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

                       Securities and Exchange Commission
                             Washington, D.C. 20549

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

                                   FORM 10-Q

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

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                    For the Period Ended September 30, 1996

                                       or

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

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

                         Commission file number 0-28652

                        AMERICAN DISPOSAL SERVICES, INC.

                               Delaware 13-3858494

                           745 McClintock - Suite 305
                           Burr Ridge, Illinois 60521

                                 (630) 655-1105

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

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  periods 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

                      Applicable Only to Corporate Issuers

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practical date.

Common Stock, $.01 Par Value - 8,872,159 shares as of October 31, 1996

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

<PAGE>




                        AMERICAN DISPOSAL SERVICES, INC.

                                      INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

  Condensed Consolidated Balance Sheets - September 30, 1996 and
     December 31, 1995

  Condensed Consolidated Statements of Operations - Three months ended 
     September 30, 1996 and 1995; Nine months ended September 30, 1996 and 1995

  Condensed Consolidated  Statements of Cash Flows - Nine months ended 
     September 30, 1996 and 1995

  Notes to the Condensed Consolidated Financial Statements

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations


PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

Signatures



                                        2

<PAGE>



Part I. Financial Information

                        AMERICAN DISPOSAL SERVICES, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEET
                             (Dollars in Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                              September 30,       December 31,
                                                                  1996                1995
                                                             ---------------     ---------------
<S>                                                          <C>                 <C>
                                     ASSETS

Current assets:
  Cash and cash equivalents (includes restricted cash of
    $2,738 and $156)                                         $         5,046     $         6,539
  Trade receivables, net                                               8,575               6,331
  Other current assets                                                 1,226                 998
                                                             ---------------     ---------------
Total current assets                                                  14,847              13,868
Property, plant, and equipment, net                                   89,189              81,250
Other assets:
  Cost over fair value of assets acquired, net                        27,564              15,739
  Other intangible and deferred assets, net                            3,931               1,896
  Other assets                                                         1,760               1,940
                                                             ---------------     ---------------
                                                             $       137,291     $       114,693
                                                             ===============     ===============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Note payable due to stockholder                            $             -     $        12,500
  Accounts payable                                                     3,227               3,185
  Accrued liabilities and deferred revenues                            6,508               3,562
  Current portion of long-term debt and capital lease
    obligations                                                        3,108               3,440
                                                             ---------------     ---------------
Total current liabilities                                             12,843              22,687

Long-term debt and capital lease obligations, net of current
  portion                                                             58,207              48,789
Accrued environmental and landfill costs                               7,214               6,214
Deferred income taxes                                                  1,240               1,240

Redeemable preferred stock of subsidiary                                   -               1,908

Total stockholders' equity (8,825,365 and 5,662,865
  shares of common stock issued and outstanding)                      57,787              33,855
                                                             ---------------     ---------------
                                                             $       137,291     $       114,693
                                                             ===============     ===============
</TABLE>

See accompanying notes.


                                        3

<PAGE>



                        AMERICAN DISPOSAL SERVICES, INC.

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                  (Dollars in Thousands, Except per Share Data)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                  Three Months Ended            Nine Months Ended
                                                     September 30,                September 30,
                                                  1996          1995          1996          1995
                                               ----------    ----------    ----------    ----------
<S>                                            <C>           <C>           <C>           <C>
Revenues                                       $   15,122    $    8,929    $   40,299    $   19,864
Cost of operations                                  8,100         4,827        21,270        11,406
Selling, general and administrative expenses        2,037         1,603         6,085         3,830
Depreciation and amortization                       3,321         1,597         8,984         3,663
                                               ----------    ----------    ----------    ----------
  Operating income                                  1,664           902         3,960           965
Interest expense, net                               1,374           658         4,431         1,715
Other income                                           30             -            67             -
                                               ----------    ----------    ----------    ----------
  Income (loss) before income taxes
    and extraordinary item                            320           244          (404)         (750)
Income tax benefit (expense)                          (93)         (265)           62          (109)
                                               ----------    ----------    ----------    ----------
  Income (loss) before extraordinary item             227           (21)         (342)         (859)
Extraordinary loss, net of income tax benefit           -             -          (476)            -
                                               ----------    ----------    ----------    ----------
  Net income (loss)                                   227           (21)         (818)         (859)
Preferred stock dividend requirement of
  subsidiary                                            -           (63)         (109)         (126)
                                               ----------    ----------    ----------    ----------
  Net income (loss) applicable to common
     stockholders                              $      227    $      (84)   $     (927)   $     (985)
                                               ==========    ==========    ==========    ==========


Net income (loss) per share:
  Income (loss) before extraordinary item      $      .03    $     (.02)   $     (.07)   $     (.32)
  Extraordinary loss, net of income tax
    benefit                                             -             -          (.07)            -
                                               ----------    ----------    ----------    ----------
  Net income (loss) applicable to common
    stockholders                               $      .03    $     (.02)   $     (.14)   $     (.32)
                                               ==========    ==========    ==========    ==========
Weighted average common stock
  and common stock equivalent
  shares outstanding                                8,457         3,656         6,775         3,042
                                               ==========    ==========    ==========    ==========

</TABLE>

See accompanying notes.

                                        4

<PAGE>



                        AMERICAN DISPOSAL SERVICES, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                               Nine months ended
                                                                                 September 30,
                                                                            1996              1995
                                                                         ----------        ----------
<S>                                                                      <C>               <C>
Operating activities:
Net loss                                                                 $     (818)       $     (859)
Adjustments to reconcile net loss to net cash provided by (used in)
 operating activities:
  Extraordinary loss, net of income tax benefit                                 476                 -
  Depreciation and amortization                                               8,984             3,663
  Provision for environmental and landfill costs                                429               161
  Net changes in working capital                                               (154)               66
                                                                         ----------        ----------
Net cash provided by operating activities                                     8,917             3,031
                                                                         ----------        ----------

Investing activities:
  Capital expenditures                                                      (11,961)           (5,049)
  Cost of acquisitions                                                      (17,879)          (22,272)
                                                                         ----------        ----------
Net cash used in investing activities                                       (29,840)          (27,321)
                                                                         ----------        ----------

Financing activities:
  Net proceeds from issuance of common stock                                 24,901                 -
  Proceeds of indebtedness, net of issuance cost                             72,574            13,744
  Repayments of indebtedness                                                (63,099)           (9,350)
  Repayment of note payable to stockholder                                  (12,500)                -
  Net proceeds from issuance of common stock of subsidiary                        -            19,500
  Net proceeds from issuance of preferred stock of subsidiary                     -             1,908
  Preferred stock redemption                                                 (1,950)                -
  Preferred stock dividends                                                    (109)             (126)
  Payments under capital lease obligations                                     (387)              (47)
                                                                         ----------        ----------
Net cash provided by financing activities                                    19,430            25,629
                                                                         ----------        ----------
(Decrease) increase in cash and cash equivalents                             (1,493)            1,339
Cash and cash equivalents (including restricted cash)
  at beginning of period                                                      6,539               739
                                                                         ----------        ----------
Cash and cash equivalents (including restricted cash)
  at end of period                                                       $    5,046        $    2,078
                                                                         ==========        ==========
</TABLE>

See accompanying notes.


                                        5

<PAGE>



                        AMERICAN DISPOSAL SERVICES, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 1996 and 1995
                                   (Unaudited)


1.  Formation and Basis of Presentation

    The accompanying  unaudited condensed consolidated financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation  S-X.  Accordingly,  they do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been  included.  Operating  results for the three and nine month  periods  ended
September 30, 1996,  are not  necessarily  indicative of the results that may be
expected  for  the  fiscal  year  ending  December  31,  1996.  These  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements,  including the notes thereto, for the fiscal year ended December 31,
1995 included in the Company's Registration Statement on Form S-1.

    Effective  January  1,  1996,  the  stockholders  of ADS,  Inc.  and  County
Disposal,  Inc.  exchanged  their shares for shares of a newly  created  holding
company by the name of American  Disposal  Services,  Inc. (the  Company).  This
share exchange (the Exchange)  qualifies as a transfer of companies under common
control and,  accordingly,  the transaction has been accounted for at historical
cost in a manner  similar to  pooling  of  interest  accounting.  The  financial
statements have been prepared as if the Exchange occurred on December 31, 1994.

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


2.  Related Party Interest Expense
<TABLE>
<CAPTION>

                                               Three months ended       Nine months ended
                                                  September 30,           September 30,
                                                1996         1995        1996         1995

                                                       (Dollars in Thousands)
    <S>                                      <C>          <C>         <C>           <C>

    Charterhouse Equity Partners II, L.P.    $   -        $   -       $     621     $   -
                                             =========    =========   =========     =========
</TABLE>

3.  Environmental Matters

    See Note 8 of Notes to the Consolidated Financial Statements included in the
Company's  Registration Statement on Form S-1 for a description of environmental
matters.


4.  CDI Acquisition

    As described in Note 3 of the Notes to the Consolidated Financial Statements
included  in the  Company's  Registration  Statement  on Form S-1 the pro forma
results of  operations  for the three and nine months ended  September  30, 1995
assuming the CDI  Acquisition  had occurred on January 1, 1995,  were as follows
(dollars in thousands, except per share data):

                                        6

<PAGE>




                        AMERICAN DISPOSAL SERVICES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                           September 30, 1996 and 1995
                                   (Unaudited)


4.  CDI Acquisition (Continued)
<TABLE>
<CAPTION>

                                            Three Months Ended                     Nine Months Ended
                                               September 30,                         September 30,
                                            1996           1995                   1996           1995
                                         ----------     ----------             ----------     ----------
<S>                                      <C>            <C>                    <C>            <C>
Revenue                                      15,122         11,814                 40,299         33,008
Operating income (loss)                       1,664            (92)                 3,960            697
Net income (loss) applicable to common
  shareholders                                  227         (1,638)                  (927)        (2,934)
Pro forma income (loss) per share of
  common stock                                  .03           (.19)                  (.14)          (.43)
Weighted average common stock and
  common stock equivalent shares
  outstanding                                 8,457          8,457                  6,775          6,775
</TABLE>

5.  Refinancing of Credit Facility

    In  May  1996,   the  Company   negotiated  a  new  credit   agreement  with
Internationale  Nederlanden (U.S.) Capital  Corporation (ING), as administrative
agent,  and Morgan Guaranty Trust Company of New York, as document  agent,  that
provides for borrowings of up to $87 million to finance acquisitions and provide
working  capital,  which was used to repay the existing  credit  agreements with
Bank of  America  and  ING,  as well as the  note  payable  to  stockholder  and
redeemable preferred stock of subsidiary.  In August 1996, this credit agreement
was  renegotiated  to provide for  borrowings of up to $110 million.  The Credit
Facility  consists of a $25 million term loan, $10 million  revolving  loan, and
$75 million acquisition facility. The rate of interest is equal to either a base
rate plus an applicable  margin or the London  Interbank  Offered Rate ("LIBOR")
plus an  applicable  margin.  The  various  loans and lines of credit  under the
Credit  Facility  bear  interest at rates per annum  equal to, at the  Company's
discretion,  either: (i) the higher of (a) the federal funds rate plus 1/2 of 1%
and (b) the prime rate,  plus an applicable  margin  ranging from 0% to 1.5%; or
(ii) the LIBOR,  plus an applicable margin ranging from 1.25% to 3.00%, and have
maturities  ranging from 2001 to 2003. The facility is secured by  substantially
all of the  assets of the  Company.  Under  terms of the credit  agreement,  the
Company is subject to various debt covenants,  including  maintenance of certain
financial  ratios and other  restrictions.  The  Credit  Facility  requires  the
Company to use 50% of the proceeds of any equity  offering to repay a portion of
the term loans. In connection with the May refinancing,  the Company  recognized
an  extraordinary  loss,  net of income tax benefit,  of $476,000,  representing
unamortized deferred debt issuance costs.










                                        7

<PAGE>



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

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

INTRODUCTION

    The Company has adopted an  acquisition-based  growth  strategy that focuses
on: (i) the  identification  and acquisition of solid waste landfills located in
secondary  markets  that are  within  approximately  125  miles  of  significant
metropolitan  centers;  and  (ii)  securing  dedicated  waste  streams  for such
landfills  by the  acquisition  or  development  of  transfer  stations  and the
acquisition of collection  companies.  The Company has completed 26 acquisitions
from January 1993 through September 1996, including 9 hauling companies acquired
in the nine months ended September 30, 1996 (the "1996 Acquisitions").  In 1995,
the Company  acquired three landfills in Illinois,  Ohio and  Pennsylvania and a
hauling  company  in  Pennsylvania  (the  "CDI   Acquisition").   All  of  these
acquisitions  were  accounted for under the purchase  method of  accounting  for
business  combinations.  Accordingly,  the amortization of goodwill and landfill
airspace  reflects the fair market value of the Company's  assets at the time of
their  acquisition,  and the results of operations for such acquired  businesses
are included in the Company's financial statements only from the applicable date
of  acquisition.  As a result,  the Company  believes its historical  results of
operations for the periods presented are not directly comparable.

FORWARD LOOKING STATEMENTS

    Certain  information  contained  in this  Quarterly  Report  on  Form  10-Q,
including,  without  limitation  information  appearing  under  Part I,  Item 2,
"Managements'  Discussion  and  Analysis of Financial  Condition  and Results of
Operations," are  forward-looking  statements (within the meaning of Section 27A
of the Securities Act of 1934 and Section 21E of the Securities  Exchange Act of
1934).  Factors  set forth  under the caption  "Risk  Factors" in the  Company's
Registration Statement on Form S-1 could affect the Company's actual results and
could  cause the  Company's  actual  results  to differ  materially  from  those
expressed  in any  forward-looking  statements  made by,  or on behalf  of,  the
Company in this quarterly Report on Form 10-Q.

GENERAL

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

                         Three Months Ended            Nine Months Ended
                            September 30,                September 30,
                         1996          1995            1996         1995
                        ------        ------          ------       ------

  Collection (1)          46.0%         49.7%           42.1%        55.1%
  Transfer                 1.9           3.9             2.1          6.9
  Landfill (1)            51.7          45.4            55.5         37.1
  Other                    0.4           1.0             0.3          0.9
                        ------        ------          ------       ------
    Total Revenues       100.0%        100.0%          100.0%       100.0%
                        ======        ======          ======       ======

(1) The portion of collection revenues attributable to disposal charges
    for waste collected by the Company and disposed of at the Company's  

                                        8

<PAGE>



    landfills has been  excluded from  collection revenues and included in  
    landfill revenues.

    A   component   of  the   Company's   business   strategy   is  to  maximize
internalization of waste it collects and thereby realize higher margins from its
operations.  By  disposing  of waste at  Company-owned  landfills,  the  Company
retains the margin generated through disposal operations that would otherwise be
earned by third-party landfills.  For the three months ended September 30, 1996,
94%  of  the  total  tonnage  collected  by  the  Company  was  disposed  of  at
Company-owned  landfills.  For the nine months ended  September 30, 1996, 93% of
the total  tonnage  collected  by the Company was  disposed of at  Company-owned
landfills.  This  represents  approximately  34%  and 31% of the  total  tonnage
disposed  of at  Company-owned  landfills  in the  three and nine  months  ended
September 30, 1996, respectively.

    The Company has  estimated  that,  as of December 31, 1995,  total costs for
post-closure  activities,  including cap  maintenance,  groundwater  monitoring,
methane gas control and recovery and  leachate  treatment/disposal  for up to 30
years  after  closure in certain  cases,  will  approximate  $11.3  million.  In
addition, the Company has estimated that, as of December 31, 1995, closure costs
expected to occur during the operating  lives of these  facilities  and expensed
over these facilities' useful lives will approximate $28.4 million.  At December
31, 1995 and September 30, 1996,  accruals for landfill closure and post-closure
costs (including costs assumed through  acquisitions)  were  approximately  $6.2
million and $7.2 million,  respectively.  The accruals reflect  relatively young
landfills with estimated  remaining  lives,  based on current waste flows,  that
range from 4 to 46 years,  and an estimated  average  remaining  life of greater
than 20 years.

RESULTS OF OPERATIONS

    The following table sets forth items in the Company's consolidated statement
of operations as a percentage of revenues for the periods indicated:
<TABLE>
<CAPTION>
                                                   Three Months Ended                 Nine Months Ended
                                                      September 30,                     September 30,
                                                   1996          1995               1996          1995
                                                ----------    ----------         ----------    ----------
  <S>                                           <C>           <C>                <C>           <C>
  Revenues.....................................      100.0 %       100.0 %            100.0 %       100.0 %
  Cost of operations...........................       53.5          54.1               52.8          57.4
  Selling, general and administrative expenses.       13.5          17.9               15.1          19.3
  Depreciation and amortization expenses.......       22.0          17.9               22.3          18.4
                                                ----------    ----------         ----------    ----------
  Operating income.............................       11.0          10.1                9.8           4.9
  Interest expense, net........................        9.1           7.3               11.0           8.6
  Other income.................................        0.2             -                0.2             -
  Income tax provision (benefit)...............        0.6           3.0               (0.2)          0.6
  Extraordinary loss, net of income tax benefit          -             -                1.2             -
                                                ----------    ----------         ----------    ----------
    Net income (loss)..........................        1.5 %        (0.2)%             (2.0)%        (4.3)%
                                                ==========    ==========         ==========    ==========

  EBITDA margin (1)                                   33.0 %        28.0 %             32.1 %        23.3 %
                                                ==========    ==========         ==========    ==========
</TABLE>

(1) EBITDA margin represents operating income plus depreciation and amortization
    divided by revenues.


THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

    REVENUES.    Revenues for the three months ended September 30, 1996 were
$15.1 million compared to $8.9 million for the three months ended

                                       9

<PAGE>



September  30, 1995.  The increase in revenue is due primarily to the effects of
the CDI Acquisition and the 1996 Acquisitions.

    COST OF OPERATIONS.  Cost of operations for the three months ended September
30, 1996 was $8.1  million  compared to $4.8  million for the three months ended
September 30, 1995. This increase was  attributable  primarily to the associated
increase in revenues  described  above.  As a percentage  of  revenues,  cost of
operations  was 53.5% in the 1996 period  compared to 54.1% in the 1995  period.
The  resulting  increase in margins was due  primarily to the  Company's  higher
proportion of landfill  operations  (which  generally  have higher  margins than
hauling operations), with landfill revenues increasing from $4.0 million to $7.8
million  and from  45.4% to 51.7% as a  percentage  of  revenues.  Margins  also
increased  because  of  increased  operating  efficiencies  resulting  from  the
consolidation of hauling  operations and the opening of new transfer stations in
the Company's Missouri region.

    SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  SG&A expenses increased to
$2.0  million for the three  months ended  September  30, 1996  compared to $1.6
million for the three months ended September 30, 1995. The aggregate increase in
SG&A expenses resulted from expenses associated with the CDI Acquisition and the
1996 Acquisitions. As a percentage of revenues, SG&A expenses decreased 13.5% in
the 1996 period from 17.9% in the 1995 period.  The decrease in SG&A expenses as
a percentage of revenues is due  primarily to a significant  increase in revenue
producing assets.

    DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization expense
for the three months ended September 30, 1996 was $3.3 million  compared to $1.6
million  for the  three  months  ended  September  30,  1995.  The  increase  in
depreciation  and  amortization  expense is due primarily to the CDI Acquisition
which significantly  increased landfill airspace  amortization and provision for
closure costs, and, to a lesser extent, the capital expenditures associated with
such  acquisition.  As a percentage of revenues,  depreciation  and amortization
expense was 22.0% and 17.9% for the three  months ended  September  30, 1996 and
September  30, 1995,  respectively.  The increase in the  September  1996 period
compared to the September  1995 period is due to a higher  concentration  of the
Company's assets in landfills following the CDI Acquisition.

    NET INTEREST  EXPENSE.  Net interest  expense was $1.4 million for the three
months ended  September 30, 1996 compared to $658,000 for the three months ended
September 30, 1995. This increase is attributable to additional debt incurred to
complete the CDI Acquisition and the 1996 Acquisitions.

    INCOME  TAXES.  The Company  recorded an income tax provision of $93,000 for
the three  months ended  September  30, 1996  compared to a $265,000  income tax
provision for the three months ended September 30, 1995.


NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

    REVENUES.  Revenues for the nine months ended  September 30, 1996 were $40.3
million  compared to $19.9 million for the nine months ended September 30, 1995.
This  increase in revenues  is due,  primarily,  to having the effect of the CDI
Acquisition  in the full nine months ended  September  30, 1996 versus a limited
impact in the period ended  September 30, 1995.  Additionally,  the Company 
completed nine acquisitions during the period ended September 30, 1996, which 
added $2.1 million in revenue for this period.  

    COST OF OPERATIONS.  Cost of operations for the nine months ended  September
30, 1996 was $21.3  million  compared to $11.4 million for the nine months ended
September 30, 1995. This increase was attributable  primarily to the increase in
revenues  described  above.  As a  percentage  of revenues,  cost of  operations
decreased  to 52.8% in the  1996  period  from  57.4%  in the 1995  period.  The
resulting  increase  in  margins  was  due  primarily  to the  Company's  higher
proportion of landfill  operations  (which  generally  have higher  margins than
hauling operations), with landfill revenues increasing from $7.4 million to

                                       10

<PAGE>



$22.4 million and from 37.1% to 55.5% as a percentage of revenues.  Margins also
increased  because  of  increased  operating  efficiencies  resulting  from  the
consolidation of hauling  operations and the opening of new transfer stations in
the Company's Missouri region.

    SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  SG&A expenses increased to
$6.1  million  for the nine months  ended  September  30, 1996  compared to $3.8
million for the nine months ended September 30, 1995. The aggregate  increase in
SG&A expenses resulted from expenses associated with the CDI Acquisition and the
effect of the 1996  Acquisitions.  As a percentage  of revenues,  SG&A  expenses
decreased  to 15.1% in the  1996  period  from  19.3%  in the 1995  period.  The
decrease in SG&A  expenses as a  percentage  of revenues is due  primarily  to a
significant increase in revenue producing assets while corporate level personnel
and other related expenses increased moderately. SG&A expenses in future periods
should be positively affected by savings of approximately $300,000 per annum due
to the  termination of the Company's  management  agreement with an affiliate of
its  principal  stockholder  upon the closing of the  Company's  initial  public
offering.

    DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization expense
for the nine months ended  September 30, 1996 was $9.0 million  compared to $3.7
million  for  the  nine  months  ended  September  30,  1995.  The  increase  in
depreciation  and  amortization  expense is due primarily to the CDI Acquisition
which significantly  increased landfill airspace  amortization and provision for
closure costs, and, to a lesser extent, the capital expenditures associated with
such  acquisition.  As a percentage of revenues,  depreciation  and amortization
expense was 22.3% and 18.4% for the nine  months  ended  September  30, 1996 and
September 30, 1995, respectively.  The relatively high percentages are primarily
due to the configuration of the Wheatland  Landfill during the nine months ended
September  30,  1995 and the higher  concentration  of the  Company's  assets in
landfills  following the CDI Acquisition  during the nine months ended September
30, 1996.

    NET INTEREST  EXPENSE.  Net  interest  expense was $4.4 million for the nine
months  ended  September  30, 1996  compared to $1.7 million for the nine months
ended  September 30, 1995.  This  increase is  attributable  to additional  debt
incurred to complete the CDI Acquisition and the 1996 Acquisitions.

    INCOME TAXES.  The Company recorded an income tax benefit of $62,000 for the
nine months ended September 30, 1996 and an income tax provision of $109,000 for
the nine  months  ended  September  30,  1995  primarily  due to the  effects of
differences in the treatment of goodwill for book and tax purposes.

    EXTRAORDINARY  LOSS.  In  connection  with  the  refinancing  of its  Credit
Facility in May 1996,  the Company  recognized  an  extraordinary  loss,  net of
federal tax benefit, of $476,000, representing the write-off of unamortized debt
issuance cost.

LIQUIDITY AND CAPITAL RESOURCES

    Due to the capital intensive nature of the solid waste industry, the Company
has used, and expects to continue using,  substantially  all cash generated from
operations to fund acquisitions,  capital expenditures and landfill development.
Certain operating equipment has also been acquired using leases which have short
and  medium-term  maturities.  As a result,  the  Company has  incurred  working
capital  deficits  in the past.  Historically,  the Company  has  satisfied  its
acquisition, capital expenditure and working capital needs primarily through 
equity and bank financing.  There can be no assurances that such financing will
continue to be available.

    Operating  activities  provided  net cash of $8.9 million in the nine months
ended September 30, 1996 compared to $3.0 million in the nine months ended
September  30, 1995  reflecting  the  increased  operating  contribution  of the
Company.

    Investing activities used net cash of $29.8 million and $27.3 million in the
nine months  ended  September  30, 1996 and 1995,  respectively.  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 acquisition  based growth strategy.  During the
nine months ended September 30, 1996, the Company spent $12.0 million in

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capital  expenditures,  of  which  $5.8  million  was for cell  development.  In
connection with the acquisition of nine hauling companies during the nine months
ended  September 30, 1996 the Company  required $19.9 million in debt and equity
financing. In 1996, the Company expects to spend approximately $13.2 million for
capital  expenditures  of which $8.1 million is  anticipated to be used for cell
development.  The increase in cell  development  costs in 1996 over 1995 will be
due to the  Company's  ownership of the acquired  companies'  landfills  for the
entire year and the fact that increased volumes at the landfills will cause cell
development  to occur prior to the winter  season when  construction  activities
cease.

    Financing activities provided net cash of $19.4 million and $25.6 million in
the nine months ended September 30, 1996 and 1995, respectively.

    In May 1996, the Company  entered into the $87 million Credit  Facility with
Internationale  Nederlanden (U.S.) Capital Corporation ("ING") as administrative
agent,  and  Morgan  Guaranty  Trusts  Company  of  New  York   ("Morgan"),   as
documentation  agent,  which repaid all of the Company's then existing bank debt
and a portion of a note payable to a  stockholder,  and  redeemed the  preferred
stock of a subsidiary.

    In August 1996, the Company  increased the Credit  Facility from $87 million
to $110 million.  The increased facility will provide a $25 million term loan, a
$10 million  working  capital  facility,  and a $75 million  expansion  facility
(reduced  to $37.5  million  commencing  August 1,  1997 to the extent the 
facility is then unused) for  acquisitions.  At October 31, 1996 the Company had
borrowed  $59.8  million under the $110 million Credit Facility.

    Effective  July  25,  1996,  the  Company  completed  a public  offering  of
2,750,000  shares at a price of $9 per  share.  In  addition,  the  underwriters
exercised  their  over-allotment  option in full resulting in the issuance of an
additional  412,500 shares of common stock. This resulted in net proceeds to the
Company of approximately $24.9 million.

    The Company  intends to satisfy its interest  obligations  as well as future
capital  expenditures  and working  capital  requirements,  with cash flows from
operations and borrowings  under the Credit Facility.  However,  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 bank
financings  or public or private  offerings of its  securities.  There can be no
assurances that such funds will be available on commercially reasonable terms or
at all.

INFLATION AND PREVAILING ECONOMIC CONDITIONS

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

SEASONALITY

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





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Part II. Other Information

Item 6. Exhibits and Reports on Form 8-K

    a.  The Company filed a Financial Data Schedule (Exhibit-27) for the period
        ended September 30, 1996 electronically, only.

    b.  The Company filed a Form 8-K dated August 26, 1996 (Reporting Items 
        5 and 7).


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                                   Signatures


    Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.


                              AMERICAN DISPOSAL SERVICES, INC.

Date: November 14, 1996       /s/ Scott H. Flamm
                              -------------------
                              Scott H. Flamm
                              Senior Vice President and Chief Financial Officer




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