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                          Superior Services, Inc. Logo
                                    FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934. FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934. FOR THE TRANSITION PERIOD FROM             TO
                 .

                         COMMISSION FILE NUMBER 0-27508

                             SUPERIOR SERVICES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

              WISCONSIN                                 39-1733405
    (STATE OR OTHER JURISDICTION 
  OF INCORPORATION OR ORGANIZATION)                    (I.R.S. EMPLOYER 
   125 SOUTH 84TH STREET, SUITE 200                    IDENTIFICATION NO.)
         MILWAUKEE, WISCONSIN                                53214
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                  (ZIP CODE)

Registrant's telephone number, including area code: (414) 479-7800
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:COMMON STOCK, $.01
                                                           PAR VALUE; COMMON
                                                           STOCK PURCHASE RIGHTS

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

       Indicate by check mark if  disclosure of  delinquent  filers  pursuant to
Item 405 of Regulation  S-K (229.405 of this  chapter) is not contained  herein,
and will not be contained,  to the best of registrant's knowledge, in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]

       State  the   aggregate   market   value  of  the  voting  stock  held  by
non-affiliates of the registrant as of March 10, 1999.(1)

                                  $603,001,463

       Number of shares  outstanding of each of the classes of the  registrant's
capital stock as of March 10, 1999:

                 COMMON STOCK, $.01 PAR VALUE: 32,356,812 SHARES

              PORTIONS OF THE FOLLOWING DOCUMENTS ARE INCORPORATED
                              HEREIN BY REFERENCE:

       PROXY  STATEMENT  FOR  1999  ANNUAL  MEETING  OF   SHAREHOLDERS   (TO  BE
INCORPORATED  BY REFERENCE INTO PART III UPON THE FILING OF THE PROXY  STATEMENT
WITH THE SECURITIES AND EXCHANGE COMMISSION, TO THE EXTENT INDICATED THEREIN).
------------
(1) Excludes only shares held by directors and officers of the registrant.
--------------------------------------------------------------------------------
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<PAGE>


                                     PART I

       Unless the context indicates  otherwise,  references to the number of the
Company's various facilities set forth in this Form 10-K Annual Report are as of
December 31, 1998.

                Special Note Regarding Forward-Looking Statements

       Certain  matters  discussed  in  this  Annual  Report  on Form  10-K  are
"forward-looking  statements"  intended  to qualify  for the safe  harbors  from
liability  established by the Private Securities  Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such because the
context of the  statement  will  include  words such as the Company  "believes",
"anticipates",  "expects"  or words of  similar  import.  Whether  or not  these
forward-looking statements will be accurate in the future will depend on certain
risks and factors  including  risk  factors  associated  with (i) the  Company's
ability to manage its growth; (ii) the availability to the Company of additional
acquisition  opportunities  at favorable  pricing  levels and the ability of the
Company to effectively integrate its existing and potential future acquisitions;
(iii) the continuing  seasonality of its business; and (iv) competition for both
collection  and disposal  services and  acquisitions.  These and other risks and
uncertainties  are also set forth in the  Company's S-4  Registration  Statement
dated  March 30,  1998,  as amended  (No.  333-48887)  under the  caption  "Risk
Factors."  Shareholders,  potential investors and other readers should carefully
consider  these risks and  factors and the impact they may have when  evaluating
these forward-looking statements. The forward-looking statements included herein
are only  made as of the  date of this  report  and the  Company  undertakes  no
obligation  to  publicly  update  such  forward-looking  statements  to  reflect
subsequent events or circumstances.

ITEM 1. BUSINESS.

GENERAL

       Superior   Services,   Inc.   ("Superior"   or  the   "Company")   is  an
acquisition-oriented  integrated solid waste services company  providing a range
of  collection,  transfer,  transportation,  disposal and recycling  services to
generators of solid waste and special  waste.  The Company  provides solid waste
collection,  transfer,  transportation,  recycling and disposal services to over
750,000 residential,  commercial and industrial  customers in Alabama,  Florida,
Georgia,   Illinois,   Michigan,   Minnesota,   Missouri,   New  Jersey,   Ohio,
Pennsylvania,  West  Virginia and  Wisconsin.  The Company also  provides  other
integrated  waste services,  most of which are  project-based  and many of which
provide  additional  waste  volumes to the  Company's  landfills  and  recycling
facilities. As of December 31, 1998, the Company owned and operated 19 landfills
(including a greenfield  landfill),  45 solid waste  collection  operations,  15
recycling  facilities  and 19 solid waste  transfer  stations.  The Company also
manages four other third party owned landfills.

       Superior's  objective  is to be one of the  largest  and most  profitable
fully integrated  providers of solid waste  collection and disposal  services in
each market it serves.  The Company's  strategy to achieve this  objective is to
(i) continue to expand its operations and customer base in existing  markets and
to enter new markets  through the  acquisition of other solid waste  operations;
(ii) pursue  internal growth  opportunities  in its current  markets;  and (iii)
achieve continuing operating improvements in its business.  Superior's principal
strategy for future growth is through the acquisition of additional  solid waste
disposal,  transfer and collection operations.  The Company's operating strategy
emphasizes the integration of its solid waste collection and disposal operations
and the internalization of waste collected.

       Acquisitions

       In recent years,  the solid waste  collection  and disposal  industry has
undergone significant  consolidation and integration.  The Company believes that
this  consolidation  and  integration is caused  primarily by four factors:  (i)
increasingly  stringent  environmental  regulation and enforcement  resulting in
increased capital requirements;  (ii) the inability of many smaller operators to
achieve the  economies  of scale  necessary  to compete  effectively  with large
integrated  solid waste  service  providers;  (iii) the evolution of an industry
competitive    model   which   emphasizes    providing   both   collection   and
disposal/recycling  capabilities;  and (iv) the continued privatization of solid
waste collection and disposal services by municipalities and other 


                                       2
<PAGE>

governmental bodies and authorities.  Despite the considerable consolidation and
integration  occurring  in the solid waste  industry,  the Company  believes the
industry remains primarily regional in nature and highly fragmented,  and that a
substantial number of potential acquisition opportunities remain.

       Since the Company's March 1996 initial public offering  through  December
31,  1998,  the Company has  acquired 70 solid waste  collection,  transfer  and
disposal  operations,  including 13  landfills,  one  greenfield  landfill,  two
recycling  operations,  and 54  collection  operations,  taking the Company into
numerous  new service  markets in seven new  states.  During  1998,  the Company
acquired  or merged  with 31 solid  waste,  transfer  and  disposal  operations,
including five landfills plus one landfill previously managed under an operating
agreement since 1997, and 25 solid waste collection operations,  with annualized
revenues of approximately  $140 million.  A single  acquisition  transaction may
involve the purchase of multiple business operations.

       The Company  intends to continue to expand its  geographic  scope through
acquisitions  by (i)  expanding  into  adjacent  and  new  markets  by  pursuing
principally  a "hub and spoke"  acquisition  strategy  and (ii)  increasing  its
revenues and operational and administrative  efficiencies  through "tuck-in" and
other  acquisitions  of  profitable  solid waste  collection  operations  in its
existing markets.

       In  addition  to  eight  full  time  market  development  personnel,  the
Company's  senior and executive  management  teams focus a  substantial  part of
their time identifying acquisition candidates and consummating acquisitions.

       The following  table sets forth the Company's  acquisitions of operations
completed in 1998:

<TABLE>
<CAPTION>
  ACQUIRED COMPANY     MONTH ACQUIRED       PRINCIPAL BUSINESS             LOCATION           MARKET AREA
  ----------------     --------------       ------------------             --------           -----------
<S>                    <C>              <C>                           <C>                   <C>
Sycamore Landfill,     December 1998    Solid waste landfill          Hurricane, WV         Western West
  Inc.                                                                                      Virginia
Otto Jacobs Company    December 1998    Solid waste collection and    Lake Geneva, WI       Southeastern
  LLC                                   transportation                                      Wisconsin
Certain assets of BFI  November 1998    Solid waste collection and    Eau Claire, WI        Western
  Waste Systems of                      transportation                                      Wisconsin
  North America, Inc.
Ray's Disposal         November 1998    Solid waste collection and    Warren, PA            Northwest
                                        transportation                                      Pennsylvania
Macon County Landfill  October 1998     Solid waste landfill          Decatur, IL           Central
  Corporation                                                                               Illinois
GeoWaste Incorporated  October 1998     Solid waste landfill, solid   Valdosta, GA,         Southern
  (GeoWaste of GA,                      waste collection and          Bronx, NY and         Georgia,
  Inc., GeoWaste                        transportation                Ocala, FL             New York City,
  Transfer, Inc., and                                                                       Northern
  Spectrum Group,                                                                           Florida
  Inc. d/b/a United
  Sanitation)
PenPac, Inc.,          September 1998   Solid waste collection,       Totowa, NJ            Northern New
  Heritage Recycling,                   transportation and transfer                         Jersey
  Inc. Iorio Carting,                   stations
  Inc.


                                        3

<PAGE>


<CAPTION>
  ACQUIRED COMPANY     MONTH ACQUIRED       PRINCIPAL BUSINESS             LOCATION           MARKET AREA
  ----------------     --------------       ------------------             --------           -----------
<S>                    <C>              <C>                           <C>                   <C>
ACS Services, Inc.,    September 1998   Solid waste collection,       Paterson, NJ          Northern New
  Recycling                             transportation and transfer                         Jersey
  Techniques, Inc.                      stations
  Advanced Waste
  Technologies, Inc.,
  Baray, Inc.,
  Nicholas
  Enterprises, Inc.
  d/b/a Nicholas
  Sanitation
Santangelo Hauling,    September 1998   Solid waste collection,       Norristown, PA        Eastern
  Inc., Santangelo                      transportation and transfer                         Pennsylvania
  Transfer, Inc.,                       station
  Keystone Disposal,
  Co., and Gold Star
  Leasing Corp.
South Lake Refuse      August 1998      Solid waste and recyclables   Groveland, FL         Central Florida
  Service, Inc. and                     collection and
  Commercial Refuse,                    transportation
  Inc.
Gopher Disposal,       August 1998      Solid waste and recyclables   St. Paul and          Central and
  Inc., Eagle                           collection and                Rochester, MN         Southeastern
  Environmental,                        transportation                                      Minnesota
  Inc., Materials
  Recovery, Ltd.,
  Newport Properties,
  and Watson's
  Rochester Disposal,
  Inc.
Superior Disposal,     August 1998      Solid waste collection and    Ocala, FL             Northern
  Inc. and All Bright                   transportation                                      Florida
  Sanitation
Wilson Waste Systems,  August 1998      Solid waste collection and    Defiance, MO          Central
  Inc.                                  transportation                                      Missouri
Strunk Sanitary        August 1998      Solid waste collection and    Clearfield, PA        Western
  Service, Inc.                         transportation                                      Pennsylvania
Sandman Trucking       May 1998         Construction and demolition   Ocala, FL             North Central
  Corp.                                 landfill and construction                           Florida
                                        and demolition
                                        transportation
Certain assets of      May 1998         Solid, liquid & foundry       Milwaukee, Racine,    Southeastern
  BFI Waste Systems                     sand waste and recyclables    Ozaukee, Walworth,    Wisconsin
  of North America,                     collection and                & Washington
  Inc.                                  transportation                Counties, WI
CBF, Inc.              May 1998         Solid waste landfill and      McClellandtown, PA    Southwestern
                                        solid waste collection and                          Pennsylvania
                                        transportation
Eggers Sanitation,     April 1998       Solid waste and recyclables   Prescott, WI          Central
  Inc.                                  collection and                                      Wisconsin
                                        transportation
Longview of            March 1998       Solid waste and recyclables   Bethany, MO           Central
  Livingston County,                    collection and                                      Missouri
  Inc.                                  transportation


                                        4

<PAGE>


<CAPTION>
  ACQUIRED COMPANY     MONTH ACQUIRED       PRINCIPAL BUSINESS             LOCATION           MARKET AREA
  ----------------     --------------       ------------------             --------           -----------
<S>                    <C>              <C>                           <C>                   <C>
Missouri Disposal      March 1998       Solid waste and recyclables   Galt, MO              Central
  Partners                              collection and                                      Missouri
                                        transportation
Alabama Waste          March 1998       Solid waste and recyclables   Moody, AL             Central Alabama
  Services, Inc.                        collection and
                                        transportation
ACMAR Regional         March 1998       Solid waste landfill          Moody, AL             Central Alabama
  Landfill, Inc.
Weaver Sanitation      March 1998       Solid waste and recyclables   Punxsutawney, PA      Eastern
                                        collection and                                      Pennsylvania
                                        transportation
Dick's Rubbish         March 1998       Solid waste and recyclables   Winona, MN            Central
                                        collection and                                      Minnesota
                                        transportation
Johnson Disposal       March 1998       Solid waste and recyclables   Eau Claire, WI        Western
  Service, Inc.                         collection and                                      Wisconsin
                                        transportation
TWR, Inc.              March 1998       Solid waste collection and    Tuscaloosa, AL        Central Alabama
                                        transportation
Nelson & Son           February 1998    Solid waste collection and    Ashland, OH           North/Central
  Sanitation                            transportation                                      Ohio
Ideal Disposal         February 1998    Solid waste and recyclables   Germantown, WI        Southeastern
  Service, Inc.                         collection and                                      Wisconsin
                                        transportation
Pozanc Trucking        February 1998    Solid waste and recyclables   Winona, MN            Central
                                        collection and                                      Minnesota
                                        transportation
Love's Disposal        January 1998     Solid waste collection and    Audrain County, MO    Central
  Service, Inc.                         transportation                                      Missouri
T-MAC, Inc.            January 1998     Solid waste and recyclables   Columbia, MO          Central
                                        collection and                                      Missouri
                                        transportation
</TABLE>

       There can be no  assurance  that the Company  will be able to continue to
identify  suitable  acquisition  candidates  or,  if  identified,   successfully
negotiate  their  acquisition.  If the Company is successful in identifying  and
negotiating  suitable  acquisitions,  there can be no assurance that any debt or
equity financing  necessary to complete any such acquisitions can be arranged on
terms  satisfactory  to  the  Company  or  that  any  such  financing  will  not
significantly  increase the Company's leverage or result in additional  dilution
to existing shareholders.  Moreover,  there can be no assurance that the Company
will be able to continue to integrate  successfully any acquired operations,  or
manage or improve the operating or  administrative  efficiencies or productivity
of any  acquired  operations.  As the Company  continues  to pursue  acquisition
opportunities in new market areas, the potential additional geographic expansion
of the Company's operations resulting from the successful  completion of some of
those acquisition  opportunities  will make it more difficult for the Company to
successfully  and  efficiently  integrate  such  operations  with the  Company's
existing  operations.  Similarly,  the Company may not realize as many synergies
and efficiencies  from acquiring  operations  outside its existing market areas.
Failure by the Company to implement  successfully its acquisition  strategy will
limit,  and  may  limit  materially,  the  Company's  growth  potential  and may
adversely affect the Company's results of operations.

       The ongoing  consolidation  and  integration  activity in the solid waste
industry,  as well as the difficulties,  uncertainties,  and expense relating to
the development  and permitting of solid waste landfills and transfer  stations,
has  increased   competition   for  the  acquisition  of  existing  solid  waste
collection, transfer and disposal

                                        5

<PAGE>


operations.  Increased competition for acquisition  candidates has resulted, and
may continue to result,  in fewer  attractive  acquisition  opportunities  being
available  to the  Company as well as on less  advantageous  acquisition  terms,
including  particularly  increased  purchase  prices.  These  circumstances  may
increase acquisition costs to levels beyond the Company's financial capabilities
or pricing  parameters or, as to acquisitions  made by the Company,  may have an
adverse effect on the Company's results of operations.  Several of the Company's
competitors   for   acquisitions   are  larger,   better  known  companies  with
significantly  greater  resources than the Company.  The Company believes that a
significant factor in its ability to consummate additional  acquisitions will be
the relative  attractiveness of its Common Stock as an investment  instrument to
potential  acquisition  candidates.  This  attractiveness may, in large part, be
dependent upon the relative market price and capital  appreciation  prospects of
the Common Stock compared to the equity securities of the Company's competitors.

  Internal Growth

       Superior  believes its internal  growth will come from  additional  sales
penetration in its current and adjacent markets,  marketing  additional services
to  existing  customers,  including  recycling  services,  and  selective  price
adjustments.  Utilizing a  decentralized  operations  strategy,  the Company has
added an executive  sales  manager to its existing  sales force,  consisting  of
approximately  75 sales  representatives  dedicated to increasing  the Company's
sales to new and existing  commercial,  industrial  and municipal  customers.  A
principal  component of the Company's  internal growth strategy is to become the
sole  provider  of  solid  waste  services  to its  customers,  including  other
integrated waste and recycling services.

  Operating Improvements

       The Company has programs and benchmarking systems designed to improve the
operational  productivity,  administrative  efficiency and  profitability of its
operations  through  improved   collection  and  disposal  routing   efficiency,
consolidation of "back office" operations, equipment utilization, cost controls,
employee training and safety.

       An important  element of the Company's  strategy for improving  operating
margins is to establish new transfer  stations  within a 150-mile  radius of its
existing  landfills to increase its collection and  transportation  efficiencies
and improve the Company's internalization of collected solid waste. For example,
the Company recently acquired transfer stations in Bethany and Mexico, Missouri,
which will provide additional disposal to the Company's local landfill.

CURRENT OPERATIONS

  Introduction

       As of December 31, 1998, the Company  provides  integrated waste services
to its customers in 12 states.  Specifically,  the Company  operates solid waste
collection  operations,  solid waste transfer  stations,  recycling  facilities,
Company-owned  solid waste  landfills  and managed  third party  landfills.  The
Company  also  provides  other  integrated  waste  services,  most of which  are
project-based  and  many  of  which  provide  additional  waste  volumes  to the
Company's  landfills  and recycling  facilities.  These other  integrated  waste
services include the remediation and disposal of contaminated  soils and similar
materials;  underwater remediation and industrial services; wastewater biosolids
management; full container consumer product recycling; and temporary storage and
transportation  of special and hazardous waste,  including  household  hazardous
waste.  However,  solid waste  services  have been and will remain the Company's
core business.

       Superior markets its services  principally  through its facility managers
and direct sales  representatives.  The Company also obtains new customers  from
referral  sources,  reputation,  and local  media  marketing.  The Company has a
diverse  customer base, with no single  customer  accounting for more than 3% of
the  Company's  revenues in 1998.  The Company does not believe that the loss of
any  single  customer  would  have a material  adverse  effect on the  Company's
results of operations.

  Solid Waste Collection and Transfer

       As of December  31, 1998,  the Company  provided  solid waste  collection
services to over 750,000 residential,  commercial and industrial customers.  The
Company's collection operations are generally conducted within a 150-mile radius
from its landfills or transfer stations. The Company contracts with local

                                        6

<PAGE>

generators  of  solid  waste  and  directs  the  waste to its own  landfill  for
disposal;  to a third-party  landfill;  or for additional handling at one of its
owned or third party transfer stations or recycling facilities. After compacting
and/or separating at a transfer station,  the Company has historically  directed
the waste to either its own landfill or a third party landfill.

       In 1998,  approximately  58% of the solid waste  collected by the Company
was delivered for disposal at its own landfills,  compared to approximately  52%
in 1997, as restated. Solid waste collection and transfer services accounted for
approximately 61% of the Company's  revenues for 1998,  including  revenues from
disposal services provided to customers of the Company's collection and transfer
units, compared to approximately 60% in 1997, as restated.

       The Company's commercial and industrial collection services are generally
performed  under  one-year  to  three-year  service  agreements,  and  fees  are
determined  by such  factors as  collection  frequency,  type of  equipment  and
containers  furnished,  the type, volume and weight of the waste collected,  the
distance to the  disposal or  processing  facility,  and the cost of disposal or
processing.  The Company's commercial and industrial customers generally utilize
portable  containers that  temporarily  hold solid waste,  thereby  enabling the
Company to service many customers with fewer collection vehicles.

       A majority of the Company's  municipal  solid waste  collection  services
have  historically  been performed  under contracts with  municipalities.  These
contracts grant the Company  exclusive rights to service all or a portion of the
residential homes in a specified  community or provide a central  repository for
residential  waste  drop-off.   The  Company  had  approximately  370  municipal
contracts in place as of December 31, 1998,  compared to over 350 as of December
31, 1997, as restated.  No single municipal contract is individually material to
the Company's results of operations. Municipal contracts in the Company's market
areas are typically awarded, at least initially,  on a competitive bid basis and
usually range in duration from one to three years.  Fees are based  primarily on
the  frequency  and type of service,  the distance to the disposal or processing
facility, and the cost of disposal or processing.  Municipal collection fees are
usually paid either by the  municipalities  from tax revenues or through  direct
service  charges to the  residents  receiving  the  service.  The  Company  also
provides subscription residential collection services directly to households.

       The Company's  transfer stations receive solid waste collected  primarily
from its various  collection  operations,  compact the waste,  and  transfer the
waste to larger vehicles for transport to landfills.  This procedure reduces the
Company's  costs by  improving  its  utilization  of  collection  personnel  and
equipment.  Approximately  51% of the solid waste  accepted  for transfer at the
Company's  transfer  stations  in  1998  was  from  third  parties  compared  to
approximately 55% in 1997, as restated.

  Recycling Services

       The Company also provides recycling services to customers in most markets
as part of its strategy to be a  full-service  integrated  solid waste  services
company.  Recycling  involves the removal of reusable  materials  from the waste
stream for processing and sale in various applications.

       The Company  operates 15 recycling  facilities as part of its  collection
and  transfer  operations  at which  it  processes,  sorts  and  recycles  paper
products,  certain  plastics,  glass,  aluminum  and tin cans and certain  other
items. The Company also operates a wood pallet recycling  operation and curbside
residential  recycling  programs in connection with its  residential  collection
operations in many communities.

       The  Company  attempts  to resell  recycled  waste  products  in the most
commercially  reasonable  manner  practicable  and,  by  contract,  to pass on a
portion of the commodity pricing risk to its commercial and industrial  clients.
The Company has a five-year  wastepaper  purchase  agreement  effective  through
April 2000 with a national  paper  company  pursuant to which the paper  company
purchases   certain  grades  of  recyclable   wastepaper  from  the  Company  at
above-market prices, subject to certain minimum floor resale pricing assurances.
Under the terms of this  agreement,  the  Company  has the ability to sell up to
all,  but not less  than 50%,  of its  supply of  certain  grades of  recyclable
wastepaper  to this company.  The Company  believes  that this  agreement  helps
mitigate some of the variability associated with the resale of its collected and
recyclable wastepaper.

                                        7

<PAGE>


       In 1998, the Company processed an average of approximately 12,000 tons of
recyclable paper and cardboard per month,  compared to approximately  9,850 tons
per month in 1997, as restated.  The decrease of the average price  received for
recyclable wastepaper caused total revenues in 1998 to decrease by approximately
1% compared to 1997. The Company expects this trend to continue  assuming resale
prices are similar to 1998 levels.

  Solid Waste Landfill Disposal

       The  Company  owns and  operates  19 solid  waste  landfills  in Alabama,
Florida,  Georgia,  Illinois,  Minnesota,  Missouri,  Ohio,  Pennsylvania,  West
Virginia,  and  Wisconsin.  This includes one  greenfield  landfill in Wisconsin
expected to open in the first half of 1999.  The Company's  landfill  facilities
are designed and operated to meet federal,  state, and local  regulations in all
material  respects and the Company  believes  each of its landfill  sites are in
compliance with current  applicable  state and federal Subtitle D Regulations in
all material respects.  None of the Company's  landfills are permitted to accept
hazardous  waste. In both 1998 and 1997, as restated,  approximately  39% of the
solid waste disposed of at the Company's landfills was delivered by the Company.

       The average daily volume of waste  accepted for disposal at the Company's
open  landfills  increased  to  approximately  15,100  tons per day in 1998 from
approximately  10,100 tons per day in 1997,  in each case as restated to reflect
the Company's acquisitions of landfills in transactions which were accounted for
as pooling of  interests.  The  increase  in  revenues  from  landfill  disposal
operations is the result of waste received at three new disposal sites purchased
during 1998 and increased  volumes of special waste from the Company's  project-
driven other integrated waste services.

       The following table provides certain information with respect to Superior
landfills which are owned or under development:

<TABLE>
<CAPTION>
                                                                                                APPROXIMATE
                                                                                   PERMITTED       TOTAL
           LANDFILL NAME AND LOCATION             MONTH ACQUIRED    YEAR OPENED    ACREAGE(1)   ACREAGE(1)
           --------------------------             --------------   -------------   ----------   -----------
<S>                                               <C>              <C>             <C>          <C>
Superior Cranberry Creek landfill,                      *              1986            34          1,060
  Wisconsin Rapids, WI (Central Wisconsin)
Superior Valley Meadows landfill,                       *              1979            29            600(2)
  Fort Atkinson, WI (Southeastern Wisconsin)
Superior Glacier Ridge landfill,                    March 1993         1986            59            560
  Mayville, WI (Eastern Wisconsin)
Superior Emerald Park landfill,                   November 1993        1994            35            340
  Muskego, WI (Milwaukee metropolitan area)
Superior FCR landfill, Buffalo, MN                  July 1994          1965            24            397
  (Minneapolis metropolitan area)
Superior Seven Mile Creek landfill,               September 1996       1978            37            160(3)
  Eau Claire, WI (Northwest Wisconsin)
Superior Oak Ridge landfill, Ballwin, MO          September 1996       1975           111            180(4)
  (St. Louis metropolitan area)
Superior Hickory Meadows landfill,                  April 1997     Scheduled to        59            317
  Chilton, WI (Northeastern Wisconsin)(5)                          open mid 1999
Superior Greentree landfill, Kersey, PA             April 1997         1986            91          1,336
  (Central Pennsylvania)
Superior Eagle Bluff landfill, Tuscaloosa,          June 1997          1988            24             87
  AL (Central Alabama)(6)
Superior Cedar Hill landfill, Pell City, AL         June 1997          1975            59            418
  (Central Alabama)(7)
Superior Maple Hill landfill, Macon, MO            October 1997        1976            30            380
  (Northeastern Missouri)(8)
Superior Oakland Marsh landfill, Mansfield,       December 1997        1997           102            288
  OH (Central Ohio)(9)
Macon County landfill, Decatur, Illinois           October 1998        1965            89            250
  (Central Illinois)

                                        8

<PAGE>


<CAPTION>
                                                                                                APPROXIMATE
                                                                                   PERMITTED       TOTAL
           LANDFILL NAME AND LOCATION             MONTH ACQUIRED    YEAR OPENED    ACREAGE(1)   ACREAGE(1)
           --------------------------             --------------   -------------   ----------   -----------
<S>                                               <C>                  <C>            <C>            <C>
CBF landfill, McClellandtown, PA                    June 1998          1960            36             84
  (Southwestern Pennsylvania)
Superior Star Ridge landfill                        April 1998         1983           336            763
  Moody, Alabama (Central Alabama)
Superior Cypress Acres landfill, Ocala,              May 1998          1991            33             48
  Florida (North Central Florida)(10)
Pecan Row landfill, Valdosta, Georgia              October 1998        1991            57            129
  (Southern Georgia)(11)
Sycamore landfill, Hurricane, WV                  December 1998        1975            25             93
  (Western West Virginia)(12)

------------
     *    Acquired as part of the Company's original consolidation in 1993.
     (1)  Permitted acreage represents the portion of the total acreage on which
          disposal cells have been constructed (including any that may have been
          filled or capped) or may be constructed  based upon an approval issued
          by the regulatory  agency  generally  authorizing the development of a
          landfill  on the  acreage.  The portion of total  acreage  that is not
          currently permitted is not available for waste disposal.
     (2)  Does  not  include   approximately  80  acres  currently   subject  to
          acquisition by the Company upon exercise of a purchase option.
     (3)  Does  not  include   approximately  80  acres  currently   subject  to
          acquisition by the Company upon exercise of a purchase option.
     (4)  Includes   approximately   125  acres  leased  by  the  Company.   See
          "Properties."  Does not  include  approximately  58 acres  subject  to
          acquisition by the Company upon exercise of a purchase option.
     (5)  Formerly M & N Disposal,  Inc. In February 1998, the WDNR approved the
          Company's  application  for  58.7  permitted  acres at this  site.  In
          December 1998, the Company  completed the first phase of construction.
          The Company is currently  negotiating a local host community agreement
          and awaiting regulatory approval of the construction.
     (6)  Construction and demolition landfill, formerly Holt Landfill Co., Inc.
     (7)  Formerly Urban Sanitation Corporation.
     (8)  Formerly Teter Sanitary Landfill and Refuse Hauling, Inc.
     (9)  Also known as Noble Road Landfill, Inc.
    (10)  Construction and demolition landfill, formerly Sandman Trucking Corp.
    (11)  Also known as GeoWaste of GA, Inc.
    (12)  Operated by the Company since  September 1997 pursuant to an operating
          agreement.
</TABLE>

  Management of Third Party Landfills

       As of December 31, 1998,  the Company  managed  four  landfills  owned by
third parties including a fly ash monofill in Oak Creek, Wisconsin, a bottom ash
monofill in Port  Washington,  Wisconsin,  and two paper  sludge and ash captive
monofills owned by separate paper companies.  A monofill is a landfill that only
accepts one type of waste. The fly ash and bottom ash monofills are managed with
a Wisconsin  public  electric  utility  company under  agreements that expire in
April 2000. One of the paper company monofills is located in Brokaw,  Wisconsin,
and is managed under a ten-year waste hauling and landfill  operation  agreement
that expires in January 2009.  The  remaining  monofill is located in Quinnesec,
Michigan,  and is managed under an agreement that expires in July 1999.  None of
these contracts are considered material to Superior.

  Other Integrated Waste Services

       In order to provide  integrated  solid waste  services to a wide range of
customers,  Superior  provides a variety of other waste services,  most of which
are  project-based  and many of which  provide  additional  waste volumes to the
Company's  landfills.  These services  include the  remediation  and disposal of
contaminated soils and similar materials;  underwater remediation and industrial
services;  wastewater  biosolids  management;  full container  consumer  product
recycling;  and temporary  storage and  transportation  of special and hazardous
waste, including household hazardous waste. Revenues from these other integrated
waste services constituted

                                        9

<PAGE>

approximately  12% of the  Company's  revenues  in  1998  and  11% in  1997,  as
restated.  This trend is expected to continue as the Company  pursues its growth
strategy of acquiring  additional solid waste disposal,  transfer and collection
operations.

       The Company's project-based  remediation services involve the removal and
transportation of contaminated soil from environmental  remediation projects for
disposal at the Company's  landfills in compliance with applicable  regulations.
The Company also  provides  value-added  services to  bioremediate  contaminated
soils at its landfills prior to final disposal.  After  excavation,  the Company
uses nutrients and  micro-organisms  to naturally remove or reduce  contaminants
from contaminated soil before disposing of the remediated soils in its landfills
or  using  the  remediated  soils  in  landfill   construction.   The  Company's
environmental  field  services,  which are provided  principally  to  industrial
clients  in  Wisconsin,  include  the  containment  and  cleanup  of actual  and
threatened  releases  of  hazardous  materials  into the  environment  on both a
planned and an emergency  response  basis.  These services  include clean out of
wastewater  treatment  tanks,  cleanup of abandoned  oil  recycling  facilities,
cleanup and demolition of manufacturing facilities,  and removal and remediation
of underground  storage tanks.  The Company is the primary  standby  provider of
environmental  emergency spill response services to the Wisconsin  Department of
Natural Resources ("WDNR") in Eastern and Central  Wisconsin,  the United States
Coast Guard in District Nine, and is a subcontractor  to the U.S.  Environmental
Protection Agency ("EPA") in Region V.

       The Company's  wastewater biosolids operations consist principally of the
removal,  transportation,  storage and beneficial reuse through land application
of industrial and municipal  nonhazardous  wastewater biosolids and food wastes.
The Company  contracts  with  municipalities,  paper  mills and food  processing
plants to  remove,  transport  and  dispose  of both  municipal  and  industrial
wastewater  biosolids.  In most cases,  municipalities or industrial  processors
have on-site  wastewater  treatment  facilities  which pretreat and  concentrate
biosolid  wastes prior to removal and reuse.  In other  cases,  the Company will
transport a generator's  wastewater biosolids from holding tanks or lagoons to a
third party wastewater treatment facility. Land application is generally limited
by state  regulations to six months out of the year in Wisconsin.  Consequently,
the Company built a one million gallon  permitted  wastewater  biosolid  storage
tank in which it stores  certain  liquid and  biosolid  wastes until they can be
land applied during the spring and fall.

       The Company  provides  nonhazardous  "special"  waste and hazardous waste
(including  household hazardous waste) services,  transportation,  and temporary
storage services to industrial  clients,  principally in Wisconsin.  The Company
provides its hazardous waste services from its fully-permitted temporary storage
facility ("TSF") located in Port Washington,  Wisconsin  (approximately 25 miles
north of Milwaukee)  and operates a hazardous  household  waste  collection  and
transfer  facility in St.  Paul,  Minnesota.  Hazardous  waste  collected by the
Company is transported to third party treatment or disposal facilities that have
been selected by the customer in virtually all cases.  The Company also reclaims
mercury  at its TSF from  discarded  mercury-containing  items  such as  utility
meters, fluorescent lights and thermometers. The Company does not typically take
title to  collected  hazardous  waste nor does it  handle or accept  radioactive
wastes,  explosives,  certain  poisons,  certain PCBs and certain other types of
hazardous  wastes.  The  Company  does not own or  operate,  or intend to own or
operate,  a hazardous  waste disposal  facility.  Revenues from hazardous  waste
transportation  and temporary storage services accounted for less than 2% of the
Company's  revenues in 1998 and in 1997,  as restated.  Although the Company may
under certain conditions from time to time acquire  additional  operations which
focus on providing other integrated waste services,  including certain hazardous
waste  services,  this trend is expected  to continue  over the long term as the
Company  pursues  its  growth  strategy  of  acquiring  additional  solid  waste
disposal, transfer and collection operations.

COMPETITION

       The  solid  waste  management  industry  is  highly   competitive,   very
fragmented  and  requires  substantial  labor  and  capital  resources.  Intense
competition  exists within the industry not only for collection,  transportation
and disposal volume, but also for acquisition candidates.  The industry includes
four large national waste companies:  Waste  Management,  Inc.;  Browning-Ferris
Industries,  Inc.; Allied Waste Industries,  Inc.; and Republic Industries, Inc.
The Company also competes with a number of regional and local companies.

                                       10

<PAGE>

       Superior competes for landfill  disposal business  primarily on the basis
of disposal fees, geographical location and quality of operations. The Company's
ability to obtain landfill  disposal volume may be limited by the fact that some
major  collection  companies  also own or  operate  their own  landfills  in the
Company's  market  areas,  to which  they send their  waste.  The  Company  also
competes,  to a lesser extent,  with certain  municipalities that maintain their
own solid waste  disposal  operations.  These  municipalities  may have  certain
advantages  over  the  Company  in  financing   their   operations  due  to  the
availability of tax revenues and tax-exempt financing.  The Company competes for
collection and recycling accounts primarily on the basis of price and 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.  These  practices may also lead to reduced  pricing for the
Company's  services or the loss of business.  The Company provides a substantial
portion of its residential collection services under municipal contracts.  As is
generally  the case in the  industry,  these  contracts  are subject to periodic
competitive  bidding.  There can be no  assurance  that the Company  will be the
successful bidder to obtain or retain these contracts.

EMPLOYEES

       At December 31, 1998, the Company employed  approximately 2,250 full-time
employees. Drivers at two of the Company's current locations have voted in favor
of union  representation.  These  employees  are not yet covered by a collective
bargaining  agreement  and, in fact,  the Company has  challenged  the  election
process involved in one of these elections.  Through  acquisitions,  the Company
has also  acquired  other  locations  that  are  party  to  existing  collective
bargaining  agreements.  The Company  considers  its  employee  relations  to be
satisfactory.

REGULATION

  Introduction

       The Company is currently subject to extensive and evolving federal, state
and local  environmental laws and regulations that have been enacted in response
to technological advances and increased concern over environmental issues. These
regulations not only strictly  regulate the conduct of the Company's  operations
but also are related  directly to the demand for many of the services offered by
the Company.  Some of the federal  statutes  discussed below contain  provisions
authorizing, under certain circumstances, the institution of lawsuits by private
citizens to enforce the provisions of the statutes.

       The  regulations  affecting the Company are  administered  by the EPA and
various other federal,  state and local  environmental,  zoning,  and health and
safety  agencies.  The Company  believes  that it is  currently  in  substantial
compliance with applicable federal,  state and local laws,  permits,  orders and
regulations.   The  Company   believes  there  will  continue  to  be  increased
regulation,  legislation and regulatory enforcement actions related to the solid
waste services industry.  As a result, the Company attempts to anticipate future
regulatory requirements and to plan accordingly to remain in compliance with the
regulatory framework.

       In order to develop and operate a landfill,  a biosolid storage facility,
a transfer  station,  most other solid waste  facilities,  or a hazardous  waste
treatment/storage  facility,  the  Company  must  typically  go through  several
governmental review processes and obtain one or more permits and often zoning or
other  land use  approvals.  Obtaining  these  permits  and  zoning  or land use
approvals is difficult,  time  consuming,  and expensive and is often opposed by
various local elected officials and citizens' groups.  Once obtained,  operating
permits generally must be reviewed  periodically and are subject to modification
and revocation by the issuing agency.

       The  Company's   operating   facilities  are  subject  to  a  variety  of
operational,  monitoring, site maintenance,  closure, post-closure and financial
assurance  obligations  which change from time to time and which could give rise
to increased  capital  expenditures  and operating costs. In connection with the
Company's expansion of its existing or any newly acquired landfills, it is often
necessary to expend  considerable  time, effort, and money in complying with the
governmental review and permitting process necessary to maintain or increase the
capacity  of these  landfills.  Governmental  authorities  have  broad  power to
enforce  compliance with these laws and regulations and to obtain injunctions or
impose civil or criminal penalties in the case of violations. In the

                                       11

<PAGE>


ordinary  course of its  landfill,  transfer  station  and TSF  operations,  the
Company has from time to time received notices from regulatory  authorities that
its operations may not be in compliance  with certain  applicable  environmental
laws and  regulations.  Upon  receipt  of any  notices,  the  Company  generally
cooperates  with the  authorities  in an attempt to resolve the issues raised by
such  notices  and pays the  agreed  upon fine or  penalty,  if any.  Failure to
correct  the  problems  to the  satisfaction  of the  authorities  could lead to
curtailed operations, fines and penalties or even closure of a landfill or other
facility.

       In order to transport  waste,  it is necessary for the Company to possess
one or more permits  from state or local  agencies.  These  permits also must be
periodically  renewed  and are subject to  modification  and  revocation  by the
issuing agency.

       The  principal   federal,   state  and  local  statutes  and  regulations
applicable to the Company's various operations are as follows:

  The Resource Conservation and Recovery Act of 1976, as amended ("RCRA")

       RCRA   regulates   the   generation,    treatment,   storage,   handling,
transportation,  and  disposal  of solid  waste and  requires  states to develop
programs to ensure the safe  disposal of solid waste.  RCRA divides  solid waste
into two groups, hazardous and nonhazardous.  Wastes are generally classified as
hazardous  if  they  (i)  either  (a)  are  specifically  included  on a list of
hazardous wastes or (b) exhibit certain hazardous characteristics,  and (ii) are
not  specifically  designated as  nonhazardous.  Wastes  classified as hazardous
under RCRA are subject to much  stricter  regulation  than wastes  classified as
nonhazardous.  Among the wastes that are specifically designated as nonhazardous
waste are household waste and "special" waste, including items such as petroleum
contaminated soils, asbestos, foundry sand, shredder fluff and most nonhazardous
industrial waste products.

       The  EPA   regulations   issued  under   Subtitle  C  of  RCRA  impose  a
comprehensive   "cradle  to  grave"   system  for   tracking   the   generation,
transportation,  treatment,  storage  and  disposal  of  hazardous  wastes.  The
Subtitle C  regulations  provide  standards  for  generators,  transporters  and
disposers of hazardous  wastes,  and for the issuance of permits for sites where
such  material  is  treated,  stored or  disposed.  Subtitle C imposes  detailed
operating,   inspection,   training  and  emergency  preparedness  and  response
standards,  as  well  as  requirements  for  manifesting,   record  keeping  and
reporting, facility closure, post-closure and financial responsibilities.  These
regulations  require the Company's  transfer/storage  facilities to  demonstrate
financial  assurance for sudden and nonsudden pollution  occurrences.  Financial
assurance for future closure and post-closure  expenses must also be maintained.
The Company believes that its hazardous waste transportation  activities and its
TSF comply in all material respects with the applicable requirements of Subtitle
C of RCRA.

       In October  1991,  the EPA adopted the Subtitle D  Regulations  governing
solid waste  landfills.  The  Subtitle D  Regulations,  which  generally  became
effective  in October  1993,  include  location  restrictions,  facility  design
standards, operating criteria, closure and post-closure requirements,  financial
assurance  requirements,   groundwater  monitoring   requirements,   groundwater
remediation  standards,  and corrective action  requirements.  In addition,  the
Subtitle D Regulations require that new landfill sites meet more stringent liner
design criteria  (typically,  composite soil and synthetic liners or two or more
synthetic  liners)  designed  to  keep  leachate  out of  groundwater  and  have
extensive  collection  systems to carry away  leachate  for  treatment  prior to
disposal.  Groundwater  monitoring wells must also be installed at virtually all
landfills  to  monitor  groundwater  quality  and,   indirectly,   the  leachate
collection  system  operation.  The Subtitle D Regulations  also require,  where
threshold  test levels are present,  that methane gas  generated at landfills be
controlled  in a manner that  protects  human health and the  environment.  Each
state is required to revise its landfill  regulations to meet these requirements
or such  requirements  will be  automatically  imposed upon it by the EPA.  Each
state is also  required  to  adopt  and  implement  a  permit  program  or other
appropriate  system to ensure that  landfills  within the state  comply with the
Subtitle D Regulations  criteria.  Wisconsin  and various  states into which the
Company has  entered,  or may enter,  have  adopted  regulations  or programs as
stringent as, or more stringent  than,  the Subtitle D Regulations.  The Company
believes that all of its present  landfill  operations  are in  compliance  with
current  applicable  state and federal  Subtitle D  Regulations  in all material
respects.

                                       12

<PAGE>


  The Federal Water Pollution Control Act of 1972, as amended ("Clean Water
  Act")

       The  Clean  Water Act  establishes  rules  regulating  the  discharge  of
pollutants  from a variety of sources,  including solid waste disposal sites and
transfer  stations,  into waters of the United States.  If surface water run off
from the Company's  landfills or transfer  stations is discharged  into streams,
rivers or other surface waters, the Clean Water Act would require the Company to
apply for and obtain a discharge  permit,  conduct  sampling and monitoring and,
under  certain  circumstances,   reduce  the  quantity  of  pollutants  in  such
discharge.  Also,  virtually all landfills are required to comply with the EPA's
storm water  regulations  issued in November 1990, which are designed to prevent
possibly  contaminated  landfill  storm water  runoff from  flowing into surface
waters.  The Company  believes  that its  facilities  are in  compliance  in all
material respects with Clean Water Act requirements,  particularly as they apply
to treatment and discharge of storm water.  The Company  believes it has secured
or has applied for all material required discharge permits under the Clean Water
Act or  comparable  state-delegated  programs.  In  those  instances  where  the
Company's  applications for discharge  permits are pending and a final discharge
permit has not been issued, the Company believes it is in substantial compliance
with  the  applicable  substantive  state  standards  in  its  market  areas  in
administering the Clean Water Act.

  The Comprehensive Environmental Response, Compensation and Liability Act of
  1980, as amended ("CERCLA")

       CERCLA  establishes a regulatory and remedial program intended to provide
for the investigation and cleanup of facilities from which there has been, or is
threatened, a release of any hazardous substance into the environment.  CERCLA's
primary  mechanism  for  remedying  such  problems is to impose strict joint and
several  liability for cleanup of facilities on current  owners and operators of
the site, former owners and operators of the site at the time of the disposal of
the hazardous substances,  as well as the generators of the hazardous substances
and  the  transporters  who  arranged  for  disposal  or  transportation  of the
hazardous substances.  The costs of CERCLA investigation and cleanup can be very
substantial.  Liability  under  CERCLA  does not depend  upon the  existence  or
disposal of "hazardous  waste" as defined by RCRA,  but can also be founded upon
the  existence  of even  very  small  amounts  of the more  than 700  "hazardous
substances" listed by the EPA, many of which can be found in household waste. If
the Company were to be found to be a responsible party for a CERCLA cleanup, the
enforcing agency could hold the Company, or any other generator, transporter, or
the  owner  or  operator  of  the  facility,   completely  responsible  for  all
investigative  and  remedial  costs even if others  may also be liable.  CERCLA,
however,  provides  a  responsible  party with the right to bring  legal  action
against other responsible parties for their allocable share of investigative and
remedial  costs.  The Company's  ability to get others to reimburse it for their
allocable share of such costs would be limited by the Company's  ability to find
other responsible  parties and prove the extent of their  responsibility  and by
the  financial  resources  of such other  parties.  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 into the  environment and
which require  investigation  or cleanup.  In addition,  CERCLA  authorizes  the
imposition  of a lien in  favor of the  United  States  upon  all real  property
subject to, or affected by, a remedial action for all costs for which a party is
liable.

  The Clean Air Act

       Through state implementation of federal  requirements,  the Clean Air Act
provides for regulation of the emission of air pollutants from certain landfills
based  upon  the  date  of  the  landfill   construction,   reconstruction,   or
modification, and volume of emissions of regulated pollutants or capacity of the
landfill.  The EPA has issued new source  performance  standards  regulating air
emissions of methane and  non-methane  organic  compounds from  municipal  solid
waste landfills with certain  capacity,  constructed or reconstructed  after May
1991.  States are required to develop  regulations  for  landfills  that existed
prior to that date and the  regulations  are in various stages of development in
the states  where the  Company  operates.  The state  regulations  will  require
installation of pollution controls for pre-1991 landfills that emit over certain
amounts of non-methane  organic  compounds.  In addition to these  requirements,
landfills  may  be  subject  to  more  extensive  pollution  controls,  emission
limitations,  and  pre-construction  permitting  requirements,  depending on the
amount of air

                                       13

<PAGE>


pollutants the landfill emits or has the potential to emit;  these  requirements
are more stringent for landfills  located in areas with air pollution  problems.
Some states may  require a permit to install  pollution  controls at  landfills,
particularly  gas  extraction  and  flaring  systems.  The EPA has  also  issued
standards to regulate the disposal of  asbestos-containing  wastes. The landfill
may be required to obtain a federal  operating  permit  under Title V.  Finally,
future  regulations  under  development  by EPA for the control of  emissions of
hazardous air  pollutants  from  landfills  may apply;  EPA plans to issue these
rules in November 2000.

  The Occupational Safety and Health Act of 1970, as amended ("OSHA")

     OSHA  authorizes  the  Occupational  Safety  and Health  Administration  to
promulgate   occupational   safety  and  health  standards.   Various  of  these
promulgated  standards,  including  standards for notices of hazards,  safety in
excavation, and the handling of asbestos, may apply to the Company's operations.
The Company has no direct involvement in asbestos removal or abatement projects.
However,  asbestos-containing  waste  materials  are  accepted at certain of the
Company's  landfills that are authorized to accept such  materials,  and some of
the Company's collection operations receive  asbestos-containing waste materials
that have already been packaged and labeled.  These packages are loaded onto the
Company's  vehicles by  employees  of the  asbestos  abatement  contractors  for
transportation   to  and  disposal  at  the  Company's   authorized   landfills.
Accordingly,  OSHA  regulations  designed  to  minimize  employees'  exposure to
airborne  asbestos  fibers  and  provide  employees  with  proper  training  and
protection generally apply to the Company's operations in the transportation and
handling of the asbestos waste.  The Company's  employees are trained to respond
appropriately  in the  event  there is an  accidental  spill or  release  of the
packaged   asbestos-containing   materials  during  transportation  or  landfill
disposal.

  State and Local Regulations

     Each state in which the Company currently  operates,  or may operate in the
future, has laws and regulations governing the generation,  storage,  treatment,
handling,  transportation,  and disposal of solid and hazardous waste, water and
air pollution and, in most cases, the siting,  design,  operation,  maintenance,
closure and post-closure  maintenance of landfills and other solid and hazardous
waste management facilities. In addition, many states have programs that require
investigation and clean up of sites containing  hazardous  materials in a manner
comparable to CERCLA.  These statutes impose  requirements for investigation and
cleanup of  contaminated  sites and liability  for costs and damages  associated
with such sites,  and some provide for the imposition of liens on property owned
by responsible parties.  Furthermore,  many municipalities also have ordinances,
local laws, and regulations  affecting the Company's  operations.  These include
zoning and health  measures  that limit solid  waste  management  activities  to
specified  facilities,  laws that grant the right to  establish  franchises  for
collection  services  and then put out for bid the right to  provide  collection
services,  and bans or other restrictions on the movement of solid wastes into a
municipality.

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

     In  addition,  certain  states and  localities  may for  economic  or other
reasons  restrict the  exportation of waste from their  jurisdiction  or require
that a  specified  amount of waste be  disposed of at  facilities  within  their
jurisdiction.  In 1994, the United States  Supreme Court held  unconstitutional,
and therefore  invalid, a local ordinance that sought to impose flow controls on
taking waste out of the locality. In response to that decision,
                                       14

<PAGE>


some local  jurisdictions  attempt to flow control through  contractual means as
opposed to through  ordinance means. In certain  circumstances,  flow control by
contract  may be valid.  Additionally,  certain  state  and local  jurisdictions
continue to seek to enforce such restrictions and, in certain cases, the Company
may elect not to challenge such restrictions based upon various  considerations.
In addition, the aforementioned  proposed federal legislation would allow states
and localities to impose certain flow control  restrictions.  These restrictions
could result in the volume of waste going to landfills  being reduced in certain
areas,  which may materially  adversely affect the Company's  ability to operate
its  landfills  at their full  capacity  and/or  affect  the prices  that can be
charged for landfill disposal  services.  These  restrictions may also result in
higher disposal costs for the Company's  collection  operations.  If the Company
were unable to pass such higher costs  through to its  customers,  the Company's
business,  financial  condition,  and result of  operations  could be materially
adversely affected.

     The permits or other land use approvals with respect to a landfill, as well
as state or local laws and  regulations,  may (i) specify the  quantity of waste
that may be accepted  at the  landfill  during a given time  period  and/or (ii)
specify  the  types  of waste  that may be  accepted  at the  landfill.  Once an
operating permit for a landfill is obtained,  it is generally necessary to renew
the permit periodically.

     There has been an increasing  trend at the state and local level to mandate
and encourage  waste  reduction at the source and to provide waste recycling and
limit or prohibit the disposal of certain  types of solid  wastes,  such as yard
wastes, in landfills. The enactment of regulations reducing the volume and types
of wastes  available  for transport to and disposal in landfills has reduced the
volume of waste disposed of by the Company's continuing  customers.  The Company
has responded to these trends by increasing its emphasis on providing  recycling
services to its customers.

ITEM 2. PROPERTIES.

     The Company owns solid waste landfills,  solid waste collection operations,
recycling  facilities,  solid waste  transfer  facilities,  a TSF, a waste water
treatment plant and other  operating  facilities in Alabama,  Florida,  Georgia,
Illinois, Minnesota, Missouri, New Jersey, Ohio, Pennsylvania, West Virginia and
Wisconsin. The Company leases its various offices and facilities,  including its
executive  offices in Milwaukee under a lease expiring in 2003. The Company also
leases  property  that  provides  access to its Superior  Oak Ridge  landfill in
Ballwin,  Missouri.  See "Business." The real estate owned by the Company is not
subject  to  material  encumbrances.  The  Company  believes  that its  existing
facilities are generally adequate for its current needs and requirements.

ITEM 3. LEGAL PROCEEDINGS.

     In connection  with an  acquisition in March 1993, the Company was required
to accept the  transfer of an  adjacent  closed  landfill  that is listed on the
National  Priorities  List ("NPL").  A remedial  investigation  performed by the
potentially  responsible parties ("PRPs") (including the Company) has determined
the  scope  and  nature  of the  contamination  at the site  and the  PRPs  have
submitted  a  feasibility  study  to the  EPA  and  WDNR,  which  describes  the
alternatives for remediating the associated groundwater contamination.  The WDNR
has formally  approved the remedial  alternative  recommended  by the PRPs which
calls for the installation of two to four additional gas extraction wells (which
would be  connected  to the  existing  gas  extraction  system  at the site) and
continued  groundwater  monitoring.  The estimate of total costs of the remedial
alternative  approved by the WDNR is approximately  $2.8 million,  consisting of
one-time  capital costs for the additional  extractions  wells of $107,000,  and
annual operating, maintenance and monitoring costs for the new extraction wells,
the landfill cap, the existing gas extraction system, and groundwater monitoring
system  estimated at $90,000 per year.  The  operating  duration of the proposed
remediation  is uncertain,  but could be 30 years or longer.  As the duration is
uncertain,  the accrual was not measured on a discounted  basis. The Company has
an accrued liability of approximately  $2.3 million relating to this matter. The
Company has entered into settlement  agreements with certain generator PRPs that
allocates the costs of the remediation.  Under the settlement agreements certain
of the generator  PRPs agreed to contribute to a total of  approximately  42% of
future  costs for remedial  action and the annual  operating,  maintenance,  and
monitoring costs related to the site.
                                       15

<PAGE>


     The seller and former owner of the closed  landfill agreed to indemnify the
Company up to $2.8 million for any site liabilities,  including the annual costs
of operating,  maintaining, and monitoring the closed landfill and any costs the
Company may incur as a PRP. The Company has been paid approximately  $500,000 by
the  seller  as  of  December  31,  1998.  The  seller's   remaining   potential
indemnification  obligation  was  collateralized  as of December  31,  1998,  by
$2,317,245 in cash held in escrow.  On August 15, 1997, an engineer  selected by
the seller determined that the reasonable  present value of the cost of a likely
remediation plan for the closed landfill approximates  $688,000. The Company and
seller are in dispute  regarding the cost of a likely  remedial action plan. The
seller  demanded  arbitration  and filed a declaratory  judgment action in state
circuit court.  The state court entered  judgment on March 23, 1998 finding that
the engineer's  estimate is final and binding on the parties.  On April 30, 1998
the  Company  filed its notice of appeal of the lower  court  judgment  in state
appellate  court.  On December  17, 1998 the  appellate  court issued a decision
reversing  the  judgment  of the trial  court and  directed  that the dispute be
arbitrated. The matter is now before the arbitrator. If the seller's position is
accepted  or upheld in the  pending  proceeding,  the Company may be required to
return to the seller  substantially all or a substantial  portion of the current
amount held in escrow.  The Company has recorded as an asset  approximately $2.3
million that is deemed  probable of recovery from the generator PRPs and through
indemnification  from the seller.  As is the case with all sites on the NPL, the
performance  of the selected  remedy at the closed  landfill  will be subject to
periodic  review by the WDNR and the EPA. In the event the selected  remedy does
not  perform   adequately  to  meet  applicable  state  and  federal  standards,
additional  remedial  measures  beyond  those  currently  anticipated  could  be
required  by the WDNR or EPA.  Implementation  of any such  additional  remedial
measures  may  involve  substantial  additional  costs  beyond  those  currently
anticipated.

     In  connection  with the  formation  of the  Company  in 1993  through  the
consolidation of three groups of independent waste services  companies,  certain
potential  environmental  liabilities  associated  with  the  previously  filled
portion of the Superior Valley Meadows  landfill were  identified.  The range of
possible loss has been estimated not to exceed $1.3 million.  At the time of the
consolidation of these companies into the Company, a contingent liability escrow
was  established to cover the then estimated costs of remediation and monitoring
with respect to the contingent liabilities.  To indemnify the Company against up
to $1,308,000 of these contingent  liabilities,  130,800 shares of the Company's
common stock otherwise  issuable as part of the  consolidation to the individual
who was the principal  shareholder of the prior owner of the site and who is now
a director,  executive officer, and significant shareholder of the Company, were
withheld from  issuance.  In order to preserve the  Company's  rights under this
indemnification  arrangement  prior to the February 24, 1997 expiration date for
advancing such types of  indemnification  claims,  the Company formally notified
the individual of the Company's claim against the withheld shares for the entire
amount of the originally established liability escrow. The Company believes that
the entire amount of such  environmental  liabilities  will either be covered by
the foregoing indemnification arrangement or otherwise is not expected to have a
material  adverse  effect on the  Company's  results of  operations or financial
condition.

     In connection  with the ACMAR Regional  Landfill,  Inc. merger on March 31,
1998, a landfill was acquired which was subject to legal proceedings  brought by
the  local   municipality.   In  October  1996,   the   municipality   filed  an
administrative   appeal   challenging   the  State  of  Alabama   Department  of
Environmental   Management's  ("ADEM")  decision  to  issue  a  landfill  permit
modification. An administrative commission appointed a judge to act as a hearing
officer  to  oversee  the  permit  appeal.  Based  upon  the  hearing  officer's
recommendation,  the administrative  commission in June 1997 unanimously adopted
the recommendation of the hearing officer that the landfill permit  modification
was properly  issued.  Subsequently,  the  municipality  filed an appeal of this
administrative  decision in state circuit court.  While the Company  believes it
will be  successful in defending  the appeal of this  decision,  there can be no
assurance that this appeal will not be determined  adversely to the Company. Any
such adverse decision,  if ultimately  upheld,  could impact the ability of such
landfill to accept any or certain volumes of waste and, in turn, could adversely
effect the Company's results of operations. The Company has landfill assets with
a net book value of $3.8 million at this site.  Separately,  the municipality in
August  1996  filed in Federal  district  court a  citizen's  suit  against  the
landfill  brought  under  provisions  of the RCRA.  The Company does not believe
there is a basis for a claim  supporting the citizen's  suit. In addition to the
Federal  claims,  the  municipality  has alleged  certain state law claims that,
among other things, the prior owners of the landfill  misrepresented the geology
and hydrogeology
                                       16

<PAGE>


of an expansion portion of the landfill,  allegedly inducing the municipality to
grant local approval for the expansion of the landfill. This local approval is a
prerequisite  for  issuance  of  the  ADEM  solid  waste  permit.  Prior  to the
acquisition  of this  landfill,  the prior  owners  were  engaged in  settlement
negotiations  with the  municipality  regarding  these  proceedings.  Since  the
acquisition,  the  Company  has  met  with  municipal  officials  and  presented
settlement offers that the municipality  currently has under consideration.  The
Company  believes that the ultimate  resolution  of the  citizen's  suit and the
municipality's  state law claims will not have a material  adverse effect on the
Company's financial condition or results of operations.

     As part of the Company's  PenPac  acquisition  on September  30, 1998,  the
Company acquired Nicholas Enterprises, Inc. ("Nicholas"). Prior to the Company's
acquisition of PenPac, Nicholas was named as a defendant in litigation commenced
pursuant to the New Jersey Spill Compensation and Control Act and was named as a
PRP commenced pursuant to the Comprehensive Environmental Response, Compensation
and Control Act  ("CERCLA"  or  "Superfund"),  respectively,  at two sites:  (i)
Sharkey's  Landfill in  Parsippany--Troy  Hills Township,  New Jersey,  and (ii)
Cortese Landfill in the Hamlet of  Narrowsburg--Town of Tusten, New York. During
1998,  Nicholas  entered  into a Hardship  Buyout  Agreement  pertaining  to the
Sharkey Landfill, whereby Nicholas was released from its liability regarding the
site in  exchange  for  remitting  $300,000  of  insurance  proceeds  and  other
additional  assessments  up to  $50,000.  During  1994,  Nicholas  agreed to pay
$200,000 to the State of New York in final settlement of its share of past costs
at the Cortese Landfill. This amount has been paid. Nicholas has requested,  but
not yet received,  release of liability for any subsequent costs related to this
site.  Under the terms of the  acquisition  agreement for  Nicholas,  its former
shareholders have agreed to indemnify the Company,  to the extent not covered by
insurance,  for all claims  arising from any liability at or related to disposal
of waste at these sites.

     The Company  carries a range of insurance,  including a commercial  general
liability policy and a property damage policy.  The Company  maintains a limited
environmental impairment liability policy on its landfills and transfer stations
that provides  coverage,  on a "claims made" basis,  against certain third party
off-site  environmental  damage.  There  can be no  assurance  that the  limited
environmental  impairment  policy  will  remain in place or  provide  sufficient
coverage for existing,  but not yet known, third party,  off-site  environmental
liabilities. The Company is also a party to various legal proceedings arising in
the normal course of business. The Company believes that the ultimate resolution
of these other matters will not have a material  adverse effect on the Company's
financial condition or result of operations.

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

     No matters were  submitted to a vote of the Company's  shareholders  during
the fourth quarter of 1998.

                                       17

<PAGE>




                                     PART II

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

     The Company's  Common Stock is traded on the Nasdaq  National  Market under
the symbol "SUPR". The following table sets forth the range of high and low sale
prices for the Common Stock for the past two years. The prices below may reflect
interday trading prices and may include  intradealer  prices without retail mark
up, mark down, or commission and may not reflect actual transactions.

                                                           HIGH         LOW
                                                           ----        -----
1997                                                                  
First quarter ended March 31, 1997.....................    $24         $17
Second quarter ended June 30, 1997.....................    $23 3/4     $20 1/8
Third quarter ended September 30, 1997.................    $29         $22 3/4
Fourth quarter ended December 31, 1997.................    $29 1/2     $20 7/8
1997                                                                  
First quarter ended March 31, 1998.....................    $31 7/8     $24 11/16
Second quarter ended June 30, 1998.....................    $33 3/8     $28 1/2
Third quarter ended September 30, 1998.................    $30 3/8     $24 7/8
Fourth quarter ended December 31, 1998.................    $27 1/4     $17 1/4
                                                             
     At March 1, 1999, there were approximately  1,050 shareholders of record of
the Company's common stock and, based on security position listings, the Company
believes it has in excess of 6,500 beneficial owners.

     The Company has never paid cash  dividends  on its Common  Stock and has no
present intention to pay cash dividends.  In addition,  the Company's  revolving
credit facility  prohibits the payment of cash dividends on its Common Stock. It
is the  Company's  intention to retain  earnings to finance the expansion of its
business.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA.

     The following table presents selected consolidated statement of operations,
balance  sheet,  and  other  operating  data  of the  Company  for  the  periods
presented. The following selected financial and operating data were derived from
the  Company's  consolidated  financial  statements,  which have been audited by
Ernst & Young LLP, independent  auditors.  The selected  consolidated  financial
data below should be read in conjunction with the Company's audited consolidated
financial statements and notes thereto at December 31, 1997 and 1998 and for the
three years in the period  ended  December  31,  1998 and "Item 7.  Management's
Discussion and Analysis of Financial  Condition and Results of  Operations.  All
financial  data for 1994  through 1998 have been  restated and give  retroactive
effect to  reflect  the  Company's  merger  with  Resource  Recovery  Transfer &
Transportation,  Inc.  ("R(2)T(2)")  completed on June 27, 1997;  Alabama  Waste
Services,  Inc. and ACMAR Regional Landfill, Inc. (collectively "AWS") completed
on March 31, 1998; South Lake Refuse Service,  Inc. and Commercial Refuse,  Inc.
(collectively "South Lake") completed on August 17, 1998; Gopher Disposal, Inc.,
Eagle  Environmental,  Inc., Materials Recovery,  Ltd., Newport Properties,  and
Watson's Rochester Disposal,  Inc.  (collectively  "Gopher") completed on August
26, 1998; Wilson Waste Systems,  Inc.  ("Wilson")  completed on August 31, 1998;
PenPac, Inc., Heritage Recycling, Inc., Iorio Carting, Inc., ACS Services, Inc.,
Recycling Techniques, Inc., Advanced Waste Technologies,  Inc., Baray, Inc., and
Nicholas Enterprises,  Inc.  (collectively  "PenPac") completed on September 30,
1998; and GeoWaste Incorporated  ("GeoWaste") completed on October 30, 1998, and
all  accounted  for using the pooling of  interests  method  except 1995 was not
restated to include the accounts and operation of Wilson and

                                       18

<PAGE>


periods  prior to 1995  have not been  restated  to  include  the  accounts  and
operation  of  R(2)T(2),  or  Wilson  as  combined  results  are not  materially
different from the results as previously presented.

<TABLE>
<CAPTION>
                                                            YEARS ENDED DECEMBER 31, (1)
                                              --------------------------------------------------------
                                                1994        1995        1996        1997        1998
                                              --------    --------    --------    --------    --------
                                                      (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                           <C>         <C>         <C>         <C>         <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................................    $119,395    $145,295    $180,720    $253,241    $319,673
Cost of operations........................      74,375      78,613      99,150     144,377     184,964
Selling, general and administrative
  expenses................................      24,158      26,086      30,416      38,458      40,224
Merger costs (2)..........................          --          --          --       1,035      10,599
Unusual charges (3).......................          --          --          --       2,873          --
Depreciation and amortization.............      14,108      19,691      24,389      32,397      39,121
                                              --------    --------    --------    --------    --------
Operating income from continuing
  operations..............................       6,754      20,905      26,765      34,101      44,765
Interest expense..........................      (3,435)     (4,349)     (2,617)     (3,440)     (3,116)
Other income..............................       2,247       1,675       2,069       1,888         912
                                              --------    --------    --------    --------    --------
Income from continuing operations before
  income taxes............................       5,566      18,231      26,217      32,549      42,561
Income taxes..............................       1,203       6,382       9,814      12,912      22,060
                                              --------    --------    --------    --------    --------
Income from continuing operations.........       4,363      11,849      16,403      19,637      20,501
Income (loss) from discontinued
  operations, net of income tax (4).......      (5,735)       (329)         --          --          --
                                              --------    --------    --------    --------    --------
Net income (loss).........................    $ (1,372)   $ 11,520    $ 16,403    $ 19,637    $ 20,501
                                              ========    ========    ========    ========    ========
Earnings (loss) per share:
     Basic................................    $  (0.07)   $   0.52    $   0.65    $   0.70    $   0.64
                                              ========    ========    ========    ========    ========
     Diluted (5)..........................    $  (0.07)   $   0.51    $   0.64    $   0.69    $   0.63
                                              ========    ========    ========    ========    ========
OTHER OPERATING DATA:
EBITDA (6)................................    $ 20,862    $ 40,596    $ 51,154    $ 66,498    $ 83,886

<CAPTION>
                                                                    DECEMBER 31,
                                              --------------------------------------------------------
                                                1994        1995        1996        1997        1998
                                                ----        ----        ----        ----        ----
                                                                   (IN THOUSANDS)
<S>                                           <C>         <C>         <C>         <C>         <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................    $  4,732    $  8,807    $ 23,657    $ 44,955    $  9,715
Working capital...........................      12,920       7,004      10,956      39,533      13,759
Property and equipment, net...............     104,491     113,393     149,226     251,414     312,497
Total assets..............................     166,676     179,166     256,183     442,855     526,842
Long-term debt, net of current
  maturities..............................      50,456      35,157      18,815      27,215      66,284
Total common shareholders' investment.....      46,981      55,886     133,271     285,384     316,742
------------
(1) All  financial  data for the period  ending on  December  31,  1994 has been
    restated to reflect separately the results of discontinued operations.
(2) During  1998,  the  Company  incurred  nonrecurring  merger  costs  totaling
    $10,599,000 in connection  with its mergers with TWR, AWS,  PenPac,  Gopher,
    Wilson,  South  Lake and  GeoWaste.  These  mergers  were  accounted  for as
    poolings  of  interest.  In 1997,  the  Company  completed  its merger  with
    R(2)T(2)  accounted  for as a pooling  of  interest.  The  Company  incurred
    nonrecurring  merger  costs of  $1,035,000  during  1997 as a result  of the
    merger with R(2)T(2).
(3) Prior to their acquisition by the Company, AWS and GeoWaste incurred charges
    classified as unusual. ACMAR Regional Landfill, Inc. negotiated a settlement
    agreement with the United States  Government  with respect to a "Clean Water
    Act"  violation  in  1993  resulting  in  fines  and  restitutions  totaling
    $1,790,000  and was placed on  probation  for three  years.  This amount was
    accrued for in the

                                       19

<PAGE>


    December  31, 1997  financial  statements.  As  provided  in the  settlement
    agreement,  its probation  was  terminated as a result of the payment of the
    fine and its merger with the Company on March 31,  1998.  Additionally,  AWS
    incurred legal fees included in selling, general and administrative costs of
    $342,000 during 1997 in connection with this matter.  During 1997,  GeoWaste
    terminated an existing transfer,  transportation and disposal agreement with
    the City of St. Augustine.  Due to the termination of the agreement,  assets
    related  specifically  to the  project  for the City of St.  Augustine  were
    impaired and the related  expense of $436,000 was  classified  as an unusual
    charge. Additionally, the Company incurred legal, consulting and other costs
    to terminate  the  agreement of $647,000  which were  classified  as unusual
    charges.  These unusual charges amounted to approximately $0.10 per share in
    1997.
(4) Includes estimated losses on disposition of discontinued operations,  net of
    income taxes of $5,042,000 and $329,000 for 1994 and 1995, respectively.
(5) The  earnings  per share  excluding  the merger  costs and  unusual  charges
    described  above;  excluding  cumulative  deferred tax  provisions for those
    companies that were S Corporations prior to acquisition by the Company;  and
    including  Federal  and State  income  tax  provisions  as if the  Companies
    reported as C Corporations would be $0.75 in 1997 and $0.96 in 1998.
(6) EBITDA is defined as  operating  income  from  continuing  operations,  plus
    depreciation   and   amortization.   EBITDA  should  not  be  considered  an
    alternative  to  (i)  operating  income  or net  income  (as  determined  in
    accordance with generally  accepted  accounting  principles  ("GAAP")) as an
    indicator of the  Company's  operating  performance  or (ii) cash flows from
    operating activities (as determined in accordance with GAAP) as a measure of
    operating performance or liquidity. However, the Company has included EBITDA
    data (which are not a measure of financial  performance  under GAAP) because
    it  understands  that such data are  commonly  used by certain  investors to
    evaluate a Company's  performance in the solid waste industry.  Furthermore,
    the Company  believes that EBITDA data are relevant to an  understanding  of
    the  Company's  performance  because they reflect the  Company's  ability to
    generate  cash  flows  sufficient  to  satisfy  its  debt  service,  capital
    expenditure  and  working  capital   requirements.   The  Company  therefore
    interprets  the trends that EBITDA  depicts as one measure of the  Company's
    operating performance. However, funds depicted by the EBITDA measure may not
    be available for debt service, capital expenditures,  or working capital due
    to legal or functional  requirements to conserve funds or other  commitments
    or  uncertainties.  EBITDA,  as  measured  by  the  Company,  might  not  be
    comparable  to  similarly   titled  measure  reported  by  other  companies.
    Therefore, in evaluating EBITDA data, investors should consider, among other
    factors:  the non-GAAP nature of EBITDA data;  actual cash flows; the actual
    availability  of funds for debt service;  capital  expenditures  and working
    capital;  and the  comparability  of the Company's  EBITDA data to similarly
    titled measures reported by other companies.
</TABLE>

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

GENERAL

     Superior  provides  solid  waste  collection,   transfer,   transportation,
recycling  and  disposal  services to customers  in Alabama,  Florida,  Georgia,
Illinois, Michigan,  Minnesota,  Missouri, New Jersey, Ohio, Pennsylvania,  West
Virginia  and  Wisconsin.  The Company  also  provides  other  integrated  waste
services,  most of which are project-based and many of which provide  additional
waste  volumes  to the  Company's  landfills  and  recycling  facilities.  As of
December  31, 1998,  solid waste  operations  consisted of 19 Company  owned and
operated  landfills  (including a greenfield  landfill),  4 managed  third party
landfills, 45 solid waste collection operations,  15 recycling facilities and 19
solid waste transfer stations.

                                       20

<PAGE>




     As described  more fully below,  revenues  for the periods  presented  were
comprised of fees received for the following services:
                                                           1996    1997    1998
                                                            ----    ----    ----
Collection..............................................     61%     60%     61%
Disposal................................................     19%     20%     20%
Recycling...............................................      8%      9%      7%
Other integrated waste services.........................     12%     11%     12%
                                                            ----    ----    ----
                                                            100%    100%    100%
                                                            ====    ====    ====

     The Company's  strategy for future growth  anticipates  additional  revenue
resulting  from its  acquisition  program and  continued  internal  growth.  The
Company acquired businesses with estimated annualized revenues of more than $140
million in 1998. The  percentage of revenue  obtained from  collection  services
increased  to 61% in 1998  compared  to 60% in 1997 due to a greater  portion of
revenue  being  generated  from  collection  operations  acquired.  The  Company
believes  that future  operations  acquired  will move its revenue mix away from
recycling  and other  integrated  waste  services and more  towards  solid waste
collection and disposal.

     All  financial  data for 1996,  1997,  and 1998 have been restated and give
retroactive  effect to reflect the  Company's (i) June 27, 1997  acquisition  of
R(2)T(2);  (ii)  March 31,  1998  acquisition  of AWS;  (iii)  August  17,  1998
acquisition  of South  Lake;  (iv) August 26, 1998  acquisition  of Gopher;  (v)
August 31, 1998  acquisition of Wilson;  (vi) September 30, 1998  acquisition of
PenPac;  and (vii)  October 30,  1998  acquisition  of GeoWaste in  transactions
accounted for as pooling of interests.

RESULTS OF OPERATIONS

     The information  below reflects pro forma net income which includes federal
and state income tax provisions  for 1997 and 1998 as if AWS,  Gopher and PenPac
had been taxable  entities,  and excludes the cumulative  deferred tax provision
for AWS, Gopher and PenPac which were  Subchapter S Corporations  prior to their
acquisition.  Adjusted net income  excludes  merger costs incurred in connection
with accounted for as poolings of interest,  as well as unusual charges incurred
during 1997 related to the termination of an agreement and settlement of a Clean
Water Act dispute with the United  States  Government.  See Note #3 "Mergers and
Acquisitions"  in the  Notes  to  Consolidated  Financial  Statements  for  more
detailed explanations of these costs.

<TABLE>
<CAPTION>
                                                                      SUMMARY FINANCIAL DATA
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                     YEAR ENDED DECEMBER 31,
                                                            ------------------------------------------
                                                               1997        PER                   PER
                                                            (RESTATED)    SHARE       1998      SHARE
                                                            ----------    ------    --------    ------
<S>                                                          <C>          <C>       <C>         <C>
Revenue.................................................     $253,241         --    $319,673        --
Net Income, as reported.................................     $ 19,637     $ 0.69    $ 20,501    $ 0.63
Pro forma adjustments:
  Adjustment for income taxes...........................       (1,324)     (0.05)       (620)    (0.02)
                                                             --------     ------    --------    ------
Pro forma net income....................................       18,313       0.64      19,881      0.61
Adjustments:
  Adjustment for deferred income taxes..................           --         --       2,686      0.08
  Merger costs, net of tax..............................          762       0.03       8,681      0.27
  Unusual charges, net of tax...........................        2,258       0.08          --        --
                                                             --------     ------    --------    ------
Adjusted net income, exclusive of merger costs, unusual
  charges and cumulative deferred tax provisions........     $ 21,333     $ 0.75    $ 31,248    $ 0.96
                                                             ========     ======    ========    ======
</TABLE>

                                       21

<PAGE>


  Overview

     In 1998,  revenues  increased  26.2% to $319.7  million  compared to $253.2
million in 1997. Income from operations increased 31.3% to $44.8 million in 1998
from $34.1 million in 1997.  Diluted  earnings per share decreased 8.7% to $0.63
for 1998 from $0.69 per share for 1997. Diluted earnings per share excluding the
effect of merger costs, nonrecurring items and the cumulative effect of deferred
tax adjustments  increased 28.0% to $0.96 per share in 1998 from $0.75 per share
in 1997. The weighted average of common and common equivalent shares outstanding
was 32.6 million for 1998 and 28.4 million for 1997.

     The following  table sets forth for the years  indicated the  percentage of
revenues  represented  by the individual  line items  reflected in the Company's
consolidated statements of operations:

<TABLE>
<CAPTION>
                                                                                     PERIOD-TO-PERIOD
                                                     PERCENTAGE RELATIONSHIP TO     CHANGE YEARS ENDED
                                                           TOTAL REVENUES              DECEMBER 31,
                                                      YEARS ENDED DECEMBER 31,     --------------------
                                                     --------------------------    1997 VS.    1998 VS.
                                                      1996      1997      1998       1996        1997
                                                     ------    ------    ------    --------    --------
<S>                                                  <C>       <C>       <C>       <C>         <C>
Revenues.........................................    100.0%    100.0%    100.0%     40.1 %      26.2 %
Cost of operations...............................      54.9      57.0      57.9     45.6 %      28.1 %
Selling, general and administrative expenses.....      16.8      15.2      12.6     26.4 %       4.6 %
Merger costs.....................................        --       0.4       3.3        N/A*        N/M**
Unusual charges..................................        --       1.1        --        N/A*        N/A*
Depreciation and amortization....................      13.5      12.8      12.2     32.8 %      20.8 %
                                                     ------    ------    ------     ------     -------
Operating income.................................      14.8      13.5      14.0     27.4 %      31.3 %
Interest expense.................................     (1.4)     (1.3)     (1.0)     31.4 %      (9.4)%
Other income.....................................       1.1       0.7       0.3     (8.7)%     (51.7)%
                                                     ------    ------    ------     ------     -------
Income from operations before income taxes.......      14.5      12.9      13.3     24.2 %      30.8 %
Income taxes.....................................       5.4       5.1       6.9     31.6 %      70.8 %
                                                     ------    ------    ------     ------     -------
Income from operations...........................      9.1%      7.8%      6.4%     19.7 %       4.4 %
                                                     ======    ======    ======     ======     =======

------------
 * N/A not applicable
** N/M not meaningful
</TABLE>

  Revenues

     Revenues increased approximately $66.5 million, or 26.2%, to $319.7 million
in 1998 from $253.2  million in 1997 due  primarily to the impact of  operations
acquired  which were  accounted  for under the  purchase  method of  accounting.
During 1998,  the Company  acquired or merged with 31 businesses  with estimated
annualized  revenues of  approximately  $140  million.  The Company  expects its
revenues and income from  operations  to increase in 1999 in comparison to those
reported  historically due to the inclusion of a full year of revenue and income
in 1999 from  these  acquired  businesses,  as well as a result  of its  ongoing
acquisition  program.  The  increase  in revenue  was also due, to a much lesser
extent,  to  increases  in volumes of wastes  collected  and  disposed of at the
Company's   landfills.   Internal   growth  from  sales   activities   increased
approximately  6% over 1997 primarily due to increased  volumes.  Daily disposal
volume at the Company's  landfills  rose to an average of  approximately  15,100
tons per day in 1998  compared to an average of 11,500 tons per day in 1997,  as
restated.  The Company expects to continue to increase  disposal volumes in 1999
due primarily to the inclusion of a full year of disposal  income from landfills
acquired during 1998 and continued internal sales growth activities.

     Revenues increased approximately $72.5 million, or 40.1%, to $253.2 million
in 1997 from $180.7  million in 1996 due  primarily to the impact of  operations
acquired  which were  accounted  for under the  purchase  method of  accounting.
During 1997,  the Company  acquired or merged with 26 businesses  with estimated
annualized  revenues of approximately  $75 million.  The increase in revenue was
also due, to a much lesser extent,  to increases in volumes of wastes  collected
and disposed at the Company's  landfills.  Internal growth from sales activities
increased  5% over 1996,  exclusive  of the impact of an increase in  recyclable
commodity

                                       22

<PAGE>


prices which caused an approximately  1% increase in total revenues  compared to
the previous year.  Daily disposal volume at the Company's  landfills rose to an
average of  approximately  11,500 tons per day in 1997 compared to an average of
approximately  8,300 tons per day in 1996,  as  restated.  The  higher  landfill
volume  was  predominantly  the  result  of waste  received  at  disposal  sites
acquired,  as well as  increased  volumes  of  special  waste  streams  from the
Company's project-driven other integrated waste services.

  Cost of Operations

     Cost of operations  increased $40.6 million, or 28.1%, for 1998 compared to
1997.  As a percentage of revenues,  cost of operations  increased to 57.9% from
57.0% in 1997.  The slight  increase in cost of  operations  as a percentage  of
revenues was due to a higher  relative  percentage of business  recognized  from
collection  operations  (which  typically  have higher costs of  operations as a
percentage  of revenues  than  disposal  operations).  Changes in this trend are
dependent on the timing and mix of potential future business  acquisitions,  the
ability to internalize waste streams from new and planned transfer stations, and
the seasonality of the Company's operations.  See "Seasonality." The increase in
the dollar amount of cost of operations was primarily  attributable to the costs
of collecting  and disposing of the  increased  volumes of wastes  received from
services  provided to new  customers,  including the operation of new businesses
acquired.

     Cost of operations  increased $45.2 million, or 45.6%, for 1997 compared to
1996. As a percentage of revenues in 1997, cost of operations increased to 57.0%
compared to 54.9% in 1996. The increase in cost of operations as a percentage of
revenues was due to the higher relative percentage of non-integrated  collection
revenues from  businesses  acquired  resulting in a lower overall  percentage of
waste collected by the Company which is disposed of at its own  facilities.  The
increase in the cost of operations  was primarily  attributable  to the costs of
collecting  and  disposing  of the  increased  volumes of wastes  received  from
services  provided to new  customers,  including the operation of new operations
acquired.

  Merger Costs

     The Company  incurred  nonrecurring  merger  costs of  approximately  $10.6
million during 1998 compared to $1.0 million in 1997, as a result of the mergers
completed with TWR, AWS, South Lake, Gopher,  Wilson, PenPac and GeoWaste during
1998.  The one-time  merger costs included  severance and bonuses,  professional
fees and other related  merger costs.  As of December 31, 1998,  $6.7 million of
the merger costs had been paid with the remaining $3.9 million to be paid during
1999.

  Unusual Charges

     There were no unusual  charges  incurred in 1998  compared to $2.9  million
incurred in 1997.  During 1997,  prior to the merger with the Company,  GeoWaste
terminated an existing transfer, transportation, and disposal agreement. Unusual
charges of $1.1 million were recognized related to assets which were impaired as
a result as well as costs incurred to terminate the agreement. Also during 1997,
AWS  recognized  $1.8 million in an unusual  charge  related to  settlement of a
Clean Water Act dispute with the United States  Government,  prior to its merger
with the Company.

  Selling, General and Administrative Expense ("SG&A")

     SG&A  increased  $1.8  million,  or 4.6%,  for 1998  compared to 1997. As a
percentage of revenues,  SG&A decreased to 12.6% in 1998 from 15.2% in 1997. The
percentage  decline in SG&A was  primarily  due to the  significant  increase in
revenues  acquired without a corresponding  increase in SG&A support  functions,
particularly at the headquarters.  This trend is expected to continue in 1999 as
the Company continues to pursue further SG&A efficiencies.  While SG&A decreased
as a percentage of revenues,  the actual dollars spent to support SG&A functions
increased  primarily due to increased  costs for personnel  necessary to support
service  to new  customers,  including  those  associated  with  the  operations
acquired.

     SG&A  increased  $8.0  million,  or 26.4%,  for 1997 compared to 1996. As a
percentage of revenues,  SG&A decreased to 15.2% in 1997 from 16.8% in 1996. The
percentage  decline  in SG&A was due to the  significant  increase  in  disposal
revenues without a corresponding increase in SG&A support functions. While SG&A

                                       23

<PAGE>


decreased as a percentage of revenues,  the actual dollars  increased  primarily
due to  increased  costs  for  personnel  necessary  to  support  the  Company's
acquisition  program and to service new customers,  including  those  associated
with the operations acquired and increased  expenditures for 6 additional market
development personnel.

  Depreciation and Amortization

     Depreciation  and amortization  increased $6.7 million,  or 20.8%, for 1998
compared to 1997  primarily as a result of increased  depreciation  costs of the
additional assets and businesses  acquired,  increased landfill depletion costs,
and increased goodwill amortization as a result of acquisitions completed during
1998. As a percentage of revenues,  depreciation,  and amortization decreased to
12.2% in 1998  compared  to 12.8% in 1997  reflecting  the change in revenue mix
towards  collection  operations which typically reflect lower  depreciation as a
percentage of revenue as well as lower relative depletion rates at the landfills
resulting from better compaction  rates.  Changes in this trend are dependent on
the timing and mix of potential future business acquisitions and the seasonality
of the Company's operations. See "Seasonality".

     Depreciation  and amortization  increased $8.0 million,  or 32.8%, for 1997
compared to 1996,  primarily as a result of increased  depreciation costs of the
additional assets and businesses  acquired,  increased landfill depletion costs,
and increased goodwill amortization as a result of acquisitions completed during
1997. As a percentage of revenues,  depreciation and  amortization  decreased to
12.8% in 1997  compared to 13.5% in 1996  reflecting  lower  relative  depletion
rates at the landfills resulting from better compaction rates.

  Interest Expense

     Gross interest expense  (exclusive of interest income) decreased  $324,000,
or 9.4%, for 1998 compared to 1997.  Interest  expense in 1998 was lower because
indebtedness  was repaid in September  1997 through the use of proceeds from the
Company's September 1997 follow-on offering. Interest expense as a percentage of
revenues was 1.0% in 1998 and 1.3% in 1997. Interest of $712,000 was capitalized
during 1998 related to landfills under development.

     Interest expense increased  $823,000,  or 31.4%, for 1997 compared to 1996.
Interest  expense as a percentage  of revenues was 1.3% in 1997 compared to 1.4%
in 1996.  The  increase in  interest  expense  was due to the  application  of a
portion of the net proceeds from the Company's September 1997 follow-on offering
later in 1997 compared to the  application of a portion of the net proceeds from
the Company's March 1996 initial public offering to repay  indebtedness  earlier
in 1996.  Interest  of $1.0  million  was  capitalized  during  1997  related to
landfills under development.

  Income Taxes

     The Company's  effective  tax rate  increased to 51.8% for 1998 compared to
39.7% in 1997 and 37.4% in 1996.  The increase in the effective tax rate in 1998
is due to the $2.4 million tax effect of non-deductible  merger costs associated
with  businesses  acquired  and the $2.7  million  tax effect of the  cumulative
deferred  tax  provision  associated  with  the  termination  of  S  Corporation
elections  of merged  companies.  As indicated  in the pro forma  provision  for
income taxes,  income tax would have been $1,324,000 higher in 1997 and $620,000
higher in 1998 had AWS, South Lake Refuse Service,  Inc., Gopher and PenPac (the
Pooled Entities) been C Corporations.  Exclusive of these nondeductible  charges
and cumulative  deferred tax provision,  and including the pro forma tax expense
of the pooled  entities,  the  Company's  effective  tax rate would be 43.7% and
41.3% in 1997 and 1998, respectively.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's  balance sheet at December 31, 1998  reflected  approximately
$9.7 million in cash and cash equivalents  compared to $45.0 million at December
31, 1997. Pending specific application, the Company has invested the unused cash
in short-term interest bearing securities. At December 31, 1998, the Company had
$62.1 million  outstanding  borrowings and approximately $3.9 million in letters
of credit  outstanding  under its $275 million  revolving  credit  facility.  At
December 31, 1998, the ratio of the Company's long-term debt to

                                       24

<PAGE>


total  capitalization  was 17.3%  compared to 8.7% at  December  31,  1997.  The
increase was attributable to the increase in the use of debt during 1998 to fund
the Company's growth through acquisitions.

     The  Company's   principal  strategy  for  future  growth  is  through  the
acquisition of additional solid waste disposal and collection operations. During
1998,  exclusive  of  pooled  company  acquisitions,  the  Company  acquired  22
businesses,  including four operational  landfills,  which were accounted for as
purchases.  Consideration for these  acquisitions was $71.4 million in cash (net
of cash  acquired),  $10.8  million in future  payments  or notes  payable,  and
148,348  shares of Common  Stock.  In  addition,  63,041  shares  were issued in
payment of debt of entities  acquired in 1998.  Also during 1998, as a result of
final valuations pertaining to previous  acquisitions,  $4.4 million in cash was
paid and 194,000  shares of common stock were issued.  Although  there can be no
assurance that the Company will be able to successfully continue its acquisition
program at the same pace as in 1998, the Company intends to fund any such future
acquisitions  through  the  use of  cash,  assumption  of  indebtedness,  future
royalties   and/or  capital  stock.   The  cash  required  to  fund  any  future
acquisitions will likely be provided from one or more of the following  sources:
existing cash balances,  cash flow from operations  and/or  borrowings under the
Company's revolving credit facility. $209.0 million of the $275 million facility
was available at December 31, 1998. The revolving  credit facility  requires the
Company to maintain  certain  financial  ratios and satisfy other  requirements,
including a prohibition  on the payment of cash  dividends.  Availability  under
this  facility is based on the  Company's  cash flow and  leverage.  Interest is
payable  monthly  based on the agent  bank's base rate or  quarterly  based on a
Eurodollar borrowing rate, depending upon how advances are drawn, plus a margin.
The facility matures in September 2003.

     Capital  expenditures  for 1999 currently are expected to be  approximately
$55  million  compared to $52.9  million in 1998.  These  amounts are  primarily
allocated to continued spending for landfill expansions.  The Company intends to
fund future capital expenditures  principally through internally generated funds
and, to a lesser extent,  equipment lease  financing.  In addition,  the Company
also anticipates that it may require substantial additional capital expenditures
to facilitate its growth strategy of acquiring additional solid waste collection
and disposal  businesses.  If the Company is successful in acquiring  additional
landfill  disposal  facilities,  the  Company  may  also  be  required  to  make
significant  expenditures to bring any such newly acquired  disposal  facilities
into compliance with applicable regulatory requirements,  obtain permits for any
such  newly  acquired  disposal  facilities,  or expand the  available  disposal
capacity at any such newly  acquired  disposal  facilities.  The amount of these
expenditures  cannot be  currently  determined,  since  they will  depend on the
nature and extent of any acquired landfill disposal facilities, the condition of
any facilities  acquired and the permitting status of any acquired sites. In the
past, the Company has been able to obtain other types of financing arrangements,
such as equipment lease financing, to fund its various capital requirements. The
Company  believes it can readily access such additional  sources of financing as
necessary to facilitate the Company's growth.

     The Company also has material financial obligations relating to closure and
post-closure  costs or  remediation  of disposal  facilities  it operates or for
which it is or may become responsible. While the precise amounts of these future
obligations  cannot be determined,  at December 31, 1998, the Company  estimated
the total costs (on a current  dollar as opposed to a discounted  present  value
basis) to be  approximately  $160  million  for final  closure of its  operating
facilities and post closure monitoring costs pursuant to applicable  regulations
(generally for a term of 30 to 40 years after final closure), as well as ongoing
remediation.  At December 31, 1998,  the Company had accrued  $50.9  million for
such  projected  costs.  The Company will provide  additional  accruals based on
engineering  estimates of  consumption of permitted  landfill  airspace over the
useful lives of its landfills.

     Net cash  provided  by  operations  for the year ended  December  31,  1998
increased to $51.2  million  from $47.6  million  during 1997.  The increase was
primarily  due to the  increase  in  depreciation  and  amortization,  a noncash
expense,  of $6.7 million between 1997 and 1998.  These increases were offset by
the $4.7 million  decrease in accounts  payable and accrued  expenses as well as
the  increase  in  accounts  receivable  of  $2.2  million  attributable  to the
increased sales volume from operations acquired.

     Net cash used in investing  activities for the year ended December 31, 1998
decreased to $120.3  million from $148.6 million for the year ended December 31,
1997. The decrease was primarily due to $75.8 million of

                                       25

<PAGE>


net cash payments for  businesses  acquired  compared to $113.8 million in 1997.
Purchases of property and equipment increased $14.8 million to $52.9 million for
1998, primarily due to landfill expansions.

     Net cash provided by financing  activities  in the year ended  December 31,
1998 totaled $33.9 million compared to $122.4 million in the year ended December
31, 1997. This decrease  reflected the receipt of $116.7 million in net proceeds
from the  follow-on  offering of the Company's  stock in September  1997 with no
corresponding proceeds during 1998.

QUARTERLY RESULTS

     The following table presents the Company's unaudited consolidated quarterly
results and the percentages of revenues represented by the individual line items
reflected in the Company's consolidated statements of operations for each of the
four  quarters in the years ended  December 31, 1998 and December 31, 1997,  all
restated to give  retroactive  effect to the Company's  acquisitions  during the
periods which were accounted for as poolings of interests.  This information has
been presented on the same basis as the Company's audited consolidated financial
statements  and, in the Company's  opinion,  contains all necessary  adjustments
(consisting only of normal  recurring  accruals) to present fairly the Company's
unaudited  quarterly results when read in conjunction with the Company's audited
consolidated  financial  statements and notes thereto.  These interim  operating
results,  however,  are not necessarily  indicative of the Company's results for
any future period.

<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED
                                        ------------------------------------------------------------------------------
                                           MARCH 31,            JUNE 30,           SEPTEMBER 30,        DECEMBER 31,
                                             1998                 1998                 1998                 1998
                                        ---------------      ---------------      ---------------      ---------------
                                                        (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                     <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>
Revenues..............................  $68,163   100.0%     $81,462   100.0%     $84,255   100.0%     $85,793   100.0%
Expenses:
  Cost of operations..................   39,879    58.5       46,825    57.5       48,086    57.1       50,174    58.5
  Selling general and administrative
    expenses..........................   10,007    14.6        9,667    11.9       10,213    12.1       10,337    12.0
  Merger costs........................    1,543     2.3          315     0.4        5,595     6.6        3,146     3.7
  Depreciation and amortization.......    9,338    13.7        9,977    12.2        9,661    11.5       10,145    11.8
                                        -------   -----      -------   -----      -------   -----      -------   -----
Operating income......................    7,396    10.9       14,678    18.0       10,700    12.7       11,991    14.0
Other income:
  Interest expense....................     (928)   (1.4)        (815)   (1.0)        (554)   (0.7)        (819)   (1.0)
  Other income (expense), net.........      538     0.8          460     0.6          (56)     --          (30)     --
                                        -------   -----      -------   -----      -------   -----      -------   -----
  Income before income taxes..........    7,006    10.3       14,323    17.6       10,090    12.0       11,142    13.0
  Income taxes........................    3,687     5.4        5,676     7.0        7,267     8.6        5,430     6.3
                                        -------   -----      -------   -----      -------   -----      -------   -----
Net income............................  $ 3,319     4.9%     $ 8,647    10.6%     $ 2,823     3.4%     $ 5,712     6.7%
                                        =======              =======              =======              =======
Earnings per share:
      Basic...........................  $  0.10              $  0.27              $  0.09              $  0.18
                                        =======              =======              =======              =======
      Diluted.........................  $  0.10              $  0.26              $  0.09              $  0.18
                                        =======              =======              =======              =======
Adjusted:
  Net income, as adjusted(1)..........  $ 5,041              $ 8,552              $ 9,300              $ 8,355
                                        =======              =======              =======              =======
  Earnings per share, as adjusted--
    diluted(1)........................  $  0.16              $  0.26              $  0.28              $  0.26
                                        =======              =======              =======              =======

                                       26

<PAGE>

<CAPTION>
                                                                      THREE MONTHS ENDED
                                        ------------------------------------------------------------------------------
                                           MARCH 31,            JUNE 30,           SEPTEMBER 30,        DECEMBER 31,
                                             1997                 1997                 1997                 1997
                                        ---------------      ---------------      ---------------      ---------------
                                                        (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                     <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>
Revenues..............................   47,935   100.0       63,882   100.0       71,684   100.0       69,740   100.0
Expenses:
  Cost of operations..................   26,962    56.2       36,235    56.7       41,215    57.5       39,965    57.3
  Selling, general and administrative
    expenses..........................    8,652    18.0        9,686    15.2        9,547    13.3       10,573    15.1
  Merger costs........................       --      --        1,035     1.6           --      --           --      --
  Unusual charges.....................    1,083     2.3           --      --           --                1,790     2.6
  Depreciation and amortization.......    6,554    13.7        7,698    12.1        9,171    12.8        8,974    12.9
                                        -------   -----      -------   -----      -------   -----      -------   -----
Operating income......................    4,684     9.8        9,228    14.4       11,751    16.4        8,438    12.1
Other income:
  Interest expense....................     (668)   (1.4)        (899)   (1.4)      (1,081)   (1.5)        (792)   (1.1)
  Other income (expense), net.........      379     0.8          (28)     --          538     0.8          999     1.4
                                        -------   -----      -------   -----      -------   -----      -------   -----
  Income before income taxes..........    4,395     9.2        8,301    13.0       11,208    15.6        8,645    12.4
  Income taxes........................    1,720     3.6        3,029     4.7        4,038     5.6        4,125     5.9
                                        -------   -----      -------   -----      -------   -----      -------   -----
Net income............................  $ 2,675     5.6%     $ 5,272     8.3%     $ 7,170    10.0%     $ 4,520     6.5%
                                        =======              =======              =======              =======
Earnings per share:
  Basic...............................  $  0.10              $  0.20              $  0.26              $  0.15
                                        =======              =======              =======              =======
  Diluted.............................  $  0.10              $  0.19              $  0.26              $  0.14
                                        =======              =======              =======              =======
Adjusted:
  Net income, as adjusted(1)..........  $ 3,176              $ 5,478              $ 6,559              $ 6,120
                                        =======              =======              =======              =======
  Earnings per share, as adjusted--
    diluted(1)........................  $  0.12              $  0.20              $  0.24              $  0.19
                                        =======              =======              =======              =======


------------
(1) Adjusted  financial  information  is  presented  to  reflect  net income and
    earnings per share exclusive of merger costs and unusual charges incurred in
    connection  with  acquisitions  accounted  for as poolings  of interest  and
    cumulative   deferred  tax  provisions  for  those  companies  that  were  S
    Corporations  prior to acquisition by the Company.  Net income, as adjusted,
    includes  federal  and  state  income  tax  provisions  as if the  companies
    reported as C Corporations.

</TABLE>

SEASONALITY

     The Company's results of operations tend to vary seasonally, with the first
quarter of the year typically generating the least amount of revenues,  and with
revenues higher in the second and third  quarters,  followed by a decline in the
fourth quarter.  This seasonality reflects the lower volume of waste, as well as
decreased revenues from project-based and other integrated waste services during
the fall and winter months,  as well as the operating  difficulties  experienced
during  the  protracted   periods  of  cold  and  inclement   weather  typically
experienced during the winter in the Upper Midwest.  In 1998, revenues increased
during the fourth  quarter  compared to the third  quarter  due to the  revenues
recognized from  operations  acquired by the Company at the end of the third and
the beginning of the fourth quarters,  thereby partially  offsetting the typical
effects of  seasonality.  Also,  certain  operating and other fixed costs remain
relatively  constant  throughout  the  calendar  year,  resulting  in a  similar
seasonality of operating income.

YEAR 2000 INITIATIVE

     The  Company  is  conducting  a  comprehensive  review to  ensure  that all
internal  computer  systems and equipment  are, or prior to the end of 1999 will
be, Year 2000  compliant.  The Company's  Year 2000  readiness plan includes the
following phases: (i) conducting an inventory of the Company's internal systems,
including information technology systems and non-information  technology systems
(which  include  office and  facilities'  environment  related  systems) and the
systems acquired or to be acquired by the Company from third parties;

                                       27

<PAGE>

(ii) assessing and prioritizing any required remediation;  (iii) remediating any
problems by repairing or, if appropriate,  replacing the non-compliant  systems;
(iv)  testing  of all  remediated  systems  for Year  2000  compliance;  and (v)
developing  contingency  plans that may be employed in the event that any system
used by the  Company is  unexpectedly  affected  by an  unanticipated  Year 2000
problem.  The  Company has  completed  its  inventory  phase of this plan and is
actively  engaged in completing  the  remaining  phases.  The Company  currently
expects to complete all phases of this plan and that all  computer  systems will
be Year 2000 complaint before August 31, 1999.

     In addition  to  assessing  its own  systems,  the  Company  has  initiated
communication  with  all of its  vendors,  service  providers  and  third  party
business  partners to assess  their Year 2000  readiness.  The Company  plans to
continue  assessment of its vendors,  service suppliers and third party business
partners to ensure Year 2000 readiness.  Despite the Company's diligence,  there
can be no guarantee that the  non-compliant  systems of other entities which the
Company  relies  upon in its day to day  operations  will  not  have a  material
adverse impact on the Company.  The actual impact on the Company  resulting from
non- compliance of these entities cannot be determined at this time.

     The Company has limited the scope of its risk  assessment  to those factors
which it can  reasonably  be  expected  to  influence.  The Company has made the
assumption   that   government   agencies,   utility   companies   and  national
telecommunication  providers  will continue to operate.  Obviously,  the lack of
such services could have a material impact on the Company's  ability to operate,
but the Company has little, if any, ability to influence such an outcome,  or to
make  alternative  arrangements  in  advance  for  such  services  if  they  are
unavailable.  Additionally, the Company believes that disruptions in the economy
generally  resulting from Year 2000 issues could have a material  adverse impact
on the Company.  The Company could be subject to litigation for computer  system
failures  such as  equipment  shutdown  or failure to properly  update  business
records.  Other potential  consequences  include the inability to accurately and
timely  update  customers'  accounts,   process  financial  transactions,   bill
customers,  report  accurate data to management,  shareholders,  customers,  and
others as well as business  interruptions  and financial  losses.  The amount of
potential  liability  or loss of revenue  to the  Company  cannot be  reasonably
estimated at this time.

     The Company intends to develop  contingency plans within the second quarter
of 1999 to address  Year 2000  problems.  The Company  believes  that this is an
appropriate time frame for developing these  contingency  plans and that efforts
prior to that time should be focused on the  remediation  and testing  phases of
the Company's Year 2000 readiness plan.

     While the Company believes its planning efforts are adequate to address its
Year  2000  concerns,  there  can be no  guarantee  that  the  systems  of other
companies on which the Company's  systems and operations  rely will be converted
on a timely  basis  and will not have a  material  effect  on the  Company.  The
Company currently  estimates that it will cost  approximately  $250,000 to fully
execute its Year 2000  initiative.  Through  December 31, 1998,  the Company has
spent  approximately  $35,000 in connection with Year 2000 issues. All Year 2000
expenditures  are made  from the  Information  Systems  department  budget.  The
percentage of the Information Systems budget during 1999 expected to be used for
Year 2000  remediation  is less than 10%. No Information  Systems  projects have
been deferred due to Year 2000 efforts.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The  Company is exposed to market  risks,  primarily  related to changes in
U.S. interest rates and, to a lesser extent, recyclable prices. The Company does
not engage in financial transactions for trading or speculative purposes.

INTEREST RATE RISK

     The  interest  payable on the  Company's  Credit  Facility  is  affected by
changes in market  interest  rates.  As of December  31,  1998,  the Company had
$62,100,000  outstanding  under the Credit Facility.  Based on borrowings during
1996  through  1998,  a 5%  increase  or  decrease  in the  average  cost of the
Company's Credit Facility debt would not be material.  In addition,  the Company
has fixed income investments consisting of cash

                                       28

<PAGE>


equivalents and short-term investments in marketable debt securities,  which are
also  affected by changes in market  interest  rates.  The Company  does not use
derivative financial instruments in its investment portfolio.

RECYCLABLE PRICES

     The  Company is exposed to  fluctuations  in market  prices for  recyclable
materials. The Company manages its exposure to changes in those prices primarily
through the terms of its wastepaper  purchase  agreement  limiting the impact to
the difference between the market price and the minimum floor resale price.

                                       29

<PAGE>




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors
Superior Services, Inc.

     We have audited the  accompanying  consolidated  balance sheets of Superior
Services,  Inc. (the Company) as of December 31, 1997 and 1998,  and the related
consolidated statements of income,  shareholders' investment, and cash flows for
the three years in the period ended  December 31, 1998.  Our audits also include
the  financial  statement  schedule  listed  in the Index at Item  14(a).  These
financial  statements  and  schedule  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and the schedule based on our audits.  We did not audit the financial
statements of GeoWaste Incorporated (GeoWaste), a wholly owned subsidiary, as of
December  31, 1997 and for the two years then ended,  which  statements  reflect
total  assets of  $32,108,899  as of December 31,  1997,  and total  revenues of
$19,396,772  and  $13,702,708  for the years ended  December  31, 1996 and 1997,
respectively.  Those  statements were audited by other auditors whose report has
been furnished to us and our opinion, insofar as it relates to data included for
GeoWaste, is based solely on the report of the other auditors.

     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 and the report of other auditors provide a reasonable
basis for our opinion.

     In our opinion,  based on our audits and the report of other auditors,  the
financial statements referred to above present fairly, in all material respects,
the  consolidated  financial  position of the  Company at December  31, 1997 and
1998, and the consolidated results of its operations and its cash flows for each
of the three years in the period ended  December 31, 1998,  in  conformity  with
generally  accepted  accounting  principles.  Also, in our opinion,  the related
financial statement schedule, when considered in relation to the basic financial
statements  taken as a whole,  presents  fairly  in all  material  respects  the
information set forth therein.

                                          ERNST & YOUNG LLP

Milwaukee, Wisconsin
February 5, 1999

                                       30

<PAGE>


           REPORT OF PRICEWATERHOUSECOOPERS LLP, INDEPENDENT AUDITORS

The Board of Directors
GeoWaste Incorporated:

     We have audited the  accompanying  consolidated  balance  sheet of GeoWaste
Incorporated  and  Subsidiaries  as of December  31,  1997 and the  consolidated
statements  of  operations,  stockholders'  equity  and cash flows for the years
ended  December 31, 1997 and 1996 (such  financial  statements  are not included
herein).  These consolidated  financial statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

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

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly,  in all material  respects,  the financial  position of GeoWaste
Incorporated  and  Subsidiaries  as of December 31, 1997, and the results of its
operations  and cash flows for the years  ended  December  31,  1997 and 1996 in
conformity with generally accepted accounting principles.

                                          PricewaterhouseCoopers LLP

Jacksonville, Florida
March 24, 1998

                                       31

<PAGE>




                             SUPERIOR SERVICES, INC.

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                     DECEMBER 31
                                                                ----------------------
                                                                  1997         1998
                                                                ---------    ---------
                                                                (IN THOUSANDS, EXCEPT
                                                                 SHARE AND PER SHARE
                                                                       AMOUNTS)
<S>                                                             <C>          <C>
ASSETS
Current assets:
     Cash and cash equivalents..............................    $ 44,955     $  9,715
     Trade accounts receivable..............................      41,921       58,122
     Prepaid expenses and other current assets..............       6,878        5,607
                                                                --------     --------
Total current assets........................................      93,754       73,444
Property and equipment, net.................................     251,414      312,497
Restricted funds held in trust..............................       7,714        1,149
Other assets................................................       4,782        5,529
Intangible assets, net......................................      85,191      134,223
                                                                --------     --------
          Total assets......................................    $442,855     $526,842
                                                                ========     ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
     Current maturities of long-term debt...................    $  9,820     $  5,194
     Trade accounts payable.................................      15,543       18,069
     Accrued payroll and related expenses...................       5,150        4,584
     Other accrued expenses.................................      23,708       31,838
                                                                --------     --------
          Total current liabilities.........................      54,221       59,685
Long-term debt, net of current maturities...................      27,215       66,284
Disposal site closure and long-term care obligation.........      43,329       48,289
Deferred income taxes.......................................      18,858       23,865
Other liabilities...........................................      13,848       11,977
Commitments and contingencies (Note 10) Shareholders' investment:
     Common stock, $.01 par value; 100,000,000 shares
      authorized; 31,438,730 and 32,202,297 issued and
      outstanding in 1997 and 1998, respectively............         315          322
     Additional paid-in capital.............................     236,391      249,023
     Retained earnings......................................      48,678       67,397
                                                                --------     --------
          Total shareholders' investment....................     285,384      316,742
                                                                --------     --------
          Total liabilities and shareholders' investment....    $442,855     $526,842
                                                                ========     ========
</TABLE>

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

                                       32

<PAGE>




                             SUPERIOR SERVICES, INC.

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31
                                                                --------------------------------
                                                                  1996        1997        1998
                                                                --------    --------    --------
                                                                  (IN THOUSANDS, EXCEPT SHARE
                                                                     AND PER SHARE AMOUNTS)
<S>                                                             <C>         <C>         <C>
Revenues....................................................    $180,720    $253,241    $319,673
Expenses:
     Cost of operations.....................................      99,150     144,377     184,964
     Selling, general and administrative expenses...........      30,416      38,458      40,224
     Merger costs...........................................          --       1,035      10,599
     Unusual charges........................................          --       2,873          --
     Depreciation and amortization..........................      24,389      32,397      39,121
                                                                --------    --------    --------
                                                                 153,955     219,140     274,908
                                                                --------    --------    --------
Operating income............................................      26,765      34,101      44,765
Other income (expense):
     Interest expense.......................................      (2,617)     (3,440)     (3,116)
     Other income...........................................       2,069       1,888         912
                                                                --------    --------    --------
Income before income taxes..................................      26,217      32,549      42,561
Provision for income taxes..................................       9,814      12,912      22,060
                                                                --------    --------    --------
Net income..................................................    $ 16,403    $ 19,637    $ 20,501
                                                                ========    ========    ========
Earnings per share:
     Basic..................................................    $    .65    $    .70    $    .64
                                                                ========    ========    ========
     Diluted................................................    $    .64    $    .69    $    .63
                                                                ========    ========    ========
Pro forma adjustments:
     Net income.............................................    $ 16,403    $ 19,637    $ 20,501
     Adjustment for income taxes............................       1,387       1,324         620
                                                                --------    --------    --------
Pro forma net income........................................    $ 15,016    $ 18,313    $ 19,881
                                                                ========    ========    ========
Pro forma earnings per share:
     Basic..................................................    $    .60    $    .66    $    .62
                                                                ========    ========    ========
     Diluted................................................    $    .59    $    .64    $    .61
                                                                ========    ========    ========
</TABLE>

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

                                       33

<PAGE>




                             SUPERIOR SERVICES, INC.

               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT

<TABLE>
<CAPTION>
                                                    COMMON STOCK        ADDITIONAL
                                                --------------------     PAID-IN      RETAINED
                                                  SHARES      AMOUNT     CAPITAL      EARNINGS     TOTAL
                                                ----------    ------    ----------    --------    --------
                                                           (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S>                                             <C>            <C>       <C>          <C>         <C>
Balance at December 31, 1995................    18,847,457     $189      $ 37,922     $17,774     $ 55,885
     Net income.............................            --       --            --      16,403       16,403
     Issuance of common stock:
       Shares sold to public, net of
          offering costs....................     3,532,500       35        37,195          --       37,230
       Acquisitions.........................       114,381        1         8,423          --        8,424
       Conversion of preferred stock........     3,317,890       33        14,967          --       15,000
       Stock options........................       169,863        2         1,520          --        1,522
       Contributions to former S Corporation
          shareholders, net.................            --       --            76      (1,996)      (1,920)
       Tax benefit of stock options.........            --       --           625          --          625
       Other................................       111,156        1           666        (564)         103
                                                ----------     ----      --------     -------     --------
Balance at December 31, 1996................    26,093,247      261       101,394      31,617      133,272
     Net income.............................            --       --            --      19,637       19,637
     Issuance of common stock:
       Shares sold to public, net of
          offering costs....................     4,403,500       44       116,684          --      116,728
       Acquisitions.........................       467,142        5        11,006          --       11,011
       Payment of debt......................        59,114        1         1,278          --        1,279
       Stock options........................       415,727        4         3,513          --        3,517
       Contributions to former S Corporation
          shareholders, net.................            --       --            94      (2,575)      (2,481)
       Tax benefit of stock options.........            --       --         2,141          --        2,141
       Other................................            --       --           281          (1)         280
                                                ----------     ----      --------     -------     --------
Balance at December 31, 1997................    31,438,730      315       236,391      48,678      285,384
     Net income.............................            --       --            --      20,501       20,501
     Issuance of common stock:
       Acquisitions.........................       342,348        3         9,423          --        9,426
       Payment of debt......................        63,041        1         1,635          --        1,636
       Stock options........................       208,178        3         1,722          --        1,725
       Distributions to former S Corporation
          shareholders, net.................            --       --          (339)     (2,074)      (2,413)
       Other................................       150,000       --           191         292          483
                                                ----------     ----      --------     -------     --------
Balance at December 31, 1998................    32,202,297     $322      $249,023     $67,397     $316,742
                                                ==========     ====      ========     =======     ========
</TABLE>

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

                                       34

<PAGE>




                             SUPERIOR SERVICES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER 31
                                                                ----------------------------------
                                                                  1996        1997         1998
                                                                --------    ---------    ---------
                                                                          (IN THOUSANDS)
<S>                                                             <C>         <C>          <C>
OPERATING ACTIVITIES
Net income..................................................    $ 16,403    $  19,637    $  20,501
Adjustments to reconcile net income to net cash provided
   by operating activities:
     Depreciation and amortization..........................      24,389       32,397       39,121
     Deferred income taxes..................................        (358)       1,153        4,858
     Loss (gain) on sale of assets..........................        (504)         181         (389)
     Change in operating assets and liabilities, net of
   effects of  acquired businesses:
          Accounts receivable...............................      (3,390)     (12,519)     (14,764)
          Prepaid expenses and other current assets.........       1,090       (2,413)         781
          Accounts payable and accrued expenses.............       3,339        7,598        2,912
          Disposal site closure and long-term care
            obligation......................................       2,737          462        1,927
          Other.............................................       2,120        1,053       (3,764)
                                                                --------    ---------    ---------
Net cash provided by operating activities...................      45,826       47,549       51,183
INVESTING ACTIVITIES
Acquisition of businesses and landfills under development,
  net of cash acquired......................................     (24,986)    (113,779)     (75,760)
Purchases of property and equipment.........................     (26,768)     (38,085)     (52,888)
Proceeds from sale of discontinued operations...............         562           --           --
Proceeds from sale of property and equipment................       1,729        2,409        1,807
Decrease in restricted funds held in trust..................         172          850        6,565
                                                                --------    ---------    ---------
Net cash used in investing activities.......................     (49,291)    (148,605)    (120,276)
FINANCING ACTIVITIES
Net decrease in short-term borrowings.......................          --       (2,259)      (4,626)
Net proceeds from public stock offering.....................      37,230      116,728           --
Issuance of stock under employee stock plans................       1,522        3,517        1,725
Proceeds from long-term debt................................       8,951       24,658       82,715
Payments of long-term debt..................................     (27,468)     (17,809)     (43,548)
Distributions to former S Corporation shareholders, net.....      (1,920)      (2,481)      (2,413)
                                                                --------    ---------    ---------
Net cash provided by financing activities...................      18,315      122,354       33,853
                                                                --------    ---------    ---------
Net increase (decrease) in cash and cash equivalents........      14,850       21,298      (35,240)
Cash and cash equivalents at beginning of year..............       8,807       23,657       44,955
                                                                --------    ---------    ---------
Cash and cash equivalents at end of year....................    $ 23,657    $  44,955    $   9,715
                                                                ========    =========    =========
</TABLE>

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

                                       35

<PAGE>



                             SUPERIOR SERVICES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1998

1. ORGANIZATION AND BASIS OF PRESENTATION

     Superior  Services,  Inc.  (Superior or the Company) is an integrated waste
management   services  company  providing  a  range  of  collection,   transfer,
transportation, disposal and recycling services to generators of solid waste and
special  waste in Alabama,  Florida,  Georgia,  Illinois,  Michigan,  Minnesota,
Missouri, New Jersey, Ohio, Pennsylvania, West Virginia and Wisconsin.

     The Company has restated its previously issued financial statements for the
years ended December 31, 1996 and 1997 and its consolidated  balance sheet as of
December 31, 1997 to reflect the  acquisition of TWR, Inc.  (TWR),  completed on
March 1, 1998; Alabama Waste Services,  Inc. and ACMAR Regional  Landfill,  Inc.
(collectively,  AWS),  completed on March 31, 1998;  South Lake Refuse  Service,
Inc. and Commercial Refuse, Inc. (collectively, South Lake), completed on August
17, 1998; Gopher Disposal, Inc., Eagle Environmental,  Inc., Materials Recovery,
Ltd., Newport Properties,  and Watson's Rochester Disposal,  Inc. (collectively,
Gopher),  completed on August 26, 1998;  Wilson Waste  Systems,  Inc.  (Wilson),
completed on August 31, 1998;  PenPac,  Inc.,  Heritage  Recycling,  Inc., Iorio
Carting,  Inc., ACS Services,  Inc., Recycling Techniques,  Inc., Advanced Waste
Technologies,  Inc., Baray, Inc., and Nicholas Enterprises,  Inc. (collectively,
PenPac),  completed on September 30, 1998; and GeoWaste Incorporated (GeoWaste),
completed on October 30, 1998, all of which were accounted for using the pooling
of interests  method.  Prior to their merger,  AWS,  South Lake Refuse  Service,
Inc.,  and a substantial  number of companies  comprising  Gopher and PenPac had
each elected S  Corporation  status for income tax  purposes.  Accordingly,  the
individual  income  statements of these entities did not include  provisions for
income taxes.  Pro forma provisions for income taxes are presented for the years
ended  December 31, 1996,  1997 and 1998 and have been computed as if AWS, South
Lake Refuse Service,  Inc., Gopher and PenPac had been C Corporations during all
periods presented.

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

2. ACCOUNTING POLICIES AND SELECTED BALANCE SHEET INFORMATION

  Revenue Recognition

     The  Company  generates  revenue   principally  by  providing   collection,
transportation,  recycling  and  disposal  services to  generators  of solid and
special waste. Revenues are recorded as services are provided. Certain customers
are billed in advance and,  accordingly,  recognition of the related revenues is
deferred until the services are provided.

     The Company grants credit to the majority of its customers.  Potential loss
amounts  associated  with the  granting of credit are  included in  management's
estimate of the allowance for doubtful  accounts,  which totals  $2,524,000  and
$2,639,000 at December 31, 1997 and 1998, respectively.  It is not the policy of
the Company to require collateral from its customers in order to obtain credit.

  Property and Equipment

     Property  and  equipment  are stated at cost.  Depreciation  for  financial
reporting purposes is provided using the straight-line method over the estimated
useful lives of the respective assets.

     Landfill  costs,  including  engineering and other  professional  fees, are
amortized using the  units-of-production  method,  which is calculated using the
total units of airspace  filled  during the year in relation to total  estimated
permitted airspace  capacity.  The determination of airspace usage and remaining
airspace  is an  essential  component  in  the  calculation  of  landfill  asset
depletion.  This  determination  is performed by conducting  annual  topographic
surveys,  using aerial and field survey  techniques  of the  Company's  landfill
facilities to determine  remaining  airspace in each  landfill.  The surveys are
reviewed by the Company's

                                       36

<PAGE>



                             SUPERIOR SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2.  ACCOUNTING  POLICIES AND  SELECTED  BALANCE  SHEET  INFORMATION--(CONTINUED)
consulting   engineers,   the  Company's  internal  engineering  staff  and  its
accounting staff. The reevaluation  process did not significantly impact results
of operations for any year presented.

     Engineering  and legal  fees  paid to third  parties  incurred  to obtain a
disposal  facility  permit are  capitalized as landfill costs and amortized over
the estimated related airspace capacity. These costs are not amortized until the
permit is obtained and operations have commenced. If the Company determines that
the facility cannot be developed, these costs are charged to expense.

  Intangible Assets

     Intangible  assets  primarily  consist  of  goodwill,  customer  lists  and
covenants not to compete  acquired in business  acquisitions.  Goodwill is being
amortized over a 15- to 40-year period.  Customer lists are being amortized over
5- to 10-year  periods.  Covenants not to compete are being amortized over 3- to
10-year  periods.  Should  events  or  circumstances  occur  subsequent  to  the
acquisition  of a business  which bring into  question the  realizable  value or
impairment  of the related  intangible  asset,  the Company  will  evaluate  the
remaining useful life and balance of the asset and make appropriate adjustments.

     Intangible assets consist of the following:

<TABLE>
<CAPTION>
                                                            DECEMBER 31
                                                        -------------------
                                                         1997        1998
                                                        -------    --------
                                                          (IN THOUSANDS)
<S>                                                     <C>        <C>
Goodwill............................................    $86,416    $138,554
Customer lists......................................      2,077       2,997
Covenants not to compete............................      5,791       6,186
Other...............................................      2,327       2,804
                                                        -------    --------
                                                         96,611     150,541
Less accumulated amortization.......................     11,420      16,318
                                                        -------    --------
                                                        $85,191    $134,223
                                                        =======    ========

  Other Accrued Expenses

     Other accrued expenses consist of the following:

<CAPTION>
                                                            DECEMBER 31
                                                         ------------------
                                                          1997       1998
                                                         -------    -------
                                                           (IN THOUSANDS)
<S>                                                      <C>        <C>
Acquisition payments due.............................    $ 6,059    $ 5,279
Real estate and personal property taxes..............      1,126      1,471
Accrued environmental surcharges.....................      1,825      1,932
Liabilities for covenants not-to-compete.............      2,279        234
Deferred revenue.....................................      6,829      9,329
Insurance............................................      1,923      3,095
Litigation settlement costs..........................      1,790         --
Income taxes payable.................................         --      1,791
Accrued merger costs.................................         --      3,880
Closure liability....................................         --      2,601
Other................................................      1,877      2,226
                                                         -------    -------
                                                         $23,708    $31,838
                                                         =======    =======
</TABLE>

                                       37

<PAGE>



                             SUPERIOR SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. ACCOUNTING POLICIES AND SELECTED BALANCE SHEET INFORMATION--(CONTINUED)
  Disposal Site Closure and Long-Term Care

     The  Company has  material  financial  obligations  relating to closure and
post-closure  costs  (long-term  care) or remediation of disposal  facilities it
operates or for which it is or may become responsible. While the precise amounts
of these future  obligations  cannot be  determined,  at December 31, 1998,  the
Company  estimates  the  total  costs  to  be  approximately  $160  million  for
remediation,  final closure of its current operating facilities and post-closure
monitoring costs pursuant to applicable  regulations (generally for a term of 30
to 40 years  after  final  closure).  The  Company's  estimate of these costs is
expressed in current dollars and is not discounted to reflect anticipated timing
of future expenditures.  The Company had accrued  approximately  $43,329,000 and
$50,890,000   for  such   projected   costs  at  December  31,  1997  and  1998,
respectively.  As of December 31, 1998,  $2,601,000 is included in other accrued
expenses,  representing the current portion of this liability.  The Company will
provide  additional  accruals based on  engineering  estimates of consumption of
airspace over the useful lives of the facilities.

     Restricted  funds held in trust at December  31,  1997 and 1998  consist of
amounts on deposit with various  regulatory bodies. The Company also pays annual
premiums to obtain  performance bonds  underwritten by a large insurance carrier
which support the Company's financial  assurance  obligations for its facilities
closure and post-closure costs. These premiums are expensed as incurred.

  Consolidated Statements of Cash Flows

     For purposes of the  consolidated  statements of cash flows, all short-term
investments  with  maturities  of  three  months  or less  are  considered  cash
equivalents.  Supplemental  disclosures of cash flow information for each of the
three years are as follows:

                                                       DECEMBER 31
                                               ----------------------------
                                                1996      1997       1998
                                               ------    -------    -------
                                                      (IN THOUSANDS)
Interest paid..............................    $2,691    $ 3,621    $ 2,789
Income taxes paid..........................     9,584     11,630     14,900

     The effects of noncash  transactions  related to business  combinations are
disclosed in Note 3.

  Fair Value of Financial Instruments

     The  Company's  financial  instruments  consist  primarily of cash and cash
equivalents,  trade  receivables,  investments  in closure  trust  funds,  trade
payables  and debt  instruments.  The book values of cash and cash  equivalents,
trade  receivables,  investments  in closure trust funds and trade  payables are
considered to be  representative  of their  respective fair values.  None of the
Company's debt  instruments  that are  outstanding as of December 31, 1998, have
readily ascertainable market values; however, the carrying values are considered
to  approximate  their  respective  fair  values.  See Note 5 for the  terms and
carrying values of the Company's various debt instruments.

  New Accounting Standards

     In June 1998,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting  for
Derivative  Instruments and Hedging Activities," which is required to be adopted
in years  beginning  after  June 15,  1999.  Because  the  Company  does not use
derivatives,  management  does  not  anticipate  that  the  adoption  of the new
Statement will have a significant  effect on earnings or the financial  position
of the Company.

                                       38

<PAGE>



                             SUPERIOR SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2.   ACCOUNTING  POLICIES AND SELECTED  BALANCE  SHEET  INFORMATION--(CONTINUED)

     Effective January 1, 1998, the Company adopted SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related  Information"  (SFAS No. 131).  SFAS
No. 131 establishes  standards for public companies to report  information about
operating  segments in annual financial  statements and also requires that those
companies  report  selected  information  about  operating  segments  in interim
financial  reports.   SFAS  No.  131  also  establishes  standards  for  related
disclosures  about products and services,  geographic areas and major customers.
The adoption of SFAS No. 131 did not affect  results of  operations or financial
position.

     Effective January 1, 1998, the Company adopted SFAS No. 130, "Comprehensive
Income."  SFAS No.  130  establishes  standards  for  reporting  and  display of
comprehensive   income  and  its   components  in  the   financial   statements.
Comprehensive  income for the  Company is the same as net income in all  periods
presented.

  Use of Estimates

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

  Reclassifications

     Certain 1996 and 1997 amounts have been reclassified to conform to the 1998
presentation.

3. MERGERS AND ACQUISITIONS

     During 1998, the Company completed mergers with TWR, AWS (consisting of two
groups),  South Lake,  Gopher,  Wilson,  PenPac  (consisting  of two groups) and
GeoWaste,  which were accounted for as poolings of interest.  The Company issued
approximately  6.6 million shares of Common Stock in the mergers.  The financial
statements  were not  restated  for the TWR  merger  because  the impact of such
restatement  would not have been  material.  The Company  incurred  nonrecurring
merger costs of  approximately  $10.6 million as a result of these mergers.  The
merger costs include  severance and bonuses,  professional fees and other merger
related costs,  of which  $6,719,000  were paid prior to December 31, 1998, with
substantially  all of the remaining  $3,880,000 to be paid during 1999. Prior to
their merger, AWS, South Lake Refuse Service,  Inc., and a substantial number of
companies comprising Gopher and PenPac had each elected S Corporation status for
income tax purposes.  As a result of the merger, AWS, South Lake Refuse Service,
Inc.,  Gopher and PenPac terminated their S Corporation  elections.  The Company
included a charge of approximately  $2,700,000 in the provision for income taxes
for 1998 representing the cumulative net deferred income tax liability  required
to be recorded upon termination of the S Corporation elections.  As indicated in
the pro forma  provision  for income  taxes,  income tax expense would have been
$1,324,000 higher in 1997 and $620,000 higher in 1998 had AWS, South Lake Refuse
Service, Inc., Gopher and PenPac been C Corporations.

                                       39

<PAGE>



                             SUPERIOR SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

3. MERGERS AND ACQUISITIONS--(CONTINUED)

     Combined  and  separate  results  of  operations  of the  Company  prior to
completion of the 1998 mergers for the restated periods are as follows:

<TABLE>
<CAPTION>
                                     SUPERIOR     AWS     GOPHER    PENPAC    SOUTH LAKE   WILSON   GEOWASTE   COMBINED
                                     --------   -------   -------   -------   ----------   ------   --------   --------
<S>                                  <C>        <C>       <C>       <C>        <C>         <C>      <C>        <C>
Year ended December 31, 1996:
    Revenue........................  $117,121   $12,322   $13,946   $16,753     $3,463     $3,412   $13,703    $180,720
    Income (loss) before income
      taxes........................    20,703     1,191       944       591         12       (207)    2,983      26,217
    Net income (loss)..............    12,163     1,191       944       532        (11)      (124)    1,708      16,403
Year ended December 31, 1997:
    Revenue........................  $177,833   $13,745   $16,713   $18,193     $3,834     $3,526   $19,397    $253,241
    Income (loss) before income
      taxes........................    30,461       640     1,757      (100)        65        (93)     (181)     32,549
    Net income (loss)..............    17,755       640     1,757      (110)        75        (56)     (424)     19,637
</TABLE>

     During 1997, GeoWaste  terminated an existing transfer,  transportation and
disposal agreement with the City of St. Augustine. Due to the termination of the
agreement,  assets  related  specifically  to the  project  for the  City of St.
Augustine were impaired and the related expense of $436,000 was classified as an
unusual charge.  Additionally,  GeoWaste  incurred  legal,  consulting and other
costs to terminate  the  agreement of $647,000  that were  classified as unusual
charges.

     During 1997, AWS recognized expense of $1,790,000 relating to settlement of
a Clean Water Act dispute  with the United  States  Government.  This amount was
paid in full during 1998. The expense is classified as an unusual charge.

     On June 27, 1997, the Company  completed its merger with Resource  Recovery
Transfer  &  Transportation,  Inc.  (R(2)T(2)),  accounted  for as a pooling  of
interests, pursuant to which the Company issued 1,705,000 shares of common stock
to the former shareholders of R(2)T(2). The Company incurred nonrecurring merger
costs of  $1,035,000  during  1997 as a result of the merger.  The merger  costs
include severance and bonuses, professional fees and other merger related costs,
substantially all of which were paid prior to December 31, 1997.

     Reported  diluted  earnings  per share for 1998 were  reduced  by $0.33 per
share  for the net  effect of the  merger  costs  incurred  of  $10,599,000  and
recorded cumulative  deferred tax provisions of approximately  $2,700,000 offset
by $620,000 of reduced income tax expense due to S Corporation status of several
of the 1998 pooled  acquisitions.  Reported  diluted earnings per share for 1997
were reduced by $0.06 per share for the net effect of the merger costs  incurred
of $1,035,000 and unusual charges of $2,873,000  offset by $1,324,000 of reduced
income tax  expense  due to S  Corporation  status of several of the 1998 pooled
acquisitions.

     During 1998, the Company  acquired  twenty two  businesses,  including four
operational  landfills,  which  were  accounted  for  as  purchases.   Aggregate
consideration  for these  acquisitions  consisted of $71,365,000 in cash (net of
cash  acquired),  $10,824,000  in future  payments or notes  payable and 148,348
shares of  common  stock.  The  final  determination  of cost,  and  allocations
thereof,  of certain of the Company's  acquisitions  is subject to resolution of
certain contingencies.  Once such contingencies are resolved, the purchase price
is  adjusted.   Future   payments  are  contingent   based  on  working  capital
adjustments, debt adjustments and contingent liabilities and are recorded at the
time  of  acquisition  if  the  contingent  payment  is  determinable  beyond  a
reasonable doubt. The results of operations of the acquired businesses have been
included  in  the  Company's   consolidated   financial  statements  from  their
respective acquisition dates.

     During  1998,  as a  result  of final  valuations  pertaining  to  previous
acquisitions, $4,395,000 in cash and 194,000 shares of common stock were issued.
In addition,  63,041 shares were issued in payment of debt of entities  acquired
in 1998.

                                       40

<PAGE>



                             SUPERIOR SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

3. MERGERS AND ACQUISITIONS--(CONTINUED)

     During 1997, the Company acquired twenty-three  businesses,  including four
operational  landfills,  which  were  accounted  for  as  purchases.   Aggregate
consideration for these  acquisitions  consisted of $104,914,000 in cash (net of
cash  acquired),  $6,059,000 in future  payments or in notes payable and 384,893
shares of common stock.  In addition,  businesses  acquired which were accounted
for  using  the  pooling-of-interests  method  completed  acquisitions  of seven
businesses in 1997 that were accounted for as purchases. Aggregate consideration
for these  acquisitions  consisted of $6,931,000 in cash (net of cash  acquired)
and  $1,309,000  in notes  payable.  The results of  operations  of the acquired
businesses have been included in the Company's consolidated financial statements
from their respective acquisition dates.

     During  1997,  as the result of final  valuations  pertaining  to  previous
acquisitions,  $1,934,000 in cash and 82,249 shares of common stock were issued.
In addition,  59,114 shares were issued in payment of debt of entities  acquired
in 1997.

     During  1996,  the Company  acquired  thirteen  businesses,  including  two
operational landfills,  all of which were accounted for as purchases.  Aggregate
consideration  for these  acquisitions  consisted of $15,273,000 in cash (net of
cash acquired),  $8,280,000 in notes payable and 114,381 shares of common stock.
In  addition,   businesses   acquired   which  were   accounted  for  using  the
pooling-of-interests  method  completed  acquisitions of five businesses in 1996
that  were  accounted  for  as  purchases.  Aggregate  consideration  for  these
acquisitions consisted of $4,556,000 in cash (net of cash acquired). The results
of  operations  of the acquired  businesses  have been included in the Company's
consolidated  financial  statements  from their  respective  acquisition  dates.
Resource  Recovery  Transfer  &  Transportation,   Inc.  (merged  with  Superior
Services,  Inc. in June 1997 and accounted  for as a pooling of interests)  paid
additional  consideration  for acquisitions in 1996 that consisted of $5,157,000
in cash and $777,000 in notes payable.

     The  unaudited  pro forma  results  of  operations  below  assume  that the
acquisitions had occurred at the beginning of each period presented.

                                                   YEAR ENDED DECEMBER 31
                                                   ----------------------
                                                     1997         1998
                                                   ---------    ---------
                                                        (UNAUDITED)
Revenues.......................................    $320,029     $340,167
Net income.....................................      20,893       20,546
Basic earnings per share.......................        0.74         0.64
Diluted earnings per share.....................        0.73         0.63

     The pro forma  results do not  purport to be  indicative  of the results of
operations which actually would have resulted had the  acquisitions  occurred on
January  1,  1997,  nor are they  necessarily  indicative  of  future  operating
results.

     As an integral part of certain acquisitions, the former shareholders signed
noncompetition  agreements and, in certain  situations,  key management  members
entered  into  employment  agreements  to  continue in the  management  of these
businesses.  Costs  associated  with these  agreements are charged to operations
over their respective lives.

                                       41

<PAGE>



                             SUPERIOR SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

4. PROPERTY AND EQUIPMENT

     Property and equipment consist of the following:

                                                              DECEMBER 31
                                                          --------------------
                                                            1997        1998
                                                          --------    --------
                                                             (IN THOUSANDS)
Land and land improvements............................    $191,282    $248,205
Vehicles and equipment................................     147,252     178,194
Buildings and leasehold improvements..................      32,810      36,541
                                                          --------    --------
                                                           371,344     462,940
Less accumulated depreciation and amortization........     119,930     150,443
                                                          --------    --------
                                                          $251,414    $312,497
                                                          ========    ========

     Landfill costs of approximately  $181,337,000 and $236,760,000 are included
in land and land  improvements  at  December  31,  1997 and 1998,  respectively.
Landfill costs include land held for development,  representing various landfill
properties with an aggregate cost of  approximately  $72,555,000 and $54,879,000
at  December  31,  1997 and 1998,  respectively,  which is not being  amortized.
During  1997 and  1998,  interest  of  approximately  $1,043,000  and  $712,000,
respectively, was capitalized related to land being actively developed.

5. LONG-TERM DEBT

     Long-term debt consists of the following:


                                                                 DECEMBER 31
                                                              ------------------
                                                               1997       1998
                                                              -------    -------
                                                                (IN THOUSANDS)
Primary revolving credit facility...........................  $    --    $62,100
Equipment loan facilities at variable interest rates
  (weighted-average interest rate of 8.73% and 8.61% at
  December 31, 1997 and 1998, respectively).................   24,148      6,627
Industrial revenue bonds--paid in 1998......................      290         --
United States Small Business Administration loans at fixed
  interest rates of 8.27% to 8.88% in 1997 and 1998.........      637        622
Other.......................................................    1,853      2,129
Other credit facilities--paid in 1998.......................    6,507         --
Mortgage facilities at variable interest rates--paid in
  1998......................................................    1,452         --
Unsecured notes payable to individuals--paid in 1998........    2,148         --
                                                              -------    -------
Total long-term debt........................................   37,035     71,478
Less current maturities.....................................    9,820      5,194
                                                              -------    -------
                                                              $27,215    $66,284
                                                              =======    =======

     The Company's  primary  revolving credit facility  provides for a borrowing
capacity  up  to  a  maximum  of  $275,000,000,  including  letters  of  credit.
Availability  under  this  facility  is based  on the  Company's  cash  flow and
leverage,  with $209,000,000 available at December 31, 1998. Interest is payable
monthly based on the agent bank's base rate, or quarterly  based on a Eurodollar
borrowing rate plus a margin,  depending upon how advances are drawn. The entire
$62,100,000  of  revolving  line of credit  borrowings  has been  excluded  from
current  liabilities because the Company intends that at least that amount would
remain  outstanding for an  uninterrupted  period extending beyond one year from
the balance sheet date. The borrowings  under this facility  mature in September
2003. In addition to the outstanding  borrowings,  the Company had approximately
$2,284,000  and  $3,933,000  in letters of credit  issued  under the facility at
December 31, 1997

                                       42

<PAGE>



                             SUPERIOR SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. LONG-TERM DEBT--(CONTINUED)

and 1998,  respectively.  This  facility is  collateralized  by the stock of the
Company's  subsidiaries.  The facility has  provisions  for the  maintenance  of
certain financial ratios and other requirements,  including a prohibition on the
payment of cash dividends.

     Maturities of long-term debt,  excluding amounts under the revolving credit
facility, for each of the years succeeding December 31, 1998, are as follows (in
thousands):

Year ending December 31:
     1999..................................................    $ 5,194
     2000..................................................      1,608
     2001..................................................      1,230
     2002..................................................        671
     2003..................................................     62,207
     Thereafter............................................        568

6. PREFERRED STOCK AND SHAREHOLDERS' INVESTMENT

  Preferred Stock

     Superior is authorized to issue up to 500,000 shares of preferred  stock in
one or more  undesignated  series.  In February 1993, the Company issued 331,789
shares of Series A Preferred Stock for $15,000,000 to an investor group pursuant
to a Series A Convertible Preferred Stock Purchase Agreement (the Agreement).

     Pursuant to the Agreement,  the Series A Preferred Stock holders  exercised
their rights to convert their  preferred  stock into 3,317,890  shares of common
stock at the time of the public  offering.  Upon the conversion,  all cumulative
dividends in connection with the Preferred Stock were defeased.

  Common Stock

     In March 1996, the Company completed an initial public offering in which it
issued 3,532,500 shares of common stock at a price of $11.50 per share resulting
in net proceeds after  deduction of  underwriting  discounts and commissions and
other offering expenses to the Company of approximately $37,230,000.

     In September 1997, the Company  completed a follow-on public stock offering
in which it issued  4,403,500  shares of common  stock at a price of $28.00  per
share,  resulting in net proceeds after deduction of underwriting  discounts and
commissions  and  other  offering  expenses  to  the  Company  of  approximately
$116,728,000.

  Common Stock Purchase Rights

     On February  21, 1997,  the Board of  Directors  of the Company  declared a
dividend of one common share purchase right (a Right) for each outstanding share
of common stock. The dividend was paid on March 24, 1997, to the shareholders of
record on March 10, 1997.

     The Rights are  attached to and traded with the shares of common  stock and
are not exercisable until certain  conditions occur.  Generally,  a distribution
date will  occur  when 15% or more of the common  stock is  acquired  by a third
party or ten business days following the  commencement of, or an announcement of
an intention to make, a tender or exchange  offer for at least 15% of the common
stock.  Upon a distribution  date, the Rights will become  exercisable  and will
allow the holders of Rights  (other than the person or entity  which  caused the
distribution  date,  whose  Rights shall become void) to purchase at a price per
share equal to one-half of the market price on the distribution  date, shares of
the Company's common stock or the stock of the acquirer.

                                       43

<PAGE>



                             SUPERIOR SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. PREFERRED STOCK AND SHAREHOLDERS' INVESTMENT--(CONTINUED)

Warrants

     Prior to its merger with the Company, GeoWaste issued warrants to a related
party for investment advisory services rendered. These warrants, which allow the
holders to acquire up to 110,190  shares of the Company's  common stock at $6.33
per share through  February  1999, are subject to  anti-dilution  rights and are
adjustable for stock splits, stock dividends and similar events.

Stock Options

     The Company has three stock  option  plans (the Option  Plans)  under which
nonqualified and/or incentive options for the purchase of up to 4,535,000 shares
may be granted at exercise  prices no less than the estimated  fair market value
of the common  stock on the date of grant.  The  options  have  various  vesting
schedules  ranging from  immediate  vesting to gradual  vesting with all options
exercisable  after four years. At December 31, 1998, there were 1,906,337 shares
available for grants under the Option Plans.

     As part of the Company's  acquisition  of GeoWaste,  two stock option plans
were acquired under which nonqualified and/or incentive options for the purchase
of up to  2,803,000  shares may be granted at  exercise  prices no less than the
estimated  fair  market  value of the  common  stock on the date of  grant.  The
options vest over a three-year  period based upon the length of service with the
Company.  At December  31,  1998,  there were  93,977  options  exercisable.  No
additional options will be granted under these plans.

     The Company has elected to follow  Accounting  Principles Board Opinion No.
25,   "Accounting   for  Stock  Issued  to  Employees"  (APB  25),  and  related
Interpretations  in  accounting  for its  employee  stock  options  because,  as
discussed below,  the alternative fair value accounting  provided for under SFAS
No. 123,  "Accounting  for  Stock-Based  Compensation,"  requires  use of option
valuation  models  that were not  developed  for use in valuing  employee  stock
options.  Under APB 25,  because the exercise  price of the  Company's  employee
stock  options  equals the market price of the  underlying  stock on the date of
grant, no compensation expense is recognized.  In determining the effect of FASB
Statement  No. 123, the  Black-Scholes  option  pricing  model was used with the
following  weighted-average  assumptions for 1997 and 1998:  risk-free  interest
rates of 5%,  dividend yields of 0%,  volatility  factors of the expected market
price of the  Company's  common  stock of .39 and  .61,  and a  weighted-average
expected life of the options of five years.

     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
estimating  the fair value of traded  options that have no vesting  restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.  Because the Company's  employee stock options have  characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially  affect the fair value estimate,  in
management's  opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

     For  purposes of pro forma  disclosures,  the  estimated  fair value of the
options is amortized to expense over the options' vesting period.  The Company's
pro forma  information  follows  (in  thousands  except for  earnings  per share
information):

                                                    1996       1997       1998
                                                   -------    -------    -------
Pro forma net income...........................    $16,181    $18,433    $14,862
Pro forma earnings per share:
  Basic........................................    $  0.64    $  0.66    $  0.46
  Diluted......................................       0.63       0.65       0.46

                                       44

<PAGE>



                             SUPERIOR SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. PREFERRED STOCK AND SHAREHOLDERS' INVESTMENT--(CONTINUED)

     The following table summarizes the transactions of the Company's Stock
Option Plans for the three-year period ended December 31, 1998:

<TABLE>
<CAPTION>
                                                   1996                      1997                      1998
                                          ----------------------    ----------------------    ----------------------
                                                       WEIGHTED-                 WEIGHTED-                 WEIGHTED-
                                                        AVERAGE                   AVERAGE                   AVERAGE
                                                       EXERCISE                  EXERCISE                  EXERCISE
                                           OPTIONS       PRICE       OPTIONS       PRICE       OPTIONS       PRICE
                                          ---------    ---------    ---------    ---------    ---------    ---------
<S>                                       <C>           <C>         <C>           <C>         <C>           <C>
Options outstanding at beginning of
  year................................    1,319,192     $ 8.37      1,405,703     $10.23      1,795,403     $16.64
Options granted.......................      350,842      15.60        841,545      23.39      1,623,058      20.59
Options exercised.....................     (182,588)      7.86       (415,784)      8.26       (208,150)      8.40
Options canceled......................      (81,743)     11.50        (36,061)     17.99        (88,681)     22.09
                                          ---------                 ---------                 ---------
Options outstanding at end of year....    1,405,703     $10.23      1,795,403     $16.64      3,121,630     $19.16
                                          =========                 =========                 =========
Weighted-average fair value of options
  granted during the year.............    $   15.60                 $   23.39                 $   20.59
                                          =========                 =========                 =========
Number of options exercisable at end
  of year.............................    1,055,677     $ 9.02        773,565     $10.22      1,280,925     $15.92
                                          =========                 =========                 =========
Options outstanding:
  Price range $3.16 to $12.65;
    weighted-average contractual life
    of 3.3 years......................                                                          554,488     $ 9.41
  Price range $12.66 to $22.14;
    weighted-average contractual life
    of 9.3 years......................                                                        1,634,979     $18.93
  Price range $22.15 to $31.63;
    weighted-average contractual life
    of 8.5 years......................                                                          932,163     $25.38
                                                                                              ---------
                                                                                              3,121,630
                                                                                              =========
</TABLE>

7. EARNINGS PER SHARE

     The  following  table  sets  forth the  computation  of basic  and  diluted
earnings per share (in thousands, except per share amounts).

<TABLE>
<CAPTION>
                                                             1996           1997           1998
                                                          -----------    -----------    -----------
<S>                                                       <C>            <C>            <C>
NUMERATOR
Income from continuing operations used in computing
  basic and diluted earnings per share................    $16,403,000    $19,637,000    $20,501,000
                                                          ===========    ===========    ===========
DENOMINATOR
Denominator for basic earnings per share--weighted
  average common shares...............................     25,142,017     27,873,392     31,974,060
Effect of dilutive securities--warrants and employee
  stock options.......................................        524,387        572,963        602,950
                                                          -----------    -----------    -----------
Denominator for diluted earnings per share--adjusted
  weighted average common shares......................     25,666,404     28,446,355     32,577,010
                                                          ===========    ===========    ===========
</TABLE>

     Shares  of common  stock  held in escrow  pursuant  to the  indemnification
agreements  discussed in Note 10 are included in the number of shares issued and
outstanding for all years presented.

                                       45

<PAGE>



                             SUPERIOR SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. EMPLOYEE BENEFIT PLANS

     The  Company  has  defined  contribution  401(k)  savings  plans that cover
substantially  all employees meeting certain minimum  eligibility  requirements.
Participating  employees can elect to defer a portion of their  compensation and
contribute  it to the plan on a pretax basis.  The Company also matches  certain
amounts,  as defined.  Contributions made by the Company under the various plans
were $256,000,  $344,000 and $431,000,  for the years ending  December 31, 1996,
1997 and 1998, respectively.

9. INCOME TAXES

     The provisions for income taxes  attributable to continuing  operations for
the years ended December 31, consist of the following:


                                                    1996      1997       1998
                                                   ------    -------    -------
                                                          (IN THOUSANDS)
Current:
     Federal...................................    $9,031    $ 9,143    $15,670
     State.....................................     2,259      2,489      4,217
                                                   ------    -------    -------
                                                   11,290     11,632     19,887
Deferred:
     Federal...................................    (1,192)     1,051      1,712
     State.....................................      (284)       229        461
                                                   ------    -------    -------
                                                   (1,476)     1,280      2,173
                                                   ------    -------    -------
          Total................................    $9,814    $12,912    $22,060
                                                   ======    =======    =======

     The  difference  in  the  provisions  for  income  taxes   attributable  to
continuing  operations  and the  amounts  determined  by  applying  the  federal
statutory  rate of 35% for  1996,  1997 and  1998,  to  income  from  continuing
operations before income taxes for the years ended December 31 are as follows:

<TABLE>
<CAPTION>
                                                         1996      1997       1998
                                                        ------    -------    -------
                                                               (IN THOUSANDS)
<S>                                                     <C>       <C>        <C>
Tax at statutory rate...............................    $9,176    $11,392    $14,896
State income taxes..................................     1,515      1,345      2,213
Income from S Corporations not subject to income
  tax...............................................      (918)      (874)      (601)
Nondeductible merger costs..........................        --        142      2,383
Cumulative deferred tax provision associated with
  the termination of S Corporation elections........        --         --      2,686
Other...............................................        41        907        483
                                                        ------    -------    -------
                                                        $9,814    $12,912    $22,060
                                                        ======    =======    =======
</TABLE>

     Deferred income taxes reflect the impact of temporary  differences  between
the  amounts  of assets  and  liabilities  recognized  for  financial  reporting
purposes and such amounts recognized for income tax purposes.

                                       46

<PAGE>



                             SUPERIOR SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. INCOME TAXES--(CONTINUED)

     The deferred income tax balances consist of the following:

                                                               DECEMBER 31
                                                            ------------------
                                                             1997       1998
                                                            -------    -------
                                                              (IN THOUSANDS)
Deferred tax liabilities:
  Property and equipment basis differences..............    $25,372    $35,965
  Other.................................................      1,481      1,352
                                                            -------    -------
Total deferred tax liabilities..........................     26,853     37,317
Deferred tax assets:
  Closure and long-term care obligations................      6,100      8,314
  Other expenses not currently deductible...............      1,190      4,135
  State and federal net operating loss carryforwards....        820      1,178
  Other.................................................        246        326
                                                            -------    -------
Total deferred tax assets...............................      8,356     13,953
Valuation allowance for deferred tax assets.............       (235)      (235)
                                                            -------    -------
Net deferred tax assets.................................      8,121     13,718
                                                            -------    -------
Net deferred tax liabilities............................    $18,732    $23,599
                                                            =======    =======

     Included in prepaid  expenses and other current assets are current deferred
tax assets of $126,000 and $266,000 at December 31, 1997 and 1998, respectively.

     At December 31, 1998, the Company has net operating loss  carryforwards  of
approximately  $23.6  million for state income tax purposes that begin to expire
in 2008 and 2009.

10. COMMITMENTS AND CONTINGENCIES

     Certain shareholders are entitled to receive additional  consideration from
the Company in the event of future  permitted  landfill  expansion at two sites.
For  permitted   horizontal   expansion  at  both   landfills,   the  additional
consideration is $.40 per cubic yard, less associated  permitting  costs, not to
exceed $2,000,000 per site.

     In connection with certain landfill acquisitions,  the sellers are entitled
to receive additional consideration from the Company, if regulatory approval, as
defined,  is obtained  for  expansions  of  permitted  airspace.  For  permitted
vertical and horizontal expansion above certain defined minimums, the additional
consideration  varies between  approximately $.11 and $1.25 per cubic yard, less
associated  costs.  These  amounts,  if any,  will be  capitalized  when paid or
payable as  additional  purchase  price.  The Company is also  obligated to make
royalty payments of $1.50 per ton of tonnage  received at a particular  landfill
to a landfill's former owners. The royalty applies to tons received in excess of
400,000  annually,  for each of the first five years.  For each year thereafter,
the $1.50 per ton royalty  applies to all tonnage  received and is guaranteed to
be at least  $600,000  annually  for the  life of the  landfill,  including  any
permitted expansions.

     The Company is obligated to make  royalty  payments to a landfill's  former
owners  of 5% of the  gross  revenues  generated  from  the  expanded  capacity.
Approximately  125 acres occupied in connection with the landfill  activities is
leased from a third  party.  Under the terms of the lease,  the Company pays the
property owner monthly rental equal to the greater of 3% of the landfill's gross
operating  receipts  or  $3,650.  The  Company  is  also  obligated  to  make an
additional contingent consideration payment of $1,800,000 to a landfill's former
owners in the event all  applicable  state and local permits are received for an
expansion of the landfill.

                                       47

<PAGE>



                             SUPERIOR SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

     In  connection  with the  formation  of the  Company  in 1993  through  the
consolidation of three groups of independent waste services  companies,  certain
potential  environmental  liabilities  associated  with  the  previously  filled
portion of the Superior Valley Meadows  landfill were  identified.  The range of
possible loss has been estimated not to exceed $1.3 million.  At the time of the
consolidation of these companies into the Company, a contingent liability escrow
was  established  to  cover  the  highest  estimated  costs  of  redemption  and
monitoring with respect to the contingent liabilities.  To indemnify the Company
against up to $1,308,000 of these contingent liabilities,  130,800 shares of the
Company's  common stock otherwise  issuable as part of the  consolidation to the
individual who was the principal  shareholder of the prior owner of the site and
who is now a director,  executive  officer and  significant  shareholder  of the
Company,  were withheld from issuance. In order to preserve the Company's rights
under this indemnification arrangement prior to the February 24, 1997 expiration
date for advancing such types of  indemnification  claims,  the Company formally
notified the individual of the Company's  claim against the withheld  shares for
the entire amount of the originally  established  liability escrow.  The Company
believes that the entire amount of such environmental liabilities will either be
covered  by  the  foregoing  indemnification  arrangement  or  otherwise  is not
expected  to  have a  material  adverse  effect  on  the  Company's  results  of
operations or financial condition.

     As of December 31, 1997, the Company or its subsidiaries have been notified
that they are  potentially  responsible  parties (PRPs) in connection with three
sites listed on the National  Priorities List (NPL).  When the Company concludes
that it is probable  that a liability  has been incurred with respect to a site,
provision will be made in the Company's financial statements reflecting its best
estimate  of the  liability  based  on  management's  judgment  and  experience,
information  available  from  regulatory  agencies  and  the  number,  financial
resources and relative degree of responsibility of other potentially responsible
parties who are jointly and severally liable for remediation of the site as well
as the typical  allocation of costs among such  parties.  If a range of possible
outcomes  is  estimated  and no amount  within the range  appears to be a better
estimate  than any other,  then the Company will provide for the minimum  amount
within the range, in accordance with generally accepted accounting principles.

     One NPL location is a landfill  owned by the Company for which the range of
total costs for remaining  remediation  is estimated to be between  $688,000 and
$2.3 million. The Company has an accrued liability of approximately $2.3 million
relating to this matter. As the timing of payments is uncertain, the accrual was
not measured on a discounted  basis. The reasonably  possible loss for this site
does not exceed the amounts  accrued by the Company  for the  selected  remedial
action.  The Company has entered into settlement  agreements with certain of the
generator  PRPs,  in which the  generator  PRPs agree to  contribute  a total of
approximately  42%  of  future  remediation  costs  and  the  annual  operating,
maintenance,  and monitoring  costs.  The former owner of the location agreed to
indemnify  the Company up to $2.8 million for any site  liabilities  the Company
may incur as a PRP.  The  Company  has been paid  approximately  $500,000 by the
former owner. The Company and the former owner are in dispute regarding the cost
of a likely  remediation  plan.  An engineer  selected  by the former  owner has
estimated the total remediation costs to be $688,000. This dispute is now before
an arbitrator.  The Company has recorded as an asset  approximately $2.3 million
that is  deemed  probable  of  recovery  from the  generator  PRPs  and  through
indemnification  from the  former  owner.  The  Company  believes  its  existing
financial reserves,  together with the amounts paid and remaining payable by the
former  owner  and the  contribution  obligations  of the  generator  PRPs,  are
adequate to cover the currently anticipated remediation costs.

     The Company acquired Nicholas  Enterprises,  Inc. (Nicholas) as part of the
PenPac acquisition on September 30, 1998. Prior to the Company's  acquisition of
PenPac,  Nicholas  was named as a defendant  in  litigation  pursuant to the New
Jersey Spill Compensation and Control Act at Sharkey's  Landfill,  a site in New
Jersey.  During 1998, Nicholas was released from its liability pertaining to the
site in  exchange  for  remitting  $300,000  of  insurance  proceeds  and  other
additional assessments up to $50,000. Further, prior to the

                                       48

<PAGE>



                             SUPERIOR SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

acquisition by the Company, Nicholas was named as a PRP at the Cortese Landfill,
an NPL site in New York pursuant to the Comprehensive Response, Compensation and
Control Act. During 1994,  Nicholas agreed to pay approximately  $200,000 to the
State of New York in final  settlement  of its share of past  costs at the site.
This amount has been paid. Nicholas has requested, but not yet received, release
of liability for any subsequent costs related to this site. Although the Company
has not been informed of any additional  liability related to these sites, under
the terms of the  acquisition  agreement for Nicholas,  its former  shareholders
have agreed to indemnify  the Company,  to the extent not covered by  insurance,
for all claims arising from these sites.

     As is the case with all sites, the performance of the elected remedies will
be subject to periodic review by regulatory agencies.  In the event the selected
remedies  do not  perform  adequately  to  meet  applicable  state  and  federal
standards, additional remedial measures beyond those currently anticipated could
be  required  by  regulatory  agencies.  Implementation  of any such  additional
remedial  measures  may  involve  substantial   additional  costs  beyond  those
currently anticipated.

     In  connection  with the AWS  merger  on March 31,  1998,  a  landfill  was
acquired  which  was  subject  to  legal   proceedings   brought  by  the  local
municipality.  In October 1996, the municipality filed an administrative  appeal
challenging the State of Alabama Department of Environmental Management's (ADEM)
decision to issue a landfill permit modification.  An administrative  commission
appointed  a judge to act as a hearing  officer  to oversee  the permit  appeal.
Based upon the hearing officer's  recommendation,  the administrative commission
in June 1997 unanimously  adopted the recommendation of the hearing officer that
the  landfill  permit  modification  was  properly  issued.  Subsequently,   the
municipality  filed an appeal of this  administrative  decision in state circuit
court.  While the Company believes it will be successful in defending the appeal
of this  decision,  there  can be no  assurance  that  this  appeal  will not be
determined  adversely to the Company.  Any such adverse decision,  if ultimately
upheld,  could  impact  the  ability of such  landfill  to accept any or certain
volumes of waste and, in turn, could adversely  effect the Company's  results of
operations.  The  Company  has  landfill  assets  with a net book  value of $3.8
million at this  site.  Separately,  the  municipality  in August  1996 filed in
federal  district  court a citizen's  suit  against the landfill  brought  under
provisions  of the Clean Water Act and the  Resource  Conservation  and Recovery
Act. The Company does not believe  there is a basis for a claim  supporting  the
citizen's  suit. In addition to federal  claims,  the  municipality  has alleged
certain  state law claims  that,  among other  things,  the prior  owners of the
landfill  misrepresented the geology and hydrogeology of an expansion portion of
the landfill,  allegedly  inducing the  municipality to grant local approval for
the  expansion  of the  landfill.  This local  approval  is a  prerequisite  for
issuance  of the  ADEM  solid  waste  permit.  Prior to the  acquisition  of the
landfill,  the prior owners were  engaged in  settlement  negotiations  with the
municipality regarding these proceedings. Since the acquisition, the Company has
met  with  municipal   officials  and  presented   settlement  offers  that  the
municipality  currently has under  consideration.  The Company believes that the
ultimate  resolution  of the  citizen's  suit and the  municipality's  state law
claims  will not have a  material  adverse  effect  on the  Company's  financial
condition or results of operations.

     In the  normal  course of its  business  and as a result  of the  extensive
government regulation of the solid waste industry,  the Company periodically may
become  subject  to  various   judicial  and   administrative   proceedings  and
investigations  involving federal, state or local agencies. To date, the Company
has not been  required to pay any material  fine or judgment for violation of an
environmental  law.  From time to time,  the Company  also may be  subjected  to
actions  brought  by  citizen's  groups in  connection  with the  permitting  of
landfills or transfer stations,  or alleging  violations of the permits pursuant
to which the Company operates.  The Company is also subject from time to time to
claims for personal injury or property damage arising out of accidents involving
its vehicles.  The Company believes that the ultimate  resolution of these other
matters  will not have a  material  adverse  effect on the  Company's  financial
condition or results of operations.

                                       49

<PAGE>



                             SUPERIOR SERVICES, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

     The Company  carries a range of insurance,  including a commercial  general
liability policy and a property damage policy.  The Company  maintains a limited
environmental impairment liability policy on its landfills and transfer stations
that provides coverage,  on a "claims made" basis,  against certain  third-party
off-site  environmental  damage.  There  can be no  assurance  that the  limited
environmental  impairment  policy  will  remain in place or  provide  sufficient
coverage for existing,  but not yet known,  third-party,  off-site environmental
liabilities.

                                       50

<PAGE>




                                    PART III

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

     None.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.

     The information  required by this item is incorporated  herein by reference
to the  information  pertaining  thereto set forth under the  captions  entitled
"Election of Directors" and "Compliance  With Section 16(a) of the Exchange Act"
in the Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION.

     The information  required by this item is incorporated  herein by reference
to the  information  pertaining  thereto set forth  under the  caption  entitled
"Executive Compensation" in the Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information  required by this item is incorporated  herein by reference
to the  information  pertaining  thereto set forth  under the  caption  entitled
"Stock  Ownership  of Certain  Beneficial  Owners and  Management"  in the Proxy
Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The  information  required  by this  item,  to the  extent  applicable,  is
incorporated herein by reference to the information pertaining thereto set forth
under the caption entitled "Certain Transactions" in the Proxy Statement.

                                       51

<PAGE>




                                     PART IV

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

     (a) The following documents are filed as part of this Form 10-K:

                                                                      FORM 10-K
                                                                      PAGE NO.
                                                                      ---------
1.      Financial Statements
        Report of Ernst & Young LLP, Independent Auditors...........     30
        Report of PricewaterhouseCoopers LLP, Independent
        Auditors....................................................     31
        Consolidated Balance Sheets as of December 31, 1997 and
        1998........................................................     32
        Consolidated Statements of Income for the years ended
          December 31, 1996, 1997, and 1998.........................     33
        Consolidated Statements of Shareholders' Investment for the
          years ended December 31, 1996, 1997, and 1998.............     34
        Consolidated Statements of Cash Flows for the years ended
          December 31, 1996 1997, and 1998..........................     35
        Notes to Consolidated Financial Statements..................     36
2.      Financial Statement Schedules
        Schedule II--Valuation and Qualifying Accounts..............     53
        Schedules other than those listed above are omitted because
        they are not applicable or not required or because the
        required information is included in the consolidated
        financial statements or notes thereto.
3.      Exhibits and Reports on Form 8-K
        (a)  The Exhibits filed herewith or incorporated by reference herein are
             set forth on the attached Exhibit Index.*
        (b)  The Company  filed the following  Current  Reports on Form 8-K with
             the Securities and Exchange Commission during the fourth quarter of
             fiscal  1998 and the first  quarter  of  fiscal  1998 and the first
             quarter of fiscal 1999 through the date of this Form 10-K:

               DATE FILED             DATE OF REPORT                   ITEM
               ----------             --------------                   ----
       November 5, 1998...........   October 30, 1998     Item 2--Acquisition of
                                                          GeoWaste Incorporated 
                                                                                
       December 15, 1998..........   December 15, 1998    Item  5--Restatement  
                                                          of      consolidated  
                                                          total      revenues,  
                                                          consolidated     net  
                                                          earnings,      basic  
                                                          earnings  per  share  
                                                          and diluted earnings  
                                                          per share to reflect  
                                                          the      use      of  
                                                          pooling-of-interest   
                                                          method of accounting  
                                                          of         GeoWaste,  
                                                          Incorporated          
                                                          acquisition           
                                                          
------------
     * Exhibits to this Form 10-K will be furnished to shareholders upon advance
       payment of a fee of $0.20 per page, plus mailing  expenses.  Requests for
       copies should be addressed to Scott S. Cramer,  Vice  President,  General
       Counsel,  Superior  Services,  Inc.,  125 South 84th  Street,  Suite 200,
       Milwaukee, Wisconsin 53214.

                                       52

<PAGE>




                                  SCHEDULE II

                        VALUATION AND QUALIFYING ACCOUNTS
                             SUPERIOR SERVICES, INC.
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                  COL. A                        COL. B         COL. C ADDITIONS         COL. D           COL. E
                  ------                        ------         ----------------         ------           ------
                                                                            (1)
                                              BALANCE AT    CHARGED TO    CHARGED                      BALANCE AT
                                              BEGINNING     COSTS AND     TO OTHER    DEDUCTIONS         END OF
               DESCRIPTION                    OF PERIOD      EXPENSES     ACCOUNTS    (ADDITIONS)        PERIOD
               -----------                    ----------    ----------    --------    -----------      ----------
<S>                                            <C>            <C>          <C>          <C>             <C>
Year ended December 31, 1998
Allowance for doubtful accounts...........     $ 2,524        $1,954       $   71       $1,910(2)       $ 2,639
Closure and long-term care obligations
  (3).....................................      43,329         4,366        4,592        1,398           50,889
                                               -------        ------       ------       ------          -------
                                               $45,853        $6,320       $4,663       $3,308          $53,528
                                               =======        ======       ======       ======          =======
Year ended December 31, 1997
Allowance for doubtful accounts...........     $ 1,223        $1,507           --       $  206(2)       $ 2,524
Closure and long-term care obligation.....      34,781         3,686        7,698        2,836           43,329
                                               -------        ------       ------       ------          -------
                                               $36,004        $5,193       $7,698       $3,042          $45,853
                                               =======        ======       ======       ======          =======
Year ended December 31, 1996
Allowance for doubtful accounts...........     $   752        $1,655       $   24       $1,208(2)       $ 1,223
Closure and long-term care obligation.....      26,334         3,593        5,618          764           34,781
                                               -------        ------       ------       ------          -------
                                               $27,086        $5,248       $5,642       $1,972          $36,004
                                               =======        ======       ======       ======          =======

------------
(1) Doubtful  accounts  written off (recovered)
(2) Assumed in acquisitions 
(3) Includes current and long-term portions
</TABLE>

                                       53

<PAGE>




                                   SIGNATURES

     Pursuant to the  requirements  of Section 13 or 15(d) of the Securities and
Exchange  Act of 1934,  the  Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, as of March 25, 1999.

                                          SUPERIOR SERVICES, INC.

                                          By: /s/ G. WILLIAM DIETRICH
                                            ------------------------------------
                                              G. William Dietrich, President
                                              and Chief Executive Officer

     Pursuant to the  requirements  of the  Securities and Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Company and in the capacities indicated as of March 25, 1999.

<TABLE>
<CAPTION>

<S>                              <C>                              <C>

By: /s/ JOSEPH P. TATE           By: /s/ G. WILLIAM DIETRICH      By: /s/ GEORGE K. FARR
    -------------------------    -------------------------        -------------------------
    Joseph P. Tate                   G. William Dietrich              George K. Farr
    Chairman of the Board and        President, Chief                 Chief Financial Officer
    Director                     Executive                            (Principal Financial &
                                     Officer and Director             Accounting Officer)
                                     (Principal Executive
                                     Officer)

By: /s/ WALTER G. WINDING        By: /s/ FRANCIS J. PODVIN        By: /s/ WARNER C. FRAZIER
    -------------------------    -------------------------        -------------------------
    Walter G. Winding                Francis J. Podvin                Warner C. Frazier
    Director                         Director                         Director

By: /s/ DONALD TAYLOR
    -------------------------
    Donald Taylor
    Director
</TABLE>

                                       54

<PAGE>




                             SUPERIOR SERVICES, INC.

                                  EXHIBIT INDEX

                  TO FORM 10-K FOR YEAR ENDED DECEMBER 31, 1998

EXHIBIT NO.                          EXHIBIT DESCRIPTION
-----------                          -------------------
    3.0          Restated Articles of Incorporation. [Incorporated by
                 reference to Exhibit 3.0 filed with the Company's Form S-1
                 Registration Statement No. 333-240, dated January 9, 1996,
                 as amended.]
    3.1          Restated Bylaws, dated January 9, 1996, as amended.
    3.2          Amendments to Restated Bylaws dated February 23, 1999.
    4.1          Rights Agreement dated February 21, 1997, between the
                 Company and LaSalle National Bank, Chicago, Illinois.
                 [Incorporated by reference to Exhibit 4.1 to the Company's
                 Current Report on Form 8-K, dated February 28, 1997.]
    4.2          Second Amended and Restated Revolving Credit Agreement,
                 dated September 17, 1998, among Superior Services, Inc. and
                 Subsidiaries (the "Borrowers"), BankBoston, N.A., Bank One,
                 Wisconsin, Harris Trust and Savings Bank, LaSalle National
                 Bank, Bank of America National Trust and Savings
                 Association, Firstar Bank Milwaukee, N.A., Fleet Bank, N.A.,
                 Paribas, PNC Bank, National Association, Comerica Bank,
                 Fifth Third Bank, Hibernia National Bank (the "Banks") and
                 BankBoston, N.A., as Agent, Bank One, Wisconsin, as
                 Co-Agent, Harris Trust and Savings Bank, as Co-Agent,
                 LaSalle National Bank, as Co-Agent and Bank of America
                 National Trust and Savings Association, as Co-Agent.
                 [Incorporated by reference to Exhibit 4.8 to the Company's
                 Form 10-Q for the period ended September 30, 1998.]
   10.0**        Stock Option  Agreement,  dated as of February 25, 1993, and as
                 amended on May 5, 1995 and August 15,  1995,  and  November 29,
                 1995, between George K. Farr and the Company.  [Incorporated by
                 reference  to Exhibit  10.1 filed with the  Company's  Form S-1
                 Registration Statement No. 333-240, dated
                 January 9, 1996, as amended.]
   10.1**        Stock Option  Agreement,  dated as of February 14, 1995, and as
                 amended on May 16, 1995, August 15, 1995 and November 29, 1995,
                 between G. William  Dietrich and the Company.  [Incorporated by
                 reference  to Exhibit  10.2 filed with the  Company's  Form S-1
                 Registration Statement No. 333-240, dated
                 January 9, 1996, as amended.]
   10.2**        Amendment to Restated Option  Agreement dated November 26, 1996
                 between G. William  Dietrich and the Company.  [Incorporated by
                 reference  to Exhibit 10.2 filed with the  Company's  Form 10-K
                 for the year ended December 31, 1997.]
   10.3**        Employment  Agreement,  dated as of  September  1,  1993 and as
                 amended August 15, 1995, between Peter J. Ruud and the Company.
                 [Incorporated  by  reference  to  Exhibit  10.3  filed with the
                 Company's Form S-1  Registration  Statement No. 333-240,  dated
                 January 9, 1996, as amended.]
   10.4**        Noncompetition Agreement, dated February 14, 1995, between
                 G. William Dietrich and the Company. [Incorporated by
                 reference to Exhibit 10.4 filed with the Company's Form S-1
                 Registration Statement No. 333-240, dated January 9, 1996,
                 as amended.]
   10.5**        Key Executive Employment and Severance Agreement,  dated August
                 15,  1995,   between  G.  William  Dietrich  and  the  Company.
                 [Incorporated  by  reference  to  Exhibit  10.5  filed with the
                 Company's Form S-1  Registration  Statement No. 333-240,  dated
                 January 9, 1996, as amended.]
   10.6**        Key Executive Employment and Severance Agreement,  dated August
                 15, 1995, between George K. Farr and the Company. [Incorporated
                 by reference to Exhibit 10.6 filed with the Company's  Form S-1
                 Registration Statement No. 333-240, dated
                 January 9, 1996, as amended.]

                                       55

<PAGE>



EXHIBIT NO.                          EXHIBIT DESCRIPTION
-----------                          -------------------
   10.7**        Key Executive Employment and Severance Agreement,  dated August
                 15, 1995, between Peter J. Ruud and the Company.  [Incorporated
                 by reference to Exhibit 10.7 filed with the Company's  Form S-1
                 Registration Statement No. 333-240, dated
                 January 9, 1996, as amended.]
   10.8**        1993 Incentive Stock Option Plan. [Incorporated by reference
                 to Exhibit 10.8 filed with the Company's Form S-1
                 Registration Statement No. 333-240, dated January 9, 1996,
                 as amended.]
   10.9**        Form of Stock Option Agreement under 1993 Stock Option Plan.
                 [Incorporated by reference to Exhibit 10.9 filed with the
                 Company's Form S-1 Registration Statement No. 333-240, dated
                 January 9, 1996, as amended.]
   10.10**       1996 Equity Incentive Plan. [Incorporated by reference to
                 Exhibit 10.10 filed with the Company's Form S-1 Registration
                 Statement No. 333-240, dated January 9, 1996.]
   10.11**       Amendment to the Superior Services, Inc. 1996 Equity
                 Incentive Plan, dated November 24, 1998.
   10.12**       Superior Services, Inc. Outside Directors Deferred Fee Plan
                 (supplements the terms of the Superior Services, Inc. 1996
                 Equity Incentive Plan).
   10.13**       Form of Non-Employee Director Non-Qualified Stock Option
                 Agreement under 1996 Equity Incentive Plan. [Incorporated by
                 reference to Exhibit 10.11 filed with the Company's Form S-1
                 Registration Statement No. 333-240, dated January 9, 1996,
                 as amended.]
   10.14*        Form of Key Employee Stock Option Agreement under 1996
                 Equity Incentive Plan.
   10.15**       Employment  Agreement  between  the Company and Scott S. Cramer
                 dated as of July 1, 1997. [Incorporated by reference to Exhibit
                 10.14  filed  with the  Company's  Form 10-K for the year ended
                 December 31, 1998.]
   10.16**       Employment  Agreement  between the  Company and Gary  Blacktopp
                 dated as of January 1, 1997, and amended as of August 26, 1997.
                 [Incorporated  by  reference  to Exhibit  10.15  filed with the
                 Company's Form 10-K for the year ended December 31, 1997.]
   10.17**       Form of Amendment of Key Executive Employment and Severance
                 Agreements entered into by each of G. William Dietrich,
                 George K. Farr, and Peter J. Ruud.
   10.18**       Amendment to Key Executive Employment and Severance
                 Agreement between Superior Services, Inc. and George K.
                 Farr, dated February 24, 1998. [Incorporated by reference to
                 Exhibit 10.17 filed with the Company's Form 10-Q for the
                 period ended March 31, 1998.]
   10.19**       Key Executive Employment and Severance Agreement between
                 Superior Services, Inc. and Joseph P. Tate, dated August 18,
                 1998.
   10.20**       Amendment No. 2 to Key Executive Employment and Severance
                 Agreement between Superior Services, Inc. and G. William
                 Dietrich, dated August 18, 1998, supplementing and amending
                 the Key Employment and Severance Agreement, dated as of
                 August 15, 1995, as previously amended.
   10.21**       Amendment No. 2 to Key Executive Employment and Severance
                 Agreement between Superior Services, Inc. and George K.
                 Farr, dated August 18, 1998, supplementing and amending the
                 Key Employment and Severance Agreement, dated as of August
                 15, 1995, as previously amended.
   10.22**       Amendment No. 2 to Key Executive Employment and Severance
                 Agreement between Superior Services, Inc. and Peter J. Ruud,
                 dated August 18, 1998, supplementing and amending the Key
                 Employment and Severance Agreement, dated as of August 15,
                 1995, as previously amended.
   10.23**       Amendment to  Employment  Agreement  between the Company and G.
                 William  Dietrich,  dated  August 18, 1998,  supplementing  and
                 amending the Employment Agreement, dated January 1, 1996.

                                       56

<PAGE>


EXHIBIT NO.                          EXHIBIT DESCRIPTION
-----------                          -------------------
   10.24**       Amendment to Employment Agreement between the Company and Peter
                 J. Ruud, dated August 18, 1998,  supplementing and amending the
                 Employment Agreement, dated January 1, 1996.
   10.25**       Amendment  to  Employment  Agreement  Between  the  Company and
                 George K.  Farr,  dated  August  18,  1998,  supplementing  and
                 amending the Employment Agreement, dated January 1, 1996.
   10.26**       Employment  Agreement  between the  Company  and G.W.  Dietrich
                 dated  January 1, 1996  [incorporated  by  reference to Exhibit
                 10.14 to the Company's Form 10-Q for the period ended March 31,
                 1996].
   10.27**       Employment  Agreement  between  the  Company and George K. Farr
                 dated  January 1, 1996  [incorporated  by  reference to Exhibit
                 10.15 to the Company's Form 10-Q for the period ended March 31,
                 1996].
   10.28**       Second  Amendment to Employment  Agreement  between the Company
                 and Peter J.  Ruud  dated  January  1,  1996  [incorporated  by
                 reference to Exhibit 10.16 to the  Company's  Form 10-Q for the
                 period ended March 31, 1996].
   10.29**       Second  Amendment and  Amendment No. 3 to Employment  Agreement
                 between the Company and Gary  Blacktopp  dated  August 18, 1998
                 and November 24, 1998, respectively, supplementing and amending
                 the Employment  Agreement  dated January 1, 1997, as previously
                 amended.
   10.30**       Amendment and Amendment No. 2 to Employment  Agreement  between
                 the Company and Scott Cramer dated August 18, 1998 and November
                 24,  1998,   respectively,   supplementing   and  amending  the
                 Employment Agreement dated July 1, 1997.
   10.31**       Amendment and Amendment No. 2 to Employment  Agreement  between
                 the  Company and John King dated  August 18, 1998 and  November
                 24,  1998,   respectively,   supplementing   and  amending  the
                 Employment Agreement dated January 1, 1997.
   10.32**       Employment Agreement between the Company and James M. Dancy,
                 Jr. dated September 14, 1998, as amended October 2, 1998.
   10.33**       Employment  Agreement  between the Company and Paul Jenks dated
                 September 21, 1998.
   10.34**       Employment  Agreement  between  the  Company and Philip J. Auld
                 dated October 5, 1998.
   10.35**       Employment  Agreement  between the Company and Larry E. Goswick
                 dated December 7, 1998.
   10.36**       Superior Services, Inc. 1999 Management Incentive Plan.
   21            List of subsidiaries as of December 31, 1998.
  23a            Consent of Ernst & Young LLP.
  23b            Consent of PricewaterhouseCoopers LLP.
   27            Financial Data Schedule.
   99            Proxy Statement to the Company's 1998 Annual Shareholders
                 meeting scheduled to be held, May 11, 1999. [To be filed
                 with the Commission prior to 120 days after December 31,
                 1998, and incorporated by reference herein to the extent
                 indicated in Part III to this Form 10-K.]

------------
      *The exhibits,  schedules and ancillary  documents to the listed agreement
       are not being  filed  herewith  because  the  Company  believes  that the
       information contained in such exhibits, schedules and ancillary documents
       should  not be  considered  material  to an  investment  decision  in the
       Company.  The listed  agreement  includes a list briefly  identifying the
       contents of all omitted exhibits,  schedules and ancillary documents. The
       Company agrees to furnish  supplementally  to the Commission  (but not to
       file) a copy of any such  exhibit,  schedule or ancillary  document  upon
       request.
     **This exhibit is a management contract or compensatory plan or arrangement
       required  to be filed as an exhibit to the Form 10-K  pursuant to Item 14
       of Form 10-K.

                                       57