<PAGE>   1

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


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

(Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 1999

                                       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:  0-19285

                         ALLIED WASTE INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)


                 Delaware                                  88-0228636
       (State or other jurisdiction of                  (I.R.S. Employer
       incorporation or organization.)                 Identification No.)


     15880 North Greenway-Hayden Loop, Suite 100, Scottsdale, Arizona 85260
             (Address of principal executive offices and zip code)

Registrant's telephone number, including area code:  (602) 423-2946

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                            Yes  X      No ___

         Indicate the number of shares outstanding of the issuer's class of
common stock, as of the latest practicable date.

           Class         Outstanding as of May 12, 1999
       Common Stock              187,710,144


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

<PAGE>   2

                         ALLIED WASTE INDUSTRIES, INC.
                 FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1999

                                     INDEX


<TABLE>
<S>                                                                                            <C>
PART I     FINANCIAL INFORMATION
              Item 1  - Financial Statements
                         Condensed Consolidated Balance Sheets ..............................  3
                         Condensed Consolidated Statements of Operations ....................  4
                         Condensed Consolidated Statements of Cash Flows ....................  5
                         Notes to Condensed Consolidated Financial Statements ...............  6
              Item 2  - Management's Discussion and Analysis of Financial Condition and
                         Results of Operations ..............................................  18



PART II    OTHER INFORMATION
              Item 1 - Legal Proceedings ....................................................  33
              Item 2 - Changes in Securities ................................................  33
              Item 3 - Defaults Upon Senior Securities ......................................  33
              Item 4 - Submission of Matters to a Vote of Security Holders ..................  33
              Item 5 - Other Information ....................................................  33
              Item 6 - Exhibits and Reports on Form 8-K .....................................  34
              Signature .....................................................................  40
</TABLE>


                                       2
<PAGE>   3

                         ALLIED WASTE INDUSTRIES, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)


<TABLE>
<CAPTION>
                                                           December 31,     March 31,
                                                               1998           1999
                                                               ----           ----
                                                                           (unaudited)
<S>                                                        <C>             <C>
ASSETS
  Current Assets --
  Cash and cash equivalents                                $   39,742      $   37,043
  Accounts receivable, net of allowance of $ 13,907
    and $13,291                                               225,087         226,335
  Prepaid and other current assets                             47,184          63,887
  Deferred income taxes, net                                   44,141          31,993
  Assets held for sale                                        143,750         132,530
                                                           ----------      ----------
    Total current assets                                      499,904         491,788
Property and equipment, net                                 1,776,025       1,799,733
Goodwill, net                                               1,327,470       1,451,412
Other assets                                                  149,193         147,734
                                                           ----------      ----------
    Total assets                                           $3,752,592      $3,890,667
                                                           ==========      ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities --
  Current portion of long-term debt                        $   21,516      $   21,306
  Accounts payable                                            106,082          96,504
  Accrued closure, post-closure and environmental costs        41,938          38,853
  Other accrued liabilities                                   236,826         255,805
  Unearned revenue                                             48,511          53,928
                                                           ----------      ----------
    Total current liabilities                                 454,873         466,396
Long-term debt, less current portion                        2,118,927       2,190,313
Accrued closure, post-closure and environmental costs         205,982         207,968
Other long-term obligations                                    42,736          44,973
Commitments and contingencies
   Stockholders' equity                                       930,074         981,017
                                                           ----------      ----------
   Total liabilities and stockholders' equity              $3,752,592      $3,890,667
                                                           ==========      ==========
</TABLE>


The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.


                                       3
<PAGE>   4

                         ALLIED WASTE INDUSTRIES, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             (in thousands except for per share amounts; unaudited)


<TABLE>
<CAPTION>
                                                       Three Months Ended
                                                            March 31,
                                                      --------------------
                                                      1998            1999
                                                      ----            ----
<S>                                               <C>             <C>      
Revenues                                          $ 357,900       $ 408,045
Cost of operations                                  205,816         230,014
Selling, general and administrative expenses         39,680          33,809
Depreciation and amortization                        35,190          38,873
Goodwill amortization                                 6,333           8,771
Acquisition related and unusual costs                 2,456           1,116
                                                  ---------       ---------
  Operating income                                   68,425          95,462

Interest income                                        (184)           (375)
Interest expense                                     22,318          27,845
                                                  ---------       ---------
  Income before income taxes                         46,291          67,992
Income tax expense                                   14,727          27,537
                                                  ---------       ---------
  Net income                                      $  31,564       $  40,455
                                                  =========       =========

Basic EPS:
  Net income per share                            $    0.17       $    0.22
                                                  =========       =========
Weighted average common shares outstanding          181,578         186,403
                                                  =========       =========

Diluted EPS:
  Net income per share                            $    0.17       $    0.21
                                                  =========       =========
Weighted average common and common
   equivalent shares outstanding                    186,333         190,562
                                                  =========       =========
</TABLE>

The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.


                                       4
<PAGE>   5

                          ALLIED WASTE INDUSTRIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands; unaudited)

<TABLE>
<CAPTION>
                                                                            Three Months Ended
                                                                                  March 31,
                                                                            --------------------
                                                                            1998            1999
                                                                            ----            ----
<S>                                                                    <C>             <C>
Operating activities --
 Net income .......................................................... $  31,564       $  40,455
 Adjustments to reconcile net income to cash
   provided by operating activities--
   Provisions for:
     Depreciation and amortization ..................................     41,523          47,644
     Non-cash acquisition related and unusual costs .................       --               571
     Doubtful accounts ..............................................        429           1,238
     Accretion of senior discount  notes ............................      7,195            --   
     Deferred income taxes ..........................................      5,358          12,242
   Gain on sale of fixed assets ...................................         (515)         (1,643)
 Change in operating assets and liabilities, excluding the
 Effects of purchase acquisitions --
   Accounts receivable, prepaid expenses, inventories and other ...          (14)        (14,231)
   Accounts payable, accrued liabilities, unearned income
       and other ..................................................       13,698           5,887
   Closure and post-closure provision .............................        3,650           5,079
   Closure, post-closure and environmental expenditures ...........       (2,752)         (6,178)
                                                                       ---------       ---------
 Cash provided by operating activities ...............................   100,136          91,064
                                                                       ---------       ---------

Investing activities --
     Cash expenditures for acquisitions, net of cash acquired .......    (46,620)       (137,946)
     Capital expenditures, other than for acquisitions ..............    (43,671)        (23,923)
     Capitalized interest ...........................................    (16,325)        (16,029)
     Proceeds from sale of assets ...................................      1,322          17,299
     Change in deferred acquisition costs and notes receivable ......      4,933          (6,654)
                                                                       ---------       ---------
   Cash used in investing activities ...................................(100,361)       (167,253)
                                                                       ---------       ---------

Financing activities --
     Net proceeds from sale of common stock, and exercise of
       stock options and warrants .....................................    1,079           4,682
     Proceeds from long-term debt, net of issuance costs ............     59,411         158,924
     Repayments of long-term debt ...................................    (33,157)        (91,519)
     Other long-term  obligations ...................................     (8,209)          1,403
     Equity transactions of pooled companies ........................     (4,354)           --
                                                                       ---------       ---------
   Cash provided by financing activities ............................     14,770          73,490
                                                                       ---------       ---------

   Increase (decrease) in  cash and cash equivalents ................     14,545          (2,699)
   Cash and cash equivalents, beginning of period ...................     33,320          39,742
                                                                       ---------       ---------
   Cash and cash equivalents, end of period .........................  $  47,865       $  37,043
                                                                       =========       =========
</TABLE>


The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these financial statements.


                                       5
<PAGE>   6

                         ALLIED WASTE INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Allied Waste Industries, Inc. ("Allied" or the "Company"), is
incorporated under the laws of the state of Delaware. Allied is a solid waste
management company providing non-hazardous waste collection, transfer, recycling
and disposal services in selected markets.

         The condensed consolidated financial statements include the accounts of
Allied and its subsidiaries. All significant intercompany accounts and
transactions are eliminated in consolidation. The condensed consolidated balance
sheet as of December 31, 1998, which has been derived from audited consolidated
financial statements, and the unaudited interim condensed consolidated financial
statements included herein have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC"). As applicable
under such regulations, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The Company believes that
the presentations and disclosures herein are adequate to make the information
not misleading when read in conjunction with the Company's Annual Report on Form
10-K for the year ended December 31, 1998. The condensed consolidated financial
statements as of March 31, 1999 and for the three months ended March 31, 1998
and 1999 reflect, in the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to fairly state the financial
position and results of operations for such periods. The condensed consolidated
financial statements and accompanying notes have also been restated to reflect
acquisitions accounted for as poolings-of-interests in 1998 (See Note 2).

         Operating results for interim periods are not necessarily indicative of
the results for full years. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements of
Allied for the year ended December 31, 1998 and the related notes thereto
included in the Company's Annual Report on Form 10-K filed with the SEC on March
31, 1999.

         There have been no significant additions to or changes in accounting
policies of the Company since December 31, 1998. For a description of these
policies, see Note 1 of Notes to Consolidated Financial Statements for the year
ended December 31, 1998 in the Company's Annual Report on Form 10-K.

         Certain reclassifications have been made in prior period financial
statements to conform to the current presentation.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards 133 - "Accounting for Derivative Instruments
and Hedging Activities". This statement establishes accounting and reporting
standards for derivative instruments, including derivative instruments embedded
in other contracts, and for hedging activities. The statement, which is to be
applied prospectively, is effective for the Company's quarter ending March 31,
2000. The Company is currently evaluating the impact of SFAS 133 on its future
results of operations and financial position.

         During 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5 ("SOP 98-5") Reporting on the Costs of
Start-Up Activities. SOP 98-5 requires costs of start-up activities and
organization costs to be expensed as incurred. The new statement is effective
for fiscal years beginning after December 15, 1998. The Company adopted this
statement effective January 1, 1999. Initial application of SOP 98-5 is required
to be reported as the cumulative effect of a change in accounting. Adoption of
this standard did not have an impact on the Company's financial position or
results of operations.


                                       6
<PAGE>   7

                         ALLIED WASTE INDUSTRIES, INC.
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


ACQUISITION RELATED AND UNUSUAL COSTS

         During the first quarter of 1999, the Company recorded a $1.1 million
acquisition related and unusual charge for transaction and restructuring costs
associated primarily with acquisitions accounted for as poolings-of-interest.
Transaction costs include stock registration, legal, accounting, consulting,
engineering and other direct third-party costs incurred to complete the
acquisitions. Restructuring costs include employee termination and relocation,
write down of fixed assets, lease termination and other one-time charges related
to the acquisitions.

         During 1998, the Company implemented employee severance and
restructuring plans in connection with acquisitions accounted for as
poolings-of-interests. These plans and associated costs consist of the
following:

         Restructuring and abandonment costs include costs to consolidate or
         relocate redundant operations and to transition to common information
         systems. Approximately $7.6 million and $5.5 million of restructuring
         costs were accrued at December 31, 1998 and March 31, 1999,
         respectively, and are expected to be paid in 1999.

         Employee severance and transition costs consist of termination payments
         made to employees of acquired companies based on change of control
         provisions in preexisting contracts and costs associated with severance
         payments under exit or integration plans implemented in connection with
         the acquisitions. The exit and integration plans call for the
         termination of approximately 800 employees who were performing
         managerial, sales, administrative support, maintenance and repair, or
         hauling and landfill operations duties. All employees were identified
         and notified of their severance or transition benefits at the time
         management approved the plan, which occurred at or around the time of
         the acquisitions, and as of March 31, 1999, substantially all employees
         identified had been terminated. Approximately $10.1 million and $6.9
         million was accrued at December 31, 1998 and March 31, 1999,
         respectively, for amounts remaining to be paid in 1999.

         Employee severance and restructuring costs expensed during the first
         quarter of 1999 relating to plans implemented in 1998 were
         approximately $0.3 million.

STATEMENTS OF CASH FLOWS

         The non-cash transactions for the three months ended March 31, 1998 and
1999 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                    March 31,
                                                               ------------------
                                                                1998        1999
                                                                ----        ----
<S>                                                           <C>         <C>
Non-cash Transactions:
   Common stock issued in acquisitions ....................       6,971       1,571
   Debt and liabilities incurred or assumed 
      in acquisitions .....................................      11,843      17,486
</TABLE>


                                       7
<PAGE>   8

                         ALLIED WASTE INDUSTRIES, INC.
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


2.  BUSINESS COMBINATIONS AND DIVESTITURES

         Acquisitions accounted for as purchases are reflected in the results of
operations since the date of purchase in Allied's condensed consolidated
financial statements. The results of operations for acquisitions accounted for
as poolings-of-interests are included in Allied's condensed consolidated
financial statements for all periods presented. Often, the final determination
of the cost, and the allocation 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.

         In the first quarter of 1999, the Company acquired two companies in
transactions accounted for as poolings-of-interests. As the effect of these
business combinations was not significant, prior period financial statements
were not restated to include historical operating results of the acquired
companies.

         In the first quarter of 1999, the Company sold certain assets for
approximately $11.2 million. These assets were included in assets held for sale
as of December 31, 1998.

         The following table summarizes acquisitions for the three months ended
March 31, 1998 and 1999:

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                     March 31,
                                                              ----------------------
                                                              1998              1999
                                                              ----              ----
                                                                    (unaudited)
<S>                                                     <C>               <C>
Number of businesses acquired and accounted for as:
  Poolings-of-interests ...........................              3                 2
  Purchases .......................................              8                17
Total consideration (in millions) .................     $     53.6        $    175.0
Shares of common stock issued .....................      1,025,957(1)      1,476,977(2)
</TABLE>

__________

(1)  Includes 129,090 shares of contingently issuable common stock.
(2)  Includes 168,792 shares of contingently issuable common stock.


                                       8
<PAGE>   9

                         ALLIED WASTE INDUSTRIES, INC.
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


UNAUDITED PRO FORMA INCOME STATEMENT DATA

         The following unaudited pro forma consolidated data for the year ended
December 31, 1998 and the three months ended March 31, 1999 presents the results
of operations of Allied as if the companies purchased and sold in 1998 and
through March 31, 1999, had all occurred as of January 1, 1998. This data does
not purport to be indicative of the results of operations of Allied that might
have occurred during the periods indicated nor that might occur in the future
(in thousands, except per share data). 


<TABLE>
<CAPTION>
                                                   December 31, 1998
                                                   -----------------
                                            Reported(1)         Pro Forma
                                            -----------         ---------
                                                               (unaudited)
<S>                                      <C>                 <C>          
Revenues ..........................      $   1,575,612       $   1,670,445
Net loss to common shareholders ...            (98,251)           (105,957)
Net loss per common share - basic .              (0.54)              (0.57)
Net loss per common share - diluted              (0.54)              (0.57)
</TABLE>

<TABLE>
<CAPTION>
                                                   March 31, 1999
                                                   --------------
                                             Reported        Pro Forma
                                             --------        ---------
                                                    (unaudited)
<S>                                       <C>              <C>        
Revenues ...........................      $   408,045      $   409,152
Net income to common shareholders ..           40,455           40,118
Net income per common share - basic              0.22             0.22
Net income per common share -diluted             0.21             0.21
</TABLE>

(1)  Amounts have been restated to reflect acquisitions made during 1998
     using the pooling-of-interests method of accounting for business
     combinations.

3.  ASSETS HELD FOR SALE

         The ability to successfully implement the Company's vertical
integration business plan is a key consideration in determining whether the
Company will continue to operate in a specific market. In the normal course of
business, the Company has exited markets in which the execution of the vertical
integration business plan was not practicable. In October 1998, the Company
formalized plans to dispose of certain operating districts that represented
non-core or non-integrated assets. The Company has entered into agreements to
sell these assets and in accordance with Statement of Financial Accounting
Standard 121 ("SFAS 121"), Accounting for the Impairment of Long-lived Assets
and Long-lived Assets to be Disposed of recorded an impairment loss to reduce
the carrying value of the assets to net realizable value including an accrual
for the cost of disposal. In the first quarter of 1999, the Company completed
the sale of approximately $11.2 million of these assets. The remaining sales are
expected to be completed in the second quarter of 1999.


                                       9
<PAGE>   10

                         ALLIED WASTE INDUSTRIES, INC.
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


         The results of operations before depreciation and amortization of these
operating districts included in consolidated operating income, in accordance
with SFAS 121, was approximately $4.5 million in the first quarter of 1999.
During the period from January 1, 1999 through March 31, 1999, the Company
excluded from consolidated statements of operations, in accordance with SFAS
121, depreciation and amortization relating to assets held for sale in the
amount of $2.6 million. At December 31, 1998 and March 31, 1999, the net assets
subject to sale totaled $143.8 million and $132.5 million, respectively, which
are classified as assets held for sale in current assets on the Condensed
Consolidated Balance Sheets and are summarized as following (in thousands):

<TABLE>
<CAPTION>
                                 December 31,       March 31,
                                      1998            1999
                                      ----            ----
<S>                              <C>             <C>      
Accounts receivable, net ..      $  16,608       $  14,962
Other current assets ......          4,460           2,252
Property and equipment, net         55,869          52,704
Goodwill, net .............        106,214          99,025
Other long-term assets ....          1,595           1,383
Current liabilities .......         (1,785)         (1,085)
Long-term liabilities .....        (39,211)        (36,711)
                                 ---------       ---------
Total net assets ..........      $ 143,750       $ 132,530
                                 =========       =========
</TABLE>


4.    CLOSURE, POST-CLOSURE AND ENVIRONMENTAL COSTS

   Closure and post-closure costs --

         The net present value of the closure and post-closure commitment is
calculated assuming inflation of 2.0% and a risk-free capital rate of 6.5%.
Discounted amounts previously recorded are accreted to reflect the effects of
the passage of time. The Company's current estimate of total future payments for
closure and post-closure, in accordance with Subtitle D, is $1.2 billion,
adjusted for inflation, as shown below, while the present value of such estimate
is $396.5 million. At December 31,1998, accruals for landfill closure and
post-closure costs (including costs assumed through acquisitions) were
approximately $154.5 million. The accruals reflect relatively young landfills
whose estimated remaining lives, based on current waste flows, range from 1 to
over 75 years, with an estimated average remaining life of greater than 30
years.

         The Company's estimate of total future payments for closure and
post-closure liabilities as of December 31, 1998 for currently owned and
operated landfills is as follows (in thousands):

<TABLE>
<S>                      <C>        
     1999                $    28,938
     2000                     25,218
     2001                     13,264
     2002                     19,960
     2003                     20,646 
     Thereafter            1,119,766
                         -----------
                         $ 1,227,792
                         ===========
</TABLE>


                                       10
<PAGE>   11

                         ALLIED WASTE INDUSTRIES, INC.
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


    Environmental costs --

         In connection with the acquisition of companies, Allied engages an
independent environmental consulting firm to assist in conducting an
environmental assessment of companies acquired from third-parties. The ultimate
amounts for environmental liabilities cannot be determined and estimates of such
liabilities made by the Company, after consultation with its independent
environmental engineers, require assumptions about future events due to a number
of uncertainties including the extent of the contamination, the appropriate
remedy, the financial viability of other potentially responsible parties and the
final apportionment of responsibility among the potentially responsible parties.
Where the Company has concluded that its estimated share of potential
liabilities is probable, a provision has been made in the consolidated financial
statements. Since the ultimate outcome of these matters may differ from the
estimates used in the Company's assessment to date, the recorded liabilities
will be periodically evaluated as additional information becomes available to
ascertain that the accrued liabilities are adequate. The Company has determined
that the recorded liability for environmental matters as of December 31, 1998 of
approximately $93.4 million represents the most probable outcome of these
contingent matters.


                                       11
<PAGE>   12

                         ALLIED WASTE INDUSTRIES, INC.
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

5.  NET INCOME PER COMMON SHARE

         Net income per common share is calculated by dividing net income less
dividend requirements on preferred stock by the weighted average number of
common shares and common share equivalents outstanding during each period, as
restated to reflect acquisitions accounted for as poolings-of-interests in 1998.
The computation of basic earnings per share and diluted earnings per share is as
follows (in thousands, except per share data; unaudited):

<TABLE>
<CAPTION>
                                                     Three Months Ended
                                                       March 31, 1999
                                                       --------------
                                                     1998          1999
                                                     ----          ----
<S>                                              <C>           <C>
Basic earnings per share computation:
Net income available to common shareholders      $ 31,564      $ 40,455
                                                 ========      ========
Weighted average common shares outstanding        181,578       186,403
                                                 ========      ========
Basic earnings per share ..................      $   0.17      $   0.22
                                                 ========      ========
Diluted earnings per share computation:
Net income available to common shareholders      $ 31,564      $ 40,455
                                                 ========      ========
Weighted average common shares outstanding        181,578       186,403
Effect of stock options and warrants,
    assumed exercisable ...................         3,916         2,655
Effect of shares assumed
    pursuant to hold-back arrangements ....           839         1,504
                                                 --------      --------
Weighted average common and common
    equivalent shares outstanding .........       186,333       190,562
                                                 ========      ========
Diluted earnings per share ................      $   0.17      $   0.21
                                                 ========      ========
</TABLE>


6.  COMMITMENTS AND CONTINGENCIES

         The Company is subject to extensive and evolving laws and regulations
and has implemented its own environmental safeguards to respond to regulatory
requirements. In the normal course of conducting its operations, Allied may
become involved in certain legal and administrative proceedings. Some of these
actions may result in fines, penalties or judgements against the Company which
may have an impact on earnings for a particular period. Management expects that
such matters in process at March 31, 1999 which have not been accrued in the
consolidated balance sheet will not have a material adverse effect on the
Company's consolidated liquidity, financial position or results from operations.

         In connection with the 1996 acquisition of substantially all of the
non-hazardous solid waste management business conducted by Laidlaw Inc.
("Laidlaw"), Laidlaw disclosed to the Company the existence of a tax controversy
relating to disallowed deductions in income tax returns with the United States
Internal Revenue Service (the "IRS"). In the first quarter of 1999, Laidlaw
negotiated a settlement of the tax case with the IRS. The total net after tax
cash cost will be $226 million. The amount includes $121 million in taxes
together with interest penalties of $161 million ($105 million after tax). The
agreement satisfies assessments upheld in the tax court opinion received on July
1, 1998, in reference to the years 1986 through 1988, as well as claims asserted
by the IRS for the six subsequent years (1989 through 1994) of a nine-year
Netherlands-based financial program.


                                       12
<PAGE>   13

                         ALLIED WASTE INDUSTRIES, INC.
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


         The Company has obtained an indemnity from Laidlaw and certain of its
subsidiaries (the "Laidlaw Group") which covers the amounts at issue in the tax
controversy for which any direct or indirect subsidiary that was acquired from
Laidlaw in 1996 may ultimately be found liable. The obligation of the Laidlaw
Group to indemnify the Company in respect of amounts at issue in the tax
controversy is a general, unsecured obligation of the Laidlaw Group.

         In connection with certain acquisitions, the Company has entered into
agreements to pay royalties based on waste tonnage disposed at specified
landfills. The royalties are generally payable quarterly and amounts earned, but
not paid are accrued in the accompanying consolidated balance sheets.

         Allied has operating lease agreements for service facilities, office
space and equipment. Future minimum payments under non-cancelable operating
leases with terms in excess of one year are as follows (in thousands):

<TABLE>
<CAPTION>
                        December 31, 1998
                        -----------------
<S>                     <C>      
     1999                  $  12,629
     2000                     11,606
     2001                     10,462
     2002                      8,821
     2003                      9,239
     Thereafter               26,274
</TABLE>


Rental expense under such operating leases was approximately $13.9 million, $2.8
million and $6.5 million for the year ended December 31, 1998, and the three
months ended March 31, 1998 and 1999, respectively.

         The Company has entered into employment agreements with certain of its
executive officers for periods up to five years. The Company has agreed to
severance pay amounts equal to a multiple of defined compensation under certain
circumstances. In the event of a material change in control or termination of
all executive officers under such agreements, Allied would be required to make
payments of approximately $10.7 million, in addition to a reimbursement payment
to eliminate the effect of any excise taxes associated with this payment.

         Allied carries a broad range of insurance coverage for protection of
its assets and operations from certain risks including environmental impairment
liability insurance for certain landfills.

         The Company is also required to provide financial assurances to
governmental agencies under applicable environmental regulations relating to its
landfill operations and collection contracts. These financial assurance
requirements are satisfied by the Company issuing performance bonds, letters of
credit, insurance policies or trust deposits to secure the Company's obligations
as they relate to landfill closure and post-closure costs and performance under
certain collection contracts. At March 31, 1999, the Company had outstanding
approximately $448.5 million in financial assurance instruments, represented by
$288.9 million of performance bonds, $135.3 million of insurance policies and
$24.3 million of trust deposits. During 1999, the Company expects to be required
to provide approximately $460 million in financial assurance obligations
relating to its landfill operations and collection contracts. The Company
expects that financial assurance obligations will increase in the future as it
acquires and expands its landfill activities and that a greater percentage of
the financial assurance instruments will be comprised of performance bonds and
insurance policies.


                                       13
<PAGE>   14

                         ALLIED WASTE INDUSTRIES, INC.
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


7.  SUMMARIZED FINANCIAL INFORMATION OF ALLIED WASTE NORTH AMERICA, INC.

         As discussed in Note 5 of the Company's Annual Report on Form 10-K, the
$525 million of 10.25% senior subordinated notes due 2006 (the "1996 Notes") and
the aggregate of $1.7 billion of senior notes consisting of $225 million 7 3/8%
senior notes due 2004, $600 million 7 5/8% senior notes due 2006 and $875
million 7 7/8% senior notes due 2009 (the "1998 Senior Notes") issued by Allied
Waste North America, Inc. ("Allied NA"; a wholly owned, consolidated subsidiary
of the Company) are guaranteed by Allied and substantially all subsidiaries of
the Company. The 1996 Notes were repaid in December 1998. The separate complete
financial statements of Allied NA have not been included herein as management
has determined that such disclosure is not material. However, summarized
financial information for Allied NA and subsidiaries as of December 31, 1998 and
March 31, 1999 is as follows (in thousands):

               SUMMARIZED CONSOLIDATED BALANCE SHEET INFORMATION

<TABLE>
<CAPTION>
                                         December 31, 1998    March 31, 1999
                                         -----------------    --------------
                                                                (unaudited)
<S>                                      <C>                  <C>        
Current assets .......................      $   499,904       $   491,788
Property and equipment, net ..........        1,776,025         1,799,733
Goodwill, net ........................        1,327,470         1,451,412
Other non-current assets .............          149,193           147,734
Current liabilities ..................          445,528           466,396
Long-term debt, net of current portion        2,118,927         2,190,313
Due to parent ........................        1,083,515         1,170,970
Other long-term obligations ..........          268,407           252,941
Equity ...............................         (163,785)         (189,953)
</TABLE>

          SUMMARIZED CONSOLIDATED STATEMENT OF OPERATIONS INFORMATION

<TABLE>
<CAPTION>
                                          Three Months
                                        Ended March 31,
                                        ---------------
                                      1998          1999
                                      ----          ----
                                          (unaudited)
<S>                               <C>           <C>     
Revenue ....................      $357,900      $408,045
Operating costs and expenses       289,475       312,583
Operating income ...........        68,425        95,462
Net income .................        35,985        40,455
</TABLE>


                                       14
<PAGE>   15

                         ALLIED WASTE INDUSTRIES, INC.
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


8.  SEGMENT REPORTING

         The Company classifies its operations into six geographic regions:
Northeast, Southeast, Great Lakes, Midwest, Southwest and West United States.
The Company's revenues are derived from one industry segment, which includes the
collection, transfer, recycling and disposal of non-hazardous solid waste. The
Company evaluates performance based on several factors, of which the primary
financial measure is business segment earnings before depreciation and
amortization ("EBITDA") before acquisition related and unusual costs and asset
impairments. The accounting policies of the business segments are the same as
those described in the Organization and Summary of Significant Accounting
Policies (see Note 1). The tables below reflect certain geographic information
relating to the Company's operations for the quarters ended March 31, 1998 and
1999 (in thousands):


<TABLE>
<CAPTION>
                        North-        South-       Great                      South-
1998                     east          east        Lakes         Midwest        West          West         Other(1)        Total
                         ----          ----        -----         -------        ----          ----         --------        -----
<S>                   <C>           <C>           <C>           <C>           <C>           <C>           <C>            <C>
Revenues from
   external
   customers ...      $ 51,107      $ 38,541      $112,284      $ 46,290      $ 30,892      $ 77,479      $  1,307       $357,900
Intersegment
   revenues ....         7,839         5,606        19,734        10,769         6,912         6,725          --           57,585
EBITDA before
   non-recurring
   charges(2) ..        11,950        10,882        36,670        19,309        12,316        23,877        (2,600)       112,404

1999
Revenues from
   external
   customer ....      $ 68,538      $ 39,542      $113,872      $ 48,271      $ 39,239      $ 97,324      $  1,259       $408,045
Intersegment
   revenues ....         8,940         9,360        33,302        11,587         9,759         9,624          --           82,572
EBITDA before
   non-recurring
   charges(2) ..        15,679        12,792        45,300        22,188        16,581        33,357        (1,675)       144,222
</TABLE>

(1)   Amounts relate primarily to the Company's subsidiaries which provide
      services throughout the organization and not on a regional basis.

(2)   EBITDA before non-recurring charges excludes acquisition related and
      unusual costs and asset impairments.


                                       15
<PAGE>   16

                         ALLIED WASTE INDUSTRIES, INC.
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


Reconciliation of reportable segment primary financial measure to operating
income (amounts in thousands):

<TABLE>
<CAPTION>
                                       Three Months Ended
                                            March 31,
                                            ---------
Operating income:                      1998          1999
-----------------                      ----          ----
<S>                                <C>           <C>
Total EBITDA before
   non-recurring charges
   for reportable segments ..      $112,404      $144,222
Depreciation and amortization
   for reportable segments ..        41,523        47,644
Acquisition related and
   unusual costs ............         2,456         1,116
                                   --------      --------
   Operating income .........      $ 68,425      $ 95,462
                                   ========      ========
</TABLE>

Percentage of Company's total revenue attributable to services provided:

<TABLE>
<CAPTION>
                             Three Months Ended
                                 March 31,
                                 ---------
                              1998      1999
                              ----      ----
<S>                          <C>        <C>
          Collection ...       57%       56%
          Transfer .....        6         7
          Landfill (1) .       28        31
          Other ........        9         6
                              ---       ---
          Total revenues      100%      100%
                              ===       ===
</TABLE>

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


                                       16
<PAGE>   17

                         ALLIED WASTE INDUSTRIES, INC.
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


9.       SUBSEQUENT EVENTS

         In March 1999, Allied and Browning-Ferris Industries, Inc. ("BFI")
announced that they entered into a definitive merger agreement under which
Allied will acquire BFI for $45 in cash per BFI common share, as well as assume
approximately $1.8 billion in debt, in a transaction valued at approximately
$9.1 billion. Allied has bank commitments to finance the acquisition consisting
of $7 billion senior secured debt and $2.5 billion senior unsecured debt at
interest rates ranging from Libor plus 2.50% to Libor plus 3.50%, and a
commitment from Apollo Management IV, L.P., Blackstone Capital Partners III
Merchant Banking Fund L.P. and other investors to purchase $1 billion of 6.5%
convertible preferred stock. The transaction is structured as a merger of BFI
with a subsidiary of Allied and is subject to the approval of BFI stockholders
and other customary conditions. In April 1999, Allied and Stericycle, Inc.
("Stericycle") announced that they entered into a binding definitive agreement
under which Stericycle will purchase all of the medical waste operations, which
Allied intends to acquire from BFI for a purchase price of approximately $440
million. This transaction is subject to the consummation of Allied's acquisition
of BFI and certain other conditions.

         Subsequent to March 31, 1999, the Company acquired solid waste
companies representing approximately $122.6 million in annual revenues ($98.8
million, net of intercompany eliminations) for consideration of approximately
$153.5 million comprised of cash and notes. Additionally, the Company completed
the previously announced sales of certain non-core and non-integrated assets.
These assets were classified as "Assets held for sale" in the consolidated
balance sheets at December 31, 1998 and March 31, 1999.


                                       17
<PAGE>   18

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

         The following discussion should be read in conjunction with the
Company's Condensed Consolidated Financial Statements and the notes thereto,
included elsewhere herein.

INTRODUCTION

         The Company has experienced significant growth, a substantial portion
of which has resulted from the acquisition of solid waste businesses. Since
January 1, 1993, the Company has completed more than 185 acquisitions. In 1998,
the Company acquired 54 businesses and, subsequent to 1998 through March 31,
1999, it has acquired 19 businesses. The Company's Condensed Consolidated
Financial Statements have been restated to reflect the acquisition of companies
accounted for using the pooling-of-interests method for business combinations in
1998. The results of operations for the acquisitions accounted for under the
purchase method for business combinations are included in the Company's
financial statements only from the applicable date of acquisition. As a result,
the Company believes its historical results of operations for the periods
presented are not directly comparable to its current results of operations.

         In June 1998, the Company completed the acquisition of the Rabanco
Companies ("Rabanco") in a transaction accounted for using the
pooling-of-interests method for business combinations. Rabanco provides solid
waste collection, recycling, transportation and disposal services in the Pacific
Northwest and generated annual revenue of approximately $160 million excluding
the effects of the internalization of waste volumes.

         In August 1998, the Company acquired Illinois Recycling Services, Inc.
and its affiliates ("Illinois Recycling") in a transaction accounted for using
the pooling-of-interests method for business combinations. Illinois Recycling
provides solid waste collection, recycling and transportation services primarily
in the Chicago metro area and northern Indiana and generated annual revenue of
approximately $80 million excluding the effects of the internalization of waste
volumes.

         In October 1998, Allied acquired American Disposal Services, Inc.
("ADSI") in a transaction accounted for using the pooling-of-interests method
for business combinations. ADSI is a vertically integrated solid waste
management company providing collection, transfer, recycling and disposal
services to approximately 485,000 customers in 12 states, primarily in the
Midwest and Northeast United States and generated annual revenue of
approximately $240 million, excluding the effects of the internalization of
waste volumes.

         In December 1998, the Company completed a private offering of an
aggregate of $1.7 billion of senior notes consisting of $225 million 7 3/8%
senior notes due 2004 (the "Five Year Senior Notes"), $600 million 7 5/8% senior
notes due 2006 (the "Seven Year Senior Notes") and $875 million 7 7/8% senior
notes due 2009 (the "Ten Year Senior Notes", and together with the Five Year
Senior Notes and the Seven Year Senior Notes, the "1998 Senior Notes"). The
Company used the net proceeds from the 1998 Senior Notes to fund the purchase of
the Company's $525 million of 10.25% senior subordinated notes due 2006 (the
"1996 Notes") and $418 million face value 11.3% senior discount notes (the
"Senior Discount Notes") pursuant to tender offers the Company commenced in
November 1998, to repay borrowings outstanding under the Senior Credit Facility
(as defined herein) and certain capital lease obligations, and for general
corporate purposes.


                                       18
<PAGE>   19

         In March 1999, Allied and Browning-Ferris Industries, Inc. ("BFI")
announced that they entered into a definitive merger agreement under which
Allied will acquire BFI for $45 in cash per BFI common share, as well as assume
approximately $1.8 billion in debt, in a transaction valued at approximately
$9.1 billion. Allied has bank commitments to finance the acquisition consisting
of $7 billion senior secured debt and $2.5 billion senior unsecured debt at
interest rates ranging from Libor plus 2.50% to Libor plus 3.50%, and a
commitment from Apollo Management IV, L.P., Blackstone Capital Partners III
Merchant Banking Fund L.P. and other investors to purchase $1 billion of 6.5%
convertible preferred stock. The transaction is structured as a merger of BFI
with a subsidiary of Allied and is subject to the approval of BFI stockholders
and other customary conditions. In April 1999, Allied and Stericycle, Inc.
("Stericycle") announced that they entered into a binding definitive agreement
under which Stericycle will purchase all of the medical waste operations, which
Allied intends to acquire from BFI for a purchase price of approximately $440
million. This transaction is subject to the consummation of Allied's acquisition
of BFI and certain other conditions.


GENERAL

         Revenues. The Company's revenues are attributable primarily to fees
charged to customers for waste collection, transfer, recycling and disposal
services. The Company's collection services are generally provided under direct
agreements with its customers or pursuant to contracts with municipalities.
Commercial and municipal contract terms, where used, generally range from 1 to 5
years and commonly have automatic renewal options. The Company's landfill
operations include both Company-owned landfills and those operated for
municipalities for a fee. The Company is fully integrated in each geographic
region in which it is located as it provides collection, transfer and disposal
services. The following tables show for the periods indicated the percentage of
the Company's total reported revenues attributable to services provided and
revenues attributable to geographic regions. The following data have been
restated to give effect to acquisitions that were accounted for using the
pooling-of-interests method for business combinations.

<TABLE>
<CAPTION>
                                            Three Months
                                               Ended
                   Year Ended December 31,    March 31, 
                   1996     1997     1998       1999
                   ----     ----     ----       ----
<S>               <C>       <C>      <C>    <C>
Collection(1)        58%      57%      56%      56%
Transfer              6        7        7        7
Landfill (1)         26       26       30       31
Other                10       10        7        6 
                    ---      ---      ---      ---
Total revenues      100%     100%     100%     100% 
                    ===      ===      ===      ===
</TABLE>


<TABLE>
<CAPTION>
                                              Three Months
                                                  Ended
                     Year Ended December 31,    March 31,
                    1996     1997      1998       1999
                    ----     ----      ----       ----
<S>                 <C>      <C>       <C>    <C>
Great Lakes           32%      32%       32%       28%
Midwest                9       13        12        12
Northeast             12       15        14        16
Southeast             14        9        10        10 
Southwest              2       10        10        10
West                  31       21        22        24 
                    ----     ----      ----       --- 
Total revenues       100%     100%      100%      100%
                    ====     ====      ====       === 
</TABLE>

_________ 

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


                                       19
<PAGE>   20

         The Company's strategy is to develop vertically integrated operations
to ensure internalization of waste it collects and thus realize higher margins
from its operations. By disposing of waste at Company-owned and/or operated
landfills, the Company retains the margin generated through disposal operations
that would otherwise be earned by third-party landfills. Approximately 68% of
Company-collected waste was disposed of at Company-owned and/or operated
landfills as measured using volume in the first three months of 1999. In
addition, transfer stations are an integral part of the disposal process. The
Company locates its transfer stations in areas where its landfills are outside
of the population centers in which it collects waste. Such waste is transferred
to long-haul trailers or railcars and transported to its landfills.

         Expenses. Cost of operations includes labor, maintenance and repairs,
equipment and facility rent, utilities and taxes, the costs of ongoing
environmental compliance, safety and insurance, disposal costs and costs of
independent haulers transporting Company waste to the disposal site. Disposal
costs include certain landfill taxes, host community fees, payments under
agreements with respect to landfill sites that are not owned, landfill site
maintenance, fuel and other equipment operating expenses and accruals for
estimated closure and post-closure monitoring expenses anticipated to be
incurred in the future. 

         Selling, general and administrative expenses include management,
clerical and administrative compensation and overhead, sales costs, community
relations expenses and provisions for estimated uncollectible accounts
receivable and potentially unrealizable acquisition costs. 

         Depreciation and amortization expense includes depreciation of fixed
assets and amortization of landfill airspace, goodwill and other intangible
assets. 

         In connection with potential acquisitions, the Company incurs and
capitalizes certain transaction costs and integration costs which include stock
registration, legal, accounting, consulting, engineering and other direct costs.
When an acquisition is completed and is accounted for using the
pooling-of-interests method for business combinations, these costs are charged
to the statement of operations as acquisition related costs. When a completed
acquisition is accounted for using the purchase method for business
combinations, these costs are capitalized. The Company routinely evaluates
capitalized transaction and integration costs, and expenses those costs related
to acquisitions not likely to occur. Indirect acquisition costs, such as
executive salaries, general corporate overhead and other corporate services, are
expensed as incurred. 

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

         Accrued closure and post-closure costs represent an estimate of the
present value of the future obligation associated with closure and post-closure
monitoring of non-hazardous solid waste landfills currently owned and/or
operated by the Company. Site specific closure and post-closure engineering cost
estimates are prepared annually for landfills owned and/or operated by the
Company for which it is responsible for closure and post-closure. The present
value of estimated future costs is accrued based on accepted tonnage as landfill
airspace is consumed. Discounting of future costs is applied where the Company
believes that both the amounts and timing of related payments are reliably
determinable. The Company periodically updates its estimates of future closure
and post-closure costs. The impact of changes which are determined to be changes
in estimates are accounted for on a prospective basis. 


                                       20
<PAGE>   21

         The net present value of the closure and post-closure commitment is
calculated assuming inflation of 2.0% and a risk-free capital rate of 6.5%.
Discounted amounts previously recorded are accreted to reflect the effects of
the passage of time. The Company's current estimate of total future payments for
closure and post-closure is $1.2 billion, adjusted for inflation, while the
present value of such estimate is $396.5 million. At December 31, 1998 and March
31, 1999, accruals for landfill closure and post-closure costs (including costs
assumed through acquisitions) were approximately $154.5 million and $156.5
million. The accruals reflect relatively young landfills with estimated
remaining lives, based on current waste flows, that range from approximately 1
to over 75 years, and an estimated average remaining life of greater than 30
years. 

         Year 2000 Systems Modifications. Certain computer program software has
been written using two digits rather than four digits to define the applicable
year. If left uncorrected, a system failure or miscalculations causing
disruptions of operations could result. The Company is implementing a formal
plan which will require programming modifications to ensure the Company's
systems will operate properly in the year 2000 ("Year 2000"). This plan includes
four phases consisting of awareness, assessment and renovation, validation and
implementation. In management's opinion, the scope of Year 2000 systems
modifications will not be extensive and the costs associated with addressing
them are not expected to exceed $300,000. 

         AWARENESS. All Year 2000 projects with respect to internal systems are
         approved by senior management and evaluated and reviewed by the Board
         of Directors as deemed necessary if they are expected to result in
         material cost.

         ASSESSMENT AND RENOVATION. The assessment and renovation phase of the
         plan includes both information technology-related systems and
         non-information technology areas.

            Information technology-related systems. To date, the Company has
            assessed all information technology-related systems, which includes
            hardware, applications software, operating systems and databases.
            The Company's core business systems, including general ledger,
            accounts payable, fixed assets, customer billing and operations
            support, function properly with respect to dates in the year 2000.

            Non-information technology areas. The Company's assessment of Year
            2000 issues will include non-information technology areas such as
            equipment and communications systems. Non-information technology
            systems will be assessed during the second quarter of 1999 and, if
            necessary, a plan for modification will be reviewed for approval by
            senior management. In addition, the Company is working with outside
            vendors to determine if their information systems will function in
            the Year 2000. The Company will monitor this through periodic
            questionnaires and discussions with suppliers.

         VALIDATION. Validation included testing and verifying the performance,
         functionality, and integration of the system after Year 2000
         modifications were made. During the first quarter of 1999, the Company
         successfully completed the validation of the modifications made to the
         information technology-related systems. 

         IMPLEMENTATION. Implementation of the Company's plan includes both
         information technology-related systems and non-information technology
         areas.

                  Information technology-related systems. The Company has begun
implementing modifications to its information systems. To date, two of the
Company's six regions has been converted to the modified applications. The
Company intends to complete the implementation of all modified information
systems, vendor supplied Local Area Network ("LAN") applications, and LAN
operating-systems patches by the end of the second quarter of 1999.


                                       21
<PAGE>   22

                  Non-Information technology areas. The Company plans to modify
necessary non-information technology equipment and systems, establish
contingency plans, and update existing disaster recovery plans throughout 1999.


         Upon completion of its Year 2000 plan in 1999, the Company expects to
be Year 2000 compliant and expects to have no material exposure with respect to
information technology-related systems. Companies acquired during 1999 will be
converted to Allied's Year 2000 compliant information technology-related systems
in a timely manner subsequent to acquisition. With respect to non-information
technology areas, it is uncertain what risks are associated with the Year 2000
issue and any risks that may be identified could have a material, adverse effect
on the Company's business, financial condition, results of operations and cash
flows. There can be no assurances that the information systems of customers and
vendors on which the Company relies will be Year 2000 compliant in a timely
manner and will not have a material and adverse effect on the Company's
business, financial condition, results of operations and cash flow. 


                                       22
<PAGE>   23

                             RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1998 AND 1999 

         The following table sets forth the percentage relationship that the
various items bear to revenues and the percentage change in dollar amounts for
the periods indicated. The statement of operations data have been restated to
give effect to acquisitions that were accounted for using the
pooling-of-interests method for business combinations during 1998. See Note 2 to
the Company's Condensed Consolidated Financial Statements.

<TABLE>
<CAPTION>
                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                                           1999
                                                                         Compared
                                                                         to 1998
                                                                         % Change
                                                     1998        1999    in Amounts
                                                     ----        ----    ----------
<S>                                                 <C>         <C>      <C>
STATEMENT OF OPERATIONS DATA:
Revenues ...................................        100.0%      100.0%      14.0%
Cost of operations .........................         57.5        56.4       11.8
Selling, general and administrative expenses         11.1         8.3      (14.9)
Depreciation and amortization expense ......         11.6        11.7       14.7
Acquisition related and unusual costs ......          0.7         0.3      (54.6)
                                                    -----       -----
 Operating income ..........................         19.1        23.3       39.5
Interest expense, net ......................          6.2         6.7       24.4
Income tax expense .........................          4.1         6.7       87.0
                                                    -----       -----
 Net income ................................          8.8%        9.9%      28.2%
                                                    =====       =====
</TABLE>

  Revenues. Revenues in 1999 were $408.0 million compared to $357.9 million in
1998, an increase of 14.0%. The increase in revenues attributable to existing
operations ("Internal Growth") was 7%, with approximately 3% attributable to net
volume increases and approximately 4% attributable to price increases. The
additional revenue growth is attributable to companies acquired, net of revenues
sold, subsequent to the end of the same period in the prior year.

  Cost of Operations. Cost of operations in 1999 was $230.0 million compared to
$205.8 million in 1998, an increase of 11.8%. The increase in cost of operations
was primarily attributable to the increase in revenues described above. As a
percentage of revenues, cost of operations decreased to 56.4% in 1999 from 57.5%
in 1998. The 1998 operating margin decreased from the previously reported margin
due to the restatements for companies acquired subsequent to March 31, 1998 and
accounted for using the pooling-of-interests method for business combinations.
The operating margin was favorably impacted by increased volumes at the
landfills and other cost savings from the integration of acquisitions.

  Selling, General and Administrative Expenses. SG&A expenses in 1999 were $33.8
million compared to $39.7 million in 1998, a decrease of 14.9%. As a percentage
of revenues, SG&A decreased to 8.3% in 1999 compared to 11.1% in 1998. The 1998
SG&A expense increased from the previously reported amount due to the
restatements for companies acquired subsequent to March 31, 1998 and accounted
for using the pooling-of-interests method for business combinations. The 1999
SG&A expense decreased due to cost savings from the integration of businesses
acquired. Additionally, the decrease in SG&A as a percentage of revenues can be
attributed to the continued increase in revenues while reducing overhead costs.


                                       23
<PAGE>   24

  Depreciation and amortization. Depreciation and amortization in 1999 was $47.6
million compared to $41.5 million in 1998, an increase of 14.7%. The increase in
depreciation and amortization is primarily the result of acquisitions. Excluded
from depreciation and amortization expense in the first quarter of 1999 is
approximately $2.6 million associated with certain assets that have been held
for sale since the beginning of the fourth quarter of 1998. Adjusting for the
suspended depreciation and amortization associated with assets held for sale,
depreciation and amortization would have been approximately $50.2 million. The
increase in depreciation and amortization expense was due to an increase in
goodwill of approximately $318 million, increased internalized landfill tonnage
and increased capital expenditures in 1998.

  Acquisition related and unusual costs. During the first quarter of 1999, the
Company recorded a $1.1 million acquisition related and unusual charge for
transaction and restructuring costs associated primarily with acquisitions
accounted for as poolings-of-interest. Transaction costs include stock
registration, legal, accounting, consulting, engineering and other direct
third-party costs incurred to complete the acquisitions. Restructuring costs
include employee termination and relocation, write down of fixed assets, lease
termination, and other one-time charges related to the acquisitions.

         During 1998, the Company recorded acquisition related and unusual
charges in connection with acquisitions accounted for as poolings-of-interests.
These plans and associated costs consist of the following:

         Restructuring and abandonment costs include costs to consolidate or
         relocate redundant operations and to transition to common information
         systems. Approximately $7.6 million and $5.5 million of restructuring
         costs were accrued at December 31, 1998 and March 31, 1999,
         respectively, and are expected to be paid in 1999.

         Employee severance and transition costs consist of termination payments
         made to employees of acquired companies based on change of control
         provisions in preexisting contracts and costs associated with severance
         payments under exit or integration plans implemented in connection with
         the acquisitions. The exit and integration plans call for the
         termination of approximately 800 employees who were performing
         managerial, sales, administrative support, maintenance and repair, or
         hauling and landfill operations duties. All employees were identified
         and notified of their severance of transition benefits at the time
         management approved the plan, which occurred at or around the time of
         the acquisitions, and as of March 31, 1999, substantially all employees
         identified had been terminated. Approximately $10.1 million and $6.9
         million was accrued at December 31, 1998 and March 31, 1999,
         respectively, for benefits remaining to be paid in 1999.

         Employee severance and restructuring costs expensed during the first
         quarter of 1999 relating to plans implemented in 1998 were
         approximately $0.3 million.

  Net interest expense. Net interest expense was $27.5 million in 1999 compared
to $22.1 million in 1998, an increase of 24.4%. Interest expense increased due
to an increase in the average outstanding debt due primarily to acquisitions
completed since March 31, 1998 and the refinancing of the 1996 Notes and the
Senior Discount Notes. This increase was partially offset by a reduction in the
average interest rate due to the issuance of the 1998 Senior Notes in December
1998. Additionally, capitalized interest decreased to $16.0 million in 1999
compared to $16.3 million in 1998.

  Income taxes. Income taxes reflect a 40.5% effective income tax rate in 1999
and 31.8% in 1998. The increase is primarily caused by the income tax accounting
effects of applying the pooling-of-interests method of accounting for business
combinations (including the initial recording of deferred income taxes and
non-deductible transaction costs, partially offset by the absence of income
taxes on S-Corporation pre-combination earnings). The first quarter 1999
effective tax rate of 40.5% deviates from the federal statutory rate of 35% due
to the effects of differences in the treatment of goodwill for book and tax
purposes, state income taxes, and other permanent differences.


                                       24
<PAGE>   25

LIQUIDITY AND CAPITAL RESOURCES

         Historically, the Company has satisfied its acquisition, capital
expenditure and working capital needs primarily through bank financing and
public offerings and private placements of debt and equity securities. Between
December 1996 and March 31, 1999, the Company has completed debt financings in
excess of $3.5 billion.

         Due to the acquisition driven and the capital intensive nature of the
Company's business strategy, the Company has used, and believes that it is
reasonably possible that it will continue using amounts in excess of the cash
generated from operations to fund acquisitions and capital expenditures,
including landfill development. In connection with acquisitions, the Company has
assumed or incurred indebtedness with relatively short-term repayment schedules,
thereby increasing its current and medium-term liabilities. Additionally, some
operating equipment has been acquired using financing leases which have short
and medium-term maturities. Additionally, the Company uses excess cash generated
from operations to pay down amounts owed on its revolver which is classified as
long-term debt. As a result, the Company has periodically had low levels of
working capital or working capital deficits.

         During the three months ended March 31, 1998 and 1999, the Company's
cash flows from operating, investing and financing activities were as follows
(in millions):

<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                                          March 31,
                                                                          ---------
                                                                      1998         1999
                                                                      ----         ----
<S>                                                               <C>          <C>
OPERATING ACTIVITIES:
Net income .................................................      $   31.6     $   40.5
Non-cash operating expenses(1) .............................          58.1         66.7
Gain on sale of assets .....................................          (0.5)        (1.6)
Increase (decrease) in operating assets and liabilities, net          10.9        (14.5)
                                                                  --------     --------
Cash provided by operating activities ......................         100.1         91.1
                                                                  --------     --------

INVESTING ACTIVITIES:
Cost of acquisitions, net of cash acquired .................         (46.6)      (138.0)
Capital expenditures .......................................         (60.0)       (39.9)
Proceeds from sale of assets ...............................           1.3         17.3
Other ......................................................           4.9         (6.7)
                                                                  --------     --------
Cash used for investing activities .........................        (100.4)      (167.3)
                                                                  --------     --------

FINANCING ACTIVITIES:
Net proceeds from sale and
   redemption of preferred stock and common stock ..........           1.1          4.7
Net proceeds from long-term debt ...........................          59.4        158.9
Payments of long-term debt .................................         (33.1)       (91.5)
Other ......................................................         (12.6)         1.4
                                                                  --------     --------
Cash provided by financing activities ......................          14.8         73.5
                                                                  --------     --------
Increase (decrease) in cash ................................      $   14.5     $   (2.7)
                                                                  ========     ======== 
</TABLE>

__________________

(1)      Consists principally of provisions for depreciation and amortization,
         allowance for doubtful accounts, potentially unrealizable acquisition
         costs and deferred income taxes.


                                       25
<PAGE>   26

         As of March 31, 1999, the Company had cash and cash equivalents of
$37.0 million. The Company's capital expenditure and working capital
requirements have increased significantly, reflecting the Company's rapid growth
by acquisition and development of revenue producing assets, and will increase
further as the Company continues to pursue its business strategy. During the
three months ended March 31, 1999, the Company acquired solid waste operations
representing approximately $106.9 million in annual revenues ($92.1 million net
of intercompany eliminations), and sold operations representing approximately
$6.0 million in annual revenue. Net consideration of approximately $175.0
million comprised of cash, notes and Common Stock, was paid in these
transactions. Subsequent to March 31, 1999, the Company acquired solid waste
companies representing approximately $122.6 million in annual revenues ($98.8
million net of intercompany eliminations) for approximately $153.5 million
comprised of cash and notes. Additionally, the Company sold operations
representing approximately $91.6 million in annual revenues for approximately
$124.9 million in cash. For the calendar year 1999, the Company expects to spend
approximately $315 million for capital expenditures, closure and post-closure,
and remediation expenditures relating to its landfill operations. As the Company
continues to acquire waste operations in 1999, additional capital amounts will
be required during 1999 for the acquisition of businesses and the capital
expenditure requirements related to those acquired businesses.

         On March 31, 1999, the Company's debt structure consisted primarily of
$1.7 billion of the 1998 Senior Notes and $300 million outstanding under the
Term Loan Facility (as defined herein) and $74 million under the Revolving
Credit Facility. As of March 31, 1999 there is aggregate availability under the
Revolving Credit Facility of approximately $667 million to be used for working
capital, letters of credit, acquisitions and other general corporate purposes.
The indentures relating to the 1998 Senior Notes and the Credit Agreement
contain financial and operating covenants and restrictions on the ability of the
Company to complete acquisitions, pay dividends, incur indebtedness, make
investments and take certain other corporate actions. A substantial portion of
the Company's available cash will be required to be applied to service
indebtedness. Currently, on an annualized basis, this is expected to include
approximately $214.9 million in annual principal and interest payments.

         The Company is also required to provide financial assurances to
governmental agencies under applicable environmental regulations relating to its
landfill operations and collection contracts. These financial assurance
requirements are satisfied by the Company issuing performance bonds, letters of
credit, insurance policies or trust deposits to secure the Company's obligations
as they relate to landfill closure and post-closure costs and performance under
certain collection contracts. At March 31, 1999, the Company had outstanding
approximately $448.5 million in financial assurance instruments, represented by
$288.9 million of performance bonds, $135.3 million of insurance policies and
$24.3 million of trust deposits. During 1999, the Company expects to be required
to provide approximately $460 million in financial assurance obligations
relating to its landfill operations and collection contracts. The Company
expects that financial assurance obligations will increase in the future as it
acquires and expands its landfill activities and that a greater percentage of
the financial assurance instruments will be comprised of performance bonds and
insurance policies.

         The Company has lease facilities (the "Lease Facilities") that allow it
to enter into equipment leases at rates ranging from similar term treasury note
rates plus 1.55% for terms of 36 to 84 months. The Company has equipment leases
outstanding at December 31, 1998 and March 31, 1999 of $36.6 million and $34.8
million, respectively.


                                       26
<PAGE>   27

         Subtitle D and other regulations that apply to the non-hazardous waste
disposal industry have required the Company, as well as others in the industry,
to alter operations and to modify or replace pre-Subtitle D landfills. Such
expenditures have been and will continue to be substantial. Further regulatory
changes could accelerate expenditures for closure and post-closure monitoring
and obligate the Company to spend sums in addition to those presently reserved
for such purposes. These factors, together with the other factors discussed
above, could substantially increase the Company's operating costs and impair the
Company's ability to invest in its facilities.

         The Company's ability to meet future capital expenditure and working
capital requirements, to make scheduled payments of principal, to pay interest,
or to refinance its indebtedness, and to fund capital amounts required for the
acquisition of businesses and the expansion of existing businesses depends on
its future performance, which, to a certain extent, is subject to general
economic, financial, competitive, legislative, regulatory and other factors
beyond its control. Based upon the current level of operations and anticipated
growth, management of the Company believes that available cash flow, together
with available borrowing under the Credit Agreement, the Lease Facilities and
other sources of liquidity, will be adequate to meet the Company's anticipated
future requirements for working capital, letters-of-credit, capital
expenditures, scheduled payments of principal and interest on debt incurred
under the Credit Agreement, interest on the 1998 Senior Notes, and capital
amounts required for acquisitions and expansion. However, the principal payment
at maturity on the 1998 Senior Notes (beginning in 2004) may require
refinancing. There can be no assurance that the Company's business will generate
sufficient cash flow from operations or that future financings will be available
in an amount sufficient to enable the Company to service its indebtedness or to
make necessary capital expenditures, or that any refinancing would be available
on commercially reasonable terms if at all. Additionally, depending on the
timing, amount and structure of any future acquisitions and the availability of
funds under the Credit Agreement, the Company may need to raise additional
capital to fund the acquisition and integration of additional solid waste
businesses. The Company may raise such funds through additional bank financings
or public or private offerings of its debt and equity securities. There can be
no assurance that the Company will be able to secure such funding, if necessary,
on favorable terms, if at all. If the Company is not successful in securing such
funding, the Company's ability to pursue its business strategy may be impaired
and results of operations for future periods may be negatively affected. 

SIGNIFICANT FINANCING EVENTS

         In June 1998, the Company repaid $486.8 million outstanding under the
1997 Credit Agreement and entered into a new credit agreement (the "Credit
Agreement"). The Credit Agreement provides a $800 million five year senior
secured revolving credit facility (the "Revolving Credit Facility") and a $300
million five year senior secured term loan facility (the "Term Loan Facility"
and together with the Revolving Credit Facility, the "Senior Credit Facility").
The Term Loan Facility is a funded, amortizing senior secured term loan with
annual principal payments increasing from $75 million in 2001, to $105 million
in 2002, and to $120 million in 2003. Principal under the Revolving Credit
Facility is due upon maturity

         In addition to the scheduled principal payments above, the Company is
also required to make mandatory prepayments on the Senior Credit Facility equal
to 75% or 50% of the net proceeds from certain debt issues and up to 75% or 50%
of the net proceeds from the sale of assets if the Company's Leverage Ratio, as
defined in the Credit Agreement, exceeds 4.5 to 1.0 or 4.0 to 1.0, respectively.
Mandatory prepayments shall be applied first to the outstanding revolving credit
advances and Term Loans pro rata based on outstandings, until no revolving
credit advances are outstanding, and then to repay outstanding Term Loans.

         Borrowings under the Credit Agreement may be used for acquisitions, the
issuance of letters of credit, working capital and other general corporate
purposes. Of the $800 million available under the Revolving Credit Facility, no
more than $250 million may be used to support the issuance of letters of credit.


                                       27
<PAGE>   28

         The Senior Credit Facility bears interest, at the Company's option, at
the lesser of (a) a Base Rate, or (b) a Eurodollar Rate, both terms defined in
the Credit Agreement, plus, in either case, an agreed upon applicable margin.
The applicable margin will be adjusted from time to time pursuant to a pricing
grid based upon the Company's Total Debt to EBITDA ratio, as defined in the
Credit Agreement, and varies between zero percent and 0.50% for Base Rate loans,
and 0.75% and 1.75% for Eurodollar loans.

         The Senior Credit Facility is guaranteed by substantially all of the
Company's present and future subsidiaries. In addition, the Senior Credit
Facility is secured by substantially all the personal property and a pledge of
the stock of substantially all the Company's present and future subsidiaries.

         The Credit Agreement contains certain financial covenants including,
but not limited to, a Total Debt to EBITDA ratio, a Fixed Charge Coverage ratio,
and an Interest Expense Coverage ratio, all terms as defined in the Credit
Agreement. In addition, the Credit Agreement also limits the Company's ability
to make acquisitions, purchase fixed assets above certain amounts, pay
dividends, incur additional indebtedness and liens, make optional prepayments on
certain subordinated indebtedness, make investments, loans or advances, enter
into certain transactions with affiliates or enter into a merger, consolidation
or sale of all or a substantial portion of the Company's assets. The Company is
in compliance with all applicable covenants at March 31, 1999.

         In December 1998, Allied NA issued an aggregate of $1.7 billion of
senior notes consisting of $225 million 7 3/8% senior notes due 2004 (the "Five
Year Senior Notes"), $600 million 7 5/8% senior notes due 2006 (the "Seven Year
Senior Notes"), and $875 million 7 7/8% senior notes due 2009 (the "Ten Year
Senior Notes" and collectively the "1998 Senior Notes") in a Rule 144A offering
which was subsequently registered for public trading with the Securities and
Exchange Commission (the "SEC") in January, 1999. The Company used the net
proceeds from the 1998 Senior Notes to fund the purchase of all of the
outstanding 1996 Notes and Senior Discount Notes, to repay borrowings
outstanding under the Senior Credit Facility and certain capital lease
obligations, and for general corporate purposes. The Five Year Senior Notes and
Seven Year Senior Notes will be redeemable, at the option of the Company, in
whole or from time to time in part, at a redemption price equal to the greater
of (i) 100% of their principal amount or (ii) the sum of the present values of
the remaining scheduled payments of principal and interest thereon discounted to
maturity on a semi-annual basis at the treasury yield plus 50 basis points, plus
in each case accrued but unpaid interest to but excluding the date of
redemption. The Ten Year Senior Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after January 1, 2004 in cash at
the redemption price plus accrued and unpaid interest to but excluding the date
of redemption. Prior to January 1, 2004, the Ten Year Senior Notes will be
redeemable, at the option of the Company, in whole or in part, at any time, in
cash, at a redemption price equal to the greater of (i) 100% of their principal
amount or (ii) the sum of the present values of the remaining scheduled payments
of principal and interest thereon discounted to maturity on a semi-annual basis
at the treasury yield plus 50 basis points, plus accrued but unpaid interest to
but excluding the date of redemption. In addition, at any time prior to January
1, 2002, the Company may on any one or more occasions redeem up to 33 1/3% of
the aggregate principal amount of Ten Year Senior Notes originally issued at a
redemption price equal to 107.9% of the principal amount thereof, plus accrued
and unpaid interest to the date of redemption, with the net cash proceeds of one
or more public offerings of capital stock; provided that the notice of
redemption with respect to any such redemption is mailed within 30 days
following the closing of the corresponding public offering. The 1998 Senior
Notes will not be subject to any redemption at the option of any holder thereof
prior to the final maturity of such notes except as set forth in the applicable
indenture. The 1998 Senior Notes are guaranteed by the Company and substantially
all of Allied NA's current and future subsidiaries, the guarantees of which are
expressly subordinated to the guarantees of Allied NA's Credit Agreement.


                                       28
<PAGE>   29

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

         This quarterly report includes forward looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended ("Forward Looking
Statements"). All statements other than statements of historical fact included
in this report, are Forward Looking Statements. Although the Company believes
that the expectations reflected in such Forward Looking Statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Generally, these statements relate to business plans or
strategies, projected or anticipated benefits or other consequences of such
plans or strategies, number of acquisitions and projected or anticipated
benefits from acquisitions made by or to be made by the Company, or projections
involving anticipated revenues, earnings, levels of capital expenditures or
other aspects of operating results. All phases of the Company operations are
subject to a number of uncertainties, risks and other influences, many of which
are outside the control of the Company and any one of which, or a combination of
which, could materially affect the results of the Company's operations and
whether Forward Looking Statements made by the Company ultimately prove to be
accurate. Such important factors ("Important Factors") that could cause actual
results to differ materially from the Company's expectations are disclosed in
this section and elsewhere in this report. All subsequent written and oral
Forward Looking Statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by the Important Factors
described below that could cause actual results to differ from the Company's
expectations. The forward-looking statements made herein are only made as of the
date of this filing and the Company undertakes no obligation to publicly update
such forward-looking statements to reflect subsequent events or circumstances.

         Competition. The solid waste collection and disposal business is highly
competitive and requires substantial amounts of capital. The Company competes
with numerous waste management companies, some of which have significantly
larger operations and greater resources than the Company. The Company also
competes with those counties and municipalities that maintain their own waste
collection and disposal operations. Forward Looking Statements assume that the
Company will be able to effectively compete with the other waste management
companies and municipalities.

         Availability of Acquisition Targets. The Company's ongoing acquisition
program is a key element of its expansion strategy. In addition, obtaining
landfill permits has become increasingly difficult, time consuming and
expensive. There can be no assurance that the Company will succeed in obtaining
landfill permits or locating appropriate acquisition candidates that can be
acquired at price levels that the Company considers appropriate and that
reflects historical prices. The Forward Looking Statements assume that a number
of acquisition candidates and landfill properties sufficient to meet the
Company's goals will be available for purchase and that the Company will be able
to complete the acquisitions at prices that the Company has experienced in the
past two years.

         Integration. The Company's financial position and results of operations
depend to a large extent on the integration of recently acquired businesses. The
Forward Looking Statements assume that integration of acquired companies,
including the internalization of waste, will require from three to nine months
from the date the acquisition closes. Failure to achieve effective integration
in the anticipated time period or at all could have an adverse effect on the
Company's future results of operations.

         Ongoing Capital Requirements. To the extent that internally generated
cash and cash available under the Company's existing credit facilities are not
sufficient to provide the cash required for future operations, capital
expenditures, acquisitions, debt repayment obligations and/or financial
assurance obligations, the Company will require additional equity and/or debt
financing in order to provide such cash. The Company has incurred significant
debt obligations in the last two years, which entail substantial debt service
costs. The Forward Looking Statements assume that the Company will be able to
raise the capital necessary to finance such requirements at rates that are as
good as or better than those it is currently experiencing. There can be no
assurance, however, that such financing will be available or, if available, will
be available on terms satisfactory to the Company.


                                       29
<PAGE>   30

         Economic Conditions. The Company's business is affected by general
economic conditions. The Forward Looking Statements assume that the Company will
be able to achieve internal volume and price growth which is not impacted by an
economic downturn. As revenue of the Company continues to grow it is likely that
the rates of internal growth will reflect growth rates which are less than those
experienced in 1998. There can be no assurance that an economic downturn will
not result in a reduction in the volume of waste being disposed of at the
Company's operations and/or the price that the Company can charge for its
services.

         Weather Conditions. Protracted periods of inclement weather may
adversely affect the Company's operations by interfering with collection and
landfill operations, delaying the development of landfill capacity and/or
reducing the volume of waste generated by the Company's customers. In addition,
particularly harsh weather conditions may result in the temporary suspension of
certain of the Company's operations. The Forward Looking Statements do not
assume that such weather conditions will occur.

         Dependence on Senior Management. The Company is highly dependent upon
its senior management team. In addition, as the Company continues to grow, its
requirements for operations management with waste industry experience will also
increase. The availability of such experienced management is not known. The
Forward Looking Statements assume that experienced management will be available
when needed by the Company at compensation levels that are within industry
norms. The loss of the services of any member of senior management or the
inability to hire experienced operations management could have a material
adverse effect on the Company.

         Influence of Government Regulation. The Company's operations are
subject to and substantially affected by extensive federal, state and local
laws, regulations, orders and permits, which govern environmental protection,
health and safety, zoning and other matters. These regulations may impose
restrictions on operations that could adversely affect the Company's results,
such as limitations on the expansion of disposal facilities, limitations on or
the banning of disposal of out-of-state waste or certain categories of waste or
mandates regarding the disposal of solid waste. Because of heightened public
concern, companies in the waste management business may become subject to
judicial and administrative proceedings involving federal, state or local
agencies. These governmental agencies may seek to impose fines or to revoke or
deny renewal of operating permits or licenses for violations of environmental
laws or regulations or to require remediation of environmental problems at sites
or nearby properties, or resulting from transportation or predecessors'
transportation and collection operations, all of which could have a material
adverse effect on the Company. Liability may also arise from actions brought by
individuals or community groups in connection with the permitting or licensing
of operations, any alleged violations of such permits and licenses or other
matters. The Forward Looking Statements assume that there will be no materially
negative impact on the Company's operations due to government regulation.

         Potential Environmental Liability. The Company may incur liabilities
for the deterioration of the environment as a result of its operations. Any
substantial liability for environmental damage could materially adversely affect
the operating results and financial condition of the Company. Due to the limited
nature of the Company's insurance coverage of environmental liability, if the
Company were to incur liability for environmental damage, its business and
financial condition could be materially adversely affected. The Forward Looking
Statements assume that the Company will not incur any material environmental
liabilities other than those for which a provision has been recorded in the
consolidated financial statements and disclosed in the notes thereto.

         Year 2000 Systems Modifications. The Company expects to be Year 2000
compliant in a timely manner and expects to have no material exposure with
respect to information technology-related systems. With respect to
non-information technology areas, it is uncertain what risks are associated with
the Year 2000 issue and any risks that may be identified could have a material,
adverse effect on the Company's business, financial condition, results of
operations and cash flows. There can be no assurances that the systems of
customers and vendors on which the Company relies will be converted in a timely
manner and will not have an adverse effect on the Company's systems or
operations. The Forward-Looking Statements assume that there will be no material
adverse effect on the Company's systems or operations related to the Year 2000
issue.


                                       30
<PAGE>   31

INFLATION AND PREVAILING ECONOMIC CONDITIONS

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

SEASONALITY

         The Company believes that its collection, transfer and landfill
operations can be adversely affected by protracted periods of inclement weather
which could delay the development of landfill capacity or transfer of waste
and/or reduce the volume of waste generated.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is subject to interest rate risk on its long-term debt.
Although no exposure exists with respect to the Company's fixed rate long-term
corporate debt instruments, the Company runs the risk of interest rate
fluctuations with respect to its Libor variable rate Senior Credit Facility at
December 31, 1998. To modify the risk from these interest rate fluctuations, the
Company enters into hedging transactions that have been authorized pursuant to
the Company's policies and procedures. The Company does not use financial
instruments for trading purposes and is not a party to any leveraged
derivatives. The following table sets forth, as of December 31, 1998, the
Company's long-term debt obligations, principal cash flows by scheduled
maturity, average interest rate and estimated fair market value (amounts in
thousands, except interest rates):

<TABLE>
<CAPTION>
                                  Senior Credit       Average
                                    Facility       Interest Rate
                                    --------       -------------
<S>                               <C>              <C>
          1999                     $     --  
          2000                             --
          2001                         75,000
          2002                        105,000
          2003                        120,000
          Thereafter                      --
                                   ----------
          Total                    $  300,000           6.0%
                                   ==========
          Estimated Fair Value
          at December 31, 1998     $  300,000
                                   ==========
</TABLE>


                                       31
<PAGE>   32

         The Company has effectively converted its long-term debt, which
requires payment at variable rates of interest, to fixed rate obligations
through interest rate swap transactions. These transactions require the Company
to pay fixed rates of interest on notional amounts of principal to
counter-parties. The counter-parties, in turn, pay to the Company variable rates
of interest on the same notional amounts of principal. Increases or decreases in
short-term market rates would not impact earnings and cash flow as all variable
rate debt has been swapped for fixed rates. In addition, decreases in long-term
market interest rates would have the effect of increasing the fair value of the
Company's long-term debt and other long-term, fixed rate obligations. The
following interest rate table shows the interest rate swaps that were in effect
and their fair value as of December 31, 1998:

<TABLE>
<CAPTION>
   Notional                                                                                          Fair
  Principal                    Interest                  Underlying                   Interest   Market Value
(in thousands)   Maturity        Paid                    Obligations                  Received   in thousands)
--------------   --------        ----                    -----------                  --------   -------------
<S>             <C>            <C>            <C>                                     <C>        <C>
$ 50,000        April 1999       5.12%        Credit Agreement Term Loan Facility      Libor       $  6.0 
  50,000        October 1999     6.02         Credit Agreement Term Loan Facility      Libor        497.4
  50,000        November 1999    5.90         Credit Agreement Term Loan Facility      Libor        442.9
  50,000        November 1999    5.91         Credit Agreement Term Loan Facility      Libor        439.5
  50,000        March 2000       6.06         Credit Agreement Term Loan Facility      Libor        618.5
  50,000        September 2000   6.08         Credit Agreement Term Loan Facility      Libor        894.3
</TABLE>

MARKET PRICE RISK

         The Company has risk exposure associated with the market price on the
1998 Senior Notes. The 1998 Senior Notes are recorded at book value, which could
vary from current market prices. At December 31, 1998, the 1998 Senior Notes had
a value of $1.7 billion based on quoted average market prices.


                                       32
<PAGE>   33
                                    PART II

                               OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

No changes to previously reported information.

ITEM 2.  CHANGES IN SECURITIES

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5.  OTHER INFORMATION


                                       33
<PAGE>   34

         EXHIBITS --

2.1      Stock Purchase Agreement dated September 17, 1996 among the Company,
         Allied NA, 3294862 Canada Inc., Laidlaw Inc., Laidlaw Transportation,
         Inc., Laidlaw Waste Systems, Inc., Laidlaw Waste Systems (Canada) Ltd.
         and Laidlaw Medical Services Ltd. Exhibit 2.1 to the Company's Current
         Report on Form 8-K dated October 2, 1996, is incorporated herein by
         reference.

2.2      Purchase Agreement relating to the 1996 Notes dated November 25, 1996.
         Exhibit 2.1 to the Company's Current Report on Form 8-K dated December
         19, 1996, is incorporated herein by reference.

2.3      Share Purchase Agreement dated January 15, 1997 among the Company,
         Allied Waste Holdings (Canada) Ltd., Laidlaw Waste Systems, Inc., USA
         Waste Services, Inc. and Canadian Waste Services, Inc. Exhibit 10.0 to
         the Company's Current Report on Form 8-K dated January 30, 1997, is
         incorporated herein by reference.

2.4      Amended and Restated Agreement and Plan of Reorganization between
         Allied Waste Industries, Inc. and Rabanco Acquisition Company, Rabanco
         Acquisition Company Two, Rabanco Acquisition Company Three, Rabanco
         Acquisition Company Four, Rabanco Acquisition Company Five, Rabanco
         Acquisition Company Six, Rabanco Acquisition Company Seven, Rabanco
         Acquisition Company Eight, Rabanco Acquisition Company Nine, Rabanco
         Acquisition Company Ten, Rabanco Acquisition Company Eleven, and
         Rabanco Acquisition Company Twelve. Exhibit 2.4 to the Company's
         Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 is
         incorporated herein by reference.

2.5      Agreement and plan of Merger dated as of August 10, 1998 by and among
         Allied Waste Industries, Inc., AWIN II Acquisition Corporation and
         American Disposal Services Inc. Exhibit 2 to the Company's Current
         Report on Form 8-K filed August 21, 1998 is incorporated hereby by
         reference.

2.6      Agreement and Plan of Merger dated as of March 7, 1999 by and among
         Allied Waste Industries, Inc., AWIN I Acquisition Corporation and
         Browning-Ferris Industries, Inc. Exhibit 2 to the Company's Current
         Report on Form 8-K filed March 16, 1999 is incorporated herein by
         reference.

3.1      Amended Certificate of Incorporation of the Company (Incorporated
         herein by reference to Exhibit 3.1 to the Company's Report on Form 10-K
         for the fiscal year ended December 31, 1996).

3.2      Amended and Restated Bylaws of the Company as of May 13, 1997. Exhibit
         3.2 to the Company's Report on Form 10-Q for the quarter ended June 30,
         1997 is incorporated herein by reference. 

3.3      Amendment to Amended Certificate of Incorporation of the Company dated
         October 15, 1998. Exhibit 3.4 to the Company's Report on Form 10-Q for
         the quarter ended September 30, 1998 is incorporated herein by
         reference.

4.1      Specimen certificate for shares of Common Stock par value $.01 per
         share. Exhibit 4.2 of the Company's Registration Statement on Form S-1
         (No. 33-48507) is incorporated herein by reference.

4.2      Indenture relating to the 1994 Notes dated January 15, 1994 between the
         Company and First Trust National Association, as trustee ("First
         Trust"). Exhibit 4.1 to the Company's Registration Statement on Form
         S-1 (No. 33-73110) is incorporated herein by reference.

4.3      Specimen certificate representing the 1994 Notes. Exhibit 4.2 of the
         Company's Registration Statement on Form S-1 (No. 33-48507) is
         incorporated herein by reference.

4.4      Second Supplemental Indenture relating to the 1994 Notes dated June 30,
         1994 between the Company and First Trust. Exhibit 1.1 to the Company's
         Current Report on Form 8-K dated December 29, 1994, is incorporated
         herein by reference.

4.5      Third Supplemental Indenture relating to the 1994 Notes dated January
         31, 1995 between the Company and First Trust. Exhibit 10.3 to the
         Company's Quarterly Report on Form 10-Q dated August 10, 1995, is
         incorporated herein by reference.


                                       34
<PAGE>   35

4.6      Fourth Supplemental Indenture relating to the 1994 Notes dated January
         23, 1996, between the Company and First Trust. Exhibit 10.1 to the
         Company's Current Report on Form 8-K dated January 22, 1996, is
         incorporated herein by reference.

4.7      Fifth Supplemental Indenture relating to the 1994 Notes dated July 30,
         1996 between the Company and First Trust. Exhibit 10.2 to the Company's
         Quarterly Report on Form 10-Q dated August 14, 1996, is incorporated
         herein by reference.

4.8      Indenture relating to the 1996 Notes dated February 28, 1997 between
         the Company and First Trust. Exhibit 4.1 to the Company's Registration
         Statement on Form S-4 (No. 333-22575) is incorporated herein by
         reference.

4.9      1991 Incentive Stock Plan of the Company. Exhibit 10.T to the Company's
         Form 10 dated May 14, 1991, is incorporated herein by reference.

4.10     1991 Non-Employee Director Stock Plan of the Company. Exhibit 10.U to
         the Company's Form 10 dated May 14, 1991, is incorporated herein by
         reference.

4.11     1993 Incentive Stock Plan of the Company. Exhibit 10.3 to the Company's
         Registration Statement on Form S-1 (No. 33-73110) is incorporated
         herein by reference.

4.12     1994 Amended and Restated Non-Employee Director Stock Option Plan of
         the Company. Exhibit B to the Company's Definitive Proxy Statement in
         accordance with Schedule 14A dated April 28, 1994, is incorporated
         herein by reference.

4.13     Amendment to the 1994 Amended and Restated Non-Employee Director Stock
         Option Plan. Exhibit 10.2 to the Company's Quarterly Report on Form
         10-Q dated August 10, 1995, is incorporated herein by reference.

4.14     Amended and Restated 1994 Incentive Stock Plan. Exhibit 10.1 to the
         Company's Quarterly Report on Form 10-Q dated May 31, 1996, is
         incorporated herein by reference.

4.15     Indenture, dated as of May 15, 1997, by and among the Company and First
         Bank National Association with respect to the Senior Discount Notes and
         Exchange Notes. Exhibit 4.1 to the Company's Registration Statement on
         Form S-4 (No. 333-31231) is incorporated herein by reference.

4.16     Indenture, dated as of December 1, 1996, by and among the Company, the
         Guarantors and First Bank National Association with respect to the 1996
         Notes and Exchange Notes. Exhibit 4.1 to the Company's Registration
         Statement on Form S-4 (No. 333-22575) is incorporated herein by
         reference.

4.17     First Supplemental Indenture dated December 30, 1996 related to the
         1996 Notes. Exhibit 4.2 to the Company's Registration Statement on Form
         S-4 (No. 333-22575) is incorporated herein by reference.

4.18     Second Supplemental Indenture dated April 30, 1997 related to the 1996
         Notes. Exhibit 4.3 to the Company's Registration Statement on Form S-4
         (No. 333-22575) is incorporated herein by reference.

4.19     Senior Subordinated Guarantee dated as of December 1, 1996 related to
         the 1996 Notes. Exhibit 4.5 to the Company's Registration Statement on
         Form S-4 (No. 333-22575) is incorporated herein by reference.

4.20     Amendment No. 1 to the 1991 Incentive Stock Plan dated November 1,
         1996. Exhibit 4.20 to the Company's Annual Report on Form 10-K dated
         March 31, 1998 is incorporated herein by reference.

4.21     Indenture relating to the 1998 Senior Notes, dated as of December 23,
         1998, by and among the Company and U.S. Bank Trust National
         Association, as Trustee, with respect to the 1998 Senior Notes and
         Exchange Notes. Exhibit 4.1 to the Company's Registration Statement on
         Form S-4 (No.333-70709) is incorporated herein by reference.

4.22     Five Year Series Supplement Indenture relating to the 1998 Five Year
         Notes, dated December 23, 1998, among the Company, the Guarantors and
         the Trustee. Exhibit 4.2 to the Company's Registration Statement on
         Form S-4 (No.333-70709) is incorporated herein by reference.

4.23     Form of Series B Five Year Notes (included in Exhibit 4.22). Exhibit
         4.3 to the Company's Registration Statement on Form S-4 (No.333-70709)
         is incorporated herein by reference.


                                       35
<PAGE>   36

4.24     Seven Year Series Supplement Indenture relating to the 1998 Seven Year
         Notes, dated December 23, 1998, among the Company, the Guarantors and
         the Trustee. Exhibit 4.4 to the Company's Registration Statement on
         Form S-4 (No.333-70709) is incorporated herein by reference.

4.25     Form of Series B Seven Year Notes (included in Exhibit 4.24). Exhibit
         4.5 to the Company's Registration Statement on Form S-4 (No.333-70709)
         is incorporated herein by reference.

4.26     Ten Year Series Supplement Indenture relating to the 1998 Ten Year
         Notes, dated December 23, 1998, among the Company, the Guarantors and
         the Trustee. Exhibit 4.6 to the Company's Registration Statement on
         Form S-4 (No.333-70709) is incorporated herein by reference.

4.27     Form of Series B Ten Year Notes (included in Exhibit 4.26). Exhibit 4.7
         to the Company's Registration Statement on Form S-4 (No.333-70709) is
         incorporated herein by reference.

4.28     Certificate of Designation, Preferences, Rights and Limitations of 7%
         Cumulative Convertible Preferred Stock, par value $.10 per share dated
         April 27, 1994. Exhibit 3.2 to Post-Effective Amendment Number 1 to the
         Company's Registration Statement on Form S-1 (No. 33-75070) is
         incorporated herein by reference. 

10.1     Agreement dated September 17, 1996, between Allied Waste Industries,
         Inc., and the Laidlaw Group. Exhibit 10.1 to the Company's Current
         Report on Form 8-K dated October 2, 1996, is incorporated herein by
         reference. 

10.2     Credit Agreement among the Company, Allied NA, and the various lenders
         represented by Goldman Sachs Credit Partners, L.P., Credit Suisse and
         Citibank, N.A. dated December 30, 1996. Exhibit 10.11 to the Company's
         report on Form 10-K for the year ended December 31, 1996 is
         incorporated herein by reference.

10.3     Securities Purchase Agreement dated April 21, 1997 between Apollo
         Investment Fund III, L.P., Apollo Overseas Partners III, L.P., and
         Apollo (U.K.) Partners III, L.P.; Blackstone Capital Partners II
         Merchant Banking Fund L.P., Blackstone Offshore Capital Partners II
         L.P. and Blackstone Family Investment Partnership II L.P.; Laidlaw Inc.
         and Laidlaw Transportation, Inc.; and Allied Waste Industries. Exhibit
         10.1 to the Company's Report on Form 10-Q for the quarter ended March
         31, 1997 is incorporated herein by reference.

10.4     Shareholders Agreement dated as of April 14, 1997 between Allied Waste
         Industries, Inc. and Apollo Investment Fund III, L.P., Apollo Overseas
         Partners III, L.P., and Apollo (U.K.) Partners III, L.P.; Blackstone
         Capital Partners II Merchant Banking Fund L.P., Blackstone Offshore
         Capital Partners II L.P. and Blackstone Family Investment Partnership
         II L.P. Exhibit 10.2 to the Company's Report on Form 10-Q for the
         quarter ended March 31, 1997 is incorporated herein by reference.

10.5     Amended and Restated Shareholders Agreement dated as of April 21, 1997
         between Allied Waste Industries, Inc. and Apollo Investment Fund III,
         L.P., Apollo Overseas Partners III, L.P., and Apollo (U.K.) Partners
         III, L.P.; Blackstone Capital Partners II Merchant Banking Fund L.P.,
         Blackstone Offshore Capital Partners II L.P. and Blackstone Family
         Investment Partnership II L.P. Exhibit 10.3 to the Company's Report on
         Form 10-Q for the quarter ended March 31, 1997 is incorporated herein
         by reference.

10.6     Registration Rights Agreement dated as of April 21, 1997 between Allied
         Waste Industries, Inc. and Apollo Investment Fund III, L.P., Apollo
         Overseas Partners III, L.P., and Apollo (U.K.) Partners III, L.P.;
         Blackstone Capital Partners II Merchant Banking Fund L.P., Blackstone
         Offshore Capital Partners II L.P. and Blackstone Family Investment
         Partnership II L.P. Exhibit 10.4 to the Company's Report on Form 10-Q
         for the quarter ended March 31, 1997 is incorporated herein by
         reference.

10.7     Amended and Restated Credit Agreement dated as of June 5, 1997 among
         the Company, Allied Waste North America, the Lenders referred to
         therein and Credit Suisse First Boston, Goldman Sachs Credit Partners
         L.P., and Citibank, N.A., as agents. Exhibit 10.1 to the Company's
         Report on Form 10-Q for the quarter ended June 30, 1997 is incorporated
         herein by reference.


                                       36
<PAGE>   37

10.8     Executive Employment Agreement between the Company and with Henry L.
         Hirvela dated June 6, 1997. Exhibit 10.2 to the Company's Report on
         Form 10-Q for the quarter ended June 30, 1997 is incorporated herein by
         reference.

*10.9    Executive Employment Agreement between the Company and with Thomas H.
         Van Weelden dated January 1, 1999.

10.10    Executive Employment Agreement between the Company and with Larry D.
         Henk dated June 6, 1997. Exhibit 10.4 to the Company's Report on Form
         10-Q for the quarter ended June 30, 1997 is incorporated herein by
         reference.

10.11    Executive Employment Agreement between the Company and with Steven M.
         Helm dated June 6, 1997. Exhibit 10.5 to the Company's Report on Form
         10-Q for the quarter ended June 30, 1997 is incorporated herein by
         reference.

*10.12   Executive Employment Agreement between the Company and with Donald W.
         Slager dated January 1, 1999.

10.13    Registration Rights Agreement, dated as of December 5, 1996, by and
         among the Company, Goldman Sachs & Co., Merrill Lynch & Co., and Credit
         Suisse First Boston. Exhibit 10.1 to the Company's Registration
         Statement on Form S-4 (No. 333-31231) is incorporated herein by
         reference.

10.14    Executive Employment Agreement between the Company and with Peter S.
         Hathaway dated June 6, 1997. Exhibit 10.14 to the Company's Report on
         Form 10-K for the year ended December 31, 1997 is incorporated herein
         by reference.

10.15    Executive Employment Agreement between the Company and with Michael G.
         Hannon dated June 6, 1997. Exhibit 10.15 to the Company's Report on
         Form 10-K for the year ended December 31, 1997 is incorporated herein
         by reference.

10.16    Share Purchase Agreement between Allied Waste Industries, Inc. and
         Allied Waste Holdings (Canada) Ltd. and Laidlaw Waste Systems, Inc. and
         USA Waste Services, Inc. and Canadian Waste Services Inc. dated January
         15, 1997. Exhibit 10.0 to the Company's Report on Form 8-K dated
         January 30, 1997 is incorporated herein by reference.

10.17    Credit Agreement dated as of June 18, 1998 among Allied Waste North
         America, Inc., Allied Waste Industries, Inc., certain lenders, Credit
         Suisse, First Boston and Goldman Sachs Credit Partners L.P., as
         Co-Syndication Agents, Citibank, N.A., as Issuing Bank and Citicorp
         USA, Inc., as Administrative Agent. Exhibit 10.1 to the Company's
         Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 is
         incorporated herein by reference.

10.18    Registration Rights Agreement, dated as of December 23, 1998, by and
         among the Company, the Guarantors, and Donaldson, Lufkin & Jenrette
         Securities Corporation, relating to the $225,000,000 7 3/8% Senior
         Notes due 2004. Exhibit 10.1 to the Company's Registration Statement on
         Form S-4 (No.333-70709) is incorporated herein by reference.

10.19    Registration Rights Agreement, dated as of December 23, 1998, by and
         among the Company, the Guarantors, and Donaldson, Lufkin & Jenrette
         Securities Corporation, relating to the $600,000,000 7 5/8% Senior
         Notes due 2006. Exhibit 10.2 to the Company's Registration Statement on
         Form S-4 (No.333-70709) is incorporated herein by reference.

10.20    Registration Rights Agreement, dated as of December 23, 1998, by and
         among the Company, the Guarantors, and Donaldson, Lufkin & Jenrette
         Securities Corporation, Goldman Sachs & Co., Credit Suisse First
         Boston, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
         Stanley Dean Witter Incorporated, Bear, Stearns, & Co, Inc., BT Alex.
         Brown, CIBC Oppenheimer, Salomon Smith Barney, Inc., relating to the
         $875,000,000 7 7/8% Senior Notes due 2009. Exhibit 10.3 to the
         Company's Registration Statement on Form S-4 (No.333-70709) is
         incorporated herein by reference.

10.21    Purchase Agreement dated December 14, 1998, by and among the Company,
         the Guarantors and Donaldson, Lufkin & Jenrette Securities Corporation,
         with respect to the 1998 Senior Notes. Exhibit 


                                       37
<PAGE>   38

         10.4 to the Company's Registration Statement on Form S-4 (No.333-70709)
         is incorporated herein by reference. 

*10.22   Equity Commitment Letter dated March 7, 1999 among the Company, Apollo
         Management IV, L.P., Blackstone Management Associates III L.L.C.,
         Greenwich Street Investments II, L.L.C., DLJMB Funding, Inc., DLJ
         Merchant Banking II, Inc., DLJ Diversified Partners, Inc., and DLJ LBO
         Plans Management Corporation.

*10.23   Side Letter Agreement between the Company, Apollo Investors II, L.P.,
         Apollo Capital Management II, Inc., Blackstone Management Associates
         II, L.L.C., and Blackstone Management Associates III, L.L.C.

*12      Ratio of earnings to fixed charges.

*27      Financial Data Schedule for the three months ended March 31, 1999.

*        Filed herewith.


                                       38
<PAGE>   39

REPORTS ON FORM 8-K DURING THE QUARTER ENDED MARCH 31, 1999

        March 8, 1999      The Company's Current Report on Form 8-K reports the
                           merger agreement between Allied Waste Industries,
                           Inc. and Browning-Ferris Industries, Inc. under which
                           Allied will acquire Browning-Ferris Industries, Inc.
                           for $45.00 in cash per Browning-Ferris Industries,
                           Inc. common share.


                                       39
<PAGE>   40
                                   SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant, Allied Waste Industries, Inc., has caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.


                                  ALLIED WASTE INDUSTRIES, INC.

                                  By: /s/  HENRY L. HIRVELA
                                      -----------------------------------------
                                                  Henry L. Hirvela
                                      Vice President and Chief Financial Officer
                                           (Principal Financial Officer)



                                  By: /s/  PETER S. HATHAWAY
                                      -----------------------------------------
                                                 Peter S. Hathaway
                                     Vice President and Chief Accounting Officer
                                           (Principal Accounting Officer)

Date:  May 14, 1999


                                       40
<PAGE>   41
                                 EXHIBIT INDEX



         Exhibits --

2.1      Stock Purchase Agreement dated September 17, 1996 among the Company,
         Allied NA, 3294862 Canada Inc., Laidlaw Inc., Laidlaw Transportation,
         Inc., Laidlaw Waste Systems, Inc., Laidlaw Waste Systems (Canada) Ltd.
         and Laidlaw Medical Services Ltd. Exhibit 2.1 to the Company's Current
         Report on Form 8-K dated October 2, 1996, is incorporated herein by
         reference.

2.2      Purchase Agreement relating to the 1996 Notes dated November 25, 1996.
         Exhibit 2.1 to the Company's Current Report on Form 8-K dated December
         19, 1996, is incorporated herein by reference.

2.3      Share Purchase Agreement dated January 15, 1997 among the Company,
         Allied Waste Holdings (Canada) Ltd., Laidlaw Waste Systems, Inc., USA
         Waste Services, Inc. and Canadian Waste Services, Inc. Exhibit 10.0 to
         the Company's Current Report on Form 8-K dated January 30, 1997, is
         incorporated herein by reference.

2.4      Amended and Restated Agreement and Plan of Reorganization between
         Allied Waste Industries, Inc. and Rabanco Acquisition Company, Rabanco
         Acquisition Company Two, Rabanco Acquisition Company Three, Rabanco
         Acquisition Company Four, Rabanco Acquisition Company Five, Rabanco
         Acquisition Company Six, Rabanco Acquisition Company Seven, Rabanco
         Acquisition Company Eight, Rabanco Acquisition Company Nine, Rabanco
         Acquisition Company Ten, Rabanco Acquisition Company Eleven, and
         Rabanco Acquisition Company Twelve. Exhibit 2.4 to the Company's
         Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 is
         incorporated herein by reference.

2.5      Agreement and plan of Merger dated as of August 10, 1998 by and among
         Allied Waste Industries, Inc., AWIN II Acquisition Corporation and
         American Disposal Services Inc. Exhibit 2 to the Company's Current
         Report on Form 8-K filed August 21, 1998 is incorporated hereby by
         reference.

2.6      Agreement and Plan of Merger dated as of March 7, 1999 by and among
         Allied Waste Industries, Inc., AWIN I Acquisition Corporation and
         Browning-Ferris Industries, Inc. Exhibit 2 to the Company's Current
         Report on Form 8-K filed March 16, 1999 is incorporated herein by
         reference.

3.1      Amended Certificate of Incorporation of the Company (Incorporated
         herein by reference to Exhibit 3.1 to the Company's Report on Form 10-K
         for the fiscal year ended December 31, 1996).

3.2      Amended and Restated Bylaws of the Company as of May 13, 1997. Exhibit
         3.2 to the Company's Report on Form 10-Q for the quarter ended June 30,
         1997 is incorporated herein by reference. 3.3 Amendment to Amended
         Certificate of Incorporation of the Company dated October 15, 1998.
         Exhibit 3.4 to the Company's Report on Form 10-Q for the quarter ended
         September 30, 1998 is incorporated herein by reference.

4.1      Specimen certificate for shares of Common Stock par value $.01 per
         share. Exhibit 4.2 of the Company's Registration Statement on Form S-1
         (No. 33-48507) is incorporated herein by reference.

4.2      Indenture relating to the 1994 Notes dated January 15, 1994 between the
         Company and First Trust National Association, as trustee ("First
         Trust"). Exhibit 4.1 to the Company's Registration Statement on Form
         S-1 (No. 33-73110) is incorporated herein by reference.

4.3      Specimen certificate representing the 1994 Notes. Exhibit 4.2 of the
         Company's Registration Statement on Form S-1 (No. 33-48507) is
         incorporated herein by reference.

4.4      Second Supplemental Indenture relating to the 1994 Notes dated June 30,
         1994 between the Company and First Trust. Exhibit 1.1 to the Company's
         Current Report on Form 8-K dated December 29, 1994, is incorporated
         herein by reference.

4.5      Third Supplemental Indenture relating to the 1994 Notes dated January
         31, 1995 between the Company and First Trust. Exhibit 10.3 to the
         Company's Quarterly Report on Form 10-Q dated August 10, 1995, is
         incorporated herein by reference.

<PAGE>   42

4.6      Fourth Supplemental Indenture relating to the 1994 Notes dated January
         23, 1996, between the Company and First Trust. Exhibit 10.1 to the
         Company's Current Report on Form 8-K dated January 22, 1996, is
         incorporated herein by reference.

4.7      Fifth Supplemental Indenture relating to the 1994 Notes dated July 30,
         1996 between the Company and First Trust. Exhibit 10.2 to the Company's
         Quarterly Report on Form 10-Q dated August 14, 1996, is incorporated
         herein by reference.

4.8      Indenture relating to the 1996 Notes dated February 28, 1997 between
         the Company and First Trust. Exhibit 4.1 to the Company's Registration
         Statement on Form S-4 (No. 333-22575) is incorporated herein by
         reference.

4.9      1991 Incentive Stock Plan of the Company. Exhibit 10.T to the Company's
         Form 10 dated May 14, 1991, is incorporated herein by reference.

4.10     1991 Non-Employee Director Stock Plan of the Company. Exhibit 10.U to
         the Company's Form 10 dated May 14, 1991, is incorporated herein by
         reference.

4.11     1993 Incentive Stock Plan of the Company. Exhibit 10.3 to the Company's
         Registration Statement on Form S-1 (No. 33-73110) is incorporated
         herein by reference.

4.12     1994 Amended and Restated Non-Employee Director Stock Option Plan of
         the Company. Exhibit B to the Company's Definitive Proxy Statement in
         accordance with Schedule 14A dated April 28, 1994, is incorporated
         herein by reference.

4.13     Amendment to the 1994 Amended and Restated Non-Employee Director Stock
         Option Plan. Exhibit 10.2 to the Company's Quarterly Report on Form
         10-Q dated August 10, 1995, is incorporated herein by reference.

4.14     Amended and Restated 1994 Incentive Stock Plan. Exhibit 10.1 to the
         Company's Quarterly Report on Form 10-Q dated May 31, 1996, is
         incorporated herein by reference.

4.15     Indenture, dated as of May 15, 1997, by and among the Company and First
         Bank National Association with respect to the Senior Discount Notes and
         Exchange Notes. Exhibit 4.1 to the Company's Registration Statement on
         Form S-4 (No. 333-31231) is incorporated herein by reference.

4.16     Indenture, dated as of December 1, 1996, by and among the Company, the
         Guarantors and First Bank National Association with respect to the 1996
         Notes and Exchange Notes. Exhibit 4.1 to the Company's Registration
         Statement on Form S-4 (No. 333-22575) is incorporated herein by
         reference.

4.17     First Supplemental Indenture dated December 30, 1996 related to the
         1996 Notes. Exhibit 4.2 to the Company's Registration Statement on Form
         S-4 (No. 333-22575) is incorporated herein by reference.

4.18     Second Supplemental Indenture dated April 30, 1997 related to the 1996
         Notes. Exhibit 4.3 to the Company's Registration Statement on Form S-4
         (No. 333-22575) is incorporated herein by reference.

4.19     Senior Subordinated Guarantee dated as of December 1, 1996 related to
         the 1996 Notes. Exhibit 4.5 to the Company's Registration Statement on
         Form S-4 (No. 333-22575) is incorporated herein by reference.

4.20     Amendment No. 1 to the 1991 Incentive Stock Plan dated November 1,
         1996. Exhibit 4.20 to the Company's Annual Report on Form 10-K dated
         March 31, 1998 is incorporated herein by reference.

4.21     Indenture relating to the 1998 Senior Notes, dated as of December 23,
         1998, by and among the Company and U.S. Bank Trust National
         Association, as Trustee, with respect to the 1998 Senior Notes and
         Exchange Notes. Exhibit 4.1 to the Company's Registration Statement on
         Form S-4 (No.333-70709) is incorporated herein by reference.

4.22     Five Year Series Supplement Indenture relating to the 1998 Five Year
         Notes, dated December 23, 1998, among the Company, the Guarantors and
         the Trustee. Exhibit 4.2 to the Company's Registration Statement on
         Form S-4 (No.333-70709) is incorporated herein by reference.

4.23     Form of Series B Five Year Notes (included in Exhibit 4.22). Exhibit
         4.3 to the Company's Registration Statement on Form S-4 (No.333-70709)
         is incorporated herein by reference.

<PAGE>   43

4.24     Seven Year Series Supplement Indenture relating to the 1998 Seven Year
         Notes, dated December 23, 1998, among the Company, the Guarantors and
         the Trustee. Exhibit 4.4 to the Company's Registration Statement on
         Form S-4 (No.333-70709) is incorporated herein by reference.

4.25     Form of Series B Seven Year Notes (included in Exhibit 4.24). Exhibit
         4.5 to the Company's Registration Statement on Form S-4 (No.333-70709)
         is incorporated herein by reference.

4.26     Ten Year Series Supplement Indenture relating to the 1998 Ten Year
         Notes, dated December 23, 1998, among the Company, the Guarantors and
         the Trustee. Exhibit 4.6 to the Company's Registration Statement on
         Form S-4 (No.333-70709) is incorporated herein by reference.

4.27     Form of Series B Ten Year Notes (included in Exhibit 4.26). Exhibit 4.7
         to the Company's Registration Statement on Form S-4 (No.333-70709) is
         incorporated herein by reference.

4.28     Certificate of Designation, Preferences, Rights and Limitations of 7%
         Cumulative Convertible Preferred Stock, par value $.10 per share dated
         April 27, 1994. Exhibit 3.2 to Post-Effective Amendment Number 1 to the
         Company's Registration Statement on Form S-1 (No. 33-75070) is
         incorporated herein by reference. 

10.1     Agreement dated September 17, 1996, between Allied Waste Industries,
         Inc., and the Laidlaw Group. Exhibit 10.1 to the Company's Current
         Report on Form 8-K dated October 2, 1996, is incorporated herein by
         reference. 

10.2     Credit Agreement among the Company, Allied NA, and the various lenders
         represented by Goldman Sachs Credit Partners, L.P., Credit Suisse and
         Citibank, N.A. dated December 30, 1996. Exhibit 10.11 to the Company's
         report on Form 10-K for the year ended December 31, 1996 is
         incorporated herein by reference.

10.3     Securities Purchase Agreement dated April 21, 1997 between Apollo
         Investment Fund III, L.P., Apollo Overseas Partners III, L.P., and
         Apollo (U.K.) Partners III, L.P.; Blackstone Capital Partners II
         Merchant Banking Fund L.P., Blackstone Offshore Capital Partners II
         L.P. and Blackstone Family Investment Partnership II L.P.; Laidlaw Inc.
         and Laidlaw Transportation, Inc.; and Allied Waste Industries. Exhibit
         10.1 to the Company's Report on Form 10-Q for the quarter ended March
         31, 1997 is incorporated herein by reference.

10.4     Shareholders Agreement dated as of April 14, 1997 between Allied Waste
         Industries, Inc. and Apollo Investment Fund III, L.P., Apollo Overseas
         Partners III, L.P., and Apollo (U.K.) Partners III, L.P.; Blackstone
         Capital Partners II Merchant Banking Fund L.P., Blackstone Offshore
         Capital Partners II L.P. and Blackstone Family Investment Partnership
         II L.P. Exhibit 10.2 to the Company's Report on Form 10-Q for the
         quarter ended March 31, 1997 is incorporated herein by reference.

10.5     Amended and Restated Shareholders Agreement dated as of April 21, 1997
         between Allied Waste Industries, Inc. and Apollo Investment Fund III,
         L.P., Apollo Overseas Partners III, L.P., and Apollo (U.K.) Partners
         III, L.P.; Blackstone Capital Partners II Merchant Banking Fund L.P.,
         Blackstone Offshore Capital Partners II L.P. and Blackstone Family
         Investment Partnership II L.P. Exhibit 10.3 to the Company's Report on
         Form 10-Q for the quarter ended March 31, 1997 is incorporated herein
         by reference.

10.6     Registration Rights Agreement dated as of April 21, 1997 between Allied
         Waste Industries, Inc. and Apollo Investment Fund III, L.P., Apollo
         Overseas Partners III, L.P., and Apollo (U.K.) Partners III, L.P.;
         Blackstone Capital Partners II Merchant Banking Fund L.P., Blackstone
         Offshore Capital Partners II L.P. and Blackstone Family Investment
         Partnership II L.P. Exhibit 10.4 to the Company's Report on Form 10-Q
         for the quarter ended March 31, 1997 is incorporated herein by
         reference.

10.7     Amended and Restated Credit Agreement dated as of June 5, 1997 among
         the Company, Allied Waste North America, the Lenders referred to
         therein and Credit Suisse First Boston, Goldman Sachs Credit Partners
         L.P., and Citibank, N.A., as agents. Exhibit 10.1 to the Company's
         Report on Form 10-Q for the quarter ended June 30, 1997 is incorporated
         herein by reference.

<PAGE>   44

10.8     Executive Employment Agreement between the Company and with Henry L.
         Hirvela dated June 6, 1997. Exhibit 10.2 to the Company's Report on
         Form 10-Q for the quarter ended June 30, 1997 is incorporated herein by
         reference.

*10.9    Executive Employment Agreement between the Company and with Thomas H.
         Van Weelden dated January 1, 1999.

10.10    Executive Employment Agreement between the Company and with Larry D.
         Henk dated June 6, 1997. Exhibit 10.4 to the Company's Report on Form
         10-Q for the quarter ended June 30, 1997 is incorporated herein by
         reference.

10.11    Executive Employment Agreement between the Company and with Steven M.
         Helm dated June 6, 1997. Exhibit 10.5 to the Company's Report on Form
         10-Q for the quarter ended June 30, 1997 is incorporated herein by
         reference.

*10.12   Executive Employment Agreement between the Company and with Donald W.
         Slager dated January 1, 1999.

10.13    Registration Rights Agreement, dated as of December 5, 1996, by and
         among the Company, Goldman Sachs & Co., Merrill Lynch & Co., and Credit
         Suisse First Boston. Exhibit 10.1 to the Company's Registration
         Statement on Form S-4 (No. 333-31231) is incorporated herein by
         reference.

10.14    Executive Employment Agreement between the Company and with Peter S.
         Hathaway dated June 6, 1997. Exhibit 10.14 to the Company's Report on
         Form 10-K for the year ended December 31, 1997 is incorporated herein
         by reference.

10.15    Executive Employment Agreement between the Company and with Michael G.
         Hannon dated June 6, 1997. Exhibit 10.15 to the Company's Report on
         Form 10-K for the year ended December 31, 1997 is incorporated herein
         by reference.

10.16    Share Purchase Agreement between Allied Waste Industries, Inc. and
         Allied Waste Holdings (Canada) Ltd. and Laidlaw Waste Systems, Inc. and
         USA Waste Services, Inc. and Canadian Waste Services Inc. dated January
         15, 1997. Exhibit 10.0 to the Company's Report on Form 8-K dated
         January 30, 1997 is incorporated herein by reference.

10.17    Credit Agreement dated as of June 18, 1998 among Allied Waste North
         America, Inc., Allied Waste Industries, Inc., certain lenders, Credit
         Suisse, First Boston and Goldman Sachs Credit Partners L.P., as
         Co-Syndication Agents, Citibank, N.A., as Issuing Bank and Citicorp
         USA, Inc., as Administrative Agent. Exhibit 10.1 to the Company's
         Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 is
         incorporated herein by reference.

10.18    Registration Rights Agreement, dated as of December 23, 1998, by and
         among the Company, the Guarantors, and Donaldson, Lufkin & Jenrette
         Securities Corporation, relating to the $225,000,000 7 3/8% Senior
         Notes due 2004. Exhibit 10.1 to the Company's Registration Statement on
         Form S-4 (No.333-70709) is incorporated herein by reference.

10.19    Registration Rights Agreement, dated as of December 23, 1998, by and
         among the Company, the Guarantors, and Donaldson, Lufkin & Jenrette
         Securities Corporation, relating to the $600,000,000 7 5/8% Senior
         Notes due 2006. Exhibit 10.2 to the Company's Registration Statement on
         Form S-4 (No.333-70709) is incorporated herein by reference.

10.20    Registration Rights Agreement, dated as of December 23, 1998, by and
         among the Company, the Guarantors, and Donaldson, Lufkin & Jenrette
         Securities Corporation, Goldman Sachs & Co., Credit Suisse First
         Boston, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
         Stanley Dean Witter Incorporated, Bear, Stearns, & Co, Inc., BT Alex.
         Brown, CIBC Oppenheimer, Salomon Smith Barney, Inc., relating to the
         $875,000,000 7 7/8% Senior Notes due 2009. Exhibit 10.3 to the
         Company's Registration Statement on Form S-4 (No.333-70709) is
         incorporated herein by reference.

10.21    Purchase Agreement dated December 14, 1998, by and among the Company,
         the Guarantors and Donaldson, Lufkin & Jenrette Securities Corporation,
         with respect to the 1998 Senior Notes. Exhibit 

<PAGE>   45

         10.4 to the Company's Registration Statement on Form S-4 (No.333-70709)
         is incorporated herein by reference. 

*10.22   Equity Commitment Letter dated March 7, 1999 among the Company, Apollo
         Management IV, L.P., Blackstone Management Associates III L.L.C.,
         Greenwich Street Investments II, L.L.C., DLJMB Funding, Inc., DLJ
         Merchant Banking II, Inc., DLJ Diversified Partners, Inc., and DLJ LBO
         Plans Management Corporation.

*10.23   Side Letter Agreement between the Company, Apollo Investors II, L.P.,
         Apollo Capital Management II, Inc., Blackstone Management Associates
         II, L.L.C., and Blackstone Management Associates III, L.L.C.

*12      Ratio of earnings to fixed charges.

*27      Financial Data Schedule for the three months ended March 31, 1999.

*        Filed herewith.