute all
shares of Common Stock then held by it, including any shares of Class A Common
Stock not sold prior to that time and any shares of Class B Common Stock not
previously converted into Class A Common Stock, so that Parent will own no
shares of Common Stock upon completion
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of the Distribution. Following the Distribution, there are restrictions on the
conversion of Class B Common Stock into Class A Common Stock. See "Description
of Capital Stock -- Conversion."

Several business purposes underlie the proposed Distribution. Parent
desires to access the capital markets and has determined that raising funds
through the completion by the Company of the Offerings will maximize value to
Parent and its stockholders. The completion of the Offerings will allow the
Company to prepay a portion of the Company Notes payable to Parent. Parent
intends to use the funds received from the Company for Parent's future
acquisitions, particularly in its automotive retail operations, and for Parent's
other corporate purposes.

The Company and Parent believe that the foregoing arrangement provides the
most effective source of capital for both Parent and the Company and is part of
the initial capitalization of the Company as a stand-alone entity. Parent and
the Company believe that such arrangement provides each entity with the most
prudent capital structures to realize their respective growth strategies as
separate, stand-alone entities, based on the Company's and Parent's prospective
capitalization and financing requirements, acquisition strategies, working
capital requirements, projected cash flow from operations and desired credit
ratings, respectively.

In addition to raising capital for Parent, the Company and Parent believe
that the Distribution will enhance the Company's ability to implement its growth
and operating strategies. As part of Parent, cash flow generated by the Company
has been used to support growth in Parent's other business segments. The Company
desires to be able to devote all of its cash flow to support its own operations
and future growth. Following the Offerings Closing Date, the Company's cash flow
will be devoted solely to support the Company's operations and future growth. In
addition, the Company believes that its future growth would be enhanced if its
management were compensated on a separate basis from Parent. Similarly, Parent
believes that its future growth would be enhanced if management of its remaining
business segments were more focused on such segments without also being
responsible for the solid waste segment. Finally, upon completion of the
Distribution, holders of Parent Common Stock as of the record date for the
Distribution will be entitled to receive a dividend of Common Stock without the
payment of further consideration, although Parent expects the market value of
shares of Parent Common Stock to diminish upon effecting the Distribution to
reflect the value (per share of Parent Common Stock) of the shares of Common
Stock distributed by Parent.

The Company believes that its capitalization and cash flow from operations
and ability to obtain short-term and long-term debt financings will be
sufficient to satisfy its future working capital, capital expenditures,
acquisitions and debt service requirements. The Company also believes that it
will be able to procure bid and performance bonds, to arrange for revolving
lines of credit and other financing as necessary, and to engage in hedging
transactions, on commercially acceptable terms. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Pro Forma Financial
Condition" and "Risk Factors -- Future Capital Requirements; Absence of Parent
Funding."

CONDITIONS TO THE DISTRIBUTION

In accordance with the Separation and Distribution Agreement, completion of
the Distribution will be subject to the satisfaction, or waiver by the Parent
Board, in its sole discretion, of the following conditions: (i) a Letter Ruling
shall have been obtained and remain effective to the effect that, among other
things, the Distribution will qualify as a tax-free distribution for federal
income tax purposes under Section 355 of the Code, and will not result in
recognition of any gain or loss for federal income tax purposes to Parent, the
Company, or Parent's or the Company's respective stockholders, and such ruling
shall be in form and substance satisfactory to Parent, in its sole discretion;
(ii) any material Governmental Approvals and Consents (as such terms are defined
in the Separation and Distribution Agreement) necessary to consummate the
Distribution shall have been obtained and shall be in full force and effect;
(iii) no order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Distribution shall be in effect, and no other event outside the control
of Parent shall have occurred or failed to occur that prevents the consummation
of the Distribution; and (iv) no other events or developments shall have
occurred subsequent to the closing of the Offerings that, in the judgment of the
Parent Board, would result in the Distribution having a material adverse effect
on Parent or on the

19
21

stockholders of Parent. Parent intends to apply for a Letter Ruling promptly.
The Parent Board will have the sole discretion to fix the record date for the
Distribution and fix the Distribution Date, at any time within three months
following the satisfaction or waiver of all of the conditions to the
Distribution, including the receipt of the Letter Ruling. It is currently
contemplated that the Letter Ruling will not be received until sometime in 1999.
The record date to determine holders of Parent Common Stock entitled to receive
shares of Common Stock in the Distribution shall be fixed by the Parent Board in
accordance with the Delaware law and the Certificate of Incorporation and bylaws
of Parent. Under Delaware law, a record date for purposes of a distribution may
not be fixed more than 60 days prior to the date of such distribution, and
therefore Parent Board will not be able to fix or announce the record date for
the Distribution until after it receives the Letter Ruling sometime in 1999.
Only those persons who hold Parent Common Stock on the record date for the
Distribution will be entitled to receive shares of Common Stock in the
Distribution. Parent has agreed to consummate the Distribution, subject to the
satisfaction, or waiver by the Parent Board, in its sole discretion, of the
conditions set forth above. Parent may terminate the obligation to consummate
the Distribution if the Distribution has not occurred by December 31, 1999. In
addition, the Separation and Distribution Agreement may be amended or terminated
at any time prior to the Distribution Date by the Company and Parent. No rights
of appeal exist if a Letter Ruling is not obtained. If a Letter Ruling is not
obtained, then Parent does not plan to complete the Distribution. See "Risk
Factors -- Risk of Noncompletion of the Distribution; Failure to Obtain
Favorable Letter Ruling," "Risk Factors -- Control of Company" and "Certain
Transactions."

USE OF PROCEEDS

The net proceeds to the Company from the Offerings, after deducting
underwriting discounts and commissions and estimated offering expenses payable
by the Company, are estimated to be $1,246.5 million ($1,434.6 million if the
Underwriters exercise their over-allotment options in full). On the Offerings
Closing Date, all of the net proceeds to the Company will be used to prepay
$1,246.5 million of the Company Notes payable to Parent. The Company Notes were
issued in April 1998 in payment of the $2.0 billion dividend declared by the
Company at that time. The Company Notes bear interest at a rate of LIBOR plus 30
basis points per annum and mature April 12, 1999. As of June 29, 1998, the
amount of the Company Notes outstanding equaled $1,977.1 million. On June 30,
1998, the Company prepaid $542.5 million of the Company Notes with the Resources
Dividend and the Resources Note Receivable. The balance of the Company Notes
remaining outstanding after the Offerings Closing Date, which will be equal to
approximately $188.1 million based on the estimated $1,246.5 million of net
proceeds from the Offerings, the approximately $90.5 million Resources Note
Receivable and the $452.0 million Resources Dividend described above, will be
prepaid in full within 31 days after the Offerings Closing Date with the net
proceeds, if any, from the exercise of the Underwriters' over-allotment options
and the issuance of shares of Class A Common Stock valued at the initial public
offering price per share. The Company will pay interest that accrues on the
Company Notes out of its cash flow from operations until all remaining amounts
outstanding of the Company Notes are prepaid in full. See "Certain
Transactions -- Dividend and Intercompany Debt Repayments."

DIVIDEND POLICY

After the Offerings Closing Date, the Company does not intend to pay cash
dividends on the Common Stock for the foreseeable future because it intends to
retain all earnings for use in the operation and expansion of the Company's
business. Furthermore, the Company's ability to declare or pay dividends may be
limited in the future by the terms of any then-existing credit facilities which
may contain covenants which restrict the payment of cash dividends. Holders of
Class A Common Stock and Class B Common Stock have identical rights as to cash
dividends, which if declared would be payable on a pro rata basis to all holders
of Common Stock. See "Description of Capital Stock -- Common
Stock -- Dividends."

20
22

CAPITALIZATION
(IN MILLIONS)

The following table sets forth as of March 31, 1998 the Company's (i) total
debt (including current maturities) and capitalization, (ii) total debt
(including current maturities) and capitalization on a pro forma basis after
giving effect to the issuance of the Company Notes in April 1998 and (iii) total
debt (including current maturities) and capitalization, as adjusted to give
effect to the application of the estimated net proceeds to the Company from the
Offerings and the other transactions and events described in "Unaudited
Condensed Consolidated Pro Forma Financial Statements." See "Description of
Capital Stock" and "Use of Proceeds." This table should be read in conjunction
with the Company's Consolidated Financial Statements and "Unaudited Condensed
Consolidated Pro Forma Financial Statements" included elsewhere in this
Prospectus.

MARCH 31, 1998
------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------

Current debt:
Due to affiliate........................................ $ 114.8 $ 114.8 $ --
Notes payable and current maturities of long-term
debt................................................. 11.7 11.7 11.7
Notes payable to Resources.............................. 130.9 130.9 --
Company Notes payable to Parent......................... -- 2,000.0 --
-------- -------- --------
Total current debt................................... 257.4 2,257.4 11.7
-------- -------- --------
Long-term debt, net of current maturities................. 61.4 61.4 61.4
-------- -------- --------
Total debt...................................... 318.8 2,318.8 73.1
-------- -------- --------
Shareholders' equity (deficit):
Investment by Parent.................................... 887.3 (1,112.7) --
Preferred stock......................................... -- -- --
Common stock:
Class A Common Stock................................. -- -- 0.7
Class B Common Stock................................. -- -- 1.0
Additional paid-in capital.............................. -- -- 1,135.7
-------- -------- --------
Total shareholders' equity (deficit)................. 887.3 (1,112.7) 1,137.4
-------- -------- --------
Total capitalization............................ $1,206.1 $1,206.1 $1,210.5
======== ======== ========

21
23

DILUTION

The Company's pro forma net tangible book value as of March 31, 1998 was a
deficit of $1,579.4 million (excluding intangible assets totaling $466.7
million) or $(16.03) per share of Common Stock. Pro forma net tangible book
value per share represents the amount of the Company's total tangible assets
less its total liabilities, divided by the total number of shares of Common
Stock outstanding after giving effect to (a) the issuance of the Company Notes
payable to Parent in the aggregate amount of $2.0 billion in connection with the
dividend to Parent in April 1998 and (b) the assumed recapitalization of the 100
shares of common stock of the Company which are currently outstanding into 98.5
million shares of Class B Common Stock as if these transactions and events
occurred on March 31, 1998.

After giving effect to the transactions and events described in "Unaudited
Condensed Consolidated Pro Forma Financial Statements," the pro forma net
tangible book value as of March 31, 1998 would have been approximately $670.7
million or $3.83 per share of Common Stock. This represents an immediate
increase in pro forma net tangible book value of $19.86 per share to the
existing stockholder and an immediate dilution in net tangible book value of
$20.17 per share to purchasers of Class A Common Stock in the Offerings, as
illustrated in the following table:

Initial public offering price per share..................... $24.00
Pro forma net tangible book value per share at March
31, 1998.............................................. (16.03)
Increase per share attributable to the Resources
Dividend.............................................. 4.94
Increase per share attributable to the issuance of 13.7
million shares of Class A Common Stock to repay in
full the Affiliate Payable and the Resources Notes
Payable(a)............................................ 2.93
Increase per share attributable to the issuance of 7.8
million shares of Class A Common Stock to prepay all
remaining amounts outstanding of the Company Notes
payable to Parent in the amount of $188.1
million(b)............................................ 1.57
Increase per share attributable to new investors....... 10.42
Pro forma net tangible book value per share after the
Offerings................................................. 3.83
------
Dilution in pro forma net tangible book value per share to
new investors............................................. $20.17
======

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

(a) The amount of the outstanding Affiliate Payable and Resources Notes Payable
as of June 30, 1998 equaled approximately $395.4 million and the Company
expects to issue 16.5 million shares of Class A Common Stock prior to the
Offerings Closing Date to satisfy such outstanding amounts in full, based on
the initial public offering price of $24.00 per share.
(b) Net proceeds, if any, received by the Company from the exercise of the
Underwriters' over-allotment options will be used to prepay amounts
outstanding under the Company Notes and, in such event, the number of shares
of Class A Common Stock issued to Parent will be reduced accordingly.

The following table sets forth, as of March 31, 1998, the difference
between the total consideration paid and the average price per share paid by
Parent and by purchasers of shares in the Offerings, before deduction of the
underwriting discounts and commissions and estimated offering expenses and after
giving effect to the transactions and events described in "Unaudited Condensed
Consolidated Pro Forma Financial Statements:"

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------- ------- ------------- ------- ---------
(IN MILLIONS) (IN MILLIONS)

Existing stockholder.......... 120.0 68.6% $ -- 0.0% $ --
New investors................. 55.0 31.4 1,320.0 100.0 24.00
----- ----- -------- ----- ------
Total............... 175.0 100.0% $1,320.0 100.0% $ 7.54
===== ===== ======== ===== ======

At the Offerings Closing Date, there will be no outstanding stock options
to purchase shares of Common Stock. Upon completion of the Distribution, the
Company intends to issue substitute options under the Company's 1998 Stock
Incentive Plan in substitution for stock option grants under Parent's stock
option plans held by employees of the Company as of the Distribution Date. Such
substitute options will provide for the purchase of a number of shares of Class
A Common Stock determined based on a ratio of average trading

22
24

prices of Parent Common Stock and Class A Common Stock immediately prior to the
Distribution. For a more detailed discussion of such substitution methodology,
see "Certain Transactions -- Employee Benefits Agreement." As of June 12, 1998,
there were outstanding stock options for approximately 7.3 million shares of
Parent Common Stock at a weighted average exercise price of $19.71 per share
held by employees of the Company (approximately 2.4 million of which were
exercisable as of June 12, 1998). If substitute options to purchase Class A
Common Stock were granted in respect of these options to purchase Parent Common
Stock based upon the closing price of the Parent Common Stock on June 30, 1998
on the NYSE ($25.0625 per share) and a price of $24.00 per share of Class A
Common Stock (the initial public offering price), the Company would grant
substitute stock options to purchase approximately 7.6 million shares of Class A
Common Stock at a weighted average exercise price of $18.87. However, it is not
possible to specify how many shares of Class A Common Stock will be subject to
such stock options at the time of the Distribution, as it is not known how many
stock options will remain unexercised and outstanding by the record date for the
Distribution. If these options are exercised, further dilution to new investors
will occur. The Company may also issue additional shares of Common Stock to
effect future business acquisitions or upon exercise of future stock option
grants or equity awards, which could also result in additional dilution to then
existing stockholders. See "Management -- Stock Incentive Plan" and "Certain
Transactions -- Separation and Distribution Agreement" and "-- Employee Benefits
Agreement."

23
25

SELECTED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)

The following table presents selected consolidated statement of operations
and balance sheet data of the Company for the periods and the dates indicated.
The selected statement of operations data for each of the full fiscal years
1997, 1996 and 1995, and the selected balance sheet data at December 31, 1997
and 1996, presented below, were derived from the Company's Consolidated
Financial Statements, which have been audited by Arthur Andersen LLP,
independent certified public accountants. The selected statement of operations
data of the Company for each of the full fiscal years 1994 and 1993, and the
selected balance sheet data at December 31, 1995, 1994 and 1993 presented below
were derived from the unaudited consolidated financial statements of the
Company, which in the opinion of management reflect all adjustments (consisting
of only normal recurring adjustments) necessary for a fair presentation of such
data. The selected statement of operations data for the three months ended March
31, 1998 and 1997 and the selected balance sheet data at March 31, 1998 were
derived from unaudited interim consolidated financial statements included
elsewhere in this Prospectus. The unaudited interim consolidated financial
statements include all material adjustments, consisting only of normal recurring
adjustments, which the Company considers necessary for a fair presentation of
its financial position and results of operations for these periods. Operating
results for the three months ended March 31, 1998 are not necessarily indicative
of the results that may be expected for a full year. The selected consolidated
financial data below should be read in conjunction with the Company's
Consolidated Financial Statements and notes thereto as of March 31, 1998
(unaudited) and December 31, 1997 and 1996 and for the three months ended March
31, 1998 and 1997 (unaudited) and for each of the three years in the period
ended December 31, 1997 included elsewhere in this Prospectus and "Management's
Discussion and Analysis of Financial Condition and Results of Operations." See
Notes 3, 7, 10, 11 and 13 of Notes to Consolidated Financial Statements for a
discussion of business combinations, investment by Parent, restructuring and
other charges, discontinued operations and subsequent events and their effect on
comparability of year-to-year data.

THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------- ----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------ ------ -------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED)

STATEMENT OF OPERATIONS DATA:
Revenue............................................... $300.8 $263.2 $1,127.7 $ 953.3 $ 805.0 $ 610.1 $ 485.5
Expenses:
Cost of operations.................................. 209.7 190.3 809.1 703.6 570.1 434.0 388.9
Selling, general and administrative................. 32.1 31.9 117.3 135.3 137.7 115.0 69.8
Restructuring and other charges..................... -- -- -- 8.8 3.3 -- 10.0
------ ------ -------- -------- -------- -------- --------
Operating income...................................... 59.0 41.0 201.3 105.6 93.9 61.1 16.8
Interest expenses..................................... (5.4) (7.6) (25.9) (29.7) (19.1) (13.2) (6.6)
Interest and other income (expense), net.............. 0.8 3.0 6.7 13.9 6.2 (4.0) (3.8)
------ ------ -------- -------- -------- -------- --------
Income (loss) from continuing operations before income
taxes............................................... 54.4 36.4 182.1 89.8 81.0 43.9 6.4
Provision for income taxes............................ 19.6 13.2 65.9 38.0 31.6 17.0 3.9
------ ------ -------- -------- -------- -------- --------
Income (loss) from continuing operations.............. 34.8 23.2 116.2 51.8 49.4 26.9 2.5
Loss from discontinued operations..................... -- -- -- -- (24.8) (5.4) (10.9)
------ ------ -------- -------- -------- -------- --------
Net income (loss)(a).................................. $ 34.8 $ 23.2 $ 116.2 $ 51.8 $ 24.6 $ 21.5 $ (8.4)
====== ====== ======== ======== ======== ======== ========

DECEMBER 31,
MARCH 31, ----------------------------------------------------
1998(B) 1997 1996 1995 1994 1993
----------- -------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
-------------------------

BALANCE SHEET DATA:
Total assets............................................. $1,488.2 $1,348.0 $1,090.3 $ 838.9 $ 681.1 $ 672.8
Due to affiliate......................................... 114.8 107.8 49.3 86.3 8.6 4.0
Notes payable to Resources............................... 130.9 158.3 205.6 38.7 18.8 15.6
Total debt, net of current maturities.................... 61.4 64.3 109.5 124.8 179.2 117.5
Total shareholder's equity............................... 887.3 750.8 494.5 372.2 272.4 230.3

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

(a) Historical net income per share has not been presented because it would not
be meaningful. Prior to the Offerings Closing Date, the Company had only 100
shares of common stock outstanding, all of which were owned by Parent.
(b) In April 1998, the Company declared a $2.0 billion dividend to Parent paid
through issuance of Company Notes payable to Parent. The pro forma effect of
this event on the Company's March 31, 1998 financial position, assuming it
occurred on March 31, 1998, would have been to issue Company Notes payable
to Parent in the amount of $2.0 billion and to decrease shareholder's equity
by $2.0 billion resulting in a shareholder's deficit of $1.1 billion.

24
26

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS

The following Unaudited Condensed Consolidated Pro Forma Financial
Statements reflect the effects of adjustments to the historical financial
condition and results of operations of the Company. The Unaudited Condensed
Consolidated Pro Forma Financial Statements should be read in conjunction with
the Consolidated Financial Statements and other financial information elsewhere
in this Prospectus.

The following Unaudited Condensed Consolidated Pro Forma Statements of
Operations for the Three Months Ended March 31, 1998 and for the Year Ended
December 31, 1997 give effect to the following transactions and events as if
they occurred at the beginning of the periods presented: (i) the issuance of the
Company Notes payable to Parent in the aggregate amount of $2.0 billion in
connection with the dividend to Parent in April 1998; (ii) the purchase of
certain assets from Parent in the amount of $4.4 million and the prepayment of
$78.7 million of the Company Notes payable to Parent using the Resources Note
Receivable in the amount of $83.1 million; (iii) the prepayment of $486.7
million of the Company Notes payable to Parent using certain assets to be
received from the Resources Dividend; (iv) the repayment in full of the
Resources Notes Payable and the Affiliate Payable, which equaled approximately
$214.0 million and $114.8 million, respectively, as of March 31, 1998, through
the issuance by the Company of 13.7 million shares of Class A Common Stock (at
the initial public offering price of $24.00 per share); (v) the sale and
issuance of 55.0 million shares of Class A Common Stock in the Offerings (at the
initial public offering price of $24.00 per share) and the application of net
proceeds therefrom to prepay $1,246.5 million of the Company Notes payable to
Parent; (vi) the issuance to Parent of 7.8 million shares of Class A Common
Stock (at the initial public offering price of $24.00 per share) to prepay
approximately $188.1 million which will constitute all remaining amounts
outstanding of the Company Notes payable to Parent within 31 days following the
Offerings Closing Date, assuming that the Underwriters' over-allotment options
are not exercised; (vii) the reclassification of the investment by Parent to
98.5 million shares of Class B Common Stock and additional paid-in capital of
the Company; and (viii) the tax effect of the foregoing. The following Unaudited
Condensed Consolidated Pro Forma Balance Sheet gives effect to the transactions
and events described in clauses (i) through (vii) above as if they occurred on
March 31, 1998.

The historical results of operations of the Company reflect an allocation
of a portion of Parent's corporate general and administrative costs. Following
the Offerings Closing Date various corporate services will be provided by Parent
to the Company based upon fees payable by the Company to Parent under a services
agreement entered into between the Company and Parent. The annual fee under the
Services Agreement is $15.0 million in 1998 and the corporate general and
administrative costs allocated to the 1997 historical financial statements was
$10.2 million. The methodology used to determine fees under the Services
Agreement and to allocate costs in the historical financial statements is
consistent. The increase is due to the actual and estimated growth of the
Company in 1998 and 1999. Accordingly, no pro forma adjustment has been made to
reflect such fees in lieu of the corporate general and administrative cost
allocation. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Overview" and "-- Pro Forma Financial Condition."

Historical net income per share has not been presented because it would not
be meaningful. Prior to the Offerings Closing Date, the Company had only 100
shares of common stock outstanding, all of which were owned by Parent. Prior to
the Offerings Closing Date, the Company will amend and restate the Certificate
to authorize two classes of Common Stock consisting of Class A Common Stock and
Class B Common Stock. Prior to the Offerings Closing Date, all outstanding
shares of common stock of the Company held by Parent will be converted into
shares of Class B Common Stock, which will constitute 100% of the outstanding
shares of Class B Common Stock. Unaudited pro forma net income per common share
is calculated based on net income after giving effect to the transactions and
events described in clauses (i) through (vii) above, divided by the number of
shares of Class A Common Stock and Class B Common Stock to be outstanding after
the Offerings Closing Date.

Management believes that the assumptions used provide a reasonable basis on
which to present the unaudited condensed consolidated pro forma financial data.
The Unaudited Condensed Consolidated Pro Forma Financial Statements are provided
for informational purposes only and should not be construed to be indicative of
the Company's consolidated financial position or results of operations had the
transactions and events described above been consummated on the dates assumed
and do not project the Company's financial condition or results of operations
for any future date or period.

25
27

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(IN MILLIONS, EXCEPT PER SHARE DATA)

HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------

Revenue................................................... $ 300.8 $ $ 300.8
Expenses:
Cost of operations...................................... 209.7 209.7
Selling, general and administrative..................... 32.1 32.1
-------- -------- --------
Operating income.......................................... 59.0 59.0
Interest expense.......................................... (5.4) 4.8(a) (0.6)
Interest and other income................................. 0.8 0.8
-------- -------- --------
Income before income taxes................................ 54.4 4.8 59.2
Provision for income taxes................................ (19.6) (1.8)(b) (21.4)
-------- -------- --------
Net income................................................ $ 34.8 $ 3.0 $ 37.8
======== ======== ========
Pro forma net income per share............................ $ 0.22
========
Pro forma weighted average shares outstanding............. 175.0
========

The accompanying notes are an integral part of this statement.

26
28

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN MILLIONS, EXCEPT PER SHARE DATA)

HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------

Revenue................................................... $1,127.7 $ $1,127.7
Expenses:
Cost of operations...................................... 809.1 809.1
Selling, general and administrative..................... 117.3 117.3
-------- -------- --------
Operating income.......................................... 201.3 201.3
Interest expense.......................................... (25.9) 20.2(a) (5.7)
Interest and other income................................. 6.7 6.7
-------- -------- --------
Income before income taxes................................ 182.1 20.2 202.3
Provision for income taxes................................ (65.9) (7.5)(b) (73.4)
-------- -------- --------
Net income................................................ $ 116.2 $ 12.7 $ 128.9
======== ======== ========
Pro forma net income per share............................ $ 0.74
========
Pro forma weighted average shares outstanding............. 175.0
========

The accompanying notes are an integral part of this statement.

27
29

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1998
(IN MILLIONS)

HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------

ASSETS
Current assets
Cash and cash equivalents............................... $ -- $ $ --
Accounts receivable, net................................ 139.0 139.0
Prepaid expenses and other current assets............... 45.2 45.2
-------- -------- --------
Total current assets............................ 184.2 184.2
Property and equipment, net............................. 826.5 4.4(d) 830.9
Intangible and other assets, net........................ 477.5 477.5
-------- -------- --------
Total assets.................................... $1,488.2 $ 4.4 $1,492.6
======== ======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities................ $ 112.1 $ $ 112.1
Due to affiliate........................................ 114.8 (114.8)(f) --
Notes payable and current maturities of long-term
debt................................................. 11.7 11.7
Notes payable to Resources.............................. 130.9 83.1(d) --
(214.0)(f)
Company Notes payable to Parent......................... -- 2,000.0(c) --
(78.7)(d)
(486.7)(e)
(1,246.5)(g)
(188.1)(h)
Deferred revenue and other current liabilities.......... 60.7 60.7
-------- -------- --------
Total current liabilities....................... 430.2 (245.7) 184.5
Long-term debt, net of current maturities............... 61.4 61.4
Deferred income taxes and other liabilities............. 109.3 109.3
-------- -------- --------
Total liabilities............................... 600.9 (245.7) 355.2
-------- -------- --------
Shareholders' equity
Investment by Parent.................................... 887.3 (2,000.0)(c) --
486.7(e)
626.0(i)
Preferred stock......................................... -- --
Common stock
Class A Common Stock................................. -- 0.1(f) 0.7
0.5(g)
0.1(h)
Class B Common Stock................................. -- 1.0(i) 1.0
Additional paid-in capital.............................. -- 328.7(f) 1,135.7
1,246.0(g)
188.0(h)
(627.0)(i)
-------- -------- --------
Total shareholders' equity...................... 887.3 250.1 1,137.4
-------- -------- --------
Total liabilities and shareholders' equity...... $1,488.2 $ 4.4 $1,492.6
======== ======== ========

The accompanying notes are an integral part of this statement.

28
30

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA FINANCIAL STATEMENTS

The following is a summary of the pro forma adjustments reflected in the
Unaudited Condensed Consolidated Pro Forma Financial Statements:

(a) Adjust historical interest expense to eliminate interest expense on the
Resources Notes Payable assumed to have been repaid at the beginning of
the period presented.

(b) Recognize income taxes on the pro forma adjustment described above.

(c) The issuance of the Company Notes payable to Parent in the aggregate
amount of $2.0 billion in connection with the dividend by the Company in
April 1998 to the Parent.

(d) The purchase of certain assets from Parent in the amount of $4.4 million
and the prepayment of $78.7 million of the Company Notes payable to Parent
using the Resources Note Receivable in the amount of $83.1 million.

(e) The prepayment of $486.7 million of the Company Notes payable to Parent
using certain assets to be received from the Resources Dividend.

(f) The repayment in full of the Resources Notes Payable and the Affiliate
Payable through the issuance by the Company of 13.7 million shares of
Class A Common Stock (at the initial public offering price of $24.00 per
share). The aggregate amount of the outstanding Affiliate Payable and
Resources Notes Payable as of June 30, 1998 is equal to $395.4 million and
16.5 million shares of Class A Common Stock will be issued prior to the
Offerings Closing Date to satisfy such outstanding amounts in full, based
on the initial public offering price of $24.00 per share.

(g) The sale and issuance of 55.0 million shares of Class A Common Stock in
the Offerings (at the initial public offering price of $24.00 per share)
and the application of the net proceeds therefrom to prepay $1,246.5
million of the Company Notes payable to Parent.

(h) The issuance to Parent of 7.8 million shares of Class A Common Stock (at
the initial public offering price of $24.00 per share) to prepay all
remaining amounts outstanding of the Company Notes payable to Parent
within 31 days following the Offerings Closing Date.

(i) The reclassification of the investment by Parent to 98.5 million shares of
Class B Common Stock and additional paid-in capital of the Company.

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

The following discussion should be read in conjunction with the
Consolidated Financial Statements and notes thereto of the Company, a wholly
owned subsidiary of Parent, and the Unaudited Condensed Consolidated Pro Forma
Financial Statements of the Company both of which are included elsewhere herein.

OVERVIEW

Prior to the Offerings Closing Date, the Company has been a wholly owned
subsidiary of Parent. As a wholly owned subsidiary, the Company has received
services provided by Parent, including accounting, auditing, cash management,
corporate communications, corporate development, financial and treasury, human
resources and benefit plan administration, insurance and risk management, legal,
purchasing and tax services. Parent has also provided the Company with the
services of a number of its executives and employees. In consideration for these
services, Parent has allocated a portion of its overhead costs related to such
services to the Company. This allocation has historically been based on the
proportion of invested capital of the Company as a percentage of the
consolidated invested capital of Parent and its subsidiaries (including the
Company). Management of the Company believes that the amounts allocated to the
Company have been no less favorable to the Company than costs the Company would
have incurred to obtain such services on its own or from unaffiliated third
parties.

The historical consolidated financial information included in this
Prospectus does not necessarily reflect what the Company's financial position
and results of operations would have been had the Company been operated as a
separate, stand-alone entity during the periods presented.

GENERAL

The Company is a leading provider of non-hazardous solid waste collection
and disposal services in the United States. The Company provides solid waste
collection services for commercial, industrial, municipal and residential
customers through 96 collection companies in 24 states. The Company also owns or
operates 54 transfer stations and 42 solid waste landfills.

The Company's revenue is generated primarily from its solid waste
collection operations, with the remainder comprised of revenue from landfill
disposal services and other services including recycling and composting
operations. Collection, landfill disposal and other services accounted for
approximately 73.8%, 12.4% and 13.8% of consolidated revenue for the year ended
December 31, 1997, respectively.

Revenue from collection operations consists of fees from commercial,
industrial, municipal and residential customers. In 1997, the Company's revenue
from collection services was derived approximately one-third from services
provided to commercial customers, one-third from services provided to industrial
customers and one-third from services provided to municipal and residential
customers. Residential and commercial collection operations in certain markets
are performed under long-term contracts with municipalities. Industrial and
commercial collection operations generally are provided to individual customers
on a contractual basis with terms up to three years. Revenue from landfill
disposal operations consists of tipping fees charged to third parties. Recycling
operations are generally integrated with collection operations with revenue
derived through the sale of recyclable materials.

Cost of operations for the Company's collection operations is primarily
variable and includes disposal, labor, fuel and equipment maintenance costs. The
Company seeks to achieve a high rate of waste internalization by controlling
waste streams from the point of collection through disposal. During the quarter
ended March 31, 1998, approximately 41% of the total volume of waste collected
by the Company was disposed of at the Company's landfills. Landfill cost of
operations includes most daily operating expenses, the legal and administrative
costs of ongoing environmental compliance, costs of capital for cell development
and accruals for closure and post-closure costs. Certain direct landfill
development costs, such as engineering, upgrading, cell construction and
permitting costs, are capitalized and depleted based on consumed airspace. All
indirect landfill development costs are expensed as incurred.

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BUSINESS COMBINATIONS

The Company and Parent make decisions to acquire or invest in businesses
based on financial and strategic considerations.

Parent has acquired various businesses operating in the solid waste
services industry using cash and shares of Parent Common Stock. These businesses
were contributed by Parent to the Company subsequent to their acquisition. The
Company has applied the same accounting method used by Parent in accounting for
business combinations.

During the three months ended March 31, 1998, Parent acquired various solid
waste services businesses which were contributed to the Company. The aggregate
purchase price paid by Parent in transactions accounted for under the purchase
method of accounting was $101.7 million consisting of cash and 2.6 million
shares of Parent Common Stock. Cost in excess of the fair value of net assets
acquired in these acquisitions totaled $109.7 million. As of March 31, 1998, the
Company had intangible assets, net of accumulated amortization, of $466.7
million which consists primarily of the cost in excess of fair value of net
assets acquired. Cost in excess of the fair value of net assets acquired is
amortized over forty years on a straight-line basis. As of March 31, 1998,
amortization expense associated with these intangible assets on an annualized
basis is approximately $14.0 million. The Company believes the forty year life
assigned to the cost in excess of the fair value of net assets acquired is
reasonable as the businesses acquired are generally well established companies
which have been in existence for many years and have stable, long-term customer
relationships.

During the year ended December 31, 1997, Parent acquired various solid
waste services businesses which were contributed to the Company. The aggregate
purchase price paid by Parent in transactions accounted for under the purchase
method of accounting was $147.9 million, consisting of cash and 5.7 million
shares of Parent Common Stock. Cost in excess of the fair value of net assets
acquired in these acquisitions totaled $149.1 million. In addition, Parent
issued an aggregate of 34.1 million shares of Parent Common Stock in
transactions accounted for under the pooling of interests method of accounting.
Included in the shares of Parent Common Stock issued in acquisitions accounted
for under the pooling of interests method of accounting are approximately 0.3
million shares issued for acquisitions that were not material individually or in
the aggregate and, consequently, prior period financial statements were not
restated for such acquisitions.

During the year ended December 31, 1996, Parent acquired various solid
waste services businesses which were contributed to the Company. The aggregate
purchase price paid by Parent in transactions accounted for under the purchase
method of accounting was $87.6 million, consisting of cash and 6.6 million
shares of Parent Common Stock. Cost in excess of the fair value of net assets
acquired in these acquisitions totaled $73.6 million. In addition, Parent issued
an aggregate of 40.0 million shares of Parent Common Stock in transactions
accounted for under the pooling of interests method of accounting. Included in
the shares of Parent Common Stock issued in acquisitions accounted for under the
pooling of interests method of accounting are approximately 1.1 million shares
issued for acquisitions that were not material individually or in the aggregate
and, consequently, prior period financial statements were not restated for such
acquisitions.

During the year ended December 31, 1995, Parent acquired various solid
waste services businesses which were contributed to the Company. The aggregate
purchase price paid by Parent in transactions accounted for under the purchase
method of accounting was $76.5 million, consisting of cash and 16.0 million
shares of Parent Common Stock. Cost in excess of the fair value of net assets
acquired in these acquisitions totaled $83.4 million. In addition, Parent issued
an aggregate of approximately 30.9 million shares of Parent Common Stock in
transactions accounted for under the pooling of interests method of accounting.

See Note 3, Business Combinations, of Notes to Consolidated Financial
Statements, for further discussion of business combinations.

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CONSOLIDATED RESULTS OF OPERATIONS

Three Months Ended March 31, 1998 and 1997

Net income was $34.8 million for the three months ended March 31, 1998 as
compared to $23.2 million for the three months ended March 31, 1997.

The following table sets forth revenue and cost of operations, selling,
general and administrative expenses, Parent overhead allocations and operating
income with percentages of revenue for the three months ended March 31, 1998 and
1997 (in millions):

1998 % 1997 %
------ ----- ------ -----

Revenue.................................................. $300.8 100.0% $263.2 100.0%
Cost of operations....................................... 209.7 69.7 190.3 72.3
Selling, general and administrative expenses............. 28.3 9.4 29.8 11.3
Parent overhead allocations.............................. 3.8 1.3 2.1 0.8
------ ----- ------ -----
Operating income......................................... $ 59.0 19.6% $ 41.0 15.6%
====== ===== ====== =====

Revenue. Revenue was $300.8 million and $263.2 million for the three
months ended March 31, 1998 and 1997, respectively, an increase of 14.3%.
Acquisitions accounted for 5.0% of the increase, volume accounted for 4.5% of
the increase and "tuck-in" acquisitions accounted for 4.8% of the increase,
respectively.

Cost of Operations. Cost of operations was $209.7 million and $190.3
million or, as a percentage of revenue, 69.7% and 72.3% for the three months
ended March 31, 1998 and 1997, respectively. The increase in aggregate dollars
is primarily due to acquisitions. The decrease in such costs as a percentage of
revenue is primarily a result of improvements in overall operating efficiency
achieved through reductions in operating costs of acquired businesses.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $28.3 million and $29.8 million or, as a percentage
of revenue, 9.4% and 11.3% for the three months ended March 31, 1998 and 1997,
respectively. The decrease in selling, general and administrative expenses in
aggregate dollars and as a percentage of revenue is primarily due to the
reduction of administrative expenses of acquired businesses and cost savings
from centralizing administrative functions in certain regions.

Parent Overhead Allocations. Parent overhead allocations include
allocations of general and administrative costs not specifically attributable to
its operating subsidiaries. Such allocations are based upon the ratio of the
Company's invested capital to Parent's consolidated invested capital and were
$3.8 million and $2.1 million for the three months ended March 31, 1998 and
1997, respectively. These allocations approximate management's estimate of
Parent's corporate overhead required to support the Company's operations.
Management believes such allocations are reasonable.

Interest Expense. Interest expense was incurred on notes payable to
Resources and the debt assumed in acquisitions. Interest expense was $5.4
million and $7.6 million for the three months ended March 31, 1998 and 1997,
respectively, and includes interest expense on notes payable to Resources of
$4.8 million and $6.2 million for the three months ended March 31, 1998 and
1997, respectively.

Interest and Other Income. Interest and other income was $0.8 million and
$3.0 million for the three months ended March 31, 1998 and 1997, respectively.
The decrease is primarily due to fluctuations in cash balances on hand and
related interest income.

Income Taxes. The provision for income taxes was $19.6 million and $13.2
million for the three months ended March 31, 1998 and 1997, respectively. Income
taxes have been provided based upon the Company's anticipated annual effective
income tax rate.

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Years Ended December 31, 1997, 1996 and 1995

Net income was $116.2 million for the year ended December 31, 1997 as
compared to $51.8 million in 1996 and $24.6 million in 1995. Operating results
for the years ended December 31, 1996 and 1995 include restructuring and other
charges further described below. Operating results for the year ended December
31, 1995 include a loss from discontinued operations described further below.

The following table sets forth revenue and cost of operations, selling,
general and administrative expenses, Parent overhead allocations, restructuring
and other charges and operating income with percentages of revenue for the years
ended December 31 (in millions):

1997 % 1996 % 1995 %
-------- ----- -------- ----- -------- -----

Revenue.............................. $1,127.7 100.0% $ 953.3 100.0% $ 805.0 100.0%
Cost of operations................... 809.1 71.7 703.6 73.8 570.1 70.8
Selling, general and administrative
expenses........................... 107.1 9.5 126.9 13.3 133.4 16.6
Parent overhead allocations.......... 10.2 0.9 8.4 .9 4.3 0.5
Restructuring and other charges...... -- -- 8.8 .9 3.3 0.4
-------- ----- -------- ----- -------- -----
Operating income..................... $ 201.3 17.9% $ 105.6 11.1% $ 93.9 11.7%
======== ===== ======== ===== ======== =====

Revenue. Revenue was $1,127.7 million, $953.3 million and $805.0 million
for the years ended December 31, 1997, 1996 and 1995, respectively. The increase
in 1997 over 1996 of $174.4 million, or 18.3%, is a result of significant
acquisitions (7.5%) as well as increases from volume (7.4%) and "tuck-in"
acquisitions (3.4%). The increase in 1996 over 1995 of $148.3 million, or 18.4%,
is a result of significant acquisitions (10.8%) as a well as increases from
volume (6.3%) and "tuck-in" acquisitions (1.3%).

Cost of Operations. Cost of operations was $809.1 million, $703.6 million
and $570.1 million or, as a percentage of revenue, 71.7%, 73.8% and 70.8% for
the years ended December 31, 1997, 1996 and 1995, respectively. The increases in
aggregate dollars are a result of the expansion of the Company's operations
through acquisitions and internal growth. The 1997 decrease in cost of
operations as a percentage of revenue is primarily a result of improvements in
overall operating efficiency achieved through reductions in operating costs of
acquired businesses. The 1996 increase in cost of operations as a percentage of
revenue is primarily a result of certain of the Company's acquired collection
companies that had higher levels of operating costs than the Company's
historical operations.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $107.1 million, $126.9 million and $133.4 million
or, as percentages of revenue, 9.5%, 13.3% and 16.6% for the years ended
December 31, 1997, 1996 and 1995, respectively. The decreases in selling,
general and administrative expenses in aggregate dollars and as percentages of
revenue in each of the years are primarily due to the reduction of
administrative expenses for acquired businesses and, in 1997, cost savings from
centralizing administrative functions in certain regions.

Parent Overhead Allocations. Parent overhead allocations include
allocations of general and administrative costs not specifically attributable to
its operating subsidiaries. Such allocations are based upon the ratio of the
Company's invested capital to Parent's consolidated invested capital and were
$10.2 million, $8.4 million and $4.3 million for the years ended December 31,
1997, 1996 and 1995, respectively. These allocations approximate management's
estimate of Parent's corporate overhead required to support the Company's
operations. Management believes such allocations are reasonable.

Restructuring and Other Charges. The Company recorded restructuring and
other charges of approximately $8.8 million and $3.3 million for the years ended
December 31, 1996 and 1995, respectively. The 1996 costs include costs to close
certain landfill operations, asset write-offs and merger expenses associated
with certain business combinations accounted for under the pooling of interests
method of accounting. The 1995 costs related to severance and other costs
associated with closing an administrative office.

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35

Operating Income. Operating income was $201.3 million, $105.6 million and
$93.9 million for the years ended December 31, 1997, 1996 and 1995,
respectively. Excluding restructuring and other charges, operating income would
have been $114.4 million and $97.2 million in 1996 and 1995, respectively.

Interest Expense. Interest expense was incurred on notes payable to
Resources and the debt assumed in acquisitions. Interest expense was $25.9
million, $29.7 million and $19.1 million for the years ended December 31, 1997,
1996 and 1995, respectively, and includes interest expense on notes payable to
Resources of $20.2 million, $18.8 million and $3.0 million for the years ended
December 31, 1997, 1996 and 1995, respectively. The 1996 increase in interest
expense is primarily due to higher average outstanding borrowings and debt
assumed in acquisitions.

Interest and Other Income. Interest and other income was $6.7 million,
$13.9 million and $6.2 million for the years ended December 31, 1997, 1996 and
1995, respectively. The variances during the periods are primarily due to
fluctuations in cash balances on hand and related interest income.

Income Taxes. The provision for income taxes was $65.9 million, $38.0
million and $31.6 million for the years ended December 31, 1997, 1996 and 1995,
respectively. The effective income tax rate was 36.2%, 42.3% and 39.0% for the
years ended December 31, 1997, 1996 and 1995, respectively. The higher 1996 and
1995 effective income tax rates are primarily due to varying higher historical
effective income tax rates of acquired businesses.

Discontinued Operations. During the year ended December 31, 1995, the
Company disposed of its mining and citrus operations resulting in a loss from
discontinued operations of approximately $24.8 million, net of income taxes. The
mining and citrus businesses were former subsidiaries of a solid waste business
acquired by Parent in 1996 and accounted for under the pooling of interests
method of accounting. Operating results for the period prior to disposition have
been classified as discontinued operations in the accompanying Consolidated
Financial Statements. See Note 11, Discontinued Operations, of Notes to
Consolidated Financial Statements, for further discussion of this transaction.

ENVIRONMENTAL AND LANDFILL MATTERS

The Company owns or operates 42 solid waste landfills with approximately
5,610 permitted acres and total available permitted disposal capacity of
approximately 1.1 billion in-place cubic yards as of March 31, 1998. As of
December 31, 1997 and 1996, cubic yards of available airspace at the Company's
landfills were 1,104.7 million and 1,092.5 million, respectively. Airspace
increased during 1997 by 12.2 million cubic yards as a result of landfills
acquired and internally developed totaling 22.2 million cubic yards, offset by
consumption of 10.0 million cubic yards during the year.

The Company provides for accrued environmental and landfill costs which
include landfill site closure and post-closure costs. Landfill site closure and
post-closure costs include estimated costs to be incurred for final closure of
the landfills and estimated costs for providing required post-closure monitoring
and maintenance of landfills. These costs are accrued based on consumed
airspace. The Company estimates its future cost requirements for closure and
post-closure monitoring and maintenance for its solid waste facilities based on
its interpretation of the technical standards of the Environmental Protection
Agency's Subtitle D regulations. These estimates do not take into account
discounts for the present value of such total estimated costs. Engineering
reviews of the future cost requirements for closure and post-closure monitoring
and maintenance for the Company's operating landfills are performed on an annual
basis. Such reviews provide the basis upon which the Company estimates future
costs and revises the related accruals. Changes in these estimates primarily
relate to permit modifications, inflation and changes in regulations, all of
which are taken into consideration annually. At December 31, 1997, assuming that
all available landfill capacity is used, approximately $280.0 million of such
costs are expected to be expensed over the remaining lives of these facilities.

As of December 31, 1997 and 1996, accrued closure and post-closure costs
associated with landfills were $47.3 million and $38.2 million, respectively.
The current and long-term portion of these costs are included in other current
liabilities and accrued environmental and landfill costs, respectively, in the
Company's

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consolidated balance sheets. The increase in such accruals resulted from the
normal accrual of closure and post-closure costs based on airspace consumed plus
additional costs associated with new landfills acquired and internally developed
during the period.

Costs related to environmental remediation activities are accrued by the
Company through a charge to income in the period such liabilities become
probable and can be reasonably estimated.

LIQUIDITY AND CAPITAL RESOURCES

The major components of changes in cash flows for the three months ended
March 31, 1998 and 1997 and for the years ended December 31, 1997, 1996 and 1995
are discussed below.

Cash Flows from Operating Activities. Cash provided by operating
activities was $80.3 million and $73.1 million during the three months ended
March 31, 1998 and 1997, respectively and $279.4 million, $143.5 million and
$125.4 million for the years ended December 31, 1997, 1996 and 1995,
respectively. The increases in cash provided by operating activities during the
periods are due to expansion of the Company's business.

Cash Flows from Investing Activities. Cash flows from investing activities
consist primarily of cash used for capital additions as further described below.

Capital additions were $29.0 million and $35.2 million during the three
months ended March 31, 1998 and 1997, respectively, and $165.3 million, $146.9
million and $147.9 million during the years ended December 31, 1997, 1996 and
1995, respectively. The Company believes capital expenditures for the full year
in 1998 will approximate the level of capital expenditures in 1997. The Company
believes capital expenditures may increase in 1999 and beyond due to acquisition
growth. The Company intends to finance capital expenditures and cash used in
business acquisitions through cash on hand, revolving credit facilities and
other financings.

Cash Flows from Financing Activities. Cash flows from financing activities
during the three months ended March 31, 1998 and 1997 and the years ended
December 31, 1997, 1996 and 1995 included commercial bank and affiliate
borrowings and repayments of debt.

Proceeds from bank and affiliate borrowings were used to fund capital
additions, to repay debt and to expand the Company's business during these
years.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's market sensitive financial instruments as of March 31, 1998
consist primarily of variable rate debt that is not material to the Company's
consolidated financial position. Therefore, management believes the Company does
not have material exposure to market risk at March 31, 1998.

PRO FORMA FINANCIAL CONDITION

The Company is expected to have outstanding debt and total capital of
approximately $73.1 million and $1.1 billion, respectively, after giving effect
to: (i) the issuance of the Company Notes payable to Parent in the aggregate
amount of $2.0 billion in connection with the dividend from the Company to
Parent in April 1998; (ii) the prepayment of a portion of the outstanding
amounts of the Company Notes payable to Parent by use of certain assets received
by the Company from the Resources Dividend and the Resources Note Receivable;
(iii) the repayment in full of the Resources Notes Payable and the Affiliate
Payable, which equaled approximately $255.9 million and $139.5 million,
respectively, as of June 30, 1998 through the issuance of shares of Class A
Common Stock (at the initial public offering price of $24.00 per share); (iv)
the sale and issuance of 55.0 million shares of Class A Common Stock in the
Offerings (at the initial public offering price of $24.00 per share) and the
application of net proceeds therefrom to prepay certain amounts outstanding of
the Company Notes payable to Parent; and (v) the issuance of shares of Class A
Common Stock (at the initial public offering price of $24.00 per share) to
prepay approximately $188.1 million which will constitute

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37

all remaining amounts outstanding of the Company Notes payable to Parent within
31 days following the Offerings Closing Date, assuming that the Underwriters'
over-allotment options are not exercised.

The Company historically has been dependent upon Parent for various
services including accounting, auditing, cash management, corporate
communications, corporate development, financial and treasury, human resources
and benefit plan administration, insurance and risk management, legal,
purchasing and tax services. The Company and Parent have entered into an
agreement under which Parent will continue to provide these services to the
Company for a period of one year from the Offerings Closing Date. In exchange
for the provision of such services, fees will be payable to Parent in the amount
of $1.25 million per month, subject to review and adjustment as the Company
reduces the amount of services it obtains from Parent from time to time. After
the initial term of such agreement, the Company will be required to extend the
term of such agreement, engage others to perform such services or perform such
services internally. No assurance can be given that Parent will continue to
provide the Company such services after the initial term of the agreement, or
that the cost of such services will not be higher if the Company purchases such
services from unaffiliated providers or employs staff to handle such functions
internally.

The Company believes that its cash flow from operations and contemplated
short-term and long-term debt financings will be sufficient to satisfy its
future working capital, capital expenditure, acquisition and debt service
requirements. The Company intends to enter into a revolving credit facility in
the aggregate principal amount of $1.0 billion which will be available to be
borrowed from time to time by the Company to be used for its working capital
requirements and future acquisitions. The Company has obtained commitments from
Bank of America National Trust and Savings Association, The Chase Manhattan
Bank, The First National Bank of Chicago, NationsBank, N.A. and certain other
lenders for a $1.0 billion revolving credit facility. The closing of such
revolving credit facility is expected to occur after the Offerings Closing Date,
but there can be no assurance that such financing will occur. If such financing
does not occur, there can be no assurance that the Company will be able to
obtain other debt financing on terms as favorable to the Company as currently
proposed or as its existing indebtedness. The Company also believes that it will
be able to procure bid and performance bonds, to arrange for revolving lines of
credit and other financing as necessary, and to engage in hedging transactions,
on commercially acceptable terms. Parent's bank credit facilities restrict the
ability of Parent and its subsidiaries to incur indebtedness, incur liens,
consummate certain asset sales, make certain investments, or enter into certain
transactions with affiliates, subject to exceptions, and require Parent to
maintain certain consolidated financial ratios. While the Company remains a
subsidiary of Parent, the Company will continue to be subject to these
restrictive covenants and financial ratios. Parent has amended its credit
facilities to permit the Company to incur unsecured indebtedness in excess of
$1.0 billion.

SEASONALITY

YEAR 2000 SYSTEMS COSTS

The Company utilizes software and related technologies that may be affected
by the date change in the year 2000 ("Year 2000"). The Company is in the process
of evaluating the full scope and related costs to insure that the Company's
systems continue to meet its internal needs and those of its customers. The
majority of the Company's information systems are supported by third party
vendors who are responsible for system modifications to address the Year 2000
issue. Anticipated costs for system modifications will be expensed as incurred
and are not expected to have a material impact on the Company's consolidated
results of operations. However, the Company cannot measure the impact that the
Year 2000 issue will have on its vendors, suppliers, customers and other parties
with which it conducts business.

NEW ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards No. 130 ("SFAS 130"),
"Reporting Comprehensive Income," was issued by the Financial Accounting
Standards Board in June 1997. This Statement requires that

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38

all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. The provisions
of this standard will not materially affect the Company's Consolidated Financial
Statements.

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

This Prospectus contains certain statements that are "Forward Looking
Statements," which include, among other things, the discussions of the Company's
growth and operating strategies and expectations concerning market position,
future operations, margins, revenue, profitability, liquidity and capital
resources, as well as statements concerning the integration of the operations of
acquired businesses and achievement of financial benefits and operational
efficiencies in connection therewith. Forward Looking Statements are included in
"Prospectus Summary," "Selected Financial Data," "Unaudited Condensed
Consolidated Pro Forma Financial Statements," "Management's Discussions and
Analysis of Financial Condition and Results of Operation," "Business," and
elsewhere in this Prospectus. Although the Company believes that the
expectations reflected in Forward Looking Statements are reasonable, the Company
can give no assurance that such expectations will prove to have been correct.
Generally, these statements relate to business plans or strategies, projected or
anticipated benefits or other consequences of such plans or strategies, number
of acquisitions and projected or anticipated benefits from acquisitions made by
or to be made by the Company, or projections involving anticipated revenue,
expenses, earnings, levels of capital expenditures, liquidity or indebtedness or
operations of the Company and are subject to a number of uncertainties, risks
and other influences, many of which are outside the control of the Company and
any one of which, or a combination of which, could materially affect the results
of the Company's operations. Important factors that could cause actual results
to differ materially from the Company's expectations include, but are not
limited to, those that are disclosed in this section and under "Risk Factors" in
this Prospectus. The Company assumes no duty to update the Forward Looking
Statements.

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39

BUSINESS

INTRODUCTION

The Company is a leading provider of non-hazardous solid waste collection
and disposal services in the United States. Based on revenue for the year ended
December 31, 1997, the Company is the fourth largest company in the domestic
non-hazardous solid waste management industry. The Company provides solid waste
collection services for commercial, industrial, municipal and residential
customers through 96 collection companies in 24 states. The Company also owns or
operates 54 transfer stations and 42 solid waste landfills.

Since 1995, the Company has acquired over 100 solid waste companies with an
aggregate of over $1.0 billion in annual revenue. The Company believes that it
is well positioned to continue to increase its revenue and operating income
through acquisitions and internal growth. The Company's acquisition growth
strategy is focused on the approximately $8.0 billion of revenue that was
generated by over 5,000 privately-held solid waste companies in 1997. The
Company believes that its ability to acquire many of these privately-held
companies is enhanced by increasing competition in the solid waste industry,
increasing capital requirements as a result of changes in solid waste regulatory
requirements and the limited number of exit strategies for such companies'
owners and principals. The Company's internal growth strategy is supported by
its presence in high growth markets throughout the Sunbelt, including Florida,
Georgia, Nevada, Southern California and Texas, and other domestic markets that
have experienced higher than average population growth during the past several
years. The Company believes that its presence in such markets positions it to
experience growth at rates that are generally higher than the industry's overall
growth rate.

INDUSTRY OVERVIEW

The Company believes that in recent years there has been a trend towards
rapid consolidation in the solid waste collection industry, which has
historically been characterized by numerous small companies. The Company
believes that this trend will continue as a result of the following factors:

Subtitle D Regulation. Subtitle D ("Subtitle D") of the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), and similar
state regulations have significantly increased the amount of capital,
technical expertise, operating costs and financial assurance obligations
required to own and operate a landfill and other solid waste facilities.
Many of the smaller industry participants have found these costs difficult,
if not impossible, to bear. Large publicly-owned companies, such as the
Company, have greater access to capital, and a lower cost of capital,
available to finance such increased capital expenditures and costs,
relative to many of the privately owned companies in the industry.
Additionally, the required permits for landfill development, expansion or
construction have become more difficult to acquire. Consequently, many
smaller, independent operators have decided to either close their
operations or sell them to larger operators with greater access to capital.
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Integration of Solid Waste Businesses. Vertically integrated solid
waste companies gain further competitive advantage over non-integrated
operators by being able to control the waste stream in a market through the
collection, transfer and disposal process. The ability of the integrated
companies to internalize the disposal of collected solid waste, coupled
with access to significant capital resources to make acquisitions, has
created an environment in which large publicly-owned integrated companies
can operate more cost effectively and competitively than non-integrated
operators.

Municipal Privatization. The trend toward consolidation in the solid
waste services industry is further supported by the increasing tendency of
a number of municipalities to privatize their waste disposal operations.
Privatization of municipal waste operations is often an attractive
alternative to funding the changes required by Subtitle D.

These developments, as well as the fact that there are a limited number of
viable exit strategies for many of the owners and principals of numerous
privately-held companies in the industry, have contributed to the overall
consolidation trend in the solid waste industry.

GROWTH STRATEGY

The Company's growth strategy is to increase revenue, gain market share and
enhance stockholder value through acquisitions and internal growth. For certain
risks related to the Company's growth strategy, see "Risk Factors."

Acquire Companies Positioned for Growth. In making acquisitions, the
Company principally targets high quality businesses that will allow it to
be, or provide it favorable prospects of becoming, a leading provider of
integrated solid waste services in markets with favorable demographic
growth. The Company generally has acquired, and will continue to seek to
acquire, solid waste collection, transfer and disposal companies that (i)
have strong operating margins, (ii) are in growth markets, (iii) are among
the largest or have a significant presence in their local markets and (iv)
have long-term contracts or franchises with municipalities and other
customers. The Company is not limited to the foregoing target criteria for
acquisitions, and may also acquire additional non-hazardous solid waste
operations as opportunities arise. Although the Company continuously
reviews possible acquisition candidates and is in discussions from time to
time with one or more of such candidates, it currently has not entered into
any agreements with respect to any significant acquisitions.

Acquire Well-Managed Companies. The Company also seeks to acquire
businesses that have experienced management teams that are willing to work
for the Company. The Company generally retains the local management of the
larger acquired companies in order to capitalize on their local market
knowledge, community relations and name recognition, and to instill their
entrepreneurial drive at all levels of operations. By furnishing the local
management of such acquired companies with the Company's financial and
marketing resources and technical expertise, such acquired companies are
better able to secure additional municipal franchises and other contracts.
This enables the Company to grow internally such acquired businesses at
faster rates than the industry average.

Expand Operations Through "Tuck-In" Acquisitions. Once it gains a
foothold in a particular market, the Company focuses on acquiring smaller
companies that also operate in that market and surrounding markets.
Management teams at acquired companies are well positioned to more
efficiently identify additional acquisition opportunities in their local
markets. The operations of such smaller companies, upon being acquired by
the Company, are "tucked-in" to the existing local subsidiary's

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operations. By acquiring smaller "tuck-in" companies that operate in
markets already serviced by the Company, the Company not only is able to
grow its revenue and increase its market share, but also is able to
integrate operations and consolidate duplicative facilities and functions
to maximize cost efficiencies and economies of scale.

Acquire Privatizing Municipal Operations. The Company also seeks to
acquire solid waste collection operations, transfer stations and landfills
that are being privatized by municipalities and other governmental
authorities. Many municipalities are seeking to outsource or sell these
types of solid waste operations, as they lack the capital, technical
expertise and/or operational resources necessary to comply with
increasingly stringent regulatory standards and/or to compete effectively
with private-sector companies.

Obtain Long-Term Contracts. The Company seeks to obtain long-term
exclusive franchise agreements for the collection of solid waste in the
high-growth markets in which it operates. By obtaining such long-term
agreements, the Company has the opportunity to grow its contracted revenue
base at the same rate as the underlying population growth in such markets.
For example, the Company has secured exclusive, long-term franchise
agreements in high-growth markets such as Orange County, California, Las
Vegas, Nevada, Arlington, Texas and many areas of Florida. The Company
believes that this positions it to experience internal growth rates that
are generally higher than the overall industry's growth rate. In addition,
the Company believes that by securing a base of long-term recurring revenue
in growth markets, the Company is better able to protect its market
position from competition and is less susceptible to downturns in economic
conditions.

Expand Sales and Marketing Activities. The Company's well-managed
sales and marketing activities enable it to capitalize on its leading
positions in many of the markets in which it operates. The Company
currently has over 260 sales and marketing employees in the field, who are
incentivized by a commission structure to generate high levels of revenue.
For the most part, such employees directly solicit business from existing
and prospective commercial, industrial, municipal and residential
customers. The Company trains new and existing sales personnel with an
emphasis on teaching sales personnel to understand the Company's rate and
cost structures.

OPERATING STRATEGY

The Company seeks to combine revenue growth with an increase in operating
margins in order to enhance stockholder value. The Company's operating strategy
to accomplish this goal is to (i) utilize the extensive industry knowledge and
experience of the Company's executive management, (ii) utilize a decentralized
management structure in overseeing day-to-day operations, (iii) internalize the
disposal of waste collected by the Company, (iv) improve operating margins
through economies of scale, cost efficiencies and asset utilization and (v)
achieve high levels of customer satisfaction. For certain risks related to the
Company's operating strategy, see "Risk Factors."

H. Wayne Huizenga, the Company's Chairman and Chief Executive Officer,
after several years of owning and operating private waste hauling companies in
Florida, co-founded Waste Management in 1971. He served in various executive
capacities with Waste Management for approximately 14 years, including
President and Chief Operating Officer, from 1971 to 1984, which had by then
become the world's largest integrated solid waste services company. From 1987
to 1994, Mr. Huizenga served as Chairman and Chief Executive Officer of
Blockbuster, leading its growth from 19 stores to the world's largest video
rental company. In August 1995, he became Chairman and Chief Executive Officer
of Parent and in less than

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three years, Parent's Solid Waste Group acquired businesses with an aggregate
of over $1.0 billion in annual revenue.

Harris W. Hudson, the Company's Vice Chairman, worked closely with Mr.
Huizenga, from 1964 until 1982, at Waste Management and at the private waste
hauling firms they operated prior to the formation of Waste Management. In
1982, Mr. Hudson retired as Vice President of Waste Management of Florida,
Inc., a subsidiary of Waste Management. In 1983, Mr. Hudson founded Hudson
Management, a solid waste collection company in Florida, and served as its
Chairman and Chief Executive Officer until it merged with Parent in August
1995. By that time, Hudson Management had grown to over $50.0 million in
annual revenue, becoming one of Florida's largest privately-held solid waste
collection companies based on revenue. Since August 1995, Mr. Hudson has
served in various executive officer positions for Parent, including President
and Vice Chairman.

James H. Cosman, the Company's President and Chief Operating Officer, has
served as President of Parent's Solid Waste Group since January 1997. Prior to
joining Parent, Mr. Cosman was employed by Browning-Ferris for over 24 years.
During that time, he served in various management positions, including
Regional Vice President -- Northern Region.

The other officers with responsibility for operational affairs of the
Company have an average of over 15 years of management experience in the solid
waste industry.

- - UTILIZE DECENTRALIZED MANAGEMENT STRUCTURE. The Company maintains a
relatively small corporate headquarters staff, relying on a decentralized
management structure to minimize administrative overhead costs and to manage
its day-to-day operations more efficiently. The Company's local management has
extensive industry experience in growing, operating and managing solid waste
companies, and substantial experience in their local geographic markets. The
Company's four Regional Vice Presidents have an average of 21 years of
experience in the industry, and the Company's 19 Area Presidents have an
average of 16 years of experience in the industry. The Regional Vice
Presidents and Area Presidents have extensive authority, responsibility and
autonomy for operations within their geographic markets. Compensation for
management within regions and areas is in large part based on the improvement
in operating income produced in each manager's geographic area of
responsibility. In addition, through long-term incentive programs, including
stock options, the Company believes that it has one of the lowest turnover
levels in the industry for its local management teams. As a result of
retaining experienced managers with extensive local knowledge, community
relations and name recognition, the Company is able to react rapidly to
changes in its markets. The Company also seeks to implement the best practices
of its various regions and areas throughout its operations to improve
operating margins.

- - INTERNALIZE WASTE DISPOSAL. The Company seeks to achieve a high rate of waste
internalization by controlling waste streams from the point of collection
through disposal. Through acquisitions and other market development
activities, the Company creates market specific, vertically integrated
operations typically consisting of one or more collection companies, transfer
stations and landfills. The Company considers acquiring companies which own or
operate landfills with significant permitted disposal capacity and appropriate
levels of waste volume. The Company also seeks to acquire solid waste
collection companies in markets in which its owns or operates landfills. In
addition, the Company generates internal growth in its disposal operations by
constructing new landfills and expanding its existing landfills from time to
time in markets in which it has significant collection operations or in
markets that it determines lack sufficient disposal capacity. During the
quarter ended March 31, 1998, approximately 41% of the total volume of waste
collected by the Company was disposed of at the Company's landfills. Because
the Company does not have landfill facilities for all markets in which it
provides collection services, the Company believes that through landfill and
transfer station acquisitions and development it has the opportunity to
increase its waste internalization rate.
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- - CAPITALIZE ON ECONOMIES OF SCALE AND COST EFFICIENCIES. To improve operating
margins, the Company's management is focused on achieving economies of scale
and cost efficiencies. The consolidation, or "tuck-in," of smaller acquired
businesses into larger existing operations reduces costs by decreasing capital
and expenses used in routing, personnel, equipment and vehicle maintenance,
inventories and back-office administration. The Company is generally
consolidating its administrative centers to reduce its general and
administrative costs. In addition, the Company's size allows it to negotiate
volume discounts for certain purchases, including waste disposal rates at
landfills operated by third parties. The Company has reduced its selling,
general and administrative expenses from 17.1% of consolidated revenue in 1995
to 10.4% of consolidated revenue in 1997. Furthermore, the Company has taken
steps to increase its utilization of assets. For example, to reduce the number
of collection vehicles, drivers are paid incentive wages based upon the number
of customers they service on each route. In addition, routes are frequently
analyzed and rerouted to ensure that the highest number of customers are
efficiently serviced over the fewest possible miles. By using assets more
efficiently, operating expenses are lowered significantly.

OPERATIONS

The Company's operations primarily consist of the collection and disposal
of non-hazardous solid waste. Collection, landfill disposal, and other services
accounted for approximately 73.8%, 12.4% and 13.8% of revenue, respectively, for
the year ended December 31, 1997. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Collection Services. The Company provides solid waste collection services
to commercial, industrial, municipal and residential customers in 24 states
through 96 collection companies. In 1997, the Company's revenue from collection
services was derived approximately one third from services provided to
commercial customers, one third from services provided to industrial customers,
and one-third from services provided to municipal and residential customers. The
Company's commercial and residential collection operations involve the curbside
collection of refuse from small containers into collection vehicles for
transport to transfer stations or directly to landfills. Commercial collection
services are generally performed under one-year to three-year service
agreements, and fees are determined by such considerations as market factors,
collection frequency, type of equipment furnished, the type and volume or weight
of the waste collected, the distance to the disposal facility and the cost of
disposal.

Residential solid waste collection services are typically performed under
contracts with municipalities, which are generally secured by competitive bid
and which give the Company exclusive rights to service all or a portion of the
homes in their respective jurisdictions. Such contracts or franchises usually
range in duration from one to five years, although some of the Company's
exclusive franchises are for as long as 20 years. Residential solid waste
collection services may also be performed on a subscription basis, in which
individual households contract directly with the Company. The fees received for
subscription residential collection are based primarily on market factors,
frequency and type of service, the distance to the disposal facility and cost of
disposal. In general, subscription residential collection fees are paid
quarterly in advance by the residential customers receiving the service.

In its industrial collection operations, the Company supplies its customers
with waste containers commonly known as "roll-off" containers. The Company also
rents compactors to large waste generators. Waste collection services are
provided to individual industrial and construction facilities on a contractual
basis with terms generally ranging from a single pickup to a one-year term. The
Company also rents waste roll-off containers to construction sites and provides
hauling services. The Company collects the roll-off containers or compacted
waste and transports them either to a landfill, where the waste is disposed of,
or to a transfer station.

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The Company owns or operates 54 transfer stations. Waste is deposited at
these stations by the Company and other private haulers for compaction and
transfer to trailers for transport to landfills, incinerators, recycling
facilities or other disposal sites.

The Company also currently provides recycling services in certain markets
to meet customer demand. These services include the curbside collection of
residential recyclable waste and the provision of a variety of recycling
services to commercial and industrial customers.

Disposal Services. The Company owns or operates 42 solid waste landfills
with approximately 5,610 permitted acres and total available permitted disposal
capacity of approximately 1.1 billion in-place cubic yards as of March 31, 1998.
See "-- Properties." The in-place capacity of the Company's landfills is subject
to change based on engineering factors, requirements of regulatory authorities
and successful site expansions. Certain of the landfills accept non-hazardous
special waste, including utility ash, asbestos and contaminated soils.

Most of the Company's existing landfill sites have the potential for
expanded disposal capacity beyond the currently permitted acreage. The Company
monitors the availability of permitted disposal capacity at each of its
landfills and evaluates whether to pursue expansion at a given landfill based on
estimated future waste volumes and prices, remaining capacity and likelihood of
obtaining expansion. The Company believes that each of its landfills currently
has adequate permitted capacity. The Company is currently seeking to expand
permitted capacity at certain of its landfills in connection with favorable
design modifications.

Other Services. The Company has 24 materials recovery facilities or other
recycling operations primarily for the sorting of recyclable paper, aluminum,
glass and other materials. Most of these recyclable materials are internally
collected by the Company's residential collection operations. In certain areas,
the Company receives certain types of commercial and industrial solid waste that
is sorted at its facilities into recyclable materials and non-recyclable waste.
The recyclable materials are salvaged, repackaged and sold to third parties and
the non-recyclable waste is disposed of at landfills or incinerators. The
Company's strategy, wherever possible, is to reduce its exposure to fluctuations
in recyclable commodity prices by utilizing third parties' facilities, thereby
minimizing its recycling investment. Long-term contracts for the sale of
recycling materials are also used to mitigate the impact of commodity price
fluctuations. The Company also has composting operations at which yard waste is
composted, packaged and sold as mulch.

SALES AND MARKETING

The Company seeks to provide quality services that will enable it to
maintain high levels of customer satisfaction. The Company derives its business
from a broad customer base which the Company believes will enable it to
experience stable growth. Marketing efforts focus on continuing and expanding
business with existing customers as well as attracting new customers.

The Company has more than 260 sales and marketing employees. The Company's
sales and marketing strategy is to provide high-quality comprehensive solid
waste collection, recycling, transfer and disposal services to its customers at
competitive prices. The Company targets potential customers of all sizes, from
small quantity generators to large "Fortune 500" companies and municipalities.

All marketing activity by the Company is local in nature. The Company
generally does not change the tradenames of the local businesses that it
acquires, and therefore it does not operate nationally under any one mark or
tradename. Rather, the Company relies on the goodwill associated with the
acquired companies' local tradenames as used in each geographic market in which
it operates.

CUSTOMERS

The Company provides collection services to commercial, industrial,
municipal and residential customers. No one customer has individually accounted
for more than 10% of the consolidated revenue of the Company in any of the last
three years.

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REGULATION

The Company's facilities and operations are subject to a variety of
federal, state and local requirements which regulate health, safety, the
environment, zoning and land use. Operating and other permits are generally
required for landfills, certain waste collection vehicles, fuel storage tanks
and other facilities owned or operated by the Company, and these permits are
subject to revocation, modification and renewal. Federal, state and local
regulations vary, but generally govern wastewater or stormwater discharges, air
emissions, the treatment, storage, transportation and disposal of hazardous and
non-hazardous wastes and the remediation of contamination associated with the
release of hazardous substances. Such regulations provide governmental
authorities with strict powers of enforcement, which include the ability to
obtain injunctions and/or impose fines or penalties in the case of violations,
including criminal penalties. These regulations are administered by the U.S.
Environmental Protection Agency ("EPA") and various other federal, state and
local environmental, health and safety agencies and authorities, including the
Occupational Safety and Health Administration of the U.S. Department of Labor
("OSHA").

The Company strives to conduct its operations in compliance with applicable
laws and regulations. However, in the existing climate of heightened
environmental concerns, the Company, from time to time, has been issued
citations or notices from governmental authorities which have resulted in the
need to expend funds for remedial work and related activities at various of the
Company's landfills and other facilities. The Company has established a reserve
which it believes, based on currently available information, will be adequate to
cover any potential regulatory costs. However, there can be no assurance that
actual costs will not exceed the Company's reserve.

Federal Regulation. The following summarizes the primary environmental and
safety-related federal statutes of the United States affecting the facilities
and operations of the Company:

(1) The Solid Waste Disposal Act ("SWDA") as amended by RCRA. SWDA
and its implementing regulations establish a framework for regulating the
handling, transportation, treatment, storage and disposal of hazardous and
non-hazardous solid wastes, and require states to develop programs to
ensure the safe disposal of solid wastes in sanitary landfills.

Subtitle D of RCRA establishes a framework for regulating the disposal
of municipal solid wastes. Regulations under Subtitle D currently include
minimum comprehensive solid waste management criteria and guidelines,
including location restrictions, facility design and operating criteria,
closure and post-closure requirements, financial assurance standards,
groundwater monitoring requirements and corrective action standards, many
of which have not commonly been in effect or enforced in the past in
connection with municipal solid waste landfills. Each state was required to
submit a permit program designed to implement Subtitle D regulations to the
EPA by April 9, 1993. These state permit programs may include landfill
requirements which are more stringent than those of Subtitle D. Some states
have not yet fully implemented permit programs pursuant to RCRA and
Subtitle D. Once a state has an approved permit program it is required to
review all existing landfill permits to ensure compliance with the new
regulations.

All of the Company's planned landfill expansions or new landfill
development projects have been engineered to meet or exceed Subtitle D
requirements. Operating and design criteria for existing operations have
been modified to comply with these new regulations. Compliance with the
Subtitle D regulations has resulted in increased costs and may in the
future require substantial additional expenditures in addition to other
costs normally associated with the Company's waste management activities.

(2) The Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended ("CERCLA"). CERCLA, among other things,
provides for the cleanup of sites from which there is a release or
threatened release of a hazardous substance into the environment. CERCLA
may impose strict, joint and several liability for the costs of cleanup and
for damages to natural resources upon current owners and operators of the
site, parties who were owners or operators of the site at the time the
hazardous substances were disposed of, parties who transported the
hazardous substance to the site and

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parties who arranged for disposal at the site. Under the authority of
CERCLA and its implementing regulations, detailed requirements apply to the
manner and degree of investigation and remediation of facilities and sites
where hazardous substances have been or are threatened to be released into
the environment. CERCLA liability is not dependent upon the existence or
disposal of "hazardous wastes" but can also be based upon the existence of
small quantities of more than 700 "substances" characterized by the EPA as
"hazardous," many of which may be found in common household waste.

Among other things, CERCLA authorizes the federal government to
investigate and remediate sites at which hazardous substances have been or
are threatened to be released into the environment, or to order (or offer
an opportunity to) persons potentially liable for the cleanup of the
hazardous substances to do so. In addition, CERCLA requires the EPA to
establish a National Priorities List ("NPL") of sites at which hazardous
substances have been or are threatened to be released and which require
investigation or cleanup.

Liability under CERCLA is not dependent upon the intentional disposal
of hazardous wastes. It can be founded upon the release or threatened
release, even as a result of unintentional, non-negligent or lawful action,
of thousands of hazardous substances, including very small quantities of
such substances. Thus, even if the Company's landfills have never received
hazardous wastes as such, it is possible that one or more hazardous
substances may have come to be located or "released" at its landfills or at
other properties which the Company may have owned or operated. The Company
could thus be liable under CERCLA for the cost of cleaning up such
hazardous substances at such sites and for damages to natural resources,
even if those substances were deposited at the Company's facilities before
the Company acquired or operated them. The costs of a CERCLA cleanup can be
very expensive. Given the difficulty of obtaining insurance for
environmental impairment liability, such liability could have a material
impact on the Company's business and financial condition. For a further
discussion, see "-- Liability Insurance and Bonding."

(3) The Federal Water Pollution Control Act of 1972 (the "Clean Water
Act"). The Clean Water Act regulates the discharge of pollutants from a
variety of sources, including solid waste disposal sites, into streams,
rivers and other waters. Point source runoff from the Company's landfills
and transfer stations that is discharged into surface waters must be
covered by discharge permits that generally require the Company to conduct
sampling and monitoring and, under certain circumstances, reduce the
quantity of pollutants in those discharges. Storm water discharge
regulations under the Clean Water Act require a permit for certain
construction activities, which may affect the Company's operations. If a
landfill or transfer station discharges wastewater through a sewage system
to a publicly-owned treatment works ("POTW"), the facility must comply with
discharge limits imposed by the POTW. In addition, states may adopt
groundwater protection programs under the Clean Water Act or Safe Drinking
Water Act that could affect solid waste landfills. Furthermore, development
which alters or affects "wetlands" must generally be permitted prior to
such development commencing, and certain mitigation requirements may be
required by the permitting agencies.

(4) The Clean Air Act. The Clean Air Act imposes limitations on
emissions from various sources, including landfills. On March 12, 1996, the
EPA enacted rules that require large municipal solid waste landfills to
install landfill gas monitoring systems. These EPA regulations apply to
landfills that have been operating since November 8, 1987, and that can
accommodate 2.5 million cubic meters or more of municipal solid waste. The
regulations apply whether the landfill is active or closed. The date by
which each affected landfill must have the required gas collection and
control system is dependent upon the adoption of state regulations and the
date the EPA approves the state program. Many state regulatory agencies
currently require monitoring systems for the collection and control of
landfill gas. Compliance with the new EPA regulations is not expected to
have a material effect on the Company.

(5) The Occupational Safety and Health Act of 1970 (the "OSH
Act"). The OSH Act authorizes OSHA to promulgate occupational safety and
health standards. Various of these standards, including standards for
notices of hazardous chemicals and the handling of asbestos, apply to the
Company's facilities and operations.

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State Regulation. Each state in which the Company operates has its own
laws and regulations governing solid waste disposal, water and air pollution
and, in most cases, releases and cleanup of hazardous substances and liability
for such matters. States also have adopted regulations governing the design,
operation, maintenance and closure of landfills and transfer stations. The
Company's facilities and operations are likely to be subject to these types of
requirements. In addition, the Company's solid waste collection and landfill
operations may be affected by the trend in many states toward requiring the
development of waste reduction and recycling programs. For example, several
states have enacted laws that require counties or municipalities to adopt
comprehensive plans to reduce, through waste planning, composting, recycling or
other programs, the volume of solid waste deposited in landfills. Additionally,
laws and regulations restricting the disposal of certain wastes, including yard
waste, newspapers, beverage containers, unshredded tires, lead-acid batteries
and household appliances, in solid waste landfills have been promulgated in
several states and are being considered in others. Legislative and regulatory
measures to mandate or encourage waste reduction at the source and waste
recycling also are under consideration by Congress and the EPA.

In order to construct, expand and operate a landfill, one or more
construction or operating permits, as well as zoning approvals, must be
obtained. These are difficult and time-consuming to obtain, are often opposed by
neighboring landowners and citizens' groups, may be subject to periodic renewal
and are subject to modification and revocation by the issuing agency. In
connection with the Company's acquisition of existing landfills, it may be
necessary to expend considerable time, effort and money to bring the acquired
facilities into compliance with applicable requirements and to obtain the
permits and approvals necessary to increase their capacity.

Many of the Company's facilities own and operate underground storage tanks
("USTs") which are generally used to store petroleum-based products. USTs are
generally subject to federal, state and local laws and regulations that mandate
periodic testing, upgrading, closure and removal of USTs and that, in the event
of leaks from USTs, require that polluted groundwater and soils be remediated.
The Company has a number of USTs which, under federal regulations, will have to
be upgraded, removed or closed in place by December 22, 1998. The exact nature
and extent of associated costs cannot be assessed until the Company has
conducted soil or groundwater testing in connection with the upgrading, removal
and/or closure of the USTs. If USTs owned or operated by the Company leak, and
such leakage migrates onto the property of others, the Company could be liable
for response costs and other damages to third parties. Compliance with
regulations related to USTs is not expected to have a material adverse effect on
the Company.

Finally, with regard to its solid waste transportation operations, the
Company is subject to the jurisdiction of the Interstate Commerce Commission and
is regulated by the Federal Highway Administration, Office of Motor Carriers and
by regulatory agencies in each state. Various states have enacted, or are
considering enacting, laws and regulations that would restrict the interstate
transportation and processing of solid waste. In 1978, the United States Supreme
Court held similar laws and regulations unconstitutional; however, states have
attempted to distinguish proposed laws and regulations from the laws and
regulations involved in that ruling. In May 1994, the Supreme Court ruled that
state and local flow control laws and ordinances (which attempt to restrict
waste from leaving its place of generation) were an impermissible burden on
interstate commerce, and therefore, were unconstitutional. In response to these
Supreme Court rulings, Congress has considered passing legislation authorizing
states and local governments to restrict the free movement of solid waste in
interstate commerce. If federal legislation authorizing state and local
governments to restrict the free movement of solid waste in interstate commerce
is enacted, such legislation could adversely affect the Company's operations.

The Company has a reserve for environmental and landfill costs, which
includes landfill site closure and post-closure costs. The Company periodically
reassesses such costs based on various methods and assumptions regarding
landfill airspace and the technical requirements of Subtitle D of RCRA and
adjusts its accruals accordingly. Based on current information and regulatory
requirements, the Company believes that its reserve for such environmental
expenditures is adequate. However, environmental laws may change, and there can
be no assurance that the Company's reserves will be adequate to cover
requirements under existing or new environmental regulations, future changes or
interpretations of existing regulations or the identification of adverse
environmental conditions previously unknown to the Company. See "Management's
Discussion and
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Analysis of Financial Condition and Results of Operation -- Environmental and
Landfill Matters" and "Risk Factors -- Environmental Regulation."

COMPETITION

The Company operates in a highly competitive industry, which is changing as
a result of rapid consolidation. Entry into the Company's business and the
ability to operate profitably in such industry requires substantial amounts of
capital and managerial experience.

Competition in the non-hazardous solid waste industry comes from a number
of large, national publicly-owned companies, including Waste Management,
Browning-Ferris, USA Waste Services, Inc. and Allied Waste Industries, Inc.,
numerous regional publicly- and privately-owned solid waste companies, and from
thousands of small privately-owned companies, in their respective markets. Some
of the Company's publicly-owned competitors also are engaging in aggressive
acquisition strategies. Certain of the Company's competitors have significantly
larger operations, and may have significantly greater financial resources, than
the Company. In addition to national and regional firms and numerous local
companies, the Company competes with those municipalities that maintain waste
collection or disposal operations. These municipalities may have financial
advantages due to the availability of tax revenues and tax-exempt financing.

The Company competes for collection accounts primarily on the basis of
price and the quality of its services. From time to time, competitors may reduce
the price of their services in an effort to expand market share or to win a
competitively bid municipal contract.

In each market in which it owns or operates a landfill, the Company
competes for landfill business on the basis of tipping fees, geographical
location and quality of operations. The Company's ability to obtain landfill
business may be limited by the fact that some major collection companies also
own or operate landfills to which they send their waste. There also has been an
increasing trend at the state and local levels to mandate waste reduction at the
source and to prohibit the disposal of certain types of wastes, such as yard
wastes, at landfills. This 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 and/or affect the prices that can
be charged for landfill disposal services. In addition, most of the states in
which the Company operates landfills have adopted plans or requirements that set
goals for specified percentages of certain solid waste items to be recycled.

LIABILITY INSURANCE AND BONDING

The nature of the Company's business exposes it to the risk of liabilities
arising out of its operations, including possible damages to the environment.
Such potential liabilities could involve, for example, claims for remediation
costs, personal injury, property damage, and damage to the environment in cases
where the Company may be held responsible for the escape of harmful materials;
claims of employees, customers or third parties for personal injury or property
damage occurring in the course of the Company's operations; or claims alleging
negligence or professional errors and omissions in the planning or performance
of work. The Company could also be subject to fines and civil and criminal
penalties in connection with alleged violations of regulatory requirements.
Because of the nature and scope of the possible environmental damages,
liabilities imposed in environmental litigation can be significant. The majority
of the Company's solid waste operations have third party environmental liability
insurance with limits in excess of those required by permit regulations, subject
to certain limitations and exclusions. However, there is no assurance that the
limits of such environmental liability insurance would be adequate in the event
of a major loss, nor is there assurance that the Company would continue to carry
environmental liability insurance should market conditions in the insurance
industry make such coverage costs prohibitive.

The Company participates in Parent's combined risk management programs for
general liability, vehicle liability, workers compensation and employer's
liability claims, as well as umbrella liability policies to provide excess
coverage over the underlying limits contained in these primary policies. The
Company also carries property insurance. Although the Company strives to operate
safely and prudently and has, subject to certain

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49

limitations and exclusions, substantial liability insurance, no assurance can be
given that the Company will not be exposed to uninsured liabilities which could
have a material adverse effect on its financial condition.

In the normal course of business, the Company may be required to post a
performance bond or a bank letter of credit in connection with municipal
residential collection contracts, the operation, closure or post-closure of
landfills, certain remediation contracts, certain environmental permits, and
certain business licenses and permits. Bonds issued by surety companies operate
as a financial guarantee of the Company's performance. To date, the Company has
satisfied financial responsibility requirements by making cash deposits,
obtaining bank letters of credit or by obtaining surety bonds.

LEGAL PROCEEDINGS

Except for routine litigation incidental to the business of the Company,
there are no pending material legal proceedings to which the Company is a party
or to which any of its property is subject. The Company believes that the
outcome of the proceedings to which it is currently a party will not have a
material adverse effect upon its financial condition, results of operations or
prospects. However, unfavorable resolution of any such proceedings could affect
the consolidated results of operations, or cash flows for the quarterly period
in which they are resolved.

EMPLOYEES

As of June 1998, the Company employed approximately 9,400 full-time
employees, approximately 2,100 of whom were covered by collective bargaining
agreements. The management of the Company believes that it has good relations
with its employees.

PROPERTIES

The Company's corporate headquarters are located in Ft. Lauderdale, Florida
in premises leased from Parent. See "Certain Transactions." As of April 1998,
the Company owned approximately 4,700 collection vehicles. Certain of the
property and equipment of the Company are subject to liens securing payment of
portions of the Company's indebtedness. The Company also leases certain of its
offices and equipment. The Company believes that all of its facilities are
sufficient for its current needs.

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50

The following table provides certain information regarding the landfills
owned or operated by the Company as of March 31, 1998:

UNUSED
TOTAL PERMITTED PERMITTED
LANDFILL NAME LOCATION ACREAGE ACREAGE ACREAGE
------------- -------- ------- --------- ---------

Anderson............................. Anderson, California 1,200 150 103
Apex................................. Clark County, Nevada 2,340 1,233 1,153
Broadhurst Landfill(1)............... Jesup, Georgia 900 90 73
C&T Regional......................... Linn, Texas 194 94 40
Capital Waste & Recycling
Disposal........................... Rotterdam, New York 33 5 --
Charter Waste........................ Abilene, Texas 396 300 266
Cleveland Container.................. Shelby, North Carolina 183 34 --
CWI Florida (f/k/a Schofield)........ Winter Haven, Florida 80 60 12
Dozit Landfill....................... Morganfield, Kentucky 232 47 33
East Carolina Landfill............... Aulander, North Carolina 729 108 71
Epperson Landfill.................... Williamstown, Kentucky 704 100 58
Forest Lawn.......................... Three Oaks, Michigan 387 126 51
Green Valley Landfill................ Ashland, Kentucky 263 37 12
Holland Excavating................... DeLand, Florida 60 24 15
Laughlin(1).......................... Laughlin, Nevada 80 40 6
Los Mangos(2)........................ Alajuela, Costa Rica 41 24 8
National Serv-All.................... Fort Wayne, Indiana 519 204 35
Nine Mile Road....................... St. Augustine, Florida 154 19 --
Northeast Sanitary................... Eastover, South Carolina 73 42 15
Northwest Tennessee.................. Union City, Tennessee 600 120 99
Oak Grove............................ Winder, Georgia 202 60 39
Ohio County Balefill(1).............. Beaver Dam, Kentucky 908 179 143
Pepperhill........................... North Charleston, South 37 22 17
Carolina
Pine Ridge........................... Griffin, Georgia 850 101 91
Pinellas(1).......................... St. Petersburg, Florida 750 478 200
Presidio(1).......................... Presidio, Texas 10 10 6
Republic/Alpine(1)................... Alpine, Texas 96 85 63
Republic/CSC......................... Avalon, Texas 289 254 183
Republic/Imperial.................... Imperial, California 230 73 37
Republic/Maloy....................... Campbell, Texas 389 270 205
Safety Lights........................ Memphis, Tennessee 49 21 11
San Angelo(1)........................ San Angelo, Texas 283 283 155
Southern Illinois Regional........... DeSoto, Illinois 219 113 35
Springfield Environmental............ Mt. Vernon, Indiana 54 25 14
Swiftcreek Landfill.................. Macon, Georgia 792 73 41
Tay-Ban.............................. Birch Run, Michigan 138 43 10
Tri-K Landfill....................... Stanford, Kentucky 572 64 49
United Refuse........................ Fort Wayne, Indiana 305 84 22
Upper Piedmont Environmental......... Roxboro, North Carolina 614 70 62
Uwharrie Landfill(1)................. Mt. Gilead, North Carolina 905 119 75
Victory Environmental................ Terre Haute, Indiana 461 260 138
Wabash Valley........................ Wabash, Indiana 262 66 18
------ ----- -----
Total................................ 17,583 5,610 3,664
====== ===== =====

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

(1) Operated but not owned by the Company.
(2) The Company is currently in the process of selling this landfill to divest
itself of all foreign operations.

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MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND OTHER OFFICERS

The directors, executive officers and other officers of the Company are as
follows:

NAME AGE POSITION
- ---- --- --------

Chairman of the Board and Chief Executive
H. Wayne Huizenga.................... 60 Officer
Harris W. Hudson..................... 55 Vice Chairman and Director
James H. Cosman...................... 55 President and Chief Operating Officer
Senior Vice President and Chief Financial
Michael S. Karsner................... 39 Officer
Tod C. Holmes........................ 49 Vice President -- Finance
Matthew E. Davies.................... 40 Vice President -- Disposal
Thomas E. Miller..................... 43 Vice President -- Hauling Operations

Directors and Executive Officers

H. WAYNE HUIZENGA was named Chairman of the Board and Chief Executive
Officer of the Company effective May 1998. Mr. Huizenga has served as the
Chairman of the Board of Parent since August 1995 and as Co-Chief Executive
Officer of Parent since October 1996. From August 1995 until October 1996, Mr.
Huizenga served as Chief Executive Officer of Parent. Since September 1996, Mr.
Huizenga has served as the Chairman of the Board of Florida Panthers Holdings,
Inc. ("Panthers Holdings"), a sports, entertainment and leisure company that
owns and operates the Florida Panthers professional sports franchise and certain
luxury resort hotels and other facilities. Since January 1995, Mr. Huizenga also
has served as the Chairman of the Board of Extended Stay America, Inc., an
operator of extended stay lodging facilities. From September 1994 until October
1995, Mr. Huizenga served as the Vice Chairman of Viacom Inc. ("Viacom"), a
diversified entertainment and communications company. During such period, Mr.
Huizenga also served as the Chairman of the Board of Blockbuster Entertainment
Group, a division of Viacom. From April 1987 through September 1994, Mr.
Huizenga served as the Chairman of the Board and Chief Executive Officer of
Blockbuster, during which time he helped build Blockbuster from a 19-store chain
into the world's largest video rental company. In September 1994, Blockbuster
merged into Viacom. In 1971, Mr. Huizenga co-founded Waste Management, which he
helped build into the world's largest integrated solid waste services company,
and he served in various capacities, including President, Chief Operating
Officer and a director from its inception until 1984. Mr. Huizenga also owns or
controls the Miami Dolphins and Florida Marlins professional sports franchises,
as well as Pro Player Stadium, in South Florida.

HARRIS W. HUDSON was named Vice Chairman and a director of the Company
effective May 1998. Mr. Hudson has served as a director of Parent since August
1995 and as Vice Chairman of the Parent and Chairman of Parent's Solid Waste
Group since October 1996. From August 1995 until October 1996, Mr. Hudson served
as President of Parent. From May 1995 until August 1995, Mr. Hudson had served
as a consultant to Parent. From 1983 until August 1995, Mr. Hudson served as
Chairman of the Board, Chief Executive Officer and President of Hudson
Management Corporation, a solid waste collection company that he founded, which
was acquired by the Parent in August 1995. From 1964 to 1982, Mr. Hudson served
as Vice President of Waste Management of Florida, Inc., a subsidiary of Waste
Management and its predecessor. Mr. Hudson also serves as a director of Panthers
Holdings and is a limited partner of the Florida Marlins.

JAMES H. COSMAN was named President and Chief Operating Officer of the
Company effective May 1998. Mr. Cosman has served as President and Chief
Operating Officer of Parent's Solid Waste Group since January 1997. From 1972
until December 1996, Mr. Cosman served in various positions with Browning
Ferris, including Regional Vice President -- Northern Region from 1993 to 1996,
Regional Vice President -- Mid America Region from 1989 to 1993, Regional Vice
President -- South Central Region from 1979 to 1988 and District Manager from
1975 to 1979.

MICHAEL S. KARSNER was named Senior Vice President and Chief Financial
Officer of the Company effective May 1998. Mr. Karsner has served as Senior Vice
President and Chief Financial Officer of Parent

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52

since October 1996. From May 1996 until September 1996, Mr. Karsner served as
Senior Vice President and Chief Financial Officer of Dole Food Company, Inc.
("Dole"), a multinational packaged food company, from February 1995 until May
1996 he served as Vice President, Chief Financial Officer and Treasurer of Dole,
and from January 1994 until February 1995 he served as Vice President and
Treasurer of Dole. From January 1990 through December 1993, Mr. Karsner served
as Vice President and Treasurer of the Black & Decker Corporation, a
multinational consumer products company.

TOD C. HOLMES was named Vice President -- Finance of the Company effective
June 1998. Mr. Holmes has served as Vice President of Finance of Parent's Solid
Waste Group since January 1998. From 1987 to 1996, Mr. Holmes served in various
positions with Browning Ferris, including Vice President, Investor Relations
from 1996 to 1998, Divisional Vice President, Collection Operations from 1995 to
1996, Divisional Vice President and Regional Controller (Northern Region) from
1993 to 1995 and Divisional Vice President and Assistant Corporate Controller
from 1991 to 1993.

Other Officers

MATTHEW E. DAVIES was named Vice President -- Disposal of the Company
effective June 1998. Mr. Davies has served as Vice President of Landfills &
Transfer Stations of Parent's Solid Waste Group since February 1997. Prior to
that, from 1985 to January 1997, Mr. Davies served in various positions with
Browning Ferris, including Divisional Vice President for Disposal Operations
from 1992 to January 1997, Regional Manager Landfill Operations from 1987 to
1992 and Corporate Project Manager from 1985 to 1987.

THOMAS E. MILLER was named Vice President -- Hauling Operations of the
Company effective June 1998. Mr. Miller has served as Vice President of
Operations of Parent's Solid Waste Group since February 1997. From 1990 to
February 1997, Mr. Miller served in various positions with Browning Ferris,
including District Vice President from 1996 to February 1997, Regional
Operations Manager (Northern Region) from 1993 to 1996 and Regional Medical
Waste and Recycling Manager from 1990 to 1995.

There is no family relationship between any of the executive officers and
directors of the Company, except that Mr. Huizenga is Mr. Hudson's
brother-in-law. The executive officers of the Company are selected by and serve
at the discretion of the Board. The directors of the Company hold office until
the next annual meeting of stockholders and until their successors have been
duly elected and qualified.

The Board expects to promptly identify a number of additional candidates,
some of whom may not be affiliated with the Company or Parent, for election as
directors and/or appointment as executive officers by the Board. Prior to the
Distribution, Mr. Huizenga intends to resign as Chief Executive Officer of the
Company as soon as the Company is able to appoint a successor, although Mr.
Huizenga intends to remain as Chairman of the Board. In addition, prior to the
Distribution, Mr. Karsner intends to resign as Senior Vice President and Chief
Financial Officer of the Company as soon as the Company is able to appoint a
successor.

The Board will develop the Company's business strategy, establish the
overall policies and standards for the Company and review the performance of
management in executing the business strategy and implementing the Company's
policies and standards. The directors will be kept informed of the Company's
operations at meetings of the Board and committees of the Board, through reports
and analyses presented to the Board, and by discussions with management.
Significant communications between the directors and management also are
expected to occur apart from meetings of the Board and committees of the Board.

COMMITTEES OF THE BOARD

The Board has established three committees: the Executive Committee, the
Audit Committee, and the Compensation Committee.

The Executive Committee has full authority to exercise all the powers of
the Board between meetings of the Board, except as reserved by the Board. The
Executive Committee does not have the power to elect or remove executive
officers, approve a merger of the Company, recommend a sale of substantially all
of the Company's assets, recommend a dissolution of the Company, amend the
Certificate or Bylaws, declare dividends on the Company's outstanding
securities, or, except as authorized by the Board, issue any Common
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53

Stock or preferred stock. The Board has given the Executive Committee the
authority to approve acquisitions, borrowings, guarantees and other transactions
individually not involving more than $100 million in cash, securities (including
Common Stock to be issued by the Company) or other consideration. Effective upon
the Offerings Closing Date, Messrs. Huizenga and Hudson will be appointed as the
members of the Executive Committee.

The Audit Committee has the power to oversee the retention, performance and
compensation of the independent public accountants for the Company, and the
establishment and oversight of such systems of internal accounting and auditing
control as it deems appropriate. The Company intends to appoint at least two
independent directors as members of the Audit Committee.

The Compensation Committee reviews and approves the compensation of
executive officers of the Company, including payment of salaries, bonuses and
incentive compensation, determines the Company's compensation philosophy and
programs, and administers the Company's stock option plans. The Company intends
to appoint at least two independent directors as members of the Compensation
Committee.

EXECUTIVE COMPENSATION

Summary Compensation Information

Immediately following the Offerings Closing Date, the base salaries and
bonuses of the Named Officers (as defined below) will be at levels determined by
Parent. Subsequent to the Distribution, the base salaries and bonuses of all
executive officers of the Company will be determined by the Compensation
Committee of the Company. It is anticipated that the base salaries paid by the
Company to all executive officers compensated by the Company rather than Parent
will initially be comparable to present base salaries being paid by Parent,
subject to such adjustments as may be determined in the normal course of
business. Following the Offerings Closing Date, Messrs. Huizenga and Karsner
will not receive any compensation as executive officers directly from the
Company. A portion of the compensation paid by Parent to Mr. Karsner has been
allocated to the Company and is included in the fee payable by the Company to
Parent under the Services Agreement. See "Certain Transactions -- Services
Agreement."

The following tables set forth certain compensation information with
respect to the Company's Chief Executive Officer and the three other most highly
compensated executive officers of the Company based upon amounts paid or accrued
by Parent for services rendered to Parent and its subsidiaries in all capacities
with Parent during the year ended December 31, 1997 (collectively, the "Named
Officers"). The Company had no other executive officers whose salary and bonus
exceeded $100,000 in 1997.

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION WITH PARENT YEAR SALARY BONUS COMPENSATION(1) OPTIONS(2) COMPENSATION
- --------------------------------------- ---- -------- -------- --------------- ------------ ------------

H. Wayne Huizenga....................... 1997 -- -- -- 1,524,017 --
(Chairman and Co-Chief 1996 -- -- -- 465,117 --
Executive Officer)(3) 1995 -- -- -- 3,000,000 --

Harris W. Hudson........................ 1997 $395,769 $100,000 -- 324,672 --
(Vice Chairman)(4) 1996 $286,501 -- -- 186,047 --
1995 $115,804 -- -- 802,020 --

Michael S. Karsner...................... 1997 $337,820 $ 81,250 -- 10,000 $234,507(6)
(Senior Vice President 1996 $104,167 $ 50,000 -- 250,000 --
and Chief Financial Officer)(5) 1995 -- -- -- -- --

James H. Cosman......................... 1997 $300,000 $ 75,000 -- 163,333 $ 33,775(8)
(President and Chief Operating 1996 -- -- -- --
Officer Solid Waste Group)(7) 1995 -- -- -- --

Footnotes on following page

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54

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

(1) The aggregate total value of perquisites and other personal benefits,
securities or property did not equal $50,000 or ten percent of the annual
salary and bonus for any Named Officer during either 1995, 1996 or 1997.
(2) All options relate to shares of Parent Common Stock.
(3) Mr. Huizenga's employment with Parent began in August 1995. He is not paid
any cash salary or bonus.
(4) Mr. Hudson's employment with Parent began in August 1995.
(5) Mr. Karsner's employment with Parent began in October 1996.
(6) Includes $136,803 of relocation expenses for Mr. Karsner and $97,704
reimbursed by Parent for the payment of taxes by Mr. Karsner incurred
thereon.
(7) Mr. Cosman's employment with Parent began in January 1997.
(8) Consists of certain relocation expenses for Mr. Cosman.

OPTION GRANTS IN YEAR ENDED DECEMBER 31, 1997

INDIVIDUAL GRANTS
--------------------------------------------------- POTENTIAL REALIZABLE
PERCENT VALUE AT ASSUMED
NUMBER OF OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION --------------------------------------
NAME GRANTED(1) FISCAL YEAR(2) PRICE DATE(3) 0% 5% 10%
- ---- ---------- -------------- -------- ---------- ---------- ----------- -----------

H. Wayne Huizenga..... 1,524,017 9.3% $28.625 1/3/07 $2,000,272 $27,435,520 $69,526,994
Harris W. Hudson...... 324,672 2.0% 28.625 1/3/07 426,132 5,844,781 14,811,822
Michael S. Karsner.... 10,000 * 28.625 1/3/07 13,125 180,021 456,209
James H. Cosman....... 163,333 1.0% 30.00 1/2/07 -- 3,081,577 7,809,322

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

* Less than 1%
(1) All options relate to shares of Parent Common Stock.
(2) Calculated as a percent of total options of Parent Common Stock granted to
all Parent employees.
(3) Mr. Huizenga's option grant is immediately exercisable in full; the option
grants for the other Named Officers vest over a four-year period at the rate
of 25% per year commencing on the first anniversary of the date of grant.

YEAR-END OPTION VALUES

NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1997(1) DECEMBER 31, 1997(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------

H. Wayne Huizenga.................................. 4,989,134 -- $38,405,528 --
Harris W. Hudson................................... 297,522 815,217 7,354,617 $5,885,820
Michael S. Karsner................................. 62,500 197,500 -- --
James H. Cosman.................................... -- 163,333 -- --

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

(1) All options relate to shares of Parent Common Stock.

COMPENSATION OF DIRECTORS

Following the Offerings Closing Date, the Company may grant options to
purchase shares of Class A Common Stock to non-employee directors of the Company
under the 1998 Stock Incentive Plan. See "-- Stock Incentive Plan." Other than
as will be provided in such Plan and the reimbursement of reasonable expenses
incurred with attending Board and Committee meetings, the Company has not yet
adopted specific policies on directors' compensation and benefits following the
Offerings Closing Date.

SEVERANCE AGREEMENTS

Messrs. Cosman and Holmes entered into severance agreements with Parent
when hired by Parent. Pursuant to Mr. Cosman's severance agreement, if his
employment with Parent is terminated without cause during the first 36 months of
his employment, then Mr. Cosman is entitled to continue to receive severance pay
equal to $300,000 per annum for a period equal to the greater of the balance of
such 36-month period or 12 months. Such 36-month period expires on December 31,
1999. The Company will assume Parent's severance obligations under Mr. Cosman's
agreement prior to the Offerings Closing Date. Mr. Cosman will not be entitled
to any severance payments as a result of the Separation and Distribution.

Mr. Holmes' severance agreement provides that if his employment with Parent
is terminated without cause during the first 24 months of his employment, then
Mr. Holmes is entitled to continue to receive severance pay equal to $200,000
per annum for a period equal to the greater of the balance of such 24-month

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period or 12 months. Mr. Holmes's severance agreement also provides that if his
employment with Parent is terminated without cause after the first 24 months of
his employment, then Mr. Holmes is entitled to continue to receive his base
monthly salary for a period of 12 months. All options granted under Parent's
stock option plans would continue to vest throughout the severance period. Mr.
Holmes will not be entitled to any severance payments as a result of the
Separation and Distribution.

STOCK INCENTIVE PLAN

The Company currently intends to adopt a 1998 Stock Incentive Plan ("Stock
Incentive Plan") prior to the Offerings Closing Date, to provide for the grant
of options to purchase shares of Class A Common Stock, stock appreciation rights
and stock grants to employees, non-employee directors and independent
contractors of the Company who are eligible to participate in the Stock
Incentive Plan. The Company intends to reserve 20,000,000 shares of Class A
Common Stock for issuance pursuant to options granted under the Stock Incentive
Plan and Substitute Options (as defined below). The Company has agreed that
prior to the Distribution Date it will not award options that, if exercised,
would cause Parent's ownership of the Common Stock to fall below the Required
Distribution Percentage or otherwise prevent the Distribution from qualifying as
a tax-free distribution under Section 355 of the Code. See "Certain
Transactions -- Separation and Distribution Agreement."

401(K) PLAN

The Company currently intends to adopt a 401(k) Savings and Retirement Plan
that is intended to qualify for preferential tax treatment under section 401(a)
of the Code ("401(k) Plan"). Although the Company has not yet adopted the
specific terms of the 401(k) Plan, the Company intends that most of the
employees of the Company will be eligible to participate in the 401(k) Plan upon
adoption.

OWNERSHIP OF PARENT COMMON STOCK BY THE COMPANY'S DIRECTORS AND EXECUTIVE
OFFICERS

No present or future officer or director currently owns any shares of
Common Stock, all of which are currently owned by Parent. Upon consummation of
the Distribution, such directors and officers will receive shares of Class B
Common Stock in respect of shares of Parent Common Stock held by them on the
record date for the Distribution. The following table sets forth the number of
shares of Parent Common Stock beneficially owned on June 12, 1998 by each of the
Company's directors and director nominees, the Named Officers and all directors
and executive officers of the Company as a group. Except as otherwise noted, the
individual director, director nominee or executive officer or their family
members had sole voting and investment power with respect to such securities.
Percentages of shares beneficially owned are based upon 455,804,071 shares of
Parent Common Stock outstanding at June 12, 1998, plus for each person named
below any shares of Parent Common Stock that may be acquired by such person
within 60 days of such date upon exercise of outstanding stock options or
warrants.

SHARES BENEFICIALLY
OWNED
--------------------
NAME NUMBER PERCENT
- ---- ---------- -------

H. Wayne Huizenga(1).................................... 31,801,912 6.8
Harris W. Hudson(2)..................................... 19,421,981 4.2
Michael S. Karsner(3)................................... 65,000 *
James H. Cosman(4)...................................... 48,834 *
Tod C. Holmes........................................... -- --
All directors and executive officers as a group (5
persons)(5)........................................... 51,337,727 10.9

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

* Less than 1 percent
(1) The aggregate amount of Parent Common Stock beneficially owned by Mr.
Huizenga consists of (a) 17,019,219 shares beneficially owned by Huizenga
Investment Limited Partnership, a Nevada limited partnership controlled by
Mr. Huizenga, (b) 1,043,559 shares owned indirectly by his wife, (c)
presently exercisable warrants owned by Huizenga Investment Limited
Partnership to purchase 8,000,000 shares, and (d) vested options to purchase
5,739,134 shares. Mr. Huizenga disclaims beneficial ownership of the shares
owned by his wife.

Footnotes continued on following page

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56

(2) The aggregate amount of Parent Common Stock beneficially owned by Mr. Hudson
consists of (a) 17,296,779 shares beneficially owned by Harris W. Hudson
Limited Partnership, a Nevada limited partnership controlled by Mr. Hudson,
(b) presently exercisable warrants owned by Harris W. Hudson Limited
Partnership to purchase 1,200,000 shares and (c) options exercisable within
60 days to purchase 925,202 shares.
(3) The aggregate amount of Parent Common Stock beneficially owned by Mr.
Karsner consists of options exercisable within 60 days to purchase 65,000
shares.
(4) The aggregate amount of Parent Common Stock beneficially owned by Mr. Cosman
consists of (a) 8,000 shares owned by Mr. Cosman and his wife as joint
tenants, and (b) options exercisable within 60 days to purchase 40,834
shares.
(5) The aggregate amount of Parent Common Stock beneficially owned by all
directors and executive officers of the Company as a group consists of (a)
35,367,557 shares, (b) presently exercisable warrants to purchase 9,200,000
shares and (c) options which are exercisable within 60 days to purchase
6,770,170 shares.

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CERTAIN TRANSACTIONS

The following includes brief summaries of the Separation and Distribution
Agreement, the Services Agreement, the Tax Indemnification and Allocation
Agreement, and the Employee Benefits Agreement between the Company and Parent.
The summaries of such agreements are qualified in their entirety by such
agreements, copies of which will be filed as exhibits to the Registration
Statement of which this Prospectus is a part.

HISTORICAL INTERCOMPANY RELATIONSHIPS

Prior to the Offerings Closing Date, the Company has been a wholly owned
subsidiary of Parent. As a wholly owned subsidiary, the Company has received
various services provided by Parent, including accounting, auditing, cash
management, corporate communications, corporate development, financial and
treasury, human resources and benefit plan administration, insurance and risk
management, legal, purchasing and tax services. Parent has also provided the
Company with the services of a number of its executives and employees. In
consideration for these services, Parent has historically allocated a portion of
its overhead costs related to such services to the Company. Management of the
Company believes that the amounts allocated to the Company have been no less
favorable to the Company than the expenses the Company would have incurred to
obtain such services on its own or from unaffiliated third parties.

From time to time, Parent has guaranteed certain obligations of the
Company. These guarantees will remain in place following the Offerings Closing
Date and may be called upon should there be a default with respect to such
obligations. In that event, the Company will be obligated to reimburse Parent
for all liabilities and costs incurred by Parent with respect to such
obligations. Within six months following the Distribution, the Company will be
required to cause all such guarantees by Parent to be released by the creditors
and other parties holding such guarantees.

DIVIDEND AND INTERCOMPANY DEBT REPAYMENTS

In April 1998, the Company declared a dividend to Parent in the amount of
$2.0 billion and paid the dividend to Parent by the issuance of the Company
Notes payable to Parent. As of June 29, 1998, the amount of the Company Notes
outstanding equaled approximately $1,977.1 million. On June 30, 1998, the
Company prepaid $542.5 million of the Company Notes with the Resources Note
Receivable and the Resources Dividend. On the Offerings Closing Date, the
Company intends to use all of the net proceeds of the Offerings to prepay
$1,246.5 million of the Company Notes payable to Parent. Prior to the Offerings
Closing Date, the Company will issue 16.5 million shares of Class A Common Stock
to repay in full the Affiliate Payable and the Resources Notes Payable. Within
31 days after the Offerings Closing Date, the Company will issue Class A Common
Stock to Parent to prepay any remaining outstanding amount of the Company Notes
to the extent that the net proceeds, if any, from the exercise of the
Underwriters' over-allotment options are not sufficient to prepay any such
remaining amount. All such issuances of Class A Common Stock will be based on
the initial public offering price per share. The Company will pay interest that
accrues on the Company Notes out of its cash flow from operations until all
remaining amounts outstanding of the Company Notes are prepaid in full. See
"Background of the Offerings -- Separation and Distribution."

SEPARATION AND DISTRIBUTION AGREEMENT

Parent has announced that, subject to satisfaction of certain conditions,
Parent intends to distribute to its stockholders in 1999 all of the Common Stock
of the Company owned by Parent at that time. The Separation and Distribution
Agreement entered into between the Company and Parent sets forth certain
agreements among the Company and Parent, with respect to the principal corporate
transactions required to effect the Separation, the Offerings and the
Distribution, and certain other agreements governing the relationship among the
parties thereafter.

The Separation. The Separation and Distribution Agreement provides that,
prior to the Offerings Closing Date and after effecting the Resources Dividend,
all of the common stock of Resources will be distributed by the Company to
Parent. Resources is a subsidiary of the Company and substantially all of its
assets and liabilities relate to Parent's automotive retail businesses, and do
not relate to the Company's solid waste services businesses. The Company's
financial statements exclude the accounts of Resources. In addition,

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prior to the Offerings, certain subsidiaries engaged in the solid waste services
business and wholly owned, directly and indirectly, by the Company will be
reorganized internally within the Company's consolidated group of subsidiaries.

The Offerings. The Separation and Distribution Agreement provides that,
subject to certain conditions, the Company shall consummate the Offerings. On
the Offerings Closing Date, Parent will own approximately 68.6% of the
outstanding shares of Common Stock (63.9% if the Underwriters exercise their
over-allotment options in full), which will represent approximately 90.1% of the
combined voting power of all the outstanding shares of Class A Common Stock and
Class B Common Stock (88.7% if the Underwriters exercise their over-allotment
options in full).

The Distribution. The Separation and Distribution Agreement provides that,
subject to the terms and conditions thereof, Parent and the Company will take
all reasonable steps necessary and appropriate to cause all conditions to the
Distribution to be satisfied and to effect the Distribution. The Parent Board
will have the sole discretion to set a record date for the Distribution and to
determine the Distribution Date at any time commencing after the Offerings
Closing Date and ending on or prior to such date as is three months following
the satisfaction or waiver of all of the conditions to the Distribution,
including receipt of the Letter Ruling. Parent has agreed to consummate the
Distribution no later than December 31, 1999, subject to the satisfaction or
waiver by the Parent Board, in its sole discretion, of the following conditions:

(i) the Letter Ruling shall have been obtained, and shall continue in
effect, to the effect that, among other things, the Distribution will qualify as
a tax-free distribution for federal income tax purposes under Section 355 of the
Code and the Distribution by Parent of Common Stock to stockholders of Parent
will not result in recognition of any income, gain or loss for federal income
tax purposes to Parent or Parent's stockholders, and such ruling shall be in
form and substance satisfactory to Parent, in its sole discretion;

(ii) any material governmental approvals and third party consents necessary
to consummate the Distribution shall have been obtained and be in full force and
effect;

(iii) no order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Distribution shall be in effect, and no other event outside
the control of Parent shall have occurred or failed to occur that prevents the
consummation of the Distribution; and

(iv) no other events or developments shall have occurred subsequent to the
Offerings Closing Date that, in the sole judgment of the Parent Board, would
result in the Distribution having a material adverse effect on Parent or on the
stockholders of Parent.

The Company and Parent have agreed that, after the Offerings Closing Date,
none of the parties will take, or permit any of its affiliates to take, any
action which reasonably could be expected to prevent the Distribution from
qualifying as a tax-free distribution to Parent and Parent's stockholders
pursuant to Section 355 of the Code. The parties have also agreed to take any
reasonable actions necessary in order for the Distribution to qualify as a
tax-free distribution to Parent and Parent's stockholders pursuant to Section
355 of the Code. Without limiting the foregoing, after the Offerings Closing
Date and prior to the Distribution Date, the Company will not issue or grant,
directly or indirectly, any shares of its capital stock or any rights, warrants,
options or other securities to purchase or acquire (whether upon conversion,
exchange or otherwise) any shares of its capital stock (whether or not then
exercisable, convertible or exchangeable), without the prior consent of Parent
if such issuance or grant would reduce Parent's ownership of the Company's
capital stock below the Required Distribution Percentage.

Registration Rights. The Separation and Distribution Agreement provides
that Parent and any of Parent's wholly owned subsidiaries that own Common Stock
will have the right in certain circumstances to require the Company to use its
best efforts to register for resale shares of Common Stock held by Parent under
the Securities Act of 1933, as amended ("1933 Act"), and applicable state
securities laws, subject to certain conditions, limitations and exceptions (a
"Demand Registration Statement"). The Company also agreed with Parent that if
the Company files a registration statement for the sale of securities under the
1933 Act (an "Incidental Registration Statement"), then Parent and its
subsidiaries may, subject to certain conditions,
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limitations and exceptions, include in such registration statement shares of
Common Stock held by Parent and its subsidiaries. Parent has agreed to pay all
of the offering expenses in connection with any Demand Registration Statement,
provided that if the Company registers any new shares of its Common Stock in the
Demand Registration Statement, then the Company will pay its pro rata portion of
the offering expenses. The Company has agreed to pay offering expenses in
connection with any Incidental Registration Statement; however, Parent will pay
its pro rata portion of the offering expenses if any shares of Common Stock held
by Parent and its subsidiaries are included in the Incidental Registration
Statement.

Releases and Indemnification. The Separation and Distribution Agreement
provides for a full and complete release and discharge as of the Offerings
Closing Date of all liabilities (including any contractual agreements or
arrangements existing or alleged to exist) existing or arising from all acts and
events occurring or failing to occur or alleged to have occurred or to have
failed to occur and all conditions existing or alleged to have existed on or
before the Offerings Closing Date, between the Company and Parent (including in
connection with the transactions and all other activities to implement any of
the Separation, the Offerings and the Distribution), except as expressly set
forth in the Separation and Distribution Agreement.

Except as provided in the Separation and Distribution Agreement, the
Company has agreed to indemnify, defend and hold harmless Parent and each of
Parent's directors, officers and employees from and against all liabilities
relating to, arising out of or resulting from (i) the failure of the Company or
any other Person to pay, perform or otherwise promptly discharge any liabilities
of the Company in accordance with their respective terms, and (ii) any breach by
the Company of the Separation and Distribution Agreement or any of the
\agreements entered into by the parties in connection with the Separation and
Distribution (the "Ancillary Agreements").

Except as provided in the Separation and Distribution Agreement, Parent has
agreed to indemnify, defend and hold harmless the Company and each of the
Company's directors, officers and employees from and against all liabilities
relating to, arising out of or resulting from (i) the failure of Parent or any
other Person to pay, perform or otherwise promptly discharge any liabilities of
Parent other than the liabilities of the Company, (ii) any breach by Parent of
the Separation and Distribution Agreement or any of the Ancillary Agreements and
(iii) any untrue statement of a material fact or omission to state a material
fact, or alleged untrue statements or omissions, with respect to certain
information relating to Parent contained in the Registration Statement, any
Demand Registration Statement or any Incidental Registration Statement.

The Separation and Distribution Agreement also specifies certain procedures
with respect to claims subject to indemnification and related matters.

Contingent Liabilities and Contingent Gains. The Separation and
Distribution Agreement provides for indemnification by the Company and Parent
with respect to contingent liabilities primarily relating to their respective
businesses or otherwise assigned to them ("Exclusive Contingent Liabilities").

The Separation and Distribution Agreement provides for the establishment of
a Contingent Claims Committee comprised of one representative designated from
time to time by each of Parent and the Company that will establish procedures
for resolving disagreements among the parties as to contingent gains and
contingent liabilities.

The Separation and Distribution Agreement provides for the sharing of
Shared Contingent Liabilities, which are defined as (i) any contingent
liabilities that are not Exclusive Contingent Liabilities of Parent or Exclusive
Contingent Liabilities of the Company and (ii) certain specifically identified
liabilities. With respect to any Shared Contingent Liability, the parties have
agreed to allocate responsibility for such Shared Contingent Liability based
upon their respective market capitalizations on the Offerings Closing Date or on
such other methodology to be established by a Contingent Claims Committee to be
appointed by the parties. Parent will assume the defense of, and may seek to
settle or compromise, any third party claim that is a Shared Contingent
Liability, and the costs and expenses thereof will be included in the amount to
be shared by the parties.

The Separation and Distribution Agreement provides that the Company and
Parent will have the exclusive right to any benefit received with respect to any
contingent gain that primarily relates to the business
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of, or that is expressly assigned to, the Company or Parent, respectively (an
"Exclusive Contingent Gain"). Each of the Company and Parent will have sole and
exclusive authority to manage, control and otherwise determine all matters
whatsoever with respect to an Exclusive Contingent Gain that primarily relates
to its respective business. The parties have agreed to share any benefit that
may be received from any Contingent Gain based upon their respective market
capitalizations on the Offerings Closing Date or on such other methodology to be
established by a Contingent Claims Committee to be appointed by the parties. The
parties have agreed that Parent will have the sole and exclusive authority to
manage, control and otherwise determine all matters whatsoever with respect to
any Shared Contingent Gain. Pursuant to the Separation and Distribution
Agreement, the Company acknowledges that Parent may elect not to pursue any
Shared Contingent Gain for any reason whatsoever (including a different
assessment of the merits of any action, claim or right or any business reasons
that are in the best interests of Parent without regard to the best interests of
the Company) and that Parent will have no liability to any Person (including the
Company) as a result of any such determination.

Certain Business Transactions. Under the terms of the Separation and
Distribution Agreement, Parent has agreed that, for a period of five years after
the date of the Distribution, Parent will not directly or indirectly compete
with the Company in the solid waste services industry anywhere in North America,
and the Company has agreed that, for a period of five years after the date of
the Distribution, the Company will not directly or indirectly compete with the
Parent in the automotive retail or vehicle rental industries anywhere in North
America. The Separation and Distribution Agreement also provides for the
allocation of certain corporate opportunities following the Offerings Closing
Date and prior to the Distribution Date. During this period, neither the Company
nor Parent will have any duty to communicate or offer such opportunities to the
other and, subject to the foregoing non-competition covenants, may pursue or
acquire any such opportunity for itself or direct such opportunity to any other
Person; provided, however, (i) if the opportunity relates primarily to the
business of the other party, the party that acquires knowledge of the
opportunity will generally be required to communicate and offer the opportunity
to the other party and (ii) if the opportunity relates to both the business of
Parent and the Company, the party that acquires knowledge of the opportunity
shall use its reasonable best efforts to communicate and offer such opportunity
to the Company.

Insurance. Pursuant to the Separation and Distribution Agreement, Parent
has agreed to permit the Company to continue to participate in certain of its
insurance policies and Parent will continue to provide claims adjustment
services for automobile liability and general liability claims, for which the
Company will pay to Parent a monthly fee of $43,000 for insurance costs plus an
amount equal to five percent of incurred losses for claims adjustment services.
Additionally, Company plans to secure insurance policies independent of Parent.
Parent and the Company have agreed to cooperate in good faith to provide for an
orderly transition of insurance coverage. However, Parent will not be liable in
the event any of these policies are terminated or prove to be inadequate. See
"Business -- Liability and Insurance Bonding."

Warrants. Under the terms of certain outstanding warrants to purchase
Parent Common Stock, persons who hold such warrants and do not exercise them
prior to the record date for the Distribution will be entitled to receive upon
exercise of such warrants, in addition to shares of Parent Common Stock, a
number of shares of Common Stock, based on the same ratio used to determine the
number of shares of Common Stock to be distributed for each outstanding share of
Parent Common Stock on the record date for the Distribution. If necessary,
Parent will reserve shares of Common Stock held by it at the time of the
Distribution to be delivered to holders of warrants upon exercise of such
warrants following the record date for the Distribution Date. The Company will
not be required to issue any additional shares of Common Stock to such warrant
holders. It is not possible to specify how many shares of Common Stock will be
subject to such warrants, as it is not known how many warrants, if any, to
purchase Parent Common Stock will remain unexercised by the record date for the
Distribution.

Expenses. The Company has agreed to pay all third-party costs, fees and
expenses relating to the Offerings, all of the reimbursable expenses of the
Underwriters pursuant to the Underwriting Agreement (as defined below), all of
the costs of producing, printing, mailing and otherwise distributing this
Prospectus, as well as the Underwriters' discount as provided in the
Underwriting Agreement. See "Underwriting." Except as set forth in an Ancillary
Agreement, whether or not the Distribution is consummated, the Separation and
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Distribution Agreement treats certain specific third-party fees, costs and
expenses paid or incurred in connection with the Distribution in the same manner
as Shared Contingent Liabilities, and all other fees, costs and expenses in
connection therewith will be paid by Parent.

Termination. The Separation and Distribution Agreement may be terminated
at any time prior to the Distribution Date by the mutual consent of Parent and
the Company, or by Parent at any time prior to the Offerings Closing Date. In
addition, the Separation and Distribution Agreement will terminate if the
Distribution does not occur on or prior to December 31, 1999, unless extended by
Parent and the Company. If the Separation and Distribution Agreement is
terminated prior to the Offerings Closing Date, no party thereto (or any of its
respective directors or officers) will have any liability or further obligation
to any other party. In the event of any termination of the Separation and
Distribution Agreement on or after the Offerings Closing Date, only the
provisions of the Separation and Distribution Agreement that obligate the
parties to pursue the Distribution, or take, or refrain from taking, actions
which would or might prevent the Distribution from qualifying for tax-free
treatment under Section 355 of the Code, will terminate and the other provisions
of the Separation and Distribution Agreement and each Ancillary Agreement will
remain in full force and effect.

SERVICES AGREEMENT

The Company and Parent have entered into a services agreement (the
"Services Agreement") pursuant to which Parent will provide to the Company
certain accounting, auditing, cash management, corporate communications,
corporate development, financial and treasury, human resources and benefit plan
administration, insurance and risk management, legal, purchasing and tax
services. In exchange for the provision of such services, fees will be payable
by the Company to Parent in the amount of $1.25 million per month, subject to
review and adjustment as the Company reduces the amount of services it obtains
from Parent from time to time. The fees will be payable monthly in arrears, 15
days after the close of each month. Management of the Company believes that the
fees for services that will or may be provided under the Services Agreement will
be no less favorable to the Company than could have been obtained by the Company
internally or from unaffiliated third parties.

The Services Agreement has an initial term expiring one year from the
Offerings Closing Date. Following the initial term, the Company may seek to
renew or extend the term, and modify the scope and fee of, the Services
Agreement on terms mutually acceptable to the Company and Parent.

Any services rendered to the Company by Parent beyond the services to be
provided under the terms of the Services Agreement, that Parent determines are
not covered by the fees provided for under the terms of the Services Agreement,
will be billed to the Company as described in the Services Agreement, or on such
other basis as the Company and Parent may agree, provided that the price payable
by the Company for non-covered services will be established on a negotiated
basis which is no less favorable to the Company than the charges for comparable
services from unaffiliated third parties.

TAX INDEMNIFICATION AND ALLOCATION AGREEMENT

The Company and Parent have entered into a Tax Indemnification and
Allocation Agreement, which provides that if any one of certain events occurs
after the Distribution Date, and such event causes the Distribution not to be a
tax-free transaction to Parent under Section 355 of the Code, then the Company
will indemnify Parent for income taxes Parent may incur by reason of such event
(the "Distribution Taxes"). Such events include certain actions taken by the
Company and any breach of representations relating to the Company's activities
and ownership of its capital stock made to Parent or to the IRS in connection
with the solicitation of a Letter Ruling.

The Tax Indemnification and Allocation Agreement also provides that Parent
will indemnify the Company for income taxes that the Company might incur if
certain internal restructuring transactions entered into in connection with the
Offerings fail to qualify as tax-free spin-offs, other than Distribution Taxes
for which the Company is liable to Parent under the circumstances described
above.

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In addition to the foregoing indemnities, the Tax Indemnification and
Allocation Agreement provides for (i) the allocation and payment of taxes for
periods during which the Company and Parent are included in the same
consolidated group for federal income tax purposes or the same consolidated,
combined or unitary returns for state tax purposes, (ii) the allocation of
responsibility for the filing of tax returns, (iii) the conduct of tax audits
and the handling of tax controversies and (iv) various related matters.

For periods during which the Company is included in Parent's consolidated
federal income tax returns or state consolidated, combined, or unitary tax
returns (which will include the periods on or before the Offerings Closing
Date), the Company will be required to pay an amount of income tax equal to the
consolidated tax liability attributable to the Company. The Company will be
responsible for its own separate tax liabilities that are not determined on a
consolidated or combined basis. The Company will also be responsible in the
future for any increases to the consolidated tax liability of the Company and
Parent that is attributable to the Company, and will be entitled to refunds for
reductions of tax liabilities attributable to the Company for prior periods.

The Company and its subsidiaries will be included in Parent's consolidated
group for federal income tax purposes so long as Parent beneficially owns at
least 80% of the total voting power and value of the outstanding Common Stock.
Each corporation that is a member of a consolidated group during any portion of
the group's tax year is jointly and severally liable for the federal income tax
liability of the group for that year. The Company (and its subsidiaries) will
cease to be members of the Parent's consolidated group upon the Offerings
Closing Date. While the Tax Indemnification and Allocation Agreement allocates
tax liabilities between Company and Parent during the period on or prior to the
Offerings Closing Date in which the Company is included in Parent's consolidated
group, the Company could be liable in the event federal tax liability allocated
to Parent is incurred, but not paid, by Parent or any other member of Parent's
consolidated group for Parent's tax years that include such periods. In such
event, the Company would be entitled to seek indemnification from Parent
pursuant to the Tax Indemnification and Allocation Agreement.

In connection with the Distribution and the Letter Ruling, the Company will
likely make certain representations to the IRS regarding its intentions at the
time of the Distribution with respect to its business assets and acquisitions or
issuances of its capital stock. Parent will make similar representations to the
IRS with respect to Parent's assets and capital stock. The IRS may require a
representation that the Company has had no negotiations or discussions with any
possible acquisition target the acquisition of which, when combined with the
Class A Common Stock issued in the Offerings or any shares of Common Stock sold
by Parent prior to the Distribution, could cause a 50% or greater change in the
vote or value of the capital stock of the Company. If the Distribution occurs
and, as a result of the Company's breach of these representations, or certain
other representations of the Company, occurring after the Distribution, Parent
incurs Distribution Taxes, then the Company would be liable to the Parent under
the Tax Indemnification and Allocation Agreement, which would have a material
adverse effect on the business, financial condition, results of operations and
prospects of the Company. Parent does not plan to consummate the Distribution
unless the Letter Ruling is satisfactory to Parent that the general acquisition
growth strategies of Parent and the Company would not cause the Distribution to
be taxable and that such acquisition growth strategies would not be impeded by
completing the Distribution.

EMPLOYEE BENEFITS AGREEMENT

The Company and Parent have entered into an employee benefits agreement
(the "Employee Benefits Agreement"). Pursuant to the Employee Benefits
Agreement, the Company will assume and agree to pay, perform, fulfill and
discharge, in accordance with their respective terms, all liabilities to, or
relating to, former employees of Parent or its affiliates who will be employed
by the Company and its affiliates as of the Distribution Date and certain former
employees of Parent or its affiliates (including retirees) who were employed in
or provided services primarily for the solid waste business of the Company for
purposes of allocating employee benefit obligations. Until the Distribution
Date, such employees and former employees will continue to participate in
Parent's employee benefit plans, although the Company will bear its allocable
share of the costs of benefits of such plans. Effective immediately after the
Distribution, the Company will establish its own employee benefit plans, which
generally will be similar to Parent's plans as in effect at that
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time. The Employee Benefits Agreement will not preclude the Company from
discontinuing or changing such plans at any time thereafter, with certain
exceptions noted below. The Company's plans generally will assume all
liabilities under Parent's plans to employees and former employees assigned to
the Company, and any assets funding such liabilities will be transferred from
funding vehicles associated with Parent's plans to the corresponding funding
vehicles associated with the Company's plans.

Parent Stock Options. Pursuant to the Employee Benefits Agreement,
following the Distribution, the Company intends to issue substitute options
under the Stock Incentive Plan (collectively "Substitute Options") in
substitution for grants under Parent's stock option plans as of the Distribution
Date (collectively, "Parent Stock Options") held by individuals employed by the
Company as of the Distribution Date (the "Company Employees"). With certain
exceptions, Parent Stock Options held by individuals employed by Parent as of
the Distribution Date and Parent Stock Options held by individuals who will not
continue their employment after the Distribution Date with any of Parent, the
Company or any of their subsidiaries, including individuals who have retired
prior to such date, will remain outstanding as Parent Stock Options, with an
appropriate antidilution adjustment to reflect the Distribution.

The Substitute Options will provide for the purchase of a number of shares
of the Class A Common Stock equal to the number of shares of Parent Common Stock
subject to such Parent Stock Options as of the Distribution Date, multiplied by
the Ratio (as defined below), rounded down to the nearest whole share. The per
share exercise price of the Substitute Options will equal the per share exercise
price of such Parent Stock Options as of the Distribution Date divided by the
Ratio. Solely for its convenience, the Company will pay the holders of the
Substitute Options cash in lieu of any fractional share. The other terms and
conditions of such Substitute Options will be the same as those of the
surrendered Parent Stock Options. The "Ratio" means the amount obtained by
dividing (i) the average of the daily high and low per share prices of the
Parent Common Stock as listed on the NYSE during each of the 30 trading days
immediately preceding the ex-dividend date for the Distribution by (ii) the
average of the daily high and low per share prices of the Class A Common Stock
as listed on the NYSE during each of the 30 trading days immediately preceding
the ex-dividend date for the Distribution.

Shares Subject to Substitute Options. It is not possible to specify how
many shares of Class A Common Stock will be subject to Substitute Options. It is
expected that some Parent Stock Options consisting of stock options held by the
Company Employees will be exercised and that some will be forfeited, and that
additional Parent Stock Options could be granted, prior to the Distribution
Date. In addition, the remaining balance of unexercised Parent Stock Options
will be converted into Substitute Options by reference to the Ratio, which will
not be known until the time of the Distribution. Stockholders of the Company
are, however, likely to experience some dilutive impact from the above-described
adjustments.

Outstanding Parent Stock Options Held by Company Employees. Pending the
Distribution, Parent Stock Options held by Company Employees will remain
outstanding as Parent Stock Options. As of June 12, 1998, there were
approximately 7.3 million shares of Parent Common Stock reserved by Parent for
possible issuance pursuant to outstanding, unexercised Parent Stock Options at a
weighted average exercise price of $19.71 per share (approximately 2.4 million
of which were exercisable as of June 12, 1998), held by Company Employees. If
the Ratio were determined using the closing price of the Parent Common Stock on
June 30, 1998 on the NYSE ($25.0625 per share) and a price of $24.00 per share
of Class A Common Stock (the initial public offering price), the foregoing
number of shares subject to Parent Stock Options would be replaced by Substitute
Options to purchase approximately 7.6 million shares of Class A Common Stock at
a weighted average exercise price of $18.87 per share.

LEASE

The Company has entered into a lease (the "Lease") with Parent pursuant to
which Parent leases to the Company approximately 10,800 square feet of office
space at Parent's corporate headquarters in Fort Lauderdale, Florida at an
annual rate of $220,320 ($20.40 per square foot), plus certain common area
maintenance charges. The Lease has an initial term of one year, is terminable by
the Company on 90 days' prior written notice and is automatically renewable by
the Company for an additional one year term. Included

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in the rental rate are utilities, security, parking, building maintenance and
cleaning services. Management of the Company believes that the Lease is on terms
no less favorable to the Company than could be obtained from unaffiliated third
parties.

OTHER RELATIONSHIPS WITH PARENT

On the Offerings Closing Date, Parent will own approximately 30.7% of the
Class A Common Stock (20.7% if the Underwriters exercise their over-allotment
options in full) and all of the outstanding shares of Class B Common Stock,
which together will represent approximately 68.6% of the outstanding shares of
Common Stock (63.9% if the Underwriters exercise their over-allotment options in
full), and approximately 90.1% of the combined voting power of all outstanding
shares of Class A Common Stock and Class B Common Stock (88.7% if the
Underwriters exercise their over-allotment options in full). In addition, the
following executive officers and/or directors of the Company also are executive
officers and/or directors of Parent:

Mr. Huizenga, the Chairman and Chief Executive Officer of the Company, also
is the Chairman and Co-Chief Executive Officer of Parent.

Mr. Hudson, the Vice Chairman of the Company, also is the Vice Chairman of
Parent.

Mr. Karsner, the Chief Financial Officer of the Company, also is Senior
Vice President and Chief Financial Officer of Parent.

During 1997, the Company collected solid waste from, and leased roll-off
containers to, certain automotive retail and vehicle rental subsidiaries of
Parent. All of such services were provided to such subsidiaries of Parent
pursuant to the Company's standard form contracts at standard rates. The Company
expects to continue to provide such services on the same terms in 1998.

During 1997, the Company from time to time rented vehicles from Parent's
Alamo Rent-A-Car and National Car Rental System subsidiaries, pursuant to
standard form vehicle rental agreements under which standard rates were charged
to the Company. The Company expects to continue from time to time to rent
vehicles from Parent on the same terms in 1998.

OTHER TRANSACTIONS WITH RELATED PARTIES

The following is a summary of certain other agreements and transactions
between or among the Company and certain related parties. It is the Company's
policy that transactions with related parties must be on terms that, on the
whole, are no less favorable than those that would be available from
unaffiliated parties. Based on the Company's experience in the industry in which
it operates and the terms of its transactions with unaffiliated parties, it is
the Company's belief that all of the transactions described below involving the
Company met that standard at the time such transactions were effected.

Pro Player Stadium (the "Stadium") is a professional sports stadium in
South Florida that is owned and controlled by Mr. Huizenga. Certain subsidiaries
of the Company collected solid waste from, and leased roll-off waste containers
to, the Stadium pursuant to standard agreements under which the Stadium paid an
aggregate of approximately $383,000 to such subsidiaries in 1997. The Company
expects to continue to provide such services on the same terms in 1998.

In 1997, the Company purchased Mr. Cosman's residence in Pennsylvania for
$770,000.

PRINCIPAL STOCKHOLDER

Prior to the Offerings Closing Date, the Company has been a wholly owned
subsidiary of Parent. On the Offerings Closing Date, Parent will own
approximately 30.7% of the Class A Common Stock (20.7% if the Underwriters
exercise their over-allotment options in full) and all of the outstanding shares
of Class B Common Stock, which together will represent approximately 68.6% of
the outstanding shares of Common Stock (63.9% if the Underwriters exercise their
over-allotment options in full), and approximately 90.1% of

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the combined voting power of all outstanding shares of Class A Common Stock and
Class B Common Stock (88.7% if the Underwriters exercise their over-allotment
options in full). Except for Parent, the Company is not aware of any person or
group that will beneficially own more than 5% of the outstanding shares of
Common Stock upon the Offerings Closing Date.

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED CAPITAL STOCK

Prior to the Offerings Closing Date, the Certificate will be amended and
restated to authorize capital stock consisting of (a) 50,000,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock"), and (b)
750,000,000 shares of Common Stock, of which 250,000,000 shares will be
authorized as Class A Common Stock, 125,000,000 shares will be authorized as
Class B Common Stock, and 375,000,000 shares may be designated by the Board as
either Class A Common Stock or Class B Common Stock prior to issuance. Of the
250,000,000 shares of Common Stock designated as Class A Common Stock,
55,000,000 shares are being offered hereby, 16,474,417 shares will be issued to
Parent, 8,250,000 are reserved for issuance upon exercise of over-allotment
options or for issuance to Parent, 20,000,000 are reserved for issuance pursuant
to the Stock Incentive Plan and 95,688,083 shares are reserved for issuance upon
conversion of shares of Class B Common Stock into shares of Class A Common
Stock. Following the Offerings Closing Date, 79,311,917 shares of Class A Common
Stock (79,724,417 shares if the Underwriters exercise their over-allotment
options in full) will be outstanding, 95,688,083 shares of Class B Common Stock
will be outstanding and held by Parent, and no shares of Preferred Stock will be
outstanding. All of the shares of Common Stock that will be outstanding
following the Offerings Closing Date, including the shares of Class A Common
Stock sold in the Offerings, will be validly issued, fully paid and
nonassessable. The following summary description of the capital stock of the
Company is qualified by reference to the Certificate and bylaws of the Company,
copies of which will be filed as exhibits to Registration Statement of which
this Prospectus is a part.

COMMON STOCK

Voting. The Class A Common Stock and Class B Common Stock are identical in
all respects, except holders of Class A Common Stock are entitled to one vote
per share while holders of Class B Common Stock are entitled to five votes per
share on all matters submitted to a vote of the stockholders, including the
election of directors. Except as otherwise required by law or provided in any
resolution adopted by the Board with respect to any series of Preferred Stock,
the holders of Common Stock will possess all voting power. Generally, all
matters to be voted on by stockholders must be approved by a majority (or, in
the case of election of directors, by a plurality) of the votes entitled to be
cast by all shares of Class A Common Stock and Class B Common Stock that are
present in person or represented by proxy, voting together as a single class,
subject to any voting rights granted to holders of any Preferred Stock. Except
as otherwise provided by law, and subject to any voting rights granted holders
of any Preferred Stock, amendments to the Certificate generally must be approved
by a majority of the votes entitled to be cast by all outstanding shares of
Class A Common Stock and Class B Common Stock, voting together as a single
class. However, amendments to the Certificate that would alter or change the
powers, preferences or special rights of the Class A Common Stock or Class B
Common Stock so as to adversely affect them must also be approved by a majority
of the outstanding shares of the class that is adversely affected by such
amendment, voting as a separate class. The Certificate will not provide for
cumulative voting in the election of directors.

Conversion. Prior to the Distribution, Parent shall be entitled, at any
time or from time to time, to convert all or any portion of its shares of Class
B Common Stock into shares of Class A Common Stock on a one-for-one basis. Any
shares of Class B Common Stock transferred by Parent or any of its subsidiaries
to any person, other than Parent or any of its subsidiaries, shall automatically
convert into shares of Class A Common Stock on a one-for-one basis, except for
the distribution of Class B Common Stock to stockholders of Parent as part of
the Distribution. All shares of Class B Common Stock shall automatically convert
into shares of

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Class A Common Stock on a one-for-one basis if the number of outstanding shares
of Class B Common Stock falls below 20% of the aggregate number of outstanding
shares of Common Stock. This automatic conversion feature will prevent Parent
from decreasing its economic interest in the Company to less than 20% while
still retaining control of approximately 55.6% of the combined voting power of
the shares of Class A Common Stock and Class B Common Stock, assuming no
additional shares of Common Stock are issued after the Offerings Closing Date.
This automatic conversion feature will ensure that, if the Distribution does not
occur, Parent will retain voting control of the Company only if it retains a
significant economic interest in the Company.

Following the Distribution, except as provided below, shares of Class B
Common Stock shall not be convertible into shares of Class A Common Stock at the
option of the holder thereof. Shares of Class B Common Stock shall automatically
convert into shares of Class A Common Stock on a one-for-one basis on the fifth
anniversary of the Distribution Date, unless prior to the Distribution Date,
Parent delivers to the Company an opinion of counsel reasonably satisfactory to
the Company to the effect that such automatic conversion would adversely affect
Parent's ability to obtain the Letter Ruling. If such opinion is received,
approval of such conversion shall be submitted to a vote of the holders of the
Common Stock as soon as practicable after the fifth anniversary of the
Distribution Date, unless Parent delivers to the Company an opinion of counsel
reasonably satisfactory to the Company prior to such fifth anniversary that such
vote would adversely affect the tax-free status of the Distribution. Approval of
such conversion will require the affirmative vote of the holders of a majority
of the shares of both the Class A Common Stock and Class B Common Stock present
in person or by proxy, voting together as a single class, with each share
entitled to one vote for such purpose. If such automatic conversion does not
occur, the Class B Common Stock may not be convertible into Class A Common
Stock. There is no assurance that any conversion will be consummated whether by
virtue of the above events or otherwise.

In addition, following the Distribution, shares of Class A Common Stock and
Class B Common Stock will be convertible, at the option of the holders thereof,
on a one-for-one basis, into shares of the other class if any person or group of
persons (other than Parent or any of its subsidiaries) makes an offer, which the
Board deems to be a bona fide offer, to purchase 20% or more of the other class
of Common Stock for cash or securities or other property without making a
similar offer for shares of such class of Common Stock, unless prior to the
Distribution Date, Parent delivers to the Company an opinion of counsel
reasonably satisfactory to the Company to the effect that such conversion right
would adversely affect Parent's ability to obtain the Letter Ruling. The shares
of Common Stock of a class may only be so converted during the period in which
such bona fide offer is in effect. Any share of Common Stock so converted and
not acquired by the offeror prior to the termination, rescission or completion
of the offer will automatically reconvert to a share of the class from which it
was converted upon such termination, rescission or completion. This automatic
conversion feature is to ensure that holders of Class A Common Stock and Class B
Common Stock may participate in any offer for a significant amount of the shares
of the other class of Common Stock that is not similarly offered for the shares
of such holder's class of Common Stock.

In addition, following the Distribution, if any person or persons acting
together as a group acquires 20% or more of the outstanding shares of Class B
Common Stock, all shares of Class B Common Stock held by such person or group
shall automatically be converted into shares of Class A Common Stock on a
one-for-one basis, unless prior to the Distribution Date, Parent delivers to the
Company an opinion of counsel reasonably satisfactory to the Company to the
effect that such automatic conversion would adversely affect Parent's ability to
obtain the Letter Ruling.

Dividends. Subject to any preferential rights of any outstanding series of
Preferred Stock created by the Board from time to time, the holders of shares of
Class A Common Stock and Class B Common Stock will be entitled to such cash
dividends as may be declared from time to time by the Board from funds available
therefor which dividends are not required to be declared on both classes,
provided that holders of shares of Class A Common Stock shall be entitled to
receive an equal pro rata share of any amounts received by holders of shares of
Class B Common Stock. See "Dividend Policy." In addition, in connection with any
stock dividend that may be declared by the Board from time to time, holders of
Class A Common Stock shall be entitled to receive such dividend only in shares
of Class A Common Stock while holders of Class B Common
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Stock shall be entitled to receive such dividend either in shares of Class A
Common Stock or in shares of Class B Common Stock as may be determined by the
Board. Neither the shares of Class A Common Stock nor the shares of Class B
Common Stock may be reclassified, subdivided or combined unless such
reclassification, subdivision or combination occurs simultaneously and in the
same proportion for each class.

Liquidation. Subject to any preferential rights of any outstanding series
of Preferred Stock created from time to time by the Board, upon liquidation,
dissolution or winding up of the Company, the holders of shares of Class A
Common Stock and Class B Common Stock will be entitled to receive pro rata all
assets of the Company available for distribution to such holders.

Other Rights. In the event of any merger or consolidation of the Company
with or into another company in connection with which shares of Common Stock are
converted into or exchangeable for shares of stock, other securities or property
(including cash), all holders of Common Stock, regardless of class, will be
entitled to receive the same kind and amount of shares of stock and other
securities and property (including cash).

PREFERRED STOCK

The Certificate will authorize the Board to establish one or more series of
Preferred Stock and to determine, with respect to any series of Preferred Stock,
the terms and rights of such series, including (i) the designation of the
series, (ii) the number of shares of the series, which number the Board may
thereafter (except where otherwise provided in the applicable certificate of
designation) increase or decrease (but not below the number of shares thereof
then outstanding), (iii) whether dividends, if any, will be cumulative or
noncumulative, and, in the case of shares of any series having cumulative
dividend rights, the date or dates or method of determining the date or dates
from which dividends on the shares of such series shall be cumulative, (iv) the
rate of any dividends (or method of determining such dividends) payable to the
holders of the shares of such series, any conditions upon which such dividends
will be paid and the date or dates or the method for determining the date or
dates upon which such dividends will be payable, (v) the redemption rights and
price or prices, if any, for shares of the series, (vi) the terms and amounts of
any sinking fund provided for the purchase or redemption of shares of the
series, (vii) the amounts payable on and the preferences, if any, of shares of
the series in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Company, (viii) whether the shares of the
series will be convertible or exchangeable into shares of any other class or
series, or any other security, of the Company or any other corporation, and, if
so, the specification of such other class or series or such other security, the
conversion or exchange price or prices or rate or rates, any adjustments
thereof, the date or dates as of which such shares will be convertible or
exchangeable and all other terms and conditions upon which such conversion or
exchange may be made, (ix) restrictions on the issuance of shares of the same
series or of any other class or series, (x) the voting rights, if any, of the
holders of the shares of the series and (xi) any other relative rights,
preferences and limitations of such series.

The Company believes that the ability of the Board to issue one or more
series of Preferred Stock will provide the Company with flexibility in
structuring possible future financings and acquisitions, and in meeting other
corporate needs that might arise. The authorized shares of Preferred Stock, as
well as shares of Common Stock, will be available for issuance without further
action by the Company's stockholders, unless such action is required by
applicable law or the rules of any stock exchange or automated quotation system
on which the Company's securities may be listed or traded. Subject to certain
exceptions, the NYSE currently requires stockholder approval as a prerequisite
to listing shares in several instances, including where the present or potential
issuance of shares could result in an increase in the number of shares of common
stock or voting securities outstanding by at least 20%. If the approval of the
Company's stockholders is not required for the issuance of shares of Preferred
Stock or Common Stock, the Board may determine not to seek stockholder approval.

Although the Board has no intention at the present time of doing so, it
could issue a series of Preferred Stock that could, depending on the terms of
such series, impede the completion of a merger, tender offer or other takeover
attempt. The Board will make any determination to issue such shares based on its
judgment as to the best interests of the Company and its stockholders. The
Board, in so acting, could issue Preferred Stock

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having terms that could discourage an acquisition attempt through which an
acquirer may be able to change the composition of the Board, including a tender
offer or other transaction that some, or a majority, of the Company's
stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then current
market price of such stock.

DELAWARE BUSINESS COMBINATION STATUTE

Section 203 of the Delaware General Corporation Law (the "DGCL") provides
that, subject to certain exceptions specified therein, an "interested
stockholder" of a Delaware corporation shall not engage in any business
combination, including mergers or consolidations or acquisitions of additional
shares of the corporation, with the corporation for a three-year period
following the date that such stockholder becomes 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 (excluding
certain shares), or (iii) on or subsequent to such date, the business
combination is approved by the board of directors of the corporation and
authorized at an annual or special meeting of stockholders by the affirmative
vote of at least 66 2/3% of the outstanding voting stock which is not owned by
the interested stockholder. Except as otherwise specified in Section 203 of the
DGCL ("Section 203"), an interested stockholder is defined to include (x) any
person that is the owner of 15% or more of the outstanding voting stock of the
corporation, or is an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the corporation at any
time within three years immediately prior to the date of determination and (y)
the affiliates and associates of any such person.

Under certain circumstances, Section 203 makes it more difficult for a
person who would be an interested stockholder to effect various business
combinations with a corporation for a three-year period. The Company has not
elected to be exempt from the restrictions imposed under Section 203. However,
Parent and its affiliates are excluded from the definition of "interested
stockholder" pursuant to the terms of Section 203. The provisions of Section 203
may encourage persons interested in acquiring the Company to negotiate in
advance with the Board, since the stockholder approval requirement would be
avoided if a majority of the directors then in office approves either the
business combination or the transaction which results in any such person
becoming an interested stockholder. Such provisions also may have the effect of
preventing changes in the management of the Company. It is possible that such
provisions could make it more difficult to accomplish transactions which the
Company's stockholders may otherwise deem to be in their best interests.

LIABILITY OF DIRECTORS; INDEMNIFICATION

The Certificate will provide that a director of the Company will not be
personally liable to the Company or its stockholders for monetary damages for a
breach of his or her fiduciary duty as a director, except, if required by the
DGCL as amended from time to time, for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL, which concerns unlawful
payments of dividends, stock purchases or redemptions, or (iv) for any
transaction from which the director derived an improper personal benefit.
Neither the amendment nor repeal of such provision will eliminate or reduce the
effect of such provision in respect of any matter occurring, or any cause of
action, suit or claim that, but for such provision, would accrue or arise prior
to such amendment or repeal.

While the Certificate will provide directors with protection from awards
for monetary damages for breaches of their duty of care, it does not eliminate
such duty. Accordingly, the Certificate will have no effect on the availability
of equitable remedies such as an injunction or rescission based on a director's
breach of his or her duty of care.

The Certificate will provide that each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person, or a person of whom such person is the legal
representative, is or was a director or officer of the Company or is or was
serving at the request of the Company as a director, officer,
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employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, will be indemnified and
held harmless by the Company to the fullest extent authorized by the DGCL, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Company to provide
broader indemnification rights than said law permitted the Company to provide
prior to such amendment), against all expense, liability and loss reasonably
incurred or suffered by such person in connection therewith. Such right to
indemnification includes the right to have the Company pay the expenses incurred
in defending any such proceeding in advance of its final disposition, subject to
the provisions of the DGCL. Such rights are not exclusive of any other right
which any person may have or thereafter acquire under any statute, provision of
the Certificate, the Company's By-Laws, agreement, vote of stockholders or
disinterested directors or otherwise. No repeal or modification of such
provision will in any way diminish or adversely affect the rights of any
director, officer, employee or agent of the Company thereunder in respect of any
occurrence or matter arising prior to any such repeal or modification. The
Certificate will also specifically authorize the Company to maintain insurance
and to grant similar indemnification rights to employees or agents of the
Company.

At present, there is no pending or threatened litigation or proceeding
involving any director or officer, employee or agent of the Company where such
indemnification will be required or permitted.

TRANSFER AGENT AND REGISTRAR

First Union National Bank will be the transfer agent and registrar for the
Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

Of the 79,311,917 shares of Class A Common Stock to be outstanding
following the Offerings Closing Date (79,724,417 shares if the Underwriters
exercise their over-allotment options in full) the 55,000,000 shares of Class A
Common Stock sold in the Offerings (63,250,000 shares if the Underwriters
exercise their over-allotment options in full) will be freely tradable without
restriction under the 1933 Act, except for any such shares which be may acquired
by an affiliate of the Company (an "Affiliate"), as that term is defined in Rule
144 promulgated under the 1933 Act ("Rule 144"). Following the Offerings Closing
Date, Parent will own 95,688,083 shares of Class B Common Stock which will
constitute 100% of the outstanding shares of Class B Common Stock and, together
with its wholly owned subsidiaries, will own 24,311,917 shares of Class A Common
Stock which will constitute approximately 30.7% of the outstanding shares of
Class A Common Stock (16,474,417 shares and 20.7%, respectively, if the
Underwriters exercise their over-allotment options in full). Shares of Class B
Common Stock may convert into shares of Class A Common Stock in certain
circumstances. See "Description of Capital Stock." Parent has announced that,
subject to certain conditions, Parent intends to distribute to its stockholders
in 1999 all of the Common Stock held by Parent by means of the Distribution.
Shares of Common Stock to be distributed to Parent's stockholders in the
Distribution generally will be freely transferable, except for shares of Common
Stock received by persons who may be deemed to be Affiliates. Persons who may be
deemed to be Affiliates generally include individuals or entities that control,
are controlled by, or are under common control with, the Company and may include
directors and certain officers of the Company as well as significant
stockholders of the Company, if any. Persons who are Affiliates will be
permitted to sell the shares of Common Stock that are issued in the Offerings or
that they receive in the Distribution only pursuant to an effective registration
statement under the 1933 Act or an exemption from the registration requirements
of the 1933 Act, including exemptions provided by Rule 144.

The shares of Common Stock held by Parent are deemed "restricted
securities" as defined in Rule 144, and may not be sold other than through
registration under the 1933 Act or pursuant to an exemption from the regulations
thereunder, including exceptions provided by Rule 144. Subject to applicable law
and to the contractual restriction with the Underwriters described below, Parent
may sell any and all of the shares of

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Common Stock it owns after completion of the Offerings. The Separation and
Distribution Agreement provides that Parent will have the right in certain
circumstances to require the Company to use its best efforts to register for
resale shares of Common Stock held by Parent and its wholly owned subsidiaries.
See "Certain Transactions -- Separation and Distribution Agreement." Parent
intends to exercise its right to cause the Company to register for resale,
subject to the 180-day lock-up, shares of Class A Common Stock held by Parent
and its wholly owned subsidiaries in order to sell shares for cash prior to the
Distribution. The Company and Parent have agreed, for a period of 90 days and
180 days, respectively, after the date of this Prospectus, not to offer or sell
any shares of Common Stock, subject to certain exceptions (including the
Distribution), without the prior written consent of Merrill Lynch on behalf of
the Underwriters; provided that the Company may at any time and from time to
time (i) issue shares of Class A Common Stock to third parties as consideration
for the Company's acquisition from such third parties of non-hazardous solid
waste businesses, (ii) grant options to purchase shares of Common Stock under
the Company's 1998 Stock Incentive Plan and (iii) issue shares of Common Stock
to Parent in connection with the prepayment of the Affiliate Payable, the
Resources Notes Payable and the remaining amounts outstanding of the Company
Notes and as consideration for the Company's acquisition from Parent of a
non-hazardous solid waste business, in each case without the prior consent of
Merrill Lynch. See "Underwriting." In addition, after the Offerings Closing Date
and prior to the Distribution Date, the Company has agreed not to issue any
shares of its capital stock or any rights, warrants, or other securities to
purchase or acquire any shares of its capital stock, without the prior consent
of Parent. See "Certain Transactions -- Separation and Distribution Agreement."
Subject to the foregoing restrictions, the Company may issue additional shares
of Class A Common Stock or Class B Common Stock to raise equity or make
acquisitions. The Company may also issue additional shares of Class A Common
Stock or Class B Common Stock to Parent in exchange for additional investments
of cash or other property by Parent in the Company.

In addition, upon completion of the Distribution, certain stock options
exercisable for shares of Parent Common Stock will be converted into stock
options exercisable for shares of Class A Common Stock. See "Certain
Transactions -- Employee Benefits Agreement" for a description of the stock
option substitution methodology. In addition, subject to the prior consent of
Parent, the Company may grant options to purchase shares of Class A Common Stock
to employees, non-employee directors and independent contractors of the Company
pursuant to the Stock Incentive Plan. See "Management -- Stock Incentive Plan."
The Company currently expects to file in 1998 a registration statement under the
1933 Act to register shares reserved for issuance under the Stock Incentive
Plan. Shares issued pursuant to the Stock Incentive Plan after the effective
date of such registration statement (other than shares issued to Affiliates)
generally will be freely tradable without restriction or further registration
under the 1933 Act. In addition, the Company may also from time to time file
registration statements covering the issuance and/or resale of shares of Class A
Common Stock which may be issued in potential future acquisitions.

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CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
FOR NON-UNITED STATES HOLDERS

The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of Class A
Common Stock applicable to Non-U.S. Holders. In general, a "Non-U.S. Holder" is
any holder of Class A Common Stock other than (i) a citizen or resident of the
United States, (ii) a corporation or partnership created or organized in the
United States or under the laws of the United States or of any state (other than
any partnership treated as foreign under U.S. Treasury regulations), (iii) an
estate, the income of which is includable in gross income for United States
federal income tax purposes regardless of its source or (iv) a trust if (a) a
court within the United States is able to exercise primary supervision over the
administration of the trust and (b) one or more United States persons have the
authority to control all substantial decisions of the trust. This discussion is
based on current law and is for general information only. This discussion does
not address aspects of United States federal taxation other than income and
estate taxation, and does not address all aspects of income and estate taxation
nor does it consider any specific facts or circumstances that may apply to a
particular Non-U.S. Holder (including certain U.S. expatriates). ACCORDINGLY,
OFFEREES OF COMMON STOCK ARE URGED TO CONSULT THEIR TAX ADVISERS REGARDING THE
UNITED STATES FEDERAL, STATE, LOCAL AND NON-UNITED STATES INCOME AND OTHER TAX
CONSEQUENCES OF HOLDING AND DISPOSING OF SHARES OF COMMON STOCK.

An individual may, subject to certain exceptions, be deemed to be a
resident alien (as opposed to a non-resident alien) by virtue of being present
in the United States for at least 31 days in the calendar year and for an
aggregate of at least 183 days during a three-year period ending in the current
calendar year (counting for such purposes all of the days present in the current
year, one-third of the days present in the immediately preceding year, and
one-sixth of the days present in the second preceding year). In addition to the
"substantial presence test" described in the immediately preceding sentence, an
alien may be treated as a resident alien if he or she (i) meets a lawful
permanent residence test (a so-called "green card" test) or (ii) elects to be
treated as a U.S. resident and meets the "substantial presence test" in the
immediately following year. Resident aliens are subject to U.S. federal tax as
if they were U.S. citizens.

DIVIDENDS

In general, dividends paid to a Non-U.S. Holder will be subject to United
States withholding tax at a 30% rate (or a lower rate prescribed by an
applicable tax treaty) unless the dividends are either (i) effectively connected
with a trade or business carried on by the Non-U.S. Holder with the United
States, or (ii) attributable to a permanent establishment in the United States
maintained by the Non-U.S. Holder if certain income tax treaties apply.
Dividends effectively connected with such a United States trade or business or
attributable to such a United States permanent establishment generally will not
be subject to United States withholding tax if the Non-U.S. Holder files the
appropriate IRS form with the payor of the dividend (which form, under U.S.
Treasury regulations generally effective for payments made after December 31,
1999 ("Final Regulations"), will require such Non-U.S. Holder to provide a U.S.
taxpayer identification number) and generally will be subject to United States
federal income tax on a net income basis, in the same manner as if the Non-U.S.
Holder were a resident of the United States. A Non-U.S. Holder that is a
corporation may be subject to an additional branch profits tax at a rate of 30%
(or such lower rate as may be specified by an applicable treaty). To determine
the applicability of a tax treaty providing for a lower rate of withholding,
dividends paid to an address in a foreign country are presumed under currently
effective United States Treasury regulations (the "Current Regulations") to be
paid to a resident of that country absent knowledge to the contrary. Under the
Final Regulations, however, a Non-U.S. Holder of Class A Common Stock who wishes
to claim the benefit of an applicable treaty rate generally will be required to
satisfy applicable certification and other requirements. In addition under the
Final Regulations, in the case of Common Stock held by a foreign partnership,
(x) the certification requirement will generally be applied to the partners of
the partnership and (y) the partnership will be required to provide certain
information, including a United States taxpayer identification number. The Final
Regulations also provide look-through rules for tiered partnerships. The Final
Regulations generally would require Non-U.S. Holders to file an IRS Form W-8 to
obtain the

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benefit of any applicable tax treaty providing for a lower rate of U.S.
withholding tax on dividends. A Non-U.S. Holder that is eligible for a reduced
rate of U.S. withholding tax pursuant to a tax treaty may obtain a refund of any
excess amounts withheld by filing an appropriate claim for refund with the IRS.

SALE OF CLASS A COMMON STOCK

In general, a Non-U.S. Holder will not be subject to United States federal
income tax on any gain realized upon the disposition of such holder's shares of
Class A Common Stock unless: (i) the gain is effectively connected with a trade
or business carried on by the Non-U.S. Holder within the United States or,
alternatively, if certain tax treaties apply, attributable to a permanent
establishment in the United States maintained by the Non-U.S. Holder (and in
either case, the branch profits tax discussed above may also apply if the
Non-U.S. Holder is a corporation); (ii) the Non-U.S. Holder is an individual who
holds shares of Class A Common Stock as a capital asset and is present in the
United States for 183 days or more in the taxable year of disposition, and
either (a) such individual has a "tax home" (as defined for United States
federal income tax purposes) in the United States (unless the gain from the
disposition is attributable to an office or other fixed place of business
maintained by such Non-U.S. Holder in a foreign country and a foreign income tax
equal to at least 10% of the gain derived from such disposition is actually paid
with respect to such gain), or (b) the gain is attributable to an office or
other fixed place of business maintained by such individual in the United
States; or (iii) the Company is or has been a United States real property
holding corporation (a "USRPHC") for United States federal income tax purposes
(which the Company does not believe that it is or is likely to become) at any
time within the shorter of the five-year-period preceding such disposition or
such Non-U.S. Holder's holding period. If the Company were or were to become a
USRPHC at any time during this period, gains realized upon a disposition of
Class A Common Stock by a Non-U.S. Holder which did not directly or indirectly
own more than 5% of the Class A Common Stock during this period generally would
not be subject to United States federal income tax, provided that the Class A
Common Stock had been regularly traded on an established securities market.

ESTATE TAX

Class A Common Stock owned or treated as owned by an individual who is not
a citizen or resident (as defined for United States federal estate tax purposes)
of the United States at the time of death will be includable in the individual's
gross estate for United States federal estate tax purposes (unless an applicable
estate tax treaty provides otherwise), and therefore may be subject to United
States federal estate tax.

BACKUP WITHHOLDING, INFORMATION REPORTING AND OTHER REPORTING REQUIREMENTS

The Company must report annually to the IRS as to each Non-U.S. Holder the
amount of dividends paid to, and the tax withheld with respect to, each Non-U.S.
Holder. These reporting requirements apply regardless of whether withholding was
reduced or eliminated by an applicable tax treaty. Copies of this information
also may be made available under the provisions of a specific treaty or
agreement with the tax authorities in the country in which the Non-U.S. Holder
resides or is established.

Under the Current Regulations, United States backup withholding tax (which
generally is imposed at the rate of 31% on certain payments to persons that fail
to furnish the information required under the United States information
reporting requirements) and information reporting requirements (other than those
discussed above) generally will not apply to dividends paid on Class A Common
Stock to a Non-U.S. Holder at an address outside of United States. Backup
withholding and information reporting generally will apply to dividends paid on
shares of Class A Common Stock to a Non-U.S. Holder at an address in the United
States, if such holder fails to establish an exemption or to provide certain
other information to the payor. Under the Final Regulations, however, a Non-U.S.
Holder of Class A Common Stock that fails to certify its Non-U.S. Holder status
in accordance with the requirements of the Final Regulations may be subject to
United States backup withholding on payments of dividends.

The payment of proceeds from the disposition of Class A Common Stock to or
through a United States office of a broker will be subject to information
reporting and backup withholding unless the owner, under

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penalties of perjury, certifies, among other things, such owner's status as a
Non-U.S. Holder or otherwise establishes an exemption. The payment of proceeds
from the disposition of Class A Common Stock to or through a non-U.S. office of
a non-U.S. broker generally will not be subject to backup withholding and
information reporting, except as noted below. In the case of proceeds from a
disposition of Class A Common Stock paid to or through a non-U.S. office of a
broker that is (i) a United States person, (ii) a "controlled foreign
corporation" for United States federal income tax purposes, (iii) a foreign
person 50% or more of whose gross income from certain periods is effectively
connected with a United States trade or business, or (iv) for payments made
after December 31, 1999, a partnership with certain connections to the United
States, information reporting (but not backup withholding) will apply unless the
broker has documentary evidence in its files that the owner is a Non-U.S. Holder
(and the broker has no actual knowledge to the contrary).

Non-U.S. Holders should consult their own tax advisors regarding the
application of information reporting or back-up withholding in their particular
situation, including the availability of an exemption therefrom and the
procedures for obtaining an exemption and the effect of the Final Regulations.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from a payment to a Non-U.S. Holder will be refunded or
credited against the Non-U.S. Holder's United States federal income tax
liability, if any, provided that the required information is furnished to the
IRS.

72
74

UNDERWRITING

Merrill Lynch International, Deutsche Bank AG London and Donaldson, Lufkin
& Jenrette International are acting as lead managers (the "Lead Managers") for
each of the International Managers named below (the "International Managers").
Subject to the terms and conditions set forth in an international purchase
agreement (the "International Purchase Agreement") among the Company and the
International Managers, and concurrently with the sale of 44,000,000 shares of
Class A Common Stock to the U.S. Underwriters (as defined below), the Company
has agreed to sell to the International Managers, and each of the International
Managers severally and not jointly has agreed to purchase from the Company, the
number of shares of Class A Common Stock set forth opposite its name below.

NUMBER OF
INTERNATIONAL MANAGER SHARES
- --------------------- ----------

Merrill Lynch International................................. 3,400,000
Deutsche Bank AG London..................................... 3,400,000
Donaldson, Lufkin & Jenrette International.................. 3,400,000
Commerzbank Aktiengesellschaft.............................. 200,000
ING Bank N.V................................................ 200,000
Lombard Odier International Underwriters Limited............ 200,000
ScotiaMcLeod Inc............................................ 200,000
----------
Total........................................... 11,000,000
==========

The Company has also entered into a U.S. purchase agreement (the "U.S.
Purchase Agreement") with certain underwriters in the United States and Canada
(the "U.S. Underwriters" and, together with the International Managers, the
"Underwriters") for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), Deutsche Bank Securities Inc. and Donaldson, Lufkin &
Jenrette Securities Corporation are acting as representatives (the "U.S.
Representatives"). Subject to the terms and conditions set forth in the U.S.
Purchase Agreement, and concurrently with the sale of 11,000,000 shares of Class
A Common Stock to the International Managers pursuant to the International
Purchase Agreement, the Company has agreed to sell to the U.S. Underwriters, and
the U.S. Underwriters severally have agreed to purchase from the Company, an
aggregate of 44,000,000 shares of Class A Common Stock. The initial public
offering price per share and the total underwriting discount per share of Class
A Common Stock are identical under the International Purchase Agreement and the
U.S. Purchase Agreement.

In the International Purchase Agreement and the U.S. Purchase Agreement,
the several International Managers and the several U.S. Underwriters,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Class A Common Stock being sold
pursuant to each such agreement if any of the shares of Class A Common Stock
being sold pursuant to such agreement are purchased. Under certain
circumstances, under the International Purchase Agreement and the U.S. Purchase
Agreement, the commitments of non-defaulting Underwriters may be increased. The
closings with respect to the sale of shares of Class A Common Stock to be
purchased by the International Managers and the U.S. Underwriters are
conditioned upon one another.

The Lead Managers have advised the Company that the International Managers
propose initially to offer the shares of Class A Common Stock to the public at
the initial public offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in excess
of $.73 per share of Common Stock. The International Managers may allow, and
such dealers may reallow, a discount not in excess of $.10 per share of Class A
Common Stock on sales to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be changed.

The Company has granted options to the International Managers, exercisable
for 30 days after the date of this Prospectus, to purchase up to an aggregate of
1,650,000 additional shares of Class A Common Stock at the initial public
offering price set forth on the cover page of this Prospectus, less the
underwriting discount. The International Managers may exercise these options
solely to cover over-allotments, if any, made on the sale of the Class A Common
Stock offered hereby. To the extent that the International Managers exercise

73
75

these options, each International Manager will be obligated, subject to certain
conditions, to purchase a number of additional shares of Class A Common Stock
proportionate to such International Manager's initial amount reflected in the
foregoing table. The Company also has granted options to the U.S. Underwriters,
exercisable for 30 days after the date of this Prospectus, to purchase up to an
aggregate of 6,600,000 additional shares of Class A Common Stock to cover
over-allotments, if any, on terms similar to those granted to the International
Managers.

At the request of the Company, the Underwriters have reserved for sale, at
the initial public offering price, up to 4,400,000 of the shares offered hereby
to be sold to certain eligible employees, business associates and employee
family members of the Company and Parent. The number of shares of Class A Common
Stock available for sale to the general public will be reduced to the extent
such persons purchase such reserved shares. Any reserved shares which are not
orally confirmed for purchase within one day of the pricing of the Offerings
will be offered by the Underwriters to the general public on the same terms as
the other shares offered hereby.

The Company and Parent have agreed, for a period of 90 days and 180 days,
respectively, after the date of this Prospectus, subject to certain exceptions,
not to directly or indirectly (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant for the sale of or otherwise dispose of or
transfer any shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock, whether now owned or thereafter
acquired by the person executing the agreement or with respect to which the
person executing the agreement thereafter acquires the power of disposition, or
file a registration statement under the 1933 Act with respect to the foregoing
or (ii) enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of the Common Stock whether any such
swap or transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, without the prior written consent of Merrill
Lynch on behalf of the Underwriters; provided that the Company may at any time
and from time to time (i) issue shares of Class A Common Stock to third parties
as consideration for the Company's acquisition from such third parties of
non-hazardous solid waste businesses, (ii) grant options to purchase shares of
Common Stock under the Company's Stock Incentive Plan and (iii) issue shares of
Common Stock to Parent in connection with the prepayment of the Affiliate
Payable, the Resources Notes Payable and the Company Notes and as consideration
for the Company's acquisition from Parent of a non-hazardous solid waste
business, in each case without the prior consent of Merrill Lynch. See "Shares
Eligible for Future Sale."

The International Managers and the U.S. Underwriters have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement, the
International Managers and the U.S. Underwriters are permitted to sell shares of
Class A Common Stock to each other for purposes of resale at the initial public
offering price, less an amount not greater than the selling concession. Under
the terms of the Intersyndicate Agreement, the U.S. Underwriters and any dealer
to whom they sell shares of Class A Common Stock will not offer to sell or sell
shares of Class A Common Stock to persons who are non-U.S. or non-Canadian
persons or to persons they believe intend to resell to persons who are non-U.S.
or non-Canadian persons, and the International Managers and any dealer to whom
they sell shares of Class A Common Stock will not offer to sell or sell shares
of Class A Common Stock to U.S. persons or to Canadian persons or to persons
they believe intend to resell to U.S. or Canadian persons, except in the case of
transactions pursuant to the Intersyndicate Agreement.

Prior to the Offerings, there has been no public market for the Common
Stock of the Company. The initial public offering price of the Class A Common
Stock was determined through negotiations between the Company, on the one hand,
and the U.S. Representatives and the Lead Managers, on the other hand. The
factors considered and analyzed by the Company, the U.S. Representatives and the
Lead Managers in determining the initial public offering price per share of
Class A Common Stock, in addition to prevailing market conditions, are
price-earnings ratios of publicly traded companies that the U.S. Representatives
and the Lead Managers believe to be comparable to the Company, certain financial
information of the Company, the history of, and the prospects for, the Company
and the industry in which it competes, and an assessment of the Company's
management, its past and present operations, the prospects for, and timing of,
future revenues of the Company, the present state of the Company's development,
the percentage interest of the Company being sold as compared to the valuation
for the entire Company and the above factors in relation to market
74
76

values and various valuation measures of other companies engaged in activities
similar to the Company. No appraisal of the assets of the Company was undertaken
by the Company, the U.S. Representatives or the Lead Managers in determining the
initial public offering price per share. There can be no assurance that an
active trading market will develop for the Class A Common Stock or that the
Class A Common Stock will trade in the public market subsequent to the Offerings
at or above the initial public offering price.

The Class A Common Stock has been approved for listing on the New York
Stock Exchange, subject to official notice of issuance, under the symbol "RSG."
In order to meet the requirements for listing of the Class A Common Stock on
that exchange, the U.S. Underwriters and the International Managers have
undertaken to sell lots of 100 or more shares to a minimum of 2,000 beneficial
owners.

The Underwriters do not expect sales of the Class A Common Stock to any
accounts over which they exercise discretionary authority to exceed 5% of the
number of shares being offered hereby.

The Company has agreed to indemnify the International Managers and the U.S.
Underwriters against certain liabilities, including certain liabilities under
the 1933 Act, or to contribute to payments the U.S. Underwriters and the
International Managers may be required to make in respect thereof.

Until the distribution of the Class A Common Stock is completed, rules of
the Securities and Exchange Commission (the "Commission") may limit the ability
of the Underwriters and certain selling group members to bid for and purchase
the Class A Common Stock. As an exception to these rules, the U.S.
Representative is permitted to engage in certain transactions that stabilize the
price of the Class A Common Stock. Such transactions consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of the
Class A Common Stock.

If the Underwriters create a short position in the Class A Common Stock in
connection with the Offerings, i.e., if they sell more shares of Class A Common
Stock than are set forth on the cover page of this Prospectus, the U.S.
Representatives may reduce that short position by purchasing Class A Common
Stock in the open market. The U.S. Representatives may also elect to reduce any
short position by exercising all or part of the over-allotment option described
above.

The U.S. Representatives may also impose a penalty bid on certain
Underwriters and selling group members. This means that if the U.S.
Representatives purchase shares of Class A Common Stock in the open market to
reduce the Underwriters' short position or to stabilize the price of the Class A
Common Stock, they may reclaim the amount of the selling concession from the
Underwriters and selling group members who sold those shares as part of the
Offerings.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of the Class A Common Stock to the extent
that it discourages resales of the Class A Common Stock.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Class A Common Stock. In addition,
neither the Company nor any of the Underwriters makes any representation that
the U.S. Representatives will engage in such transactions or that such
transactions, once commenced, will not be discontinued without notice.

Each International Manager has agreed that (i) it has not offered or sold
and, prior to the expiration of the period of six months from the Closing Date,
will not offer or sell any shares of Class A Common Stock to persons in the
United Kingdom, except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which do not
constitute an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Class A Common Stock in, from
or otherwise involving the United Kingdom; and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the

75
77

issuance of Class A Common Stock to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 (as amended) or is a person to whom such document may
otherwise lawfully be issued or passed on.

No action has been or will be taken in any jurisdiction (except in the
United States) that would permit a public offering of the shares of Class A
Common Stock, or the possession, circulation or distribution of this Prospectus
or any other material relating to the Company or shares of Class A Common Stock
in any jurisdiction where action for that purpose is required. Accordingly, the
shares of Class A Common Stock may not be offered or sold, directly or
indirectly, and neither this Prospectus nor any other offering material or
advertisements in connection with the shares of Class A Common Stock may be
distributed or published, in or from any country or jurisdiction except in
compliance with any applicable rules and regulations of any such country or
jurisdiction.

Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.

LEGAL MATTERS

Certain legal matters with respect to the validity of the Class A Common
Stock offered hereby will be passed upon for the Company by Akerman, Senterfitt
& Eidson, P.A., Miami, Florida. Certain attorneys employed by Akerman,
Senterfitt & Eidson, P.A. own shares of Parent Common Stock. Certain legal
matters relating to the Offerings will be passed upon for the Underwriters by
Fried, Frank, Harris, Shriver & Jacobson (a partnership including professional
corporations), New York, New York.

EXPERTS

The consolidated financial statements and schedule of the Company for each
of the three years ended December 31, 1997, appearing in this Prospectus and
Registration Statement, have been audited by Arthur Andersen LLP, independent
certified public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 under the 1933 Act with respect to the Class A Common Stock offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain portions of which are omitted as permitted by
the rules and regulations of the Commission. For further information pertaining
to the Company and the Class A Common Stock offered hereby, reference is made to
the Registration Statement, including the exhibits thereto and the financial
statements, notes and schedules filed as a part thereof. Statements contained in
this Prospectus regarding the contents of any contract or other document
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such reference.

On the Offerings Closing Date, the Company will be subject to the
informational requirements of the Securities Exchange Act of 1934, as amended,
and, in accordance therewith, will file reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information, as well as the Registration Statement and the exhibits and
schedules thereto, may be inspected, without charge, at the public reference
facility maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
located at Seven World Trade Center, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material may also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Such materials can also be inspected at the offices
of the NYSE, 20 Broad Street, New York, New York 10005 or on the Commission's
site on the Internet at http://www.sec.gov.
76
78

INDEX TO FINANCIAL STATEMENTS

PAGE
----

Report of Independent Certified Public Accountants.......... F-2
Consolidated Balance Sheets as of March 31, 1998 (Unaudited)
and December 31, 1997 and 1996............................ F-3
Consolidated Statements of Operations for the Three Months
Ended March 31, 1998 and 1997 (Unaudited) and each of the
Three Years Ended December 31, 1997....................... F-4
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1998 and 1997 (Unaudited) and each of the
Three Years Ended December 31, 1997....................... F-5
Notes to Consolidated Financial Statements.................. F-6

F-1
79

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To Republic Services, Inc.:

We have audited the accompanying consolidated balance sheets of Republic
Services, Inc. (a Delaware corporation and wholly owned subsidiary of Republic
Industries, Inc.) and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of operations and cash flows for each of the
years in the three-year period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Republic Services, Inc. and
subsidiaries as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1997, in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

Fort Lauderdale, Florida,
June 29, 1998.

F-2
80

REPUBLIC SERVICES, INC.

CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)

PRO FORMA DECEMBER 31,
MARCH 31, MARCH 31, -------------------
1998 1998 1997 1996
----------- ----------- -------- --------
(UNAUDITED) (UNAUDITED)

ASSETS
CURRENT ASSETS:
Cash and cash equivalents..................... $ -- $ -- $ -- $ 24.2
Restricted cash............................... 12.8 12.8 18.8 19.7
Accounts receivable, less allowance for
doubtful accounts of $13.6 and $8.3 at
December 31, 1997 and 1996, respectively... 139.0 139.0 131.0 110.8
Prepaid expenses.............................. 10.0 10.0 7.1 7.5
Other current assets.......................... 22.4 22.4 19.0 30.6
--------- --------- -------- --------
Total Current Assets.................. 184.2 184.2 175.9 192.8
PROPERTY AND EQUIPMENT, NET..................... 826.5 826.5 801.8 661.3
INTANGIBLE AND OTHER ASSETS, NET................ 477.5 477.5 370.3 236.2
--------- --------- -------- --------
$ 1,488.2 $ 1,488.2 $1,348.0 $1,090.3
========= ========= ======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable.............................. $ 38.3 $ 38.3 $ 40.2 $ 44.0
Accrued liabilities........................... 73.8 73.8 57.6 53.2
Deferred revenue.............................. 34.3 34.3 29.5 20.3
Due to affiliate.............................. 114.8 114.8 107.8 49.3
Notes payable and current maturities of
long-term debt............................. 11.7 11.7 10.8 33.2
Notes payable to Resources.................... 130.9 130.9 158.3 205.6
Company Notes payable to Parent............... 2,000.0 -- -- --
Other current liabilities..................... 26.4 26.4 31.9 17.1
--------- --------- -------- --------
Total Current Liabilities............. 2,430.2 430.2 436.1 422.7
LONG-TERM DEBT, NET OF CURRENT MATURITIES....... 61.4 61.4 64.3 109.5
ACCRUED ENVIRONMENTAL AND LANDFILL COSTS........ 49.4 49.4 46.0 39.3
DEFERRED INCOME TAXES........................... 55.2 55.2 47.5 12.7
OTHER LIABILITIES............................... 4.7 4.7 3.3 11.6
COMMITMENTS AND CONTINGENCIES...................
SHAREHOLDER'S EQUITY (DEFICIT):
Investment by Parent.......................... (1,112.7) 887.3 750.8 494.5
--------- --------- -------- --------
$ 1,488.2 $ 1,488.2 $1,348.0 $1,090.3
========= ========= ======== ========

The accompanying notes are an integral part of these statements.

F-3
81

REPUBLIC SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS)

THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------------- ------------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
(UNAUDITED)

REVENUE........................................ $ 300.8 $ 263.2 $1,127.7 $ 953.3 $ 805.0
EXPENSES:
Cost of operations........................... 209.7 190.3 809.1 703.6 570.1
Selling, general and administrative.......... 32.1 31.9 117.3 135.3 137.7
Restructuring and other charges.............. -- -- -- 8.8 3.3
-------- -------- -------- -------- --------
OPERATING INCOME............................... 59.0 41.0 201.3 105.6 93.9
INTEREST EXPENSE............................... (5.4) (7.6) (25.9) (29.7) (19.1)
INTEREST AND OTHER INCOME...................... 0.8 3.0 6.7 13.9 6.2
-------- -------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES.......................... 54.4 36.4 182.1 89.8 81.0
PROVISION FOR INCOME TAXES..................... 19.6 13.2 65.9 38.0 31.6
-------- -------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS.............. 34.8 23.2 116.2 51.8 49.4
-------- -------- -------- -------- --------
DISCONTINUED OPERATIONS:
Income from discontinued operations, net of
income taxes of $2.0...................... -- -- -- -- 5.7
Loss on disposal of segment, net of income
tax benefit of $10.0...................... -- -- -- -- (30.5)
-------- -------- -------- -------- --------
Loss from discontinued operations............ -- -- -- -- (24.8)
-------- -------- -------- -------- --------
NET INCOME..................................... $ 34.8 $ 23.2 $ 116.2 $ 51.8 $ 24.6
======== ======== ======== ======== ========

The accompanying notes are an integral part of these statements.

F-4
82

REPUBLIC SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)

THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------------- ---------------------------------
1998 1997 1997 1996 1995
-------- -------- --------- --------- ---------
(UNAUDITED)

CASH PROVIDED BY OPERATING ACTIVITIES OF
CONTINUING OPERATIONS:
Net income................................ $ 34.8 $ 23.2 $ 116.2 $ 51.8 $ 24.6
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and
depletion of property and
equipment............................ 20.3 16.7 76.1 66.6 57.9
Amortization of intangible assets...... 3.5 2.3 10.0 8.7 5.1
Deferred tax provision................. 7.6 9.4 36.5 2.8 11.0
Loss from discontinued operations, net
of income taxes...................... -- -- -- -- 24.8
Changes in assets and liabilities, net
of effects from business
acquisitions:
Accounts receivable.................. (3.3) (4.4) (15.6) (16.4) (12.9)
Prepaid expenses and other assets.... (2.9) 17.2 17.4 7.0 (20.2)
Accounts payable and accrued
liabilities....................... (3.0) (2.9) (26.7) (32.0) 21.2
Other liabilities.................... 23.3 11.6 65.5 55.0 13.9
-------- -------- --------- --------- ---------
80.3 73.1 279.4 143.5 125.4
-------- -------- --------- --------- ---------
CASH USED IN DISCONTINUED OPERATIONS........ -- -- -- -- (20.6)
-------- -------- --------- --------- ---------
CASH USED IN INVESTING ACTIVITIES:
Purchases of property and equipment....... (29.0) (35.2) (165.3) (146.9) (147.9)
Cash acquired through business
acquisitions........................... 1.8 1.2 2.7 1.2 1.0
Other..................................... 6.0 (5.0) (5.5) (30.0) 36.2
-------- -------- --------- --------- ---------
(21.2) (39.0) (168.1) (175.7) (110.7)
-------- -------- --------- --------- ---------
CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
Proceeds from notes payable and long-term
debt................................... 0.5 3.5 5.2 44.5 66.3
Payments of notes payable and long-term
debt................................... (16.3) (38.2) (100.2) (91.4) (147.4)
Increase (decrease) in notes payable to
Resources.............................. (27.3) 1.3 (47.3) 166.9 19.9
Other..................................... (16.0) 20.9 6.8 (99.7) 64.0
-------- -------- --------- --------- ---------
(59.1) (12.5) (135.5) 20.3 2.8
-------- -------- --------- --------- ---------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS............................... -- 21.6 (24.2) (11.9) (3.1)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD.................................... -- 24.2 24.2 36.1 39.2
-------- -------- --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD.................................... $ -- $ 45.8 $ -- $ 24.2 $ 36.1
======== ======== ========= ========= =========

The accompanying notes are an integral part of these statements.

F-5
83

REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL TABLES IN MILLIONS)
(INFORMATION RELATED TO THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 IS
UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying Consolidated Financial Statements include the accounts of
Republic Services, Inc. and its operating subsidiaries (the "Company"). The
Company is a wholly owned subsidiary of Republic Industries, Inc. ("Parent") and
provides non-hazardous solid waste collection and disposal services in the
United States. All material intercompany transactions have been eliminated.

The accompanying Consolidated Financial Statements exclude the accounts of
the Company's wholly owned subsidiary, Republic Resources Company, Inc.
("Resources"), all of the common stock of which will be distributed to Parent
prior to the Company's proposed initial public offering. See Note 13, Subsequent
Events, for further information regarding the Company's proposed initial public
offering. The Company and Resources are in dissimilar businesses, have been
managed and financed historically as if they were autonomous, have no more than
incidental common facilities and costs, will be operated and financed
autonomously after the distribution of Resources to Parent, and will not have
financial commitments, guarantees, or contingent liabilities to each other after
such distribution. Based on these facts, the accounts of Resources have been
excluded from the Company's consolidated financial statements as the Company has
elected to characterize the distribution of Resources as resulting in a change
in the reporting entity. As of December 31, 1997, Resources' total assets were
$1,758.9 million. For the year ended December 31, 1997, interest income,
interest expense and pre-tax income of Resources were $128.5 million, $16.5
million, and $111.7 million, respectively.

The accompanying Consolidated Financial Statements reflect the accounts of
the Company as a subsidiary of Parent subject to corporate general and
administrative expense allocations as described in Note 12, Related Party
Transactions. Such information does not necessarily reflect the financial
position or results of operations of the Company as a separate, stand-alone
entity.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

In the opinion of management, the Unaudited Consolidated Financial
Statements contain all material adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the consolidated financial position of
the Company at March 31, 1998 and the consolidated results of operations and
cash flows for the three months ended March 31, 1998 and 1997. Income taxes
during these interim periods have been provided for based upon the Company's
anticipated annual effective income tax rate. Operating results for these
interim periods are not necessarily indicative of the results that can be
expected for a full year.

The accompanying Unaudited Pro Forma Consolidated Balance Sheet presents
the Company's pro forma financial position as of March 31, 1998 as if the April
1998 dividend by the Company had occurred on March 31, 1998. See Note 13,
Subsequent Events, for further information regarding the dividend.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

RESTRICTED CASH

Restricted cash consists of amounts held in trust as a financial guaranty
of the Company's performance as well as funds restricted for capital
expenditures under certain debt facilities.

F-6
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REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

OTHER CURRENT ASSETS

Other current assets consist primarily of inventories, short-term notes
receivable and marketable securities. Inventories totaled approximately $12.2
million at March 31, 1998 (unaudited) and $11.7 million and $6.1 million at
December 31, 1997 and 1996, respectively, and consist primarily of equipment
parts, compost materials and supplies that are valued under a method that
approximates the lower of cost (first-in, first-out) or market. Other current
assets at December 31, 1996 include approximately $14.5 million of marketable
securities classified as available for sale. The carrying amounts of marketable
securities approximate fair value at December 31, 1996.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Expenditures for major
additions and improvements are capitalized, while maintenance and repairs are
charged to expense as incurred. When property is retired or otherwise disposed
of, the cost and accumulated depreciation are removed from the accounts and any
resulting gain or loss is reflected in the Consolidated Statements of
Operations.

The Company revises the estimated useful lives of property and equipment
acquired through business acquisitions to conform with its policies regarding
property and equipment. Depreciation is provided over the estimated useful lives
of the assets involved using the straight-line method. The estimated useful
lives are: twenty to forty years for buildings and improvements, three to
fifteen years for trucks and equipment and five to ten years for furniture and
fixtures.

Landfills are stated at cost and are depleted based on consumed airspace.
Landfill improvements include direct costs incurred to obtain a landfill permit
and direct costs incurred to construct and develop the site. These costs are
depleted based on consumed airspace. All indirect landfill development costs are
expensed as incurred.

Interest costs are capitalized in connection with the construction of
landfill sites. Interest capitalized was $0.8 million, $1.8 million and $2.7
million for the years ended December 31, 1997, 1996 and 1995, respectively.

A summary of property and equipment is as follows:

DECEMBER 31,
MARCH 31, -------------------
1998 1997 1996
----------- -------- --------
(UNAUDITED)

Land, landfills and improvements....................... $ 428.5 $ 420.1 $ 313.3
Furniture, fixtures, trucks and equipment.............. 694.1 668.9 607.1
Buildings and improvements............................. 133.8 126.6 84.0
-------- -------- --------
1,256.4 1,215.6 1,004.4
Less: accumulated depreciation, amortization and
depletion............................................ (429.9) (413.8) (343.1)
-------- -------- --------
$ 826.5 $ 801.8 $ 661.3
======== ======== ========

INTANGIBLE AND OTHER ASSETS

Intangible and other assets consist primarily of the cost of acquired
businesses in excess of the fair value of net assets acquired and other
intangible assets. The cost in excess of the fair value of net assets is
amortized over forty years on a straight-line basis. Other intangible assets
include values assigned to customer lists, long-term contracts and covenants not
to compete and are amortized generally over periods ranging from 5 to 25 years.
Accumulated amortization of intangible assets was $57.9 million and $46.0
million at December 31, 1997 and 1996, respectively.

F-7
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REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company continually evaluates whether events and circumstances have
occurred that may warrant revision of the estimated useful life of intangible
assets or whether the remaining balance of intangible assets should be evaluated
for possible impairment. The Company uses an estimate of the related
undiscounted cash flows over the remaining life of the intangible assets in
measuring their recoverability.

ACCRUED ENVIRONMENTAL AND LANDFILL COSTS

A summary of accrued environmental and landfill costs is as follows:

DECEMBER 31,
-------------
1997 1996
----- -----

Accrued landfill site closure/post-closure costs............ $47.3 $38.2
Accrued environmental costs................................. 8.6 7.3
----- -----
55.9 45.5
Less: current portion (included in other current
liabilities).............................................. (9.9) (6.2)
----- -----
$46.0 $39.3
===== =====

Landfill site closure and post-closure costs include estimated costs to be
incurred for final closure of the landfills and estimated costs for providing
required post-closure monitoring and maintenance of landfills. These costs are
accrued based on consumed airspace. Available airspace is generally based on
estimates of remaining permitted airspace developed by independent engineers
together with the Company's engineers and accounting personnel utilizing
information provided by aerial surveys of landfills which are generally
performed annually. These aerial surveys form the basis for the volume available
for disposal. Accruals for closure and post-closure costs totaled approximately
$7.9 million, $4.4 million and $4.2 million during the years ended December 31,
1997, 1996 and 1995, respectively. Estimated aggregate closure and post-closure
costs will be fully accrued for these landfills at the time that such facilities
cease to accept waste and are closed. At December 31, 1997, approximately $280.0
million of such costs are to be expensed over the remaining lives of these
facilities. The Company estimates its future cost requirements for closure and
post-closure monitoring and maintenance for its solid waste facilities based on
its interpretation of the technical standards of the United States Environmental
Protection Agency's Subtitle D regulations. These estimates do not take into
account discounts for the present value of such total estimated costs. The
Company periodically reassesses such costs based on various methods and
assumptions regarding landfill airspace and the technical requirements of the
Environmental Protection Agency's Subtitle D regulations and adjusts such
accruals accordingly.

In the normal course of business, the Company is subject to ongoing
environmental investigations by certain regulatory agencies, as well as other
claims and disputes that could result in litigation. Environmental costs are
accrued by the Company through a charge to income in the period such liabilities
become probable and can be reasonably estimated. No material amounts were
charged to expense during the years ended December 31, 1997, 1996 and 1995.

REVENUE RECOGNITION

Revenue consists primarily of collection fees from commercial, industrial,
residential and municipal customers and landfill disposal fees charged to third
parties. Advance billings are recorded as deferred revenue and revenue is
recognized over the period in which services are provided.

INCOME TAXES

The Company is included in the consolidated federal income tax return of
Parent. All tax amounts have been recorded as if the Company filed a separate
federal tax return. The Company accounts for income taxes
F-8
86
REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

in accordance with SFAS No. 109, "Accounting for Income Taxes." Accordingly,
deferred income taxes have been provided to show the effect of temporary
differences between the recognition of revenue and expenses for financial and
income tax reporting purposes and between the tax basis of assets and
liabilities and their reported amounts in the financial statements.

Certain businesses acquired and accounted for under the pooling of
interests method of accounting were subchapter S corporations for income tax
purposes. The subchapter S corporation status of these companies was terminated
effective with the closing date of the acquisitions. For purposes of these
Consolidated Financial Statements, federal and state income taxes have been
recorded as if these companies had filed subchapter C corporation tax returns
for the pre-acquisition periods, and the current income tax expense is reflected
in shareholder's equity. Pre-acquisition income taxes related to pooled S
corporations recorded in the consolidated financial statements were $0, $4.0
million and $12.6 million during the years ended December 31, 1997, 1996 and
1995, respectively.

NET INCOME PER SHARE

Historical net income per share has not been presented because it would not
be meaningful. The Company currently has 100 shares of common stock, par value
$.01 per share outstanding, all of which are owned by Parent. Immediately prior
to the proposed initial public offering (see Note 13), the Company will amend
and restate its certificate of incorporation to authorize two classes of common
stock consisting of Class A Common Stock and Class B Common Stock, which will be
identical in all respects except that holders of Class A Common Stock will be
entitled to one vote per share while holders of Class B Common Stock will be
entitled to five votes per share. Prior to the closing of the proposed initial
public offering, all outstanding shares of common stock of the Company held by
Parent will be converted into shares of Class B Common Stock, which will
constitute 100% of the outstanding shares of Class B Common Stock.

STATEMENTS OF CASH FLOWS

The Company considers all highly liquid investments with purchased
maturities of three months or less to be cash equivalents. The effect of
non-cash transactions related to business combinations, as discussed in Note 3,
Business Combinations, and other non-cash transactions are excluded from the
accompanying Consolidated Statements of Cash Flows.

The Company made interest payments on notes payable and long-term debt of
approximately $25.1 million, $30.1 million and $14.2 million for the years ended
December 31, 1997, 1996 and 1995, respectively. The Company made income tax
payments of approximately $29.4 million, $31.7 million and $9.9 million for the
years ended December 31, 1997, 1996 and 1995 respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, restricted cash,
receivables, and accounts payable and accrued liabilities approximate fair value
due to the short maturity of these instruments. The carrying amounts of notes
payable and long-term debt approximate fair value because interest rates
generally are variable and, accordingly, approximate current market rates.

CONCENTRATION OF CREDIT RISK

The Company provides services to commercial, industrial, municipal and
residential customers in the United States. Concentrations of credit risk with
respect to trade receivables are limited due to the wide variety of customers
and markets in which services are provided as well as their dispersion across
many geographic areas in the United States. The Company performs ongoing credit
evaluations of its customers, but does not require collateral to support
customer receivables. The Company establishes an allowance for

F-9
87
REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

doubtful accounts based on factors surrounding the credit risk of specific
customers, historical trends and other information.

3. BUSINESS COMBINATIONS

Parent has acquired various businesses operating in the solid waste
services industry using cash and/or shares of its common stock ("Parent Common
Stock"). These businesses were contributed by Parent to the Company subsequent
to their acquisition. The Company has applied the same accounting method used by
Parent in accounting for business combinations.

Significant businesses acquired and accounted for under the pooling of
interests method of accounting have been included retroactively in the
Consolidated Financial Statements as if the companies had operated as one entity
since inception. Businesses acquired and accounted for under the purchase method
of accounting are included in the Consolidated Financial Statements from the
date of acquisition. The value of the Parent Common Stock issued to effect
business combinations accounted for under the purchase method of accounting is
based on the average market price of Parent Common Stock over a five day period
before and after the parties have reached agreement on the purchase price and
the proposed transaction has been publicly announced, if applicable.

During the year ended December 31, 1997, Parent acquired various solid
waste services businesses which were contributed to the Company. The aggregate
purchase price paid by Parent in transactions accounted for under the purchase
method of accounting was $147.9 million consisting of $11.5 million in cash and
5.7 million shares of Parent Common Stock valued at $136.4 million. In addition,
Parent issued an aggregate of 34.1 million shares of Parent Common Stock in
transactions accounted for under the pooling of interests method of accounting.
Included in the shares of Parent Common Stock issued in acquisitions accounted
for under the pooling of interests method of accounting are approximately 0.3
million shares issued for acquisitions that were not material individually or in
the aggregate and, consequently, prior period financial statements were not
restated for such acquisitions.

Details of the results of operations of the Company and significant
businesses acquired in 1997 and accounted for under the pooling of interests
method of accounting (the "Pooled Entities") for the periods before the pooling
of interests combinations were consummated for the years ended December 31 are
as follows:

1997 1996 1995
--------- -------- --------

Revenue:
The Company........................................... $ 992.3 $ 611.3 $ 457.7
Pooled Entities....................................... 135.4 342.0 347.3
--------- -------- --------
$ 1,127.7 $ 953.3 $ 805.0
========= ======== ========
Income from continuing operations:
The Company........................................... $ 98.6 $ 39.4 $ 30.8
Pooled Entities....................................... 17.6 12.4 18.6
--------- -------- --------
$ 116.2 $ 51.8 $ 49.4
========= ======== ========

F-10
88
REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

under the purchase method of accounting was $87.6 million, consisting of $16.9
million in cash and 6.6 million shares of Parent Common Stock valued at $70.7
million. In addition, Parent issued an aggregate of 40.0 million shares of
Parent Common Stock in transactions accounted for under the pooling of interests
method of accounting. Included in the shares of Parent Common Stock issued in
acquisitions accounted for under the pooling of interests method of accounting
are approximately 1.1 million shares issued for acquisitions that were not
material individually or in the aggregate and, consequently, prior period
financial statements were not restated for such acquisitions.

During the year ended December 31, 1995, Parent acquired various solid
waste services businesses which were contributed to the Company. The aggregate
purchase price paid by Parent in transactions accounted for under the purchase
method of accounting was $76.5 million consisting of $3.7 million in cash and
16.0 million shares of Parent Common Stock valued at $72.8 million. In addition,
Parent issued an aggregate of approximately 30.9 million shares of Parent Common
Stock in transactions accounted for under the pooling of interests method of
accounting.

The assets and liabilities contributed by Parent to the Company based upon
the preliminary purchase price allocations for business combinations accounted
for under the purchase method of accounting (including historical accounts of
immaterial acquisitions accounted for under the pooling of interests method of
accounting) were as follows:

THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
---------------- -------------------------
1998 1997 1997 1996 1995
------- ------ ------- ------ ------
(UNAUDITED)

Property and equipment...................... $ 13.2 $ 12.2 $ 36.8 $ 71.8 $ 24.8
Intangible assets........................... 109.7 56.2 149.2 74.0 83.4
Working capital deficit..................... (8.0) (6.4) (18.0) (20.3) (4.2)
Long-term debt assumed...................... (13.8) (11.6) (26.8) (27.1) (18.5)
Other assets (liabilities).................. (1.2) 2.9 4.5 (19.9) (10.0)
Investment by Parent........................ (101.7) (54.5) (148.4) (79.7) (76.5)
------- ------ ------- ------ ------
Cash acquired............................... $ (1.8) $ (1.2) $ (2.7) $ (1.2) $ (1.0)
======= ====== ======= ====== ======

The Company's unaudited pro forma consolidated results of operations
assuming acquisitions accounted for under the purchase method of accounting and
immaterial acquisitions accounted for under the pooling of interests method of
accounting had occurred at the beginning of the periods presented are as follows
for the years ended December 31:

1997 1996 1995
-------- -------- ------

Revenue................................................... $1,166.5 $1,060.0 $872.9
Income from continuing operations......................... 117.3 53.3 50.6

The unaudited pro forma results of operations are presented for
informational purposes only and may not necessarily reflect the future results
of operations of the Company or what the results of operations would have been
had the Company owned and operated these businesses as of the beginning of the
periods presented.

F-11
89
REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. NOTES PAYABLE AND LONG-TERM DEBT

Notes payable and long-term debt are as follows:

DECEMBER 31,
------------------
1997 1996
------- -------

Bonds payable under loan agreements with California
Pollution Control Financing Authority; interest at
prevailing market rates (5.0% and 4.75% at December 31,
1997 and 1996, respectively).............................. $ 43.1 $ 44.0
Other notes; secured by real property, equipment and other
assets; interest rates ranging from 4% to 13%; maturing
through 2009.............................................. 32.0 98.7
------- -------
75.1 142.7
Less: current portion....................................... (10.8) (33.2)
------- -------
$ 64.3 $ 109.5
======= =======

At December 31, 1997, aggregate maturities of notes payable and long-term
debt were as follows:

1998........................................................ $10.8
1999........................................................ 9.2
2000........................................................ 6.9
2001........................................................ 4.5
2002........................................................ 3.7
Thereafter.................................................. 40.0
-----
$75.1
=====

The loan agreements with California Pollution Control Financing Authority
require the Company to maintain certain financial ratios and comply with certain
financial covenants. At December 31, 1997, the Company was in compliance with
the financial covenants under these agreements.

5. NOTES PAYABLE TO RESOURCES

Notes payable to Resources represent borrowings under revolving credit
facilities to fund the Company's operations and to repay debt assumed in
acquisitions. Borrowings under these facilities bear interest at prime plus 50
basis points and are payable on demand. The average balances outstanding under
these facilities for the years ended December 31, 1997, 1996 and 1995 were
$220.5 million, $224.0 million and $34.5 million, respectively. Interest expense
on notes payable to Resources was $4.8 million and $6.2 million for the three
months ended March 31, 1998 and 1997 (unaudited), respectively, and $20.2
million, $18.8 million and $3.0 million for the years ended December 31, 1997,
1996 and 1995, respectively.

6. INCOME TAXES

The components of the provision for income taxes related to continuing
operations for the years ended December 31 are as follows:

1997 1996 1995
------ ----- -----

Current:
Federal................................................... $ 20.9 $30.1 $16.3
State..................................................... 8.5 4.7 2.6
Federal and state deferred.................................. 36.5 2.4 12.7
Change in valuation allowance............................... -- 0.8 --
------ ----- -----
Provision for income taxes.................................. $ 65.9 $38.0 $31.6
====== ===== =====

F-12
90
REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A reconciliation of the statutory federal income tax rate to the Company's
effective tax rate for continuing operations for the years ended December 31 is
shown below:

1997 1996 1995
---- ---- ----

Statutory federal income tax rate........................... 35.0% 35.0% 35.0%
Non-deductible expenses..................................... 1.5 2.6 0.9
State income taxes, net of federal benefit.................. 2.0 3.6 2.7
Other, net.................................................. (2.3) 1.1 0.4
---- ---- ----
Effective income tax rate................................... 36.2% 42.3% 39.0%
==== ==== ====

Components of the net deferred income tax liability in the accompanying
Consolidated Balance Sheets at December 31 are as follows:

1997 1996
------- -------

Deferred income tax liabilities:
Book basis in property over tax basis..................... $ 64.9 $ 34.5
Deferred income tax assets:
Net operating losses...................................... (4.0) (16.8)
Accruals not currently deductible......................... (23.0) (9.2)
Valuation allowance......................................... 9.6 4.2
------- -------
Net deferred income tax liability........................... $ 47.5 $ 12.7
======= =======

At December 31, 1997, the Company had available domestic net operating loss
carryforwards of approximately $11.4 million which expire in the year 2008. In
assessing the realizability of deferred tax assets, management considers whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The Company has provided a valuation allowance to offset a
portion of the deferred tax assets due to uncertainty surrounding the future
realization of such deferred tax assets. The Company adjusts the valuation
allowance in the period management determines it is more likely than not that
deferred tax assets will or will not be realized.

7. INVESTMENT BY PARENT

The changes in the investment by Parent are as follows:

THREE MONTHS ENDED YEARS ENDED DECEMBER 31,
------------------ ------------------------
MARCH 31, 1998 1997 1996 1995
------------------ ------ ------ ------
(UNAUDITED)

Balance at beginning of period..................... $750.8 $494.5 $372.2 $272.4
Net income......................................... 34.8 116.2 51.8 24.6
Business acquisitions contributed by Parent........ 101.7 148.4 79.7 76.5
Capital transactions by former owners of pooled
companies........................................ -- 11.7 (8.8) 12.2
Investment in Resources............................ -- (17.4) -- (14.7)
Other.............................................. -- (2.6) (0.4) 1.2
------ ------ ------ ------
Balance at end of period........................... $887.3 $750.8 $494.5 $372.2
====== ====== ====== ======

8. STOCK OPTIONS

The Parent has various stock option plans under which shares of Parent
Common Stock may be granted to key employees of the Company. Options granted
under the plans are non-qualified and are granted at a price equal to the fair
market value of the Parent Common Stock at the date of grant. Generally, options
granted will have a term of ten years from the date of grant, and will vest in
increments of 25% per year over a four year period on the yearly anniversary of
the grant date. As of December 31, 1997, approximately 6.1 million options held
by employees of the Company were outstanding, 1.5 million of which were
exercisable.

F-13
91
REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" in accounting for stock-based employee
compensation arrangements whereby no compensation cost related to stock options
is deducted in determining net income. Had compensation cost for stock option
grants under the Parent's stock option plans been determined pursuant to SFAS
No. 123, "Accounting for Stock-Based Compensation", the Company's net income
would have decreased accordingly. Using the Black-Scholes option pricing model
for all options granted after December 31, 1994, the Company's pro forma net
income and pro forma weighted average fair value of options granted, with
related assumptions, are as follows for the years ended December 31:

1997 1996 1995
-------- -------- --------

Pro forma net income............................ $ 108.3 $ 47.6 $ 23.9
Pro forma weighted average fair value of options
granted....................................... 13.60 7.34 5.19
Risk free interest rates........................ 5.74% 5.98% 5.98%
Expected lives.................................. 5 years 5 years 5 years
Expected volatility............................. 40% 40% 40%

The Company currently intends to adopt a 1998 Stock Incentive Plan ("Stock
Incentive Plan") prior to the closing of the proposed initial public offering
(see Note 13, Subsequent Events) to provide for the grant of options to purchase
shares of Class A Common Stock to eligible individuals. The Company intends to
reserve 20.0 million shares of Class A Common Stock for issuance pursuant to
options granted under the Stock Incentive Plan.

Following the Distribution (as defined in Note 13, Subsequent Events) the
Company intends to issue substitute options under the Company's Stock Incentive
Plan (collectively "Substitute Options") in substitution for grants under
Parent's stock option plans as of the date of the Distribution (collectively,
"Parent Stock Options") held by individuals employed by the Company as of the
date of the Distribution (the "Company Employees"). Such Substitute Options will
provide for the purchase of a number of shares of Class A Common Stock
determined based on a ratio of average trading prices of Parent Common Stock and
Class A Common Stock immediately prior to the Distribution. It is not possible
to specify how many shares of Class A Common Stock will be subject to Substitute
Options. It is expected that some Parent Stock Options consisting of stock
options held by the Company Employees will be exercised and that some will be
forfeited, and that additional Parent Stock Options could be granted prior to
the date of the Distribution. In addition, the remaining balance of unexercised
Parent Stock Options will be converted into Substitute Options by reference to
the ratio described above, which will not be known until the time of the
Distribution.

9. COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS

The Company is a party to various general legal proceedings which have
arisen in the ordinary course of business. While the results of these matters
cannot be predicted with certainty, the Company believes that losses, if any,
resulting from the ultimate resolution of these matters will not have a material
adverse effect on the Company's consolidated results of operations, cash flows
or financial position. However, unfavorable resolution could affect the
consolidated results of operations or cash flows for the quarterly periods in
which they are resolved.

LEASE COMMITMENTS

The Company and its subsidiaries lease real property, equipment and
software under various operating leases with terms from one to twenty-five
years.

F-14
92
REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Future minimum lease obligations under noncancelable real property,
equipment and software leases with initial terms in excess of one year at
December 31, 1997 are as follows:

Year Ending December 31:
1998........................................................ $3.0
1999........................................................ 1.9
2000........................................................ 1.2
2001........................................................ 0.8
2002........................................................ 0.3
Thereafter.................................................. 1.0
----
$8.2
====

OTHER MATTERS

In the normal course of business, the Company is required to post
performance bonds, letters of credit, and/or cash deposits as a financial
guarantee of the Company's performance. To date, the Company has satisfied
financial responsibility requirements for regulatory agencies by making cash
deposits, obtaining bank letters of credit or by obtaining surety bonds. At
December 31, 1997, letters of credit and surety bonds totaling $194.3 million
expire through 2007.

The Company's business activities are conducted in the context of a
developing and changing statutory and regulatory framework. Governmental
regulation of the waste management industry requires the Company to obtain and
retain numerous governmental permits to conduct various aspects of its
operations. These permits are subject to revocation, modification or denial. The
costs and other capital expenditures which may be required to obtain or retain
the applicable permits or comply with applicable regulations could be
significant.

As a condition to Parent effecting the Distribution (as defined in Note 13,
Subsequent Events), the Company has agreed to indemnify Parent for any tax
liability suffered by Parent arising out of actions of the Company after the
Distribution that would cause the Distribution to lose its qualification as a
tax-free distribution for federal income tax purposes.

10. RESTRUCTURING AND OTHER CHARGES

During the year ended December 31, 1996, the Company recorded restructuring
and other charges of approximately $8.8 million. These costs included $5.3
million to close certain landfill operations, $1.0 million of asset write-offs
and $2.5 million of merger expenses associated with certain business
combinations accounted for under the pooling of interests method of accounting.
During the year ended December 31, 1995, the Company recorded restructuring
charges of approximately $3.3 million which primarily related to severance for
two former officers of a subsidiary. There are no remaining liabilities
associated with the 1996 and 1995 restructuring and other charges as of December
31, 1997.

11. DISCONTINUED OPERATIONS

During the year ended December 31, 1995, the Company disposed of its mining
and citrus operations resulting in a loss from discontinued operations of
approximately $24.8 million, net of income taxes. Included in the 1995 loss from
discontinued operations is a $30.5 million loss on disposal of the Company's
mining and citrus operations, net of income tax benefits of $10.0 million.
Revenue from the mining and citrus operations was $105.1 million in 1995 for the
period prior to disposition. The mining and citrus businesses were former
subsidiaries of a solid waste business acquired by Parent in 1996 and accounted
for under the pooling of

F-15
93
REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

interests method of accounting. Operating results for the period prior to
disposition have been classified as discontinued operations in the accompanying
Consolidated Financial Statements.

12. RELATED PARTY TRANSACTIONS

Due to affiliate includes allocations of various expenses from Parent
including general and administrative expenses, risk management premiums and
losses, income taxes and other costs. Such liabilities are non-interest bearing
and have no specified repayment terms. The following is an analysis of activity
in the due to affiliate account for the years ended December 31:

1997 1996 1995
------ ------ -----

Balance at beginning of period.............................. $ 49.3 $ 86.3 $ 8.6
Parent overhead allocations................................. 10.2 8.4 4.3
Insurance allocations....................................... 15.9 10.2 2.3
Self-insurance reserve allocations.......................... (7.3) (4.8) (0.5)
Intercompany purchases...................................... 13.8 12.0 27.5
Income taxes................................................ 28.7 23.4 1.4
Cash transfers.............................................. (2.8) (86.2) 42.7
------ ------ -----
Balance at end of period.................................... $107.8 $ 49.3 $86.3
====== ====== =====

Parent's corporate general and administrative costs not specifically
attributable to its operating subsidiaries have been allocated to the Company
based upon the ratio of the Company's invested capital to Parent's consolidated
invested capital. Such allocations are included in the Company's selling,
general and administrative costs and were approximately $3.8 million and $2.1
million for the three months ended March 31, 1998 and 1997 (unaudited),
respectively, and $10.2 million, $8.4 million and $4.3 million for the years
ended December 31, 1997, 1996 and 1995, respectively. These amounts approximate
management's estimate of Parent's corporate general and administrative costs
required to support the Company's operations. Management believes that the
amounts allocated to the Company are reasonable and are no less favorable to the
Company than the expenses the Company would incur to obtain such services on its
own or from unaffiliated third parties.

The Company participates in Parent's combined risk management programs for
property, casualty and general liability insurance. The Company was charged for
annual premiums and reported losses of $15.9 million, $10.2 million and $2.3
million during the years ended December 31, 1997, 1996 and 1995, respectively.
The Company's liability for unpaid and incurred but not reported claims under
the Parent's combined risk management programs was estimated to be approximately
$12.6 million and $5.3 million at December 31, 1997 and 1996, respectively, and
is included in other current liabilities in the accompanying Consolidated
Balance Sheets.

13. SUBSEQUENT EVENTS

In April 1998, the Company declared a $2.0 billion dividend to Parent that
it paid in the form of a series of one-year notes payable bearing interest at a
rate of LIBOR plus 30 basis points (the "Company Notes").

In May 1998, the Company filed a registration statement with the Securities
and Exchange Commission for the initial public offering of its Class A Common
Stock (the "Initial Public Offering"). The proceeds from the proposed Initial
Public Offering will be used to pay a portion of amounts due to Parent under the
Company Notes. Following the proposed Initial Public Offering, Parent will own
at least 80% of the combined voting power of Class A Common Stock and Class B
Common Stock.

In May 1998, Parent announced its intention to separate the solid waste
services businesses and operations that comprise the Company, and the associated
assets and liabilities of such businesses and

F-16
94
REPUBLIC SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

operations (the "Separation"). Parent also announced its intention to distribute
its remaining interest in the Company to Parent's shareholders in 1999, subject
to certain conditions and consents (the "Distribution"). The Company and Parent
have entered into or will, on or prior to the consummation of the Initial Public
Offering, enter into certain agreements providing for the Separation and
governing various interim and ongoing relationships between the companies,
including an agreement between the Company and Parent providing for the purchase
by the Company of certain services from Parent. The Distribution is contingent,
in part, on Parent obtaining a private letter ruling from the Internal Revenue
Service to the effect that, among other things, the Distribution will qualify as
a tax-free distribution for federal income tax purposes under Section 355 of the
Internal Revenue Code of 1986, as amended, in form and substance satisfactory to
Parent.

Reference is made to the discussion under "Certain Transactions" in the
registration statement referred to above for description of agreements related
to sharing of contingent liabilities, tax allocation and indemnification
matters, employee benefit arrangements and stock option grants arising out of
the Separation and Distribution.

14. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The results of operations for the third and fourth quarters of 1996
included restructuring and other charges of approximately $7.6 million and $1.2
million, respectively, as described in Note 10, Restructuring and Other Charges.

The following is an analysis of certain items in the Consolidated
Statements of Operations by quarter for 1997 and 1996.

FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------

Revenue.............................................. 1997 $263.2 $283.7 $287.6 $293.2
1996 220.6 235.9 251.7 245.1
Operating income..................................... 1997 $ 41.0 $ 47.1 $ 56.3 $ 56.9
1996 27.8 33.8 17.3 26.7
Net income........................................... 1997 $ 23.2 $ 25.9 $ 32.5 $ 34.6
1996 16.2 16.1 5.4 14.1

F-17
95

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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE CLASS A COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.

IN THE PROSPECTUS, REFERENCES TO "DOLLARS" AND "$" ARE TO UNITED STATES
DOLLARS.

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

TABLE OF CONTENTS

PAGE
----

Prospectus Summary.................... 3
Risk Factors.......................... 11
Background of the Offerings........... 18
Use of Proceeds....................... 20
Dividend Policy....................... 20
Capitalization........................ 21
Dilution.............................. 22
Selected Financial Data............... 24
Unaudited Condensed Consolidated Pro
Forma Financial Statements.......... 25
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 30
Business.............................. 38
Management............................ 50
Certain Transactions.................. 56
Principal Stockholder................. 63
Description of Capital Stock.......... 64
Shares Eligible for Future Sale....... 68
Certain United States Federal Tax
Consequences For Non-United States
Holders............................. 70
Underwriting.......................... 73
Legal Matters......................... 76
Experts............................... 76
Available Information................. 76
Index to Financial Statements......... F-1

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55,000,000 SHARES

REPUBLIC SERVICES, INC. (LOGO)
CLASS A COMMON STOCK
------------------------

PROSPECTUS
------------------------

MERRILL LYNCH INTERNATIONAL

DEUTSCHE BANK

DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL

COMMERZBANK AKTIENGESELLSCHAFT
ING BARINGS
LOMBARD ODIER INTERNATIONAL UNDERWRITERS
SCOTIA CAPITAL MARKETS
JUNE 30, 1998

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