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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)
		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
OR
		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

For the transition period from ____ to ____
Commission File Number 0-19285

ALLIED WASTE INDUSTRIES, INC.

Registrant’s telephone number, including area code: (480) 627-2700
Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)

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

         The aggregate market value of the registrant’s voting stock held by nonaffiliates of the registrant was $2,665,389,138 as of March 18, 2002.

         The number of shares of the registrant’s common stock, $.01 par value, outstanding at March 18, 2002 was 197,144,167.

         The registrant’s proxy statement is to be filed in connection with the registrant’s 2002 annual meeting of stockholders, portions of which are incorporated by reference into Part III of this report.

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PART I

Item 1. Business

Allied Waste Industries, Inc. (“Allied” or “we”), a Delaware corporation, is the second largest, non-hazardous solid waste management company in the United States. We operate as a vertically integrated company providing collection, transfer, recycling and disposal services for approximately 10 million residential, commercial and industrial customers. We serve customers through a network of 355 collection companies, 181 transfer stations, 167 active landfills and 65 recycling facilities within 39 states.

As of December 31, 2001 operations were organized into two areas: East and West. The areas were further divided into the following eight regions: Atlantic, Central, Great Lakes, Midwest, Northeast, Southeast, Southwest and West. Consistent with the vertical integration model, each region is organized into several operating districts and each district contains a group of specific site operations. Each of our regions, and substantially all of our districts include collection, transfer, recycling and disposal services, which facilitates efficient and cost effective waste handling and allows the regions and districts to maximize the efficiencies from the internalization of waste.

We are expanding our existing infrastructure in 2002 by increasing the number of areas, regions and districts. There will be four areas, Eastern, Southern, Central and Western by which we will primarily manage our business. The areas will be further divided into twelve regions: Atlantic, Capitol, Great Lakes, Midsouth, Midwest, Mountain, North Central, Northeast, Northwest, Pacific, Southeast and Southwest. The number of districts reporting to the regions will increase from 46 to 58. This expansion is being implemented to provide our field operators better flexibility to manage profitability by reducing the amount of revenue and geographic area each is responsible for managing.

We reported revenues of approximately $5.6 billion and approximately $5.7 billion for the years ended December 31, 2001 and 2000, respectively.

Industry Trends

We estimate that annual revenues of the non-hazardous solid waste industry in the United States are approximately $40 billion. The non-hazardous solid waste industry has traditionally been very fragmented, particularly in the collection segment of the business. Publicly traded companies, municipalities and privately held companies, generate approximately 48%, 24% and 28% of the industry’s revenue, respectively.

In the past several years, the non-hazardous solid waste industry has undergone significant consolidation due to certain funding requirements brought about by regulatory changes enacted throughout the 1990’s. Subtitle D of the Resource Conservation and Recovery Act of 1976 (“Subtitle D”), as well as more stringent financial assurance requirements imposed by various state and local governments, significantly increased the amount of capital required for solid waste management operations. Regulatory compliance is a significant factor in areas that effect, for example, workplace safety, vehicle operating and maintenance standards, and the labor environment. As a result, many smaller companies that lacked the requisite capital chose to cease operations or sell their operations to more strongly capitalized companies.

We believe the cycle of industry consolidation in the United States is substantially complete, and we also believe that most major solid waste companies will acquire and sell assets to improve their competitive positions within the markets they serve. Presently, the three largest companies in the United States represent a substantial majority of the revenues of the publicly traded companies. The industry is displaying a greater focus on maximization of cash flow and internal growth through initiatives that increase returns on investment. Generally, revenue growth within the industry has been a function of overall economic and population growth. Industry growth has also been impacted by changes in state and federal regulations, supply of and demand for disposal capacity, and consumer awareness of environmental matters. While the companies within the industry provide essential services, their revenue growth has been, and will continue to be, impacted by changes in general economic and industry specific trends.

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Business Strategy

The major components of our business strategy are intended to maximize operating cash flows to enable us to continue to pay down debt. These components are: (1) operating vertically integrated non-hazardous solid waste service businesses with a high rate of waste internalization (which is the process of transferring and disposing of waste we collect at our own landfills); (2) managing these businesses locally with a strong operations focus on customer service; (3) maintaining or improving our market position through internal development and incremental acquisitions; and (4) maintaining the financial capacity, management capabilities and administrative systems and controls to support on-going operations and future growth.

Vertical Integration and Internalization. The vertical integration business strategy has been and continues to be the key element of our operating philosophy. The fundamental objective of the vertical integration business model is to control the waste stream from the point of collection through disposal, thereby achieving a high rate of waste internalization. We have built through market specific acquisitions, vertically integrated operations typically consisting of collection companies, transfer stations, recycling facilities and landfills. Within our markets, we seek to strengthen our competitive position and improve our financial returns by acquiring and selling operating assets. We believe that we can realize competitive advantages by continuously implementing this strategy across existing and selected new markets in the United States. Our internalization rate, as measured by collection volumes, was approximately 67% at the end of 2001 compared to 65% at the end of 2000.

Focus on Operations. Decentralized operations and local management characterize our operations-oriented business strategy. We focus our recruiting efforts on operating managers with extensive industry experience, usually with significant experience in their geographic markets. Our senior operating management average over 20 years of industry experience. By continuing to hire and retain experienced, local market-oriented managers, we believe that we are well positioned to react to customer needs and changes in our markets and are able to capitalize on growth opportunities.

Achieving a Sustainable Long-Term Growth Rate. Our focus is on achieving a sustainable rate of long-term growth and efficiently operating the assets we have accumulated since the early 1990’s. We anticipate future revenue growth will slow to a rate reflecting growth in the economy and inflation. We intend to increase revenues by increasing volumes collected and disposed and by increasing the rates we charge for the services we provide. We intend to supplement this internal growth with tuck-in acquisitions of privately owned solid waste operations, offset by the sale of operations that do not fit our business model. We also intend to be opportunistic when government entities privatize the operation of all or part of their solid waste systems. In addition, we seek to achieve broad domestic geographic diversification in our operations and market development activities.

Maintaining Capacity for Future Growth. We seek to implement our business strategy by maintaining effective internal controls, experienced management and sufficient financial capacity. We expect operating cash flows to fund our debt service, working capital and capital expenditure requirements, with our revolving line of credit capacity sufficient to handle seasonal and other peak spending requirements.

Operations

Our revenue mix for 2001 was approximately 62.4% collection, 31.3% disposal (including transfer), 3.4% recycling and 2.9% other.

Collection. Collection operations involve collecting and transporting non-hazardous waste from the point of generation to the transfer station or the site of disposal. Depending on the customer being served, we generally provide solid waste collection under the following two service lines.

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	Commercial. We provide containerized non-hazardous solid waste disposal services to a wide variety of commercial and industrial customers. Commercial revenue represents approximately 72% of our collection revenue. We provide customers with containers that are designed to be lifted mechanically and either emptied into a collection vehicle’s compaction hopper or, in the case of roll-off containers, to be loaded onto the collection vehicle. Our commercial containers generally range in size from one to eight cubic yards and our roll-off containers generally range in size from 20 to 40 cubic yards. Contracts for roll-off containers may provide for temporary (such as the removal of waste from a construction site) or ongoing services. Fees relating to those contracts are generally a function of general competitive and prevailing local economic conditions, as well as considerations such as collection frequency, type of equipment furnished, distance traveled to the disposal site, the cost of disposal and the type and volume or weight of the waste collected.
	Residential. We perform residential collection services under individual monthly subscriptions directly to households or under contracts with municipal governments that give us exclusive rights to service all or a portion of the homes in the municipalities at established rates. We seek to obtain municipal contracts that enhance the efficiency and profitability of our operations as a result of the density of collection customers within a given area. Residential revenue represents approximately 28% of our collection revenue, half of which is subscription revenue and half of which is municipal revenue. At the end of the term of most municipal contracts, we will attempt to renegotiate the contract, and if unable to do so, will generally re-bid the contract on a sealed bid basis. We also make residential collection service arrangements directly with households. We seek to enter into residential service arrangements where the route density is high, thereby creating additional economic benefit. We set collection fees based on general competitive and prevailing local economic conditions and other considerations such as collection frequency, the type and volume or weight of the waste collected, the distance to the disposal facility, and cost of disposal. Residential collection fees are either paid by the municipalities out of tax revenues or service charges or are paid directly by the residents who receive the service.

Transfer Stations. A transfer station is a facility where solid waste is received from third-party and company owned collection vehicles and then transferred to and compacted in large, specially constructed trailers for transportation to disposal facilities. This consolidation reduces costs by increasing the density of the waste being transported through compaction and by improving utilization of collection personnel and equipment. We generally base fees upon such factors as the type and volume or weight of the waste transferred, the transport distance to the disposal facility and the cost of disposal. We believe that as increased regulations and public pressure restrict the development of landfills in urban and suburban areas, transfer stations will increasingly be used as an efficient means to transport waste over longer distances to available landfills.

Landfills. Non-hazardous solid waste landfills are the primary method of disposal of solid waste in the United States. Currently, a landfill must be designed, permitted, operated and closed in compliance with comprehensive federal, state and local regulations promulgated under Subtitle D. Operating procedures include excavation, spreading and compacting of waste, and covering of waste with earth or other inert material. Disposal fees and the cost of transferring solid waste to the disposal facility place an economic restriction on the geographic scope of landfill operations in a particular market. Access to a disposal facility, such as a landfill, is necessary for all solid waste management companies. While access to disposal facilities owned or operated by unaffiliated parties can generally be obtained, we prefer, in keeping with our business strategy, to own or operate our own disposal facilities. This strategy ensures access and allows us to internalize disposal fees.

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Recycling. We perform certain recycling services. Services include curbside collection of recyclable materials for residential customers, commercial and industrial collection of recyclable materials, and, to a lesser extent, material recovery/waste reduction. We generally charge recycling fees based on the service sought by the customer. The customer pays for the cost of removing, sorting and transferring of recyclable materials downstream in the recycle process. In most cases, we receive mixed waste materials at a materials recovery facility, which is often integrated into, or contiguous to, a transfer operation. At the facility, we sort, separate, accumulate, bind or place in a container and ready for transportation materials such as paper, cardboard, plastic, aluminum and other metals. Cardboard and paper represented 80% of our processed recyclable product in 2001. The purchaser of the recyclables generally pays for the sorted materials based on fluctuating spot-market prices. We dispose of material, for which there is no market or for which the market price is insufficient to warrant processing, at a landfill or other disposal facility. We seek to mitigate exposure to fluctuating commodity prices by passing through substantially all of the profit or loss from the sale of recyclables to customers when it is possible. We also engage in organic materials recycling and/or disposal.

Organization, Marketing and Sales

Our management philosophy utilizes a decentralized operating model, with centralized management and financial controls. We believe that this model allows us to maximize the opportunities in each market that we operate and has largely contributed to our ability to operate the business efficiently, while maintaining adequate controls over our operations.

We implement this philosophy through a corporate, area, regional and district infrastructure.

Corporate and area management establish long term strategic plans, outline business and financial goals, implement policies and procedures and evaluate their effectiveness to provide for uniform controls throughout the organization. Regional management develops tactical plans and implements and monitors compliance with policies and procedures to achieve the strategic goals and objectives. District management is responsible for operational execution in accordance with strategic plans and compliance with policies and procedures.

The area vice presidents and area controllers are located in region offices and utilize corporate and regional personnel for support staff.

A region vice president manages each region supported by a staff, including a controller. All region vice presidents and most controllers have significant industry experience (in the case of region vice presidents, an average of 25 years of experience). Region offices are typically located in a district’s facility in order to reduce overhead costs and to promote a close working relationship between the region management and district personnel.

All region managers and most district managers have responsibility for all phases of the vertical integration model including collection, transfer, recycling and disposal. Region management also has responsibility for increasing region revenues through internal development initiatives and acquisitions. In addition to base salary, we compensate region and district management through a bonus program and stock incentive plans. Compensation pursuant to the bonus and stock incentive plans is largely contingent upon meeting or exceeding various goals in the manager’s geographic area of responsibility, as well as the achievement of overall company goals.

The districts consist of a collection of stand-alone companies usually operating as a vertically integrated operation within a common marketplace. These districts range in size from approximately $27 million in revenue to approximately $366 million in revenue. Each district reports to a regional office. Each regional office has approximately 6 districts under its management.

In addition to a district manager and controller, each district has staff responsible for sales and marketing. Our policy is to periodically visit each commercial account to ensure customer satisfaction and to sell additional services. In addition to calling on existing customers, each salesperson calls upon potential customers within a defined area in each market.

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We also have municipal marketing coordinators in most service areas, who are responsible for communicating with each municipality or community to which we provide residential service to ensure customer satisfaction. Additionally, the municipal coordinators organize and handle bids for renewal and new municipal contracts in their service area.

Competition

The non-hazardous waste collection and disposal industry is highly competitive. We compete with large companies and municipalities, some of which may have greater financial and operations resources. We also compete with the use of alternatives to landfill disposal (in some cases because of state requirements to reduce landfill disposal). The non-hazardous waste collection and disposal industry is led by three large national waste management companies: Allied, Waste Management, Inc., and Republic Services, Inc. It also includes numerous regional and local companies. Many counties and municipalities that operate their own waste collection and disposal facilities have the benefits of tax-exempt financing and may control the disposal of waste collected within their jurisdictions.

We also encounter competition due to the use of alternatives to landfill disposal, such as recycling and incineration. Further, most of the states in which we operate landfills have adopted plans or requirements that require the adoption of comprehensive plans to reduce the volume of solid waste deposited in landfills through waste planning, composting and recycling or other programs. State and local governments sometimes mandate waste reduction at the source and prohibit the disposal of certain types of wastes, such as yard wastes, at landfills. Such mandates may reduce the volume of waste going to landfills in certain areas. If this occurs, we cannot assure you that we will be able to operate our landfills at their optimal level of utilization or charge optimal prices for landfill disposal services due to the decrease in demand for services. We also encounter competition in our acquisition of landfills and collection operations. This competition is due to our competitors’ interest in acquiring solid waste assets.

Environmental and Other Regulations

We are subject to extensive and evolving environmental laws and regulations. The Environmental Protection Agency, (the “EPA”) and various other federal, state and local environmental, zoning, health and safety agencies administer the regulations. Many of these agencies periodically examine our operations to monitor compliance with such laws and regulations. Governmental authorities have the power to enforce compliance with these regulations and to obtain injunctions or impose civil or criminal penalties in case of violations. We believe that regulation of the waste industry will continue to evolve and we will adapt to such future regulatory requirements to ensure compliance.

Our operation of landfills subjects us to certain operational, monitoring, site maintenance, closure, post-closure and other obligations which could give rise to increased costs for compliance and corrective measures. In connection with our acquisition and continued operation of existing landfills, we must often spend considerable time, effort and money to obtain permits required to increase the capacity of these landfills. We cannot definitively predict whether or not we will be able to obtain the governmental approvals necessary to establish new or expand existing landfills.

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Our operations are subject to extensive regulation, principally under the following federal statutes:

The Resource Conservation and Recovery Act of 1976 (“RCRA”), as amended. RCRA regulates the handling, transportation and disposal of hazardous and non-hazardous wastes and delegates authority to states to develop programs to ensure the safe disposal of solid wastes. On October 9, 1991, the EPA promulgated Solid Waste Disposal Facility Criteria for non-hazardous solid waste landfills under Subtitle D. Subtitle D includes location standards, facility design and operating criteria, closure and post-closure requirements, financial assurance standards and groundwater monitoring as well as corrective action standards, many of which had not commonly been in place or enforced previously at landfills. Subtitle D applies to all solid waste landfill cells that received waste after October 9, 1991, and, with limited exceptions, required all landfills to meet these requirements by October 9, 1993. Subtitle D required landfills that were not in compliance with the requirements of Subtitle D on the applicable date of implementation, which varied state by state, to close. In addition, landfills that stopped receiving waste before October 9, 1993 were not required to comply with the final cover provisions of Subtitle D. Each state must comply with Subtitle D and was required to submit a permit program designed to implement Subtitle D to the EPA for approval by April 9, 1993. All states except Maine and Washington have EPA approved programs which implemented the minimum requirements of Subtitle D.

The Federal Water Pollution Control Act of 1972 as amended (the “Clean Water Act”). This act establishes rules regulating the discharge of pollutants into streams and other waters of the United States (as defined in the Clean Water Act) from a variety of sources, including solid waste disposal sites. If runoff from our landfills or transfer stations may be discharged into surface waters, the Clean Water Act requires us to apply for and obtain discharge permits, conduct sampling and monitoring and, under certain circumstances, reduce the quantity of pollutants in those discharges. The EPA has expanded the permit program to include storm water discharges from landfills that receive, or in the past received, industrial waste. In addition, if development may alter or affect “wetlands,” we may have to obtain a permit and undertake certain mitigation measures before development may begin. This requirement is likely to affect the construction or expansion of many solid waste disposal sites, including some we own or are developing.

The Comprehensive Environmental Response, Compensation and Liability Act of 1980 as amended (“CERCLA). CERCLA addresses problems created by the release or threatened release of hazardous substances (as defined in CERCLA) into the environment. CERCLA’s primary mechanism for achieving remediation of such problems is to impose strict, joint and several liability for cleanup of disposal sites on current owners and operators of the site, former site owners and operators at the time of disposal, and parties who arranged for disposal at the facility (i.e. generators of the waste and transporters who select the disposal site). The costs of a CERCLA cleanup can be substantial. Liability under CERCLA is not dependent on the existence or disposal of “hazardous wastes” (as defined under RCRA), but can also be founded on the existence of even minute amounts of the more than 700 “hazardous substances” listed by the EPA.

The Clean Air Act of 1970 as amended (the “Clean Air Act”). The Clean Air Act provides for increased federal, state and local regulation of the emission of air pollutants. The EPA has applied the Clean Air Act to landfills. In March 1996, the EPA adopted New Source Performance Standard and Emission Guidelines (the “Emission Guidelines”) for municipal solid waste landfills. These regulations impose limits on air emissions from solid waste landfills. The Emission Guidelines propose two sets of emissions standards, one of which is applicable to all solid waste landfills for which construction, reconstruction or modification was commenced before May 30, 1991. The other applies to all municipal solid waste landfills for which construction, reconstruction or modification was commenced on or after May 30, 1991. The Emission Guidelines may be implemented by the states after the EPA approves the individual state’s program. These guidelines, combined with the new permitting programs established under the recent Clean Air Act amendments, will likely subject solid waste landfills to significant new permitting requirements and, in some instances, require installation of methane gas recovery systems to reduce emissions to allowable limits.

The Occupational Safety and Health Act of 1970 as amended (“OSHA”). OSHA establishes certain employer responsibilities, including maintenance of a workplace free of recognized hazards likely to cause death or serious injury, compliance with standards promulgated by the Occupational Safety and Health Administration, and various record keeping, disclosure and procedural requirements. Various standards, including standards for notices of hazards, safety in excavation and demolition work, and the handling of asbestos, may apply to our operations.

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Future Federal Legislation. In the future, our collection, transfer and landfill operations may also be affected by legislation that may be proposed in the United States Congress that would authorize the states to enact laws governing interstate shipments of waste. Such proposed federal legislation may allow individual states to prohibit the disposal of out-of-state waste or to limit the amount of out-of-state waste that could be imported for disposal and would require states, under certain circumstances, to reduce the amounts of waste exported to other states. If this or similar legislation is enacted, states in which we operate landfills could act to limit or prohibit the importation of out-of-state waste. Such state actions could adversely affect landfills within these states that receive a significant portion of waste originating from out-of-state. Our collection, transfer and landfill operations may also be affected by “flow control” legislation, which may be proposed in the United States Congress. This proposed federal legislation may allow states and local governments to direct waste generated within their jurisdiction to a specific facility for disposal or processing. If this or similar legislation is enacted, state or local governments with jurisdiction over our landfills could act to limit or prohibit disposal or processing of waste in our landfills.

State Regulation. Each state in which we operate has laws and regulations governing solid waste disposal and water and air pollution and, in most cases, regulations governing the design, operation, maintenance and closure of landfills and transfer stations. We believe that several states have proposed or have considered adopting legislation that would regulate the interstate transportation and disposal of waste in their landfills. Many states have also adopted legislative and regulatory measures to mandate or encourage waste reduction at the source and waste recycling.

Our collection and landfill operations may be affected by the current trend toward laws requiring the development of waste reduction and recycling programs. For example, a number of states have recently enacted laws that will require counties to adopt comprehensive plans within the next few years to reduce, through waste planning, composting and recycling or other programs, the volume of solid waste deposited in landfills. A number of states have also taken or propose to take steps to ban or otherwise limit the disposal of certain wastes, such as yard wastes, beverage containers, newspapers, unshredded tires, lead-acid batteries and household appliances into landfills.

We have implemented and will continue to implement environmental safeguards that seek to comply with these governmental requirements.

Liability Insurance and Bonding

We carry general liability, comprehensive property damage, workers’ compensation, employer’s liability, directors’ and officers’ liability, limited environmental impairment liability and other coverage we believe are customary in the industry. Except as discussed in Legal Proceedings below, we do not expect the impact of any known casualty, property or environmental claims or other contingency to be material to our consolidated liquidity, financial position or results of operations.

We are required to provide certain financial assurances to governmental agencies under applicable environmental regulations relating to our landfill and collection operations. We are required to provide approximately $1.6 billion in financial assurance obligations relating to our landfill operations. Additionally we have approximately $460 million in operational performance bonds with various municipalities and approximately $95 million of financial guarantee bonds for self-insurance. These financial assurances include surety bonds, letters of credit, insurance policies and trust deposits required principally to secure our estimated landfill closure and post-closure obligations and collection contracts. The mix of financial assurance instruments may change in the future, which may result in an increased use of letters of credit as financial assurance instruments. Letters of credit provided as financial assurance are issued under the 1999 Credit Facility and as such are a use of borrowing availability.

Employees

We employ approximately 29,000 people. Approximately 7,000 of our employees are covered by local collective bargaining agreements, but no more than 250 employees are covered by any one agreement. We currently have no disputes or bargaining circumstances that could cause significant disruptions in our business.

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Item 2. Properties

Our principal executive offices are located at 15880 N. Greenway-Hayden Loop, Suite 100, Scottsdale, Arizona 85260 where we currently lease approximately 75,000 square feet of office space. We currently maintain regional administrative offices in all of our regions.

Our principal property and equipment consists of land, buildings, and vehicles and equipment, substantially all of which are encumbered by liens in favor of our primary lenders. We own or lease real property in the states in which we are doing business. At December 31, 2001, we owned and operated 167 active solid waste landfills, aggregating approximately 73,674 total acres, including approximately 26,816 permitted acres. In addition, as of that date we owned or operated 355 collection companies, 181 transfer stations and 65 recycling facilities.

Item 3. Legal Proceedings

We are involved in certain routine litigation. We believe that such litigation arose in the ordinary course of business and that costs of settlements or judgments arising from such suits will not have a materially adverse effect on our consolidated liquidity, financial position or results of operations.

Federal, state and local laws and regulations that relate to the protection of the environment regulate our business. The nature of our business results in us frequently becoming a party to judicial or administrative proceedings involving governmental authorities and other interested parties. On December 27, 2001, BFI Waste Systems of North America, Inc. (BFI), one of our subsidiaries entered into a Consent Assessment of Civil Penalty (CACP) with the Commonwealth of Pennsylvania, Department of Environmental Protection (PADEP) based on violations of certain state statutes and regulations regarding the transportation of solid wastes. Pursuant to the CACP, BFI paid PADEP a total of $152,000 in full settlement of all claims. We believe that this matter will not have a material adverse effect on the Company’s consolidated financial statements. Other than the foregoing matter, at December 31, 2001, we were not involved in any such proceedings where we reasonably believe sanctions imposed by governmental authorities will exceed $100,000 or which we believe will have a material effect on our consolidated liquidity, financial position or results of operations. From time to time, we may also be subject to actions brought by citizens’ groups, adjacent landowners or others in connection with the permitting and licensing of our landfills or transfer stations, or alleging personal injury, environmental damage or violations of the permits and licenses pursuant to which we operate.

We have been notified that we are considered a potentially responsible party at a number of sites under CERCLA or other environmental laws. In all cases, such alleged responsibility is due to the actions of companies acquired by us prior to the time we acquired them. We continually review our status with respect to each site, taking into account the alleged connection to the site and the extent of the contribution to the volume of waste at the site, the available evidence connecting the entity to that site and the number and financial soundness of other potentially responsible parties at the site. The ultimate amounts for environmental liabilities at sites where we may be a potentially responsible party cannot be determined and estimates of such liabilities made by us require assumptions about future events subject 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 we have concluded that our 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 our assessments to date, the recorded liabilities are periodically evaluated, as additional information becomes available, to ascertain that the accrued liabilities are adequate. We have determined that the recorded liability for environmental matters as of December 31, 2001 of approximately $395.4 million represents the most probable outcome of these contingent matters. We do not expect that adjustments to estimates, which are reasonably possible in the near term and that may result in changes to recorded amounts, will have a material effect on our consolidated liquidity, financial position or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders

Not Applicable.

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PART II

Item 5. Market Price and Dividends on the Common Stock and Related Stockholder Matters

Price Range of Common Stock

Our common stock, $0.01 par value, is traded on the New York Stock Exchange under the symbol “AW”. The high and low sales prices per share for the periods indicated were as follows:

As of March 18, 2002, there were approximately 656 holders of record of our common stock.

Dividend Policy

We have not paid dividends on our common stock and do not anticipate paying any dividends in the foreseeable future. We are currently prohibited by the terms of our loan agreements from paying dividends.

Recent Sales of Unregistered Securities

Not Applicable.

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Item 6. Selected Financial Data

The selected financial data presented below as of and for the five years ended December 31, 2001 are derived from our Consolidated Financial Statements, which have been audited by Arthur Andersen LLP, independent public accountants. See Note 2 to our Consolidated Financial Statements. These selected financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and the notes thereto, included elsewhere herein. (All amounts are in thousands, except per share amounts and percentages.)

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Balance Sheet Data:

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

Introduction

During 2001 and 2000, we transitioned from an acquisition growth strategy to a strategy focused on internal growth and maximizing operational cash flow to repay debt. We have substantially completed the integration of previously acquired companies and achieved planned integration cost savings. We have shifted our primary focus to the efficient management of cash flows from our operations.

In the past, we experienced significant growth. Over the past nine years, we have completed over 300 acquisitions, most significantly, the acquisition of Browning-Ferris Industries, Inc. (“BFI”) on July 30, 1999.

In connection with the BFI acquisition, each share of BFI common stock was converted into the right to receive $45 in cash. Including assumed and refinanced debt, the original cost of acquiring BFI was approximately $9.6 billion. Financing for the acquisition was obtained from draws of $4.7 billion from credit facilities with a capacity of $7.1 billion (the “1999 Credit Facility”), the sale of $1.0 billion of newly issued senior convertible preferred stock (the “Preferred Stock”) and the sale of $2.0 billion of 10% Senior Subordinated Notes due 2009 (the “1999 Notes”).

As a result of the BFI acquisition, we initiated an asset divestiture program, whereby we sold, for cash or through simultaneous buy and sell transactions, certain non-core assets that did not fit with our vertical integration operating strategy for total net proceeds of approximately $1.6 billion. We completed this divestiture program, with the divestiture and restructure of the American Ref-Fuel operations which was completed on April 30, 2001.

Although we acquired 53 businesses in 2001, they were smaller tuck-in acquisitions acquired to improve the operational efficiencies of existing markets and primarily funded with the proceeds from the divestitures of other non-integrated operations. The annualized revenue of the acquired companies was approximately $150.4 million. The results of operations for the acquisitions accounted for under the purchase method for business combinations are included in our financial statements only from the applicable date of acquisition. As a result, our historical results of operations presented for 1999, which include only a half-year of BFI operations, are not directly comparable to our results of operations in years after 1999.

General

Revenues. Our revenues result primarily from fees charged to customers for waste collection, transfer, recycling and disposal services. We generally provide collection services under direct agreements with our customers or pursuant to contracts with municipalities. Commercial and municipal contract terms generally range from one to five years and commonly have renewal options. Our landfill operations include both company-owned landfills and landfills that we operate on behalf of municipalities. The following tables show the percentage of our total reported revenues by service line and geographic regions.

Revenues by Service Line (in thousands, except percentages):

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         Revenues by Region:

Our business strategy is to develop vertically integrated operations to internalize the waste we collect and thus realize higher margins from our operations. By disposing of waste at company-owned and/or operated landfills, we retain the margin generated through disposal operations that would otherwise be earned by third-party landfills. Approximately 67% of the waste we collect as measured by disposal volumes was disposed of at landfills we own and/or operate for the year 2001 compared to 65% at the end of 2000. In addition, transfer stations are an integral part of the disposal process. We locate our transfer stations in areas where our landfills are outside of the population centers in which we collect waste. Such waste is transferred to long-haul trailers or rail cars and transported to our landfills.

Operating Expenses. Cost of operations includes expenses related to labor, repairs and maintenance, equipment and facility rent, utilities and taxes, environmental compliance and remediation, safety and insurance, disposal and costs of independent haulers transporting our waste to the disposal site. Disposal costs include landfill taxes, host community fees, landfill royalty payments, landfill site maintenance, fuel and other equipment operating expenses and increases in the accruals for estimated closure and post-closure monitoring expenses.

Selling, general and administrative expenses include compensation and overhead for corporate and field general management, accounting and finance, legal, management information systems and clerical and administrative departments in addition to sales, investor and community relations and provisions for estimated uncollectible accounts receivable.

Depreciation and amortization includes depreciation of fixed assets and amortization costs associated with the acquisition and development of landfill airspace and intangible assets. Depreciation is provided on the straight-line method over the estimated useful lives of buildings and improvements (30-40 years), vehicles and equipment (3-10 years), containers and compactors (5-15 years) and furniture and office equipment (3-8 years).

Goodwill amortization includes the amortization of costs paid in excess of the fair value of net assets acquired prior to July 1, 2001 in purchase business combinations. Beginning January 1, 2002 we will no longer amortize any goodwill in accordance with the adoption of Financial Accounting Standard Board (“FASB”), Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). Also in accordance with SFAS 142, we have recorded no amortization for goodwill acquired subsequent to June 30, 2001.

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The following is a discussion of significant accounting policies for areas where we apply judgments and estimates that affect the reported amounts of our assets and liabilities and related expenses. We have noted examples of the residual accounting risk inherent for these areas that you should be aware of and for you to consider. Residual accounting risk is defined as the inherent risk that remains after the application of our policies and processes and is generally outside of our control.

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Results of Operations

The following table sets forth the percentage relationship that the various items bears to revenues for the periods indicated.