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                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                   FORM 10-K/A
                     ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
     FOR FISCAL YEAR ENDED DECEMBER 31, 2000 COMMISSION FILE NUMBER 0-11688
                          AMERICAN ECOLOGY CORPORATION
             (Exact name of registrant as specified in its charter)


            DELAWARE                                           95-3889638
  (State or other jurisdiction                              (I.R.S. Employer
of incorporation or organization)                          Identification No.)

805 W. IDAHO, SUITE #200, BOISE, IDAHO                           83702-8916
(Address of Principal Executive Offices)                         (Zip Code)

       Registrant's telephone number, including area code: (208) 331-8400
           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      NONE
           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                     COMMON STOCK, $.01 PAR VALUE PER SHARE
                                (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. [ ]

At December 14, 2001, Registrant had outstanding 13,742,322 shares of its Common
Stock.

                           EXPLANATION OF AMENDMENT

The Registrant, American Ecology Corporation (the "Company"), received a letter
from the Securities and Exchange Commission dated November 1, 2001. The
Commission made comments and requested clarification of items in the Notes to
the financial statements and to Item 7. Management Discussion and Analysis.
Based on these comments, the Company amended the Results of Operations Part I
Item 7 and the Statement of Operations and Note 3, 9, 16, and 17 of Item 8 of
its Form 10-K to include clarifications of those items in conjunction with a
response letter filed with the Commission on November 13, 2001.

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

The following discussion contains forward-looking statements that involve known
and unknown risks and uncertainties which may cause actual results in future
periods to differ materially from those indicated herein as a result of a number
of factors, including, but not limited to, those set forth under "Factors That
May Affect Future Results," Notes to the Consolidated Financial Statements, Part
I, Item 3., Legal Proceedings, and the discussion below. When the Company uses
words like "may," "believes," "expects," "anticipates," "should," "estimate,"
"project," "plan," their opposites and similar expressions, the Company is
making forward-looking statements. These expressions are most often used in
statements relating to business plans, strategies, anticipated benefits or
projections about the anticipated revenues, earnings or other aspects of our
operating results. We make these statements in an effort to keep stockholders
and the public informed about our business, and have based them on our current
expectations about future events. Such statements should be viewed with caution.
These statements are not guarantees of future performance or events. As noted
elsewhere in this report, all phases of our business are subject to
uncertainties, risks and other influences, many of which the Company has no
control over. Additionally, any of these factors, either alone or taken
together, could have a material adverse effect on the Company and could change
whether any forward-looking statement ultimately turns out to be true. The
Company undertakes no obligation to publicly release updates or revisions to
these statements. The following discussion should be read in conjunction with
audited consolidated financial statements and the notes thereto for the year
ending December 31, 2000, included elsewhere in this Form 10-K.

The Company is a hazardous, non-hazardous, and radioactive waste management
company that offers comprehensive treatment and disposal solutions for hazardous
and low-level radioactive waste to commercial and government entities including,
but not limited to nuclear power plants, petro-chemical plants, steel mills, the
U.S. Department of Defense, medical facilities, universities and research
institutions. The Company principally derives its revenue from fees charged for
access to the Company's five fixed waste disposal facilities and one LLRW
processing facility. Fees are charged for transportation, processing, and
disposal of waste, subject to strict waste acceptance criteria. The Company has
been in business for more than 49 years.

2000 FINANCIAL RESULTS COMPARED WITH 1999 FINANCIAL RESULTS

The Company's 2000 revenue reached $41.9 million which was a 22% increase over
revenue in 1999. Operating costs in 2000 increased 31% over 1999, but were only
a 4% increase over 1999 while there was a 22% revenue growth. Year 2000
represented the first year in 5 years that the Company posted increasing
revenue. The combination of higher revenue improved gross margin and relatively
flat operating costs have improved the Company's profitability. For the years
ended December 2000 and 1999, the Company posted a net income (before dividends)
of $4.7 and $4.4 million. Both years compared favorably to a net loss of $48.9
million in 1995.

Through the first two months of 2001, the Company has maintained revenue growth
and profitability and anticipates this trend to continue.

EXPENSES

Operating expenses include direct and indirect costs for labor, transportation,
maintenance and repairs, subcontracted costs and equipment, insurance, taxes,
appropriate accruals for burial fees, and other costs. The Company has properly
accounted for fees assessed by regulatory authorities for the issuance of
permits and licenses.

Selling, general & administrative costs include management salaries, sales and
marketing efforts, clerical and administrative costs, legal and consulting fees,
office rentals, insurance, and other administrative costs included under general
corporate overhead.



                                       2



STRATEGY

Management continues to evaluate the Company's relative position and presence in
the marketplace. In 2000, the Company actively pursued new business
opportunities, entered an agreement to acquire a new subsidiary, implemented new
technologies, expanded its licenses and permits, and made new business
alliances. The acquisition of Envirosafe Services of Idaho, Inc. was completed
February 1, 2001. Other strategic plan implementation activities have continued
into 2001. The environmental services industry is dynamic and highly
competitive. The Company believes that aggressively pursuing growth and market
consolidation opportunities are critical to its future success. The Company
annually develops a strategic plan and budget that reflects market and
competitive changes, as well as good business practices, flexibility, and
regulatory compliance. The Company's strategic plan focuses on six key areas.

1.   Emphasize Safety and Compliance

     The Company believes that its success and economic performance is based on
     providing scientific solution for the waste it receives in a safe and
     compliant manner. The Company has a stringent health and safety plan for
     all of its operations and has hired, from time to time, outside consultants
     to advise the Company on ongoing improvements to the Company's health and
     safety policies and procedures. In addition, the Company manages all of its
     facilities in a manner to assure compliance with applicable state and
     federal law and regulations. Company management emphasizes to employees on
     an ongoing basis the importance of health, safety, and compliance.

2.   Emphasize Business Fundamentals and Cost Control

     The Company continues to stress business fundamentals and cost control.
     Management remains committed to improving core business operations at each
     of its sites by increasing revenue, profitability and cash flow. The
     Company continues to implement and enforce new policies, procedures, and
     systems to ensure that appropriate business controls are in place.

3.   Expand Services and Increase Utilization of Assets at Existing Facilities

     In mid-year 2000, the Company opened its El Centro municipal and industrial
     solid waste landfill located at Robstown, Texas. In late 2000, the Company
     introduced Thermal Treatment and Recovery processes at its Nevada location.
     The Company intends to introduce this technology at other locations during
     2001. Successful permitting of vertical disposal space expansions at its
     Nevada and Texas disposal sites further demonstrates the Company's ability
     to maximize the value of its existing core business assets. In 2001, the
     Company's substantial operating experience will be applied to the newly
     acquired Grand View, Idaho treatment and disposal facility. The Company
     continues to work with its regulators to expand service capabilities at its
     existing sites.

4.   Increase Emphasis on E-Business and Automation

     The Company recognizes the value of a comprehensive electronic business
     strategy and has committed significant resources to improving its
     electronic business capabilities. This includes but is not limited to
     improving the Company's website, automating customer forms and government
     approval documents, posting facility waste acceptance criteria on its
     website, and providing customers with on-line access to information
     regarding their waste and their account activity. In 2000, the Company has
     started implementing order processing and accounts receivable information
     on the Internet. The Company is also using the Internet to find new
     customers, improve sales force integration, speed waste processing, and
     reduce costs. The Company believes that its electronic business
     capabilities will allow it to better serve existing customers and develop
     new business.



                                       3


5.   Increase Cross Selling

     The Company believes it offers excellent customer service and a
     complimentary and unique set of services through its multiple sites and
     operations. The Company is committed to cross-selling this integrated array
     of services to both existing customers and prospects. To achieve this goal
     the Company is updating marketing and sales materials, arming sales
     personnel with updated information on Company capabilities and services,
     and cross training key personnel. Management believes the addition of
     experienced sales personnel and rail transportation expertise acquired as
     part of the Envirosafe Services of Idaho transaction will further enhance
     cross-selling in 2001 and beyond.

6.   Execute Well Conceived Mergers and Acquisitions

     The Company will continue to evaluate and pursue strategic mergers or
     acquisitions of companies or assets that fit the Company's core
     competencies. Management believes that well-conceived mergers or
     acquisitions will continue to significantly enhance the Company's market
     position and value. The Company will also continue to pursue strategic
     alliances, joint ventures or partnership arrangements.

RECENT DEVELOPMENTS AND FUTURE CONSIDERATIONS

FACTORS THAT MAY AFFECT FUTURE RESULTS

COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS

The changing regulatory framework governing the Company's business creates
significant risks, including potential liabilities from violations of
environmental statutes and regulations. Failure to timely obtain, or to comply
with the conditions of applicable federal, state and local governmental
licenses, permits or approvals for our waste treatment and disposal facilities
could prevent or inhibit the Company from operating our facilities and providing
services, resulting in a significant loss of revenue and earnings. Changes in
laws or regulations may require the Company to obtain additional operating
licenses, permits or approvals if new environmental legislation or regulations
are enacted or existing legislation or regulations are amended, reinterpreted or
enforced differently than in the past. Any new governmental requirements that
raise compliance standards may impose significant cost upon the Company. The
Company's failure to comply with applicable statutes and regulations may result
in the imposition of substantial fines and penalties and could adversely affect
the Company's ability to carry on its business as presently constituted.

CHANGES IN LAWS AND REGULATIONS

A substantial relaxation of the requirements of compliance with environmental
laws or a substantial reduction of enforcement activities by governmental
agencies could materially reduce the demand for the Company's services. A large
portion of the Company's revenues are generated as a result of requirements
arising under federal and state laws, regulations and programs related to
protection of the environment. If the requirements of compliance with
environmental laws and regulations were substantially relaxed in the future or
were less vigorously enforced, particularly those relating to the
transportation, treatment, storage or disposal of hazardous and low-level
radioactive waste, the demand for the Company's services could decrease and
revenues could be significantly reduced.

EXPOSURE TO LITIGATION

Since Company personnel routinely handle radioactive and hazardous materials,
the Company may be subject to liability claims by employees, customers and third
parties. There can be no assurance that the Company's existing liability
insurance is adequate to cover claims asserted against the Company or that the
Company will be able to maintain such insurance in the future. The Company has
adopted risk management programs designed to reduce these risks and potential
liabilities, however, there can be no assurance that such programs will fully
protect the Company.



                                       4



ACCESS TO CAPITAL

The Company needs to have cost effective access to capital in order to implement
its strategic and financial plan. If the Company cannot retain its existing
access to capital or raise additional capital the Company may need to curtail or
scale back its planned expansion. The Company requires additional financing for
working capital, capital expenditures and new acquisitions.

NEW TECHNOLOGIES

The Company expects to increase its utilization of new thermal treatment and
possibly other advanced technologies. The Company' s future growth is somewhat
reliant upon its ability to discern emerging industry service niches and respond
to clients' needs. If the Company cannot successfully implement commercially
viable technologies for treatment of wastes in a manner that is responsive to
the clients' requirements, the business could be adversely affected.

COMPETITIVE ENVIRONMENT

The Company faces competition from companies with greater resources and
potentially more cost-effective waste treatment and disposal solutions. Any
increase in the number of licensed commercial treatment facilities or disposal
sites for hazardous or low-level radioactive waste in the United States, or any
decrease in the treatment or disposal fees charged by competitive facilities or
sites, could reduce the competitive advantage of the Company's facilities and
services.

LOSS OF MAJOR CONTRACTS

A loss on one or more of the Company's larger contracts could significantly
reduce the Company's revenues and negatively impact earnings. The Company's
contract with the Corps of Engineers for example is a contract that could have a
material adverse impact on the Company if lost or not renewed, and represents a
significant portion of the revenue for the Company's newly acquired Grand View,
Idaho site.

THE COMPANY MAY FACE RISKS RELATING TO GENERAL ECONOMIC CONDITIONS

The Company believes there is risk related to general economic and market
conditions, including the potential impact of any economic slowdown, recession,
interest rate fluctuation or other adverse external economic conditions.
Negative general economic conditions could adversely affect our financial
condition, results of operation and cash flows.

RESULTS OF OPERATIONS

The Company has continued to show improved operations since 1994, especially for
the last three years ended 2000, 1999, and 1998 when the Company reported net
income of $4,697,000, $4,409,000, and $762,000 respectively. Operationally, the
Company has continued to grow and reposition itself after having difficulty from
three unsuccessful acquisitions in 1994 that affected the reporting years ending
December 31, 1997, 1996, and 1995.

The following table summarizes the operational performance of the operating
segments, Chemical Services, LLRW Services, and Corporate & Other. Only Chemical
Services and LLRW Services generate revenue and profit. The Corporate & Other
part of the Company generate no revenue and provide administrative, managerial,
and support services for Chemical Services, LLRW Services and the ongoing
closure and post closure operations of closed facilities. Since there is no
revenue generated at the corporate level or at closed facilities there is no
profitability at this level.

Summarized financial information concerning the Company's reportable segments is
shown in the following table. The "Corporate & Other" column includes
corporate-related items not allocated to the reportable segments.


                                       5






Reported in $(000)                                CHEMICAL        LLRW       CORPORATE
                                                  SERVICES      SERVICES      & OTHER         TOTAL
                                                 ----------    ----------    ----------    ----------
2000
                                                                               
Revenue                                          $   18,975    $   23,725    $     (742)   $   41,958

Direct Cost                                          10,084        12,223          (475)       21,832
                                                 ----------    ----------    ----------    ----------
Gross Profit                                          8,891        11,502          (267)       20,126

S,G&A                                                 3,975         7,113         5,577        16,665
                                                 ----------    ----------    ----------    ----------
Income (loss) from operations
                                                      4,916         4,389        (5,844)        3,461

Investment income                                        51             1           383           435

Gain on sale of assets                                   69            23            --            92

Interest expense                                        (57)         (109)         (184)         (350)

Other income                                            164           380           297           841
                                                 ----------    ----------    ----------    ----------
Income before extraordinary items and taxes           5,143         4,684        (5,348)        4,479

Extraordinary item and taxes                             --            --           218           218
                                                 ----------    ----------    ----------    ----------
Net Income                                       $    5,143    $    4,684    $   (5,130)   $    4,697
Total Assets                                     $   23,875    $   39,537    $    2,338    $   65,750


1999

Revenue                                          $   12,074    $   23,070    $     (792)   $   34,352

Direct Cost                                           7,482         9,740          (613)       16,609
                                                 ----------    ----------    ----------    ----------
Gross Profit                                          4,592        13,330          (179)       17,743

S,G&A                                                 3,218         6,191         5,353        14,762
                                                 ----------    ----------    ----------    ----------
Income (loss) from operations                         1,374         7,139        (5,532)        2,981

Investment income                                        29             1           750           780

Gain on sale of assets                                  895             1           (70)          826

Interest expense                                        (14)          (65)         (129)         (208)

Other income                                             76             6           143           225
                                                 ----------    ----------    ----------    ----------
Income before extraordinary items and taxes           2,360         7,082        (4,838)        4,604

Extraordinary item and taxes                             --            --          (195)         (195)
                                                 ----------    ----------    ----------    ----------
Net Income                                       $    2,360    $    7,082    $   (5,033)   $    4,409
Total Assets                                     $   16,162    $   38,866    $    3,431    $   58,459


1998

Revenue                                          $   16,030    $   22,930    $       --    $   38,960

Direct Cost                                           9,488        14,057            --        23,545
                                                 ----------    ----------    ----------    ----------
Gross Profit                                          6,542         8,873            --        15,415

S,G&A                                                 6,544         6,272         2,886        15,702
                                                 ----------    ----------    ----------    ----------
Income (loss) from operations                            (2)        2,601        (2,886)         (287)
Investment income                                       381           118           (13)          486

Gain on sale of assets                                   55            --            17            72

Interest expense                                        (11)          (58)           (3)          (72)

Other income                                             29             1           588           618
                                                 ----------    ----------    ----------    ----------
Income before extraordinary items and taxes             452         2,662        (2,297)          817
Extraordinary item and taxes                             --            --           (55)          (55)
                                                 ----------    ----------    ----------    ----------
Net Income                                       $      452    $    2,662    $   (2,352)   $      762
Total Assets                                     $   15,535    $   38,000    $    8,265    $   61,800
                                                 ----------    ----------    ----------    ----------





                                       6


The following table sets forth items in the Statements of Operations for the
three years ended December 31, 2000, as a percentage of revenue:



                                                                     Percentage of Revenues for the
                                                                       Year Ended December 31,
                                                               --------------------------------------
                                                                  2000          1999          1998
                                                               ----------    ----------    ----------

                                                                                  
Revenue                                                             100.0%        100.0%        100.0%
Operating costs                                                      52.0          48.3          60.4
                                                               ----------    ----------    ----------

Gross profit                                                         48.0          51.7          39.6
Selling, general and administrative expenses                         39.7          43.0          40.3
                                                               ----------    ----------    ----------

Income (loss) from operations                                         8.3           8.7           (.7)
Other (income) expense, net                                           2.4            .7           2.8
                                                               ----------    ----------    ----------

Income (loss) before income taxes and extraordinary item             10.7          13.4           2.1
Extraordinary item                                                     .4            --            --
Income tax expense (benefit)                                           --            .6            .1
Preferred stock dividends                                              .9           1.2           1.1
                                                               ----------    ----------    ----------

Net income to common shareholders                                    10.2%         11.7%           .9%
                                                               ==========    ==========    ==========


The following table compares the Company's two operating segments without
consolidated corporate costs, intercompany charges, or the captive insurance
company ALEX.

CONDENSED STATEMENT OF OPERATIONS



Reported in $000                      DECEMBER 31, 2000             December 31, 1999
                                   CHEMICAL         LLRW         Chemical         LLRW
                                 ------------   ------------   ------------   ------------

                                                                  
Revenue                          $     18,975   $     23,725   $     12,074   $     23,070
Operating costs                        10,084         12,223          7,482          9,740
                                 ------------   ------------   ------------   ------------

Gross Profit                     $      8,891   $     11,502   $      4,592   $     13,330
Selling, G & A                          3,975          7,113          3,218          6,192
                                 ------------   ------------   ------------   ------------
Income from operations
                                 $      4,916   $      4,389   $      1,374   $      7,139
                                 ------------   ------------   ------------   ------------


REVENUE

Revenue for 2000, increased to $41,958,000 a 22% increase over 1999 revenue of
$34,352,000. During 1999, revenue had decreased 11.8% from 1998 revenue of
$38,960,000. The increase in revenue was principally the result of growth in the
Chemical Services business, while the LLRW business remained relatively flat.
The Chemical Services division has increased profitability in each of the last
three years and substantially grew revenue in 2000 from 1999. This was mainly
due to adding new hazardous waste customers and successfully bidding and winning
several new projects, including one large steel mill project and one large
remediation project. While it had little effect on revenue, the Company opened
El Centro municipal and industrial waste landfill in 2000. The Beatty, Nevada
facility had two large contracts, and made a very large contribution to revenue
in 2000, for hazardous waste disposal.

Management expects revenue to continue to increase in 2001, as the newly
constructed vertical expansion airspace is utilized at the Beatty and Texas
facilities, the newly acquired Idaho facility contributes to revenue, and El
Centro captures a greater share of the Corpus Christi, Texas market.

The LLRW services revenue remained relatively flat in 2000, 1999, and 1998 at
between $23 and $24 million. Production increased slightly at the Oak Ridge,
Tennessee LLRW facility with revenue of $14,506,000 in 2000




                                       7



compared to $13,575,000 in 1999, and $9,129,000 in 1998. While revenue has
increased at Oak Ridge, direct operating costs increases rendered this facility
unprofitable in each of these reported years. Revenue increased to $8,857,000
compared to $7,500,000 in 1999 and 1998 at the Company's Richland, Washington
rate regulated LLRW facility. This increase was due to significant NARM
contracts, which are not rate regulated. The Company expects approval of a new
5-year Washington rate agreement in May 2001. The Company expects that the
minimum revenue requirement under a new rate agreement will be materially less
than the current agreement. While both Oak Ridge and Richland have increased
revenues, the Company has decreased its business with the Central Interstate
Compact Commission pending the outcome of litigation, as explained in Item 1.
Low Level Radioactive Waste Services.

DIRECT OPERATING COSTS

Direct operating costs for 2000, totaled $21,832,000 an increase of $5,223,000
or 31% from the prior year. Direct operating costs were $16,609,000 in 1999, and
$23,545,000 in 1998. Direct operating costs increased in 2000, as the result of
increased revenue and activity, principally at Chemical Services sites. Further
contributing to the increase in direct operating costs was the Company's
decision to broker transportation when it made economic sense and introduction
of new thermal treatment and recovery processes at the Nevada site. Management
expects operating costs to increase, commensurate with and relative to revenue
in 2001.



Reported in $000                  DECEMBER 31, 2000              December 31, 1999             December 31, 1998
                               CHEMICAL         LLRW           Chemical         LLRW         Chemical          LLRW
                               --------       --------         --------       --------       --------        --------

                                                                                           
Direct operating costs          $10,085        $12,223          $7,482         $9,740         $9,488         $14,057


In 2000, Chemical Services direct operating costs increased $2,602,000 or 35%
from the prior year. The increase in direct operating costs was primarily the
result of additional service and activity associated with contracts. In 2000,
the Company capitalized approximately $2,478,000 of costs compared to $1,822,000
of capitalized costs in 1999. The capitalization of labor, engineering, and
material costs for the development of additional disposal capacity at the Nevada
and Texas facilities will generate revenue and contribute to profit in the
future.

In 2000, LLRW Services direct operating costs increased $2,483,000 or 25% from
the prior year. This increase is only moderately reflective of a 3% increase in
revenue. The increases in direct operating costs are mainly at the Oak Ridge
facility where an NLRB judgment was received against the Company for $547,000
additional subcontract and consulting costs at the motor center that the Company
made no profit on and additional equipment rental. The Company continues to have
difficulty in managing costs at the Oak Ridge facility. Operating costs continue
to be high at this facility mainly for labor, transportation and subcontracted
services, and equipment rental.


Consolidated Results of Operations (in thousands):



                                           2000                          1999                         1998
                                         --------                      -------                       -------

                                                                                           
Revenue                              $41,958                      $34,352                       $38,960
Direct operating costs                21,832     52.0%             16,609      48.3%             23,545      60.4%
                                     -------                      -------                       -------
Gross profit (loss)                  $20,126     48.0%            $17,743      51.7%            $15,415      39.6%


For the year ended 2000, direct operating costs were 52.0% of revenue compared
to 48.3% in 1999 and 60.4% in 1998. The increase in direct operating costs
reflect the increased activity levels associated with growing the business, as
well as higher than anticipated costs at the Company's Oak Ridge facility.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses ("SG&A") for 2000 totaled
$16,665,000, an increase of 13% from the prior year. SG&A were $14,762,000 and
$15,702,000 in 1999 and 1998 respectively. While SG&A expenses increased in
absolute terms $1,903,000, SG&A actually decreased relative to revenue, dropping
from 43% of revenue last year to 39.7% of revenue this year. The higher SG&A
spending (in dollars) was caused by additional




                                       8



investment in infrastructure, information systems, more travel, additional sales
personnel, outside consulting expense, and legal expense. The Company expects
that SG&A will grow in absolute dollars, but actually decrease relative to
sales.

Consolidated Results of Operations (in thousands):



                                          2000                          1999                          1998
                                          ----                          ----                          ----

                                                                                           
Revenue                              $41,958                      $34,352                       $38,960
Selling, G&A expenses                 16,665     39.7%             14,762       43%              15,702      40.3%


The following table includes SG&A for the Chemical and LLRW Services, but
excludes corporate consolidated adjustments and eliminations.



Reported in $000                        DECEMBER 31, 2000                             December 31, 1999
                                CHEMICAL                  LLRW                 Chemical                 LLRW
                                --------                  ----                 --------                 ----

                                                                                           
SG&A                             $3,974                  $7,113                 $3,219                 $6,192


In 2000, Chemical Service's SG&A increased 23.5%. The main reason for the
increase was additional sales people, new contracts, and new customers described
earlier. Chemical services had previously reduced costs as a result of selling
the transportation operations. LLRW Services SG&A increased by 14.9% from 1999.
The increase for LLRW is the result of 35% SG&A to revenue spending at the Oak
Ridge facility, compared to 22.7% at the Richland facility. However, on January
2, 2001 the Company's Oak Ridge facility implemented an aggressive cost
containment program that included a reduction in force of 10 people. The
reduction in force coupled with ongoing spending controls is expected to reduce
SG&A expense at the Company's Oak Ridge facility.

INVESTMENT INCOME

In 2000, the Company restated investment income and other income in order to
separately state interest expense for the three years ending December 31, 2000,
1999, and 1998. In the original report for December 31, 2000, the amount of
investment income for 1998 was transposed with other income in the statement of
operations and in the segment reporting table and the other income amounts for
1999 and 1998 were incorrectly compared with the 2000 investment income in the
explanation of changes. The amount of investment income as of December 31, 2000,
of $435,000 should have been compared to $780,000 and $486,000 in 1999 and 1998,
respectively.

Investment income is comprised principally of interest income earned on various
investments in securities held-to-maturity, dividend income, and realized and
unrealized gains and losses earned on the Company's stock portfolio classified
as trading securities in 1999 and 1998.

The main reason for fluctuations in investment income was realized gains on
investment securities in the ALEX portfolio. The Company had invested in some
aggressive security issues and made a higher return in 1999 when some of these
issues were sold. The ALEX stock portfolio was used as collateral for insurance
in the event of a claim at certain closed sites. The Company has secured
alternate financial assurance and the ALEX portfolio and subsidiary has been
dissolved, and the cash used for various capital expansion projects.

GAIN ON SALE OF FIXED ASSETS

As a result of the sale lease back in August 2000, the Company recognizes a
portion of the deferred gain each month. Payments are made to the bank for
$35,000 and a gain is recognized for $16,600. In 2000, a $83,000 gain was
realized on the sale of the fixed assets for the sale-leaseback. Other
miscellaneous assets were sold during the year for a gain of approximately
$9,000.

In May of 1999, the Company sold its Houston-based hazardous and non hazardous
waste transportation service provider (formerly WPI) and Surecycle(R) (a
business division that operated a containerized hazardous waste collection
service in the Gulf coast market) to Clean Harbors Environmental Services, Inc.
The sale of the two




                                       9



operations and related facilities produced working capital of $1.9 million and a
gain on the sale over remaining book value of $843,000 before sales commissions.

INTEREST EXPENSE

The Company incurred interest expense of $350,000, $208,000, and $72,000 in
2000, 1999, and 1998 respectively. Before July 1999, the majority of this
interest expense was capitalized for the development of the Company's proposed
LLRW facilities in California and Nebraska in accordance with Statement of
Financial Accounting Standards No. 34, Capitalization of Interest Cost. In 1999,
the Company ceased capitalization of interest costs. In 2000, the Company opened
a new bank credit facility with an $8 million borrowing base. Interest charges
for 2000 and 1999 are from bank borrowings and interest on long-term capital
leases for heavy equipment. Substantially all of the interest cost incurred in
1998 related to borrowings under the Company's Credit Agreement with its former
commercial bank lender.

OTHER INCOME

Other income was $841,000, $225,000 and $618,000 as of December 31, 2000, 1999,
and 1998. At the time of the original report for December 31, 2000, the amount
of other income for 1998 was transposed with investment income in the statement
of operations and the segment reporting table when year-end numbers were
restated to break out interest expense and investment income amounts for 1999
and 1998 were incorrectly compared with the 2000 other income for the
explanation of changes. The amounts of other income are generally the result of
adjustments, or money received that was originally recorded in a prior period.
Other income is the account used to record various business activities that are
not a part of the Company's ordinary and usual business line of revenue. Other
income also includes the reversal of expenses charged to reserves for contingent
liabilities from prior periods and miscellaneous cash receipts. The Company
believes it is appropriate to charge to other income those costs and expenses
which were reversed from accruals in prior periods of estimated operating or
selling, general & administrative expense. As a result, credits from prior
periods go to other income rather than crediting current years expenses or
revenue, thus preserving the true current period results from operations.

If a reserve were established based on a known liability that was reasonably
estimated, and later settled for a lesser amount, that unused portion of the
reserve from a prior period would result in other income. On the other hand if
such contingent liability were resolved within the same year, then the account
that the original expense was charged to would take the resultant credit.

Other income in large part is the result of corrections, adjustments, and
reversal of contingent liabilities and collection of accounts previously written
off, all relating to a reduction in expense from a prior year. These
transactions are all a part of the Company's general defined business of
hazardous, municipal or nuclear waste treatment and disposal.

A smaller part of other income is the earnings from outside the Company's
general defined business. These might include property rents, receipts from gas
and oil exploration, the Company's land used by sharecroppers, rock, gravel or
timber sales, and vending machine commissions. These transactions are not a part
of the Company's general line of business and thus are not included in
operational revenue.

                                       10



The following table makes the classification of general business transactions
and those income items from outside the Company's general business scope.

(Reported in whole dollars)



                                                                       AS OF DECEMBER 31,
                                                             ------------------------------------
OTHER INCOME FROM GENERAL BUSINESS ITEMS                        2000         1999         1998
                                                             ----------   ----------   ----------
                                                                              
State tax refunds from prior year                            $    7,440           --   $  100,945
 Loan repayment to Chase Bank of Texas originally
    expensed as bank fees (see below)                           112,000           --           --
Insurance claim refunds                                          24,145   $   38,148           --
Payment on sales invoices previously written off                 98,283       59,350      163,922
Adjust prior years accrued burial fee and tax accrual
   for Washington facility based on actual payment
   (see below)                                                  260,206           --           --
Reverse bad debt expense reserve                                 75,641        7,745      117,805
Refund of Texas contract bidding fees                                --        6,754           --
Refund of RCRA and burial fees from Nevada                           --           --       11,997
Adjust the prior years accrual for Texas burial fees
   based on final payment                                        58,509           --           --
Correction of prior years expenses that were allowable
   as capitalized costs for El Centro project (see below)       132,500        8,776           --
Adjustment to the closure and post closure reserve
   for the Washington facility (see below)                       52,630           --           --
Sale of various Winona, Texas facility assets                        --           --       22,000
Closed Winona, Texas facility and reversed reserves                  --           --      122,755
                                                             ----------   ----------   ----------
               SUBTOTAL                                         821,354      120,773      539,424

OTHER INCOME FROM NON-GENERAL BUSINESS ITEMS
Miscellaneous equipment sales                                        --       12,458       30,216
Cash receipts for property rents, gravel sales, and
   sharecropping                                                  9,900       39,207       41,545
Data services sold                                                   --       27,096           --
Vending machine commissions                                       1,149        1,016           --
Recycling credits                                                   968          232           --
Customer refunds and rebates                                      7,289       23,734        7,399
                                                             ----------   ----------   ----------
              TOTAL OTHER INCOME                             $  840,660   $  224,516   $  618,584
                                                             ==========   ==========   ==========



In November of 1998, the Company began repayment of a loan with $8,000 monthly
payments. These monthly payments were incorrectly charged to an expense account
called bank fees and service charges. In 2000, the Company had repaid the note
obligation and found it still had the obligation on the balance sheet.
Obviously, an error had occurred and the debit charge should have been made to
the note obligation account. This correction of charges from prior periods
resulted in a $112,000 debit to the note payable account and a credit to other
income in 2000, for the same $112,000.

The adjustment in 2000 for $260,206 is the result of correcting the prior years
accrual of state taxes and fees based on actual burial fees and taxes paid. The
Company made the monthly accrual for state taxes and fees based on actual waste
receipts throughout 1999, at the rate regulated Washington facility. However,
during the first quarter of 2000, the State of Washington's annual review
adjusted the allowable amounts of low level radioactive waste to be received.
This review indicated that waste generators would receive large rebates in 2000,
from waste they shipped and deposited with the Company in 1999. Likewise, the
Company had over accrued for taxes and fees in 1999, and paid less in 2000. The
result of less taxes and fees paid in 2000, for 1999 operations, was the
correction of the monthly accrual by crediting other income for $260,206. This
accrual was unusually high and the Company does not believe that future
operations will result in such a large difference between accrued and paid taxes
and fees. The Richland facility was also over accrued on its obligation for
scheduled closure and post closure costs by $52,630. This correction




                                       11



was made based on the calculations of the annual comparison of accrual and
actual waste receipts and the remaining space available at the facility.

Similar to other landfill facilities, the hazardous waste facility at Robstown,
Texas accrues monthly an amount for burial fees and taxes based on actual waste
receipts. However, when the actual amount paid for the prior years burial fees
and taxes was determined in 2000, the accrual was too high. The actual amount
paid was $58,509 less than the accrual resulting in other income of $58,509. The
Company believes the original estimate was reasonable since the facility pays
over $1.0 million annually in burial fees and taxes.

During 1999, the Company began the preliminary studies, surveying, and
engineering of the El Centro municipal solid waste landfill at Robstown, Texas.
The facility was permitted in December 1999, and opened in July of 2000. When
the Company reviewed the costs that had been expensed for payments to attorneys
during permitting, engineering fees, and other development fees, it realized
that $132,500 of these expenses were required to be capitalized under the rules
for project cost capitalization. In 2000, the landfill asset was debited, or
increased in value by this amount $132,500 and a corresponding credit was made
to other income.

INCOME TAXES

The Company's effective income tax (benefit) rates were .2%, 4.2%, and 14.3% for
the fiscal years 2000, 1999, and 1998 respectively. In 2000, the Company
generated a $12,000 income tax benefit with the dissolution of its ALEX
subsidiary. ALEX had generated a positive tax allowance to cover the sale of
investment securities, which is consolidated to the corporate level as a tax
credit following the dissolution. The income tax expense of $195,000 and $55,000
for 1999 and 1998 is for payments on different state and local taxes including
franchise taxes. The Company has a valuation allowance of approximately $19.8
million for deferred tax assets with more than $2.7 million of limited loss
carry-forwards and $34.4 million of unlimited net operating loss carry-forwards.
See Item 8. Note 14. Income Taxes.

EXTRAORDINARY GAIN - EARLY EXTINGUISHMENTS OF DEBT

On December 19, 2000, the Company entered into an agreement with Chase Bank of
Texas for settlement of debt associated with the Company's 1994 Federal Income
Tax Claim. The Company had pledged the income tax receivable and a deed of trust
on the Company's Winona, Texas site to Chase Bank in 1998. The settlement, which
was paid in December 2000, allowed the Company to pay $350,000 to Chase Bank and
receive in return release and discharge from all obligations of the $556,000
loan. The result is an extraordinary gain on early extinguishment of debt of
$206,000 and the release by the bank of its security interest in the Winona
property and the income tax refund claim.

NET INCOME

Net income and earnings per share for the last 5 years are listed below.



Dollars in Thousands
   EXCEPT PER SHARE AMOUNTS                2000         1999         1998         1997          1996
                                        ----------   ----------   ----------   ----------    ----------

                                                                              
Net Income (Loss)                       $    4,697   $    4,409   $      762   $     (676)   $  (11,407)

Basic Earnings Per Share                $      .31   $      .30   $      .03   $     (.17)   $    (1.47)





                                       12





CAPITAL RESOURCES AND LIQUIDITY

As of December 31, 2000, the Company had positive working capital of $2,279,000.
This compares favorably to the working capital deficits of $2,309,000 and
$7,567,000 reported for 1999 and 1998 respectively. This significant improvement
in working capital reflects financing activities in 2000 combined with increased
revenue and profit and a reduction in current liabilities.

During 1999, the Company also met certain obligations allowing a cash secured
for a $2.5 million dollar letter of credit to be replaced with a $1.5 million
performance bond. Also, certain cash assets previously pledged were released
allowing for reclassification of assets from long term to short term. The $1.5
million bond was replaced by an insurance policy in year 2000.

The Company's current ratio improved to 1.17:1 in 2000 compared with 0.9:1.0 and
0.7:1.0 for the years ending December 31, 1999, and 1998. Liquidity, as measured
by day's receivables outstanding ("DRO"), was constant for 2000 and 1999.
Average DRO for 2000 and 1999 was 69 days down from an average of 89 days in
1998. The overall improvement in the Company's liquidity allowed the Company to
continuously pay down accounts payable and retire other short-term obligations.

The Company's leverage has increased since 1999, as evidenced by a .46:1 debt to
equity ratio at December 31, 2000, compared to .20:1 for the same period one
year before. This debt to equity ratio is debt divided by shareholder's equity
as of year-end, where debt includes bank line of credit, long and short-term
borrowings through notes, commercial paper, and lease agreements all of which
are included in either current or total liabilities. Equity is the shareholder's
equity excluding any deferred tax assets or liabilities. The year-end 2000 ratio
increasing to .46:1 reflects an $8.0 million credit facility established with
First Security Bank of Boise, Idaho. The Company did not have any bank debt for
the preceding two years before 2000. This new credit facility provided available
cash for the expansion at both the Beatty, Nevada and Robstown, Texas facilities
and improved the daily operational cash position for the Company as a whole. The
Company has borrowed on this line and repaid when business dictates and cash
receipts are available.

As of March 27, 2001, the Company has maintained a business banking relationship
with First Security Bank, Boise, Idaho that provides this $8,000,000 line of
credit. At this date the Company had $3,500,000 borrowed.



OTHER MATTERS

ENVIRONMENTAL MATTERS

The Company maintains reserves and insurance policies for costs associated with
future closure and post-closure obligations for both current and formerly
operated disposal facilities. These reserves and insurance policies are based on
professional engineering studies and interpretations of current regulatory
requirements and potential regulatory changes performed at least annually.
Accounting for closure and post-closure costs includes final disposal unit
capping for the site, gas emission control, subsurface soil and groundwater
monitoring, and other monitoring and routine maintenance costs expected after a
site stops accepting waste. The Company believes it has made adequate provisions
through reserves and the insurance policy for its obligations.

The Company estimates that the aggregate final closure and post-closure costs
for all insured facilities owned or operated was approximately $15,953,000 as of
December 31, 2000. This compares to recorded closure and post-closure
liabilities of $17,285,000 and $19,539,000 for 1999 and 1998 respectively. As
described in Item 1, Insurance, the Company has a three-year prepaid insurance
policy for closure and post closure of these facilities, and has set aside
certain pledged cash and investment securities to pay certain deductible limits.

Management believes that disposition of these environmental matters will not
have a material adverse effect on the financial condition of the Company. The
Company's operation of disposal facilities creates operational, monitoring, site
maintenance, closure and post-closure obligations that could result in
unforeseen costs for monitoring and





                                       13



corrective action. The Company cannot predict the likelihood or effect of such
costs, regulations or legislation enacted, or other future events affecting
these facilities.

SEASONAL EFFECTS

The Company's operating revenue is generally lower in the winter months, and
increases in the warmer summer months. The volume of both hazardous waste and
LLRW tends to decrease during winter months, however, market conditions have a
larger effect on revenue than seasonality.

SENIOR MANAGEMENT

In the third quarter of 2000, Jack K. Lemley, Chairman, Chief Executive Officer
and President and the Company's Board of Directors appointed Barbara Trenary as
a Vice President of the Company. Ms. Trenary's responsibilities principally
relate to management of the Company's LLRW operations.

NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board has recently issued Statement of
Financial Accounting Standards 137 "Deferral of the Effective Date of FASB
Statement 133." FASB 133 established standards for recognizing all derivative
instruments including those for hedging activities as either assets or
liabilities in the statement of financial position and measuring those
instruments at fair value. FASB No. 133 is deferred until fiscal quarters
beginning after June 15, 2000. Management believes the adoption of this
statement will have no material impact on the Company's financial statements.



                                       14






                          INDEPENDENT AUDITORS' REPORT



To the Shareholders and Board of Directors
American Ecology Corporation

We have audited the accompanying consolidated balance sheets of American Ecology
Corporation and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of operations, shareholders' equity and cash flows for
the years ended December 31, 2000, 1999, and 1998. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of American Ecology
Corporation and subsidiaries as of December 31, 2000 and 1999, and the results
of their operations and their cash flows for the years ended December 31, 2000,
1999, and 1998, in conformity with generally accepted accounting principles in
the United States.




Balukoff, Lindstrom & Co., P.A.


Boise, Idaho
February 16, 2001




                                       15



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.

                          AMERICAN ECOLOGY CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                      ($ IN 000'S EXCEPT PER SHARE AMOUNTS)




                                                                                  As of December 31,
                                                                               ------------------------
                                                                                 2000           1999
                                                                               ----------    ----------
                                                                                       
ASSETS
Current Assets:
    Cash and cash equivalents                                                  $    4,122    $    4,771
    Receivables, net of allowance for doubtful
      accounts of $568 and $619 respectively                                        9,839         7,696
    Income taxes receivable                                                           740           740
    Prepayments and other                                                           1,316         1,207
                                                                               ----------    ----------
      Total current assets                                                         16,017        14,414

Cash and investment securities, pledged                                               235           226
Property and equipment, net                                                        18,488        12,818
Facility development costs                                                         27,430        27,430
Intangible assets relating to acquired businesses, net                                366           390
Other assets                                                                        3,214         3,181
                                                                               ----------    ----------
      Total Assets                                                             $   65,750    $   58,459
                                                                               ==========    ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:

     Current portion of long term debt                                         $    1,094    $      781
    Accounts payable                                                                2,680         2,706
    Accrued liabilities                                                             9,149        12,334
    Accrued closure and post closure obligation, current portion
                                                                                      700           700
    Income taxes payable                                                              115           202
                                                                               ----------    ----------
      Total current liabilities                                                    13,738        16,723

Long term debt                                                                     10,775         3,569
Accrued closure and post closure obligation, excluding current portion             15,253        16,585
Commitments and contingencies
Shareholders' equity:
    Convertible preferred stock, $.01 par value,
      1,000,000 shares authorized, none issued                                         --            --
    Series D cumulative convertible preferred stock, $.01 par value, 100,001
      authorized, issued and outstanding; 5,263 converted and retired
                                                                                        1             1
    Series E redeemable convertible preferred stock, $10.00 par value,
      300,000 authorized, 300,000 shares converted and retired                         --            --
    Common stock, $.01 par value, 50,000,000 authorized, 13,729,632
      and 13,704,050 shares issued and outstanding, respectively
                                                                                      137           137
    Additional paid-in capital                                                     54,610        54,513
    Retained earnings (deficit)                                                   (28,764)      (33,069)
                                                                               ----------    ----------
      Total shareholders' equity                                                   25,984        21,582
                                                                               ----------    ----------

Total Liabilities and Shareholders' Equity                                     $   65,750    $   58,459
                                                                               ==========    ==========



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


                                       16



                          AMERICAN ECOLOGY CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      ($ IN 000'S EXCEPT PER SHARE AMOUNTS)




                                                                      As of December 31,
                                                          --------------------------------------
                                                             2000          1999          1998
                                                          ----------    ----------    ----------

                                                                             
Revenue                                                   $   41,958    $   34,352    $   38,960
Direct operating costs                                        21,832        16,609        23,545
                                                          ----------    ----------    ----------

Gross profit                                                  20,126        17,743        15,415

Selling, general and administrative expenses                  16,665        14,762        15,702
                                                          ----------    ----------    ----------
Income (loss) from operations                                  3,461         2,981          (287)

Investment income                                                435           780           486

Gain on sale of assets                                            92           826            72

Interest expense                                                (350)         (208)          (72)

Other income                                                     841           225           618
                                                          ----------    ----------    ----------

Income before income tax and extraordinary item                4,479         4,604           817

Income tax expense (benefit)                                     (12)          195            55
                                                          ----------    ----------    ----------
Income before extraordinary item                               4,491         4,409           762

Extraordinary gain - early extinguishments of debt               206           -0-           -0-

Net income                                                     4,697         4,409           762

Preferred stock dividends                                        398           397           417
                                                          ----------    ----------    ----------
Net income available to common shareholders               $    4,299    $    4,012    $      345
                                                          ==========    ==========    ==========

Basic earnings per share                                  $      .31    $      .30    $      .03
                                                          ==========    ==========    ==========

Diluted earnings per share                                $      .26    $      .27    $      .03
                                                          ==========    ==========    ==========

Dividends paid per common share                           $       --    $       --    $       --
                                                          ==========    ==========    ==========



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



                                       17



                          AMERICAN ECOLOGY CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    ($ 000'S)




                                                                          Year Ended December 31,
                                                                   --------------------------------------
                                                                      2000          1999          1998
                                                                   ----------    ----------    ----------
                                                                                      
Cash flows from operating activities:
  Net income                                                       $    4,697    $    4,409    $      762
  Adjustments to reconcile net income to net
      cash provided (used) by operating activities:
  Depletion, depreciation and amortization                              2,028         2,054         3,152
  (Gain) loss on sale of assets                                           (92)         (826)          (72)
  Gain on sale of investments                                              --           (14)           --
  Income Taxes Payable                                                    (87)          111            --
  Stock compensation                                                       79           129            79
Changes in assets and liabilities:
  Receivables                                                          (2,143)        1,810        (1,577)
  Investment securities classified as trading                              (9)          820         1,942
  Other assets                                                           (507)       (1,415)       (1,034)
  Closure and post closure obligation                                  (1,332)       (2,254)       (1,640)
  Accounts payable and accrued liabilities                             (1,410)       (7,328)           90
                                                                   ----------    ----------    ----------
         Total adjustments                                             (3,473)       (6,913)          940
                                                                   ----------    ----------    ----------
Net cash provided (used) by operating activities                        1,224        (2,504)        1,702


Cash flows from investing activities:
  Capital expenditures, excluding site development costs               (6,442)       (3,219)         (697)
  Facility development costs, including capitalized interest               --          (521)       (1,431)
  Proceeds from sales of assets                                         2,000         1,840
                                                                                                       72
  Net proceeds from sales of investment securities                         --         2,497         6,940
  Transfers to (from) cash and investment securities, pledged              --         1,876            --
                                                                   ----------    ----------    ----------
      Net cash provided by (used in) investing activities              (4,442)        2,473         4,884

Cash flows from financing activities:
  Proceeds from issuances and indebtedness                              4,912           558        16,096
  Payments of indebtedness                                             (2,361)         (198)      (21,519)
  Proceeds from rights offering                                            --            --         2,913
  Stock options exercised                                                  18            --            --
                                                                   ----------    ----------    ----------
      Net cash provided by (used in) financing activities               2,569           360        (2,510)
                                                                   ----------    ----------    ----------

Increase (decrease) in cash and cash equivalents                         (649)          329         4,076
Cash and cash equivalents at beginning of year                          4,771         4,442           366
                                                                   ----------    ----------    ----------
Cash and cash equivalents at end of year                           $    4,122    $    4,771    $    4,442
                                                                   ==========    ==========    ==========

Supplemental disclosures of cash flow information:
Cash paid during the year for:
  Interest, net of amounts capitalized                             $      350    $      208    $       72
  Income taxes paid                                                        74           156           144
Non-cash investing and financing activities:
  Long-term debt exchange for asset interest                               --            --        24,323
  Long-term offset capitalized interest                                    --            --        12,461
  Warrants issued on exchange for debt                                     --            --         1,660
  Stock issuance--Director's compensation                                  79           129            79
  Preferred Stock Dividends                                               398           397           417
  Acquisition of equipment with capital leases                          1,769         1,235            --


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



                                       18




                          AMERICAN ECOLOGY CORPORATION
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                  ($ IN 000'S)




                                                                  ADDITIONAL      RETAINED
                                     PREFERRED       COMMON         PAID-IN       EARNINGS
                                      STOCK           STOCK         CAPITAL       (DEFICIT)
                                   ------------    ------------   ------------   ------------

                                                                     
Balance, December 31, 1997         $      3,001    $         85   $     47,701   $    (37,407)

Net income
                                             --              --             --            762
Common stock issuance                        --              51          5,024             --
Dividends of preferred stock                 --              --             --           (417)
Common stock warrants                        --              --          1,660             --
Preferred stock-retired                  (3,000)             --             --             --
                                   ------------    ------------   ------------   ------------
Balance, December 31, 1998         $          1    $        136   $     54,385   $    (37,062)

Net income                                   --              --             --          4,409
Common stock issuance                        --               1            109             --
Dividends of preferred stock                 --              --             --           (397)
Preferred stock-retired                      --              --             19            (19)
                                   ------------    ------------   ------------   ------------
Balance, December 31, 1999         $          1    $        137   $     54,513   $    (33,069)

Net income                                   --              --             --          4,491
Common stock issuance                        --              --             97             --
Dividends of preferred stock                 --              --             --           (398)
Extraordinary gain                           --              --             --            206
Other                                        --              --             --              6
                                   ------------    ------------   ------------   ------------
BALANCE, DECEMBER 31, 2000         $          1    $        137   $     54,610   $    (28,764)
                                   ============    ============   ============   ============




Note: Convertible Preferred Stock is not shown above because no shares have been
issued.

The accompanying notes are an integral part of these financial statements






                                       19





                          AMERICAN ECOLOGY CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.   NATURE OF BUSINESS.

American Ecology Corporation (a Delaware Corporation) and its subsidiaries ("the
Company") provide a variety of processing, recycling, packaging and hazardous
and non-hazardous waste services to commercial and government customers,
remediation and disposal services for generators of low-level radioactive waste.
The Company has one of the largest motor rebuilding facilities in the United
States for large electric motors from nuclear power plants. The Company acquired
Envirosafe Services of Idaho, Inc., on February 1, 2001. This purchase is a
significant addition to the Chemical division for the treatment and disposal of
hazardous and PCB waste. The Company also services the needs of hazardous waste
generators nationally, but the larger market share is in the Gulf and West Coast
regions of the country at its hazardous waste landfill disposal sites in
Robstown, Texas and Beatty, Nevada. The Company services the needs of low-level
radioactive waste ("LLRW") generators in the Northwest and Rocky Mountain
Compact regions at its rate regulated LLRW facility located near Richland,
Washington and provides LLRW processing and recycling services to LLRW waste
generators in the Mid-West and East Coast regions at its Oak Ridge, Tennessee
facility.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

Principles of Consolidation. The accompanying financial statements are prepared
on a consolidated basis. Six reporting subsidiaries and the parent company were
active in 2000. The consolidated financial statements include the accounts of
the Company and its subsidiaries after the elimination of all significant
inter-company balances and transactions. Certain estimates and assumptions are
made to accurately reflect the business operations under the accrual basis of
accounting. The Company's year-end is December 31, 2000 and there were fifty-two
weeks of reporting compared to fifty-three weeks of reporting in 1999 and
fifty-two weeks in 1998. The Company has made certain estimates and assumptions
for the consolidated financial statements. The consolidated financial statements
are prepared in accordance with generally accepted accounting principles (GAAP).

Reclassification. Reclassifications have been made to prior year financial
statements to conform to the fiscal 2000 presentations.

Cash and Investment Securities Pledged. Pledged cash and investment securities
totaled $235,000 at December 31, 2000. These consisted of a letter of credit and
money market accounts. The Company maintains these investments to cover an
insurance policy commitment and the escrow account for the closed Sheffield
facility.

Revenue Recognition. Generally, revenues are recognized as services are
performed, and as waste materials are buried or processed. Revenue also includes
sales from the Company's subsidiary Nuclear Equipment Services Corporation
("NESC"), which accounts for revenue on a percentage of completion basis. The
Company had both unbilled and deferred revenue at year-end 2000, 1999, and 1998.

Property and Equipment. Property and equipment are recorded at cost and
depreciated on straight-line and declining balance methods over estimated useful
lives. See Note 6 for major categories of property and equipment. Lease
obligations for which the Company assumes or retains substantially all the
property rights and risks of ownership are capitalized. Replacements and major
repairs of property and equipment are capitalized and retirements are made when
the useful life has been exhausted. Minor components and parts are charged to
expense as incurred. During 2000, 1999, and 1998 maintenance and repair expenses
were $176,000, $241,000, and $209,000 respectively.

Land is comprised of property owned at the processing and disposal sites. Land
owned and used for disposal is depleted over the estimated useful life of the
disposal site on a straight-line basis. Cell development costs represent waste
disposal facility preparation costs that are capitalized and charged to
operating costs as disposal space is utilized. The Company engaged certified
engineers and surveyors to make independent surveys and measure remaining cell
volume.



                                       20




Intangible Assets. Intangible assets relating to acquired businesses consist
primarily of the cost of purchased businesses in excess of fair value of net
assets acquired ("goodwill"). Intangible assets are being amortized on the
straight-line method over periods not exceeding 40 years with the majority being
amortized over 25 years. The accumulated amortization of intangible assets
amounted to $384,000, $360,000, and $336,000 at December 31, 2000, 1999, and
1998 respectively. Amortization of intangible assets was $24,000 for each of the
last three years. On an ongoing basis, the Company measures the value of its
intangible assets. In the event that facts and circumstances indicate intangible
or other assets may be impaired, an evaluation of recoverability would be
performed. If an evaluation was required, the estimated future undiscounted cash
flows associated with the assets would be compared to the asset's carrying
amount to determine if a write-down to market value or discounted cash flow
value was necessary.

Permitting Costs. Permitting costs, included under the caption Other Assets in
the Consolidated Balance Sheets, are primarily comprised of outside engineering
and legal expenses and are capitalized and amortized over the life of the
applicable permits. At December 31, 2000, and 1999 there were $3,009,000 and
$3,001,000 respectively of net capitalized permitting costs included in other
assets in the accompanying consolidated balance sheets.

The Company operates its various sites under the regulations of, and permits
issued by, various state and federal agencies. In December 1999, the Robstown,
Texas facility received its permit for a municipal waste landfill and in
February 2000, it received a permit to vertically stack either hazardous or
non-hazardous waste on top of existing cells.

Self-Insurance. The Company has insurance policies that cover any annual losses
exceeding $50,000 per employee for employee health care. The Oak Ridge union
employees are not covered under the self-insured healthcare program, but are
covered by a traditional insurance plan as negotiated under their collective
bargaining agreement. The Company also maintains a Pollution and Remediation
Legal Liability Policy pursuant to RCRA regulations. The policy is subject to a
$250,000 self-insured retention. In addition, the Company is insured for
consultant's environmental liability. The policy is subject to a $100,000
retention.

The Company restructured its closure and post-closure insurance with Indian
Harbor Insurance Company on an extended prepaid policy term for June 2000 to
September 2003. The Company no longer is reinsuring financial assurances
requirements for closure and post-closure of its facilities. Alex, the inactive
captive insurance company was dissolved in November 2000.

Accrued Closure and Post-Closure. Accrued closure and post-closure liability
includes the accruals associated with obligations for closure and post-closure
of the Company's operating and closed disposal sites and for corrective actions
and remediation. The Company generally provides accruals for the estimated costs
of closures and post-closure monitoring and maintenance as permitted disposal
space is consumed. Liabilities are recorded when environmental assessments
and/or remedial efforts are probable, and the costs can be reasonably estimated.
The Company performs routine periodic reviews of both closed and operating sites
and revises accruals for estimated post-closure, remediation or other costs
related to these locations as deemed necessary. The Company's recorded
liabilities are based on best estimates of current costs and are updated
periodically to include the effects of existing technology, presently enacted
laws and regulations, inflation and other economic factors. In 2000, the Company
completed a review with an independent engineering firm and determined that
Texas Ecologists will have a reduced cost of closure with the addition of a
slurry wall, which was completed in 2000 for approximately $1.2 million. The
Company completed a study on ground water contamination and the U.S. EPA
concurred that such remediation will be complete by 2002. The Company has
closely monitored its closure obligations and reduced the amount to $15,253,000
in 2000 from $16,585,000 and $18,839,000 in 1999 and 1998 respectively.

The Company estimates its future cost requirements for closure and post-closure
monitoring and maintenance for operating chemical disposal sites based on
Resource Conservation and Recovery Act ("RCRA") and the respective site permits.
RCRA requires that companies provide financial assurance for the closure and
post-closure care and maintenance of their chemical sites for at least thirty
years following closure.

Income Per Share. Basic earnings per share are computed based on net income and
the weighted average number of common shares outstanding. Diluted earnings per
share reflect the assumed issuance of common shares under long-term incentive,
stock option and stock purchase plans and pursuant to the terms of the 1992
Stock Option Plans. The computation of diluted earnings per share does not
assume conversion or exercise of securities that would have an antidilutive
effect on earnings per share.




                                       21





                                                 (000's except per share amounts)
                                                      Year Ended December 31,
                                               ------------------------------------
                                                  2000         1999          1998
                                               ----------   ----------   ----------

                                                                
Income before extraordinary item               $    4,491   $    4,409   $      762
Net Income                                     $    4,697   $    4,409   $      762
      Preferred stock dividends                       398          397          417
                                               ----------   ----------   ----------
        Net income available to
          common shareholders                  $    4,299   $    4,012   $      345

Weighted average shares outstanding-
    Common shares outstanding at year end          13,711       13,585       12,772
    Effect of dilutive shares                       3,157        1,475           --
                                               ----------   ----------   ----------

    Adjusted shares                                16,868       15,060       12,772

Basic earnings per share                       $      .31   $      .30   $      .03
                                               ==========   ==========   ==========
Diluted earnings per share                     $      .26   $      .27   $      .03
                                               ==========   ==========   ==========


Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenue and expenses during the
reporting period. The Company used significant estimates in the accompanying
consolidated financial statements primarily related to recoverability of closure
and post closure obligation costs and facility development assets, waste
processing and burial costs, and deferred site maintenance. Actual results could
differ from these estimates.

Major Customers. In 2000, the Company managed the disposal of hazardous waste
for Tamco Steel of Rancho Cucamonga, California, for $5,500,000 or 13% of
consolidated revenue. The Company does not expect this to be a reoccurring event
in 2001. In 1999, no single customer accounted for 10% or more of the Company's
consolidated revenue. Revenue resulting from the cost reimbursement contract
with the Central Interstate Low-Level Radioactive Waste Commission was
approximately $6,808,000 in 1998 or 18% of the Company's consolidated revenue
that year. No other single customer accounted for 10% or more of the Company's
consolidated revenue for these years.

Credit Risk Concentration. The Company maintains most of its cash with First
Security Bank. Substantially all of the cash balances are uninsured and are not
collateralized. Concentrations of credit risk with respect to accounts
receivable are believed to be limited due to the number, diversification and
character of the obligors and the Company's credit evaluation process.
Typically, the Company has not required collateral for such obligations.

Commitments. The Company has various long term lease commitments, payments on a
sale lease back, a bank credit facility, customer and vendor obligations and
certain state and federal regulatory commitments all of which the Company
believes it has properly accounted for or has made proper accruals to meet these
obligations in the future.

The Company signed an agreement in January 1999 to dispose of a minimum of
60,000 cubic feet of waste material; stored at the Oak Ridge, Tennessee facility
before December 31, 2001. The Company has been disposing of this waste on
schedule and expects to meet this commitment.

Labor Concentrations. The Paper, Allied-Industrial Chemical & Energy Workers
International Union, AFL-CIO, CLC (PACE), formerly the OCAW, represent 58
employees at two of the Companies facilities and 6 employees are represented by
the United Steel Workers of America and 1 by the United States Workers of
America.

In March 1998, the Company ended discussions on a new labor agreement and
reached an impasse in negotiations of a new collective bargaining agreement. The
Company implemented its final offer. PACE subsequently charged the Company with
unfair labor practices. The National Labor Relations Board ("NLRB") hearing
office ruled against the Company, which was sustained by a three member panel of
the NLRB. The Company has petitioned the court to


                                       22



reverse this decision and moved to stay the NLRB order pending review. This
matter is pending. If the Company is unsuccessful in its appeal, it may be
required to retroactively apply the prior labor agreement and bargain with PACE.

New Accounting Pronouncements.

 The Financial Accounting Standards Board has recently issued Statement of
Financial Accounting Standards 137 "Deferral of the Effective Date of FASB
Statement 133." FASB 133 established standards for recognizing all derivative
instruments including those for hedging activities as either assets or
liabilities in the statement of financial position and measuring those
instruments at fair value. FASB No. 133 is deferred until fiscal quarters
beginning after June 15, 2000. Management believes the adoption of this
statement will have no material impact on the Company's financial statements.

NOTE 3.  OPERATING SEGMENTS.

The Company operates with two segments, Chemical Services and LLRW Services. The
Chemical Services division provides hazardous, non-hazardous and municipal waste
management services. The LLRW Services division processes, packages, and
disposes of material contaminated with low-level radioactive material. The
accounting policies of the segments are the same as those described in Note 2,
"Summary of Significant Accounting Policies." The Company evaluates the
performance of its operating segments based on gross profit, selling, general
and administrative expense, interest expense and income, corporate allocation
and after an apportioned income tax. Segment data includes intercompany
transactions at cost, as well as allocation for certain corporate costs.

Summarized financial information concerning the Company's reportable segments
are shown in the following table. The "Corporate & Other" column includes
corporate-related items not allocated to the reportable segments.



Reported in $(000)                             CHEMICAL       LLRW         CORPORATE
                                               SERVICES      SERVICES       & OTHER        TOTAL
                                              ----------    ----------    ----------    ----------
2000

                                                                            
Revenue                                       $   18,975    $   23,725    $     (742)   $   41,958

Direct Cost                                       10,084        12,223          (475)       21,832
                                              ----------    ----------    ----------    ----------
Gross Profit                                       8,891        11,502          (267)       20,126

S,G&A                                              3,975         7,113         5,577        16,665
                                              ----------    ----------    ----------    ----------
Income (loss) from operations                      4,916         4,389        (5,844)        3,461

Investment income                                     51             1           383           435

Gain on sale of assets                                69            23            --            92

Interest expense                                     (57)         (109)         (184)         (350)

Other income                                         164           380           297           841
                                              ----------    ----------    ----------    ----------
Income before extraordinary items and taxes        5,143         4,684        (5,348)        4,479


Extraordinary item and taxes                          --            --           218           218
                                              ----------    ----------    ----------    ----------
Net Income                                    $    5,143    $    4,684    $   (5,130)   $    4,697


Total Assets                                  $   23,875    $   39,537    $    2,338    $   65,750

1999
Revenue                                       $   12,074    $   23,070    $     (792)   $   34,352

Direct Cost                                        7,482         9,740          (613)       16,609
                                              ----------    ----------    ----------    ----------
Gross Profit                                       4,592        13,330          (179)       17,743

S,G&A                                              3,218         6,191         5,353        14,762
                                              ----------    ----------    ----------    ----------
Income (loss) from operations
                                                   1,374         7,139        (5,532)        2,981

Investment income                                     29             1           750           780

Gain on sale of assets                               895             1           (70)          826

Interest expense                                     (14)          (65)         (129)         (208)

Other income                                          76             6           143           225
                                              ----------    ----------    ----------    ----------
Income before extraordinary items and taxes        2,360         7,082        (4,838)        4,604

Extraordinary item and taxes                          --            --          (195)         (195)
                                              ----------    ----------    ----------    ----------
Net Income                                    $    2,360    $    7,082    $   (5,033)   $    4,409
Total Assets                                  $   16,162    $   38,866    $    3,431    $   58,459

1998
Revenue                                       $   16,030    $   22,930    $       --    $   38,960

Direct Cost                                        9,488        14,057            --        23,545
                                              ----------    ----------    ----------    ----------
Gross Profit                                       6,542         8,873            --        15,415

S,G&A                                              6,544         6,272         2,886        15,702
                                              ----------    ----------    ----------    ----------
Income (loss) from operations                         (2)        2,601        (2,886)         (287)
Investment income                                    381           118           (13)          486

Gain on sale of assets                                55            --            17            72

Interest expense                                     (11)          (58)           (3)          (72)

Other income                                          29             1           588           618
                                              ----------    ----------    ----------    ----------
Income before extraordinary items and taxes          452         2,662        (2,297)          817

Extraordinary item and taxes                          --            --           (55)          (55)

                                              ----------    ----------    ----------    ----------
Net Income                                    $      452    $    2,662    $   (2,352)   $      762
Total Assets                                  $   15,535    $   38,000    $    8,265    $   61,800
                                              ----------    ----------    ----------    ----------






                                       23


NOTE 4.  UNAUDITED SELECTED QUARTERLY FINANCIAL DATA.

The unaudited consolidated quarterly results of operations for 2000 and 1999 (in
thousands, except per share amounts) were:



                                  FIRST QUARTER     SECOND QUARTER   THIRD QUARTER       FOURTH QUARTER
                                  2000     1999     2000     1999     2000     1999      2000     1999
                                 ------   ------   ------   ------   ------   ------    ------   ------

                                                                         
Revenue                           9,319    9,179   10,485    8,907   11,796    6,007    10,358   10,259

Gross profit                      4,444    4,356    4,587    4,710    5,241    2,343     5,854    6,334

Income before                     1,483      125      723    1,466    1,108     (155)    1,165    3,168
extraordinary items
Net Income (loss)                 1,381      119      764    1,425    1,100     (126)    1,452    2,990
                                 ------   ------   ------   ------   ------   ------    ------   ------

Basic earnings (loss) per
share                               .09     .001      .05      .10      .07     (.02)      .10      .21

Diluted earning (loss) per
share                               .08     .001      .04      .08      .06     (.02)      .08      .18
                                 ------   ------   ------   ------   ------   ------    ------   ------


Basic and diluted earnings per common share for each of the quarters presented
above is based on the respective weighted average number of common shares for
the quarters. The dilutive potential common shares outstanding for each period
and the sum of the quarters may not necessarily be equal to the full year basic
and diluted earnings per common share amounts.

NOTE 5.  CASH AND INVESTMENT SECURITIES.

In 2000 and 1999, the Company has restructured its insurance policies allowing
more flexibility with cash and investment securities pledged. The Company now
only holds sufficient pledged securities to cover letters of credit for closed
facilities and an insurance bond for a total of $235,000 and $226,000 for 2000
and 1999 respectively. The Company holds no securities for trading, and all cash
is held in money market, certificate of deposit, or the business checking
accounts.



                                       24


Cash and investment securities at December 31, 2000, and 1999 were as follows
(in thousands):



                                                     Market       Unrealized
DECEMBER 31, 2000                      Cost           Value       Gain/(loss)
                                   ------------   ------------   ------------

                                                        
Cash and cash equivalents          $      4,122   $      4,122   $         --
Securities held-to-maturity                 235            235             --
                                   ------------   ------------   ------------
                                   $      4,357   $      4,357   $         --
                                   ============   ============   ============
December 31, 1999
Cash and cash equivalents          $      4,452   $      4,771   $        319
Securities held-to-maturity                 226            226             --
                                   ------------   ------------   ------------
                                   $      4,678   $      4,997   $        319
                                   ============   ============   ============



The change in net unrealized gains on trading securities was $0, $276,000, and
$(495,000) in 2000, 1999, and 1998 respectively, each of which has been included
in earnings. Investments in securities held-to-maturity mature over various
dates during 2001 and are reported at their amortized cost basis, which
approximates fair value at December 31, 2000. Investments in securities
held-to-maturity at December 31, 1999, and 1998 consisted of the following (in
thousands):



                                                 2000         1999
                                           ----------   ----------

                                                  
Corporate Bonds/Commercial Paper           $      106   $      100
Certificates of deposit                            --           52
Money market accounts and other
                                                  129           74
                                           ----------   ----------
                                           $      235   $      226
                                           ==========   ==========


Certain cash accounts and substantially all investments in securities
held-to-maturity and trading securities totaling $235,000 and $226,000 at
December 31, 2000, and 1999 respectively, have been classified as non-current
assets as cash and investment securities pledged.



                                       25




NOTE 6.  PROPERTY AND EQUIPMENT.

Property and equipment at December 31, 2000, and 1999, were as follows (in
thousands):



                                                                     2000          1999
                                                                 ----------    ----------

                                                                         
Construction in progress                                         $    1,754    $    1,754
Land                                                                  1,546         1,537
Cell development costs                                               14,767        12,289
Buildings and improvements                                            6,411         5,968
Decontamination and processing equipment                                419         1,144
Vehicles and other equipment                                         16,988        16,084
                                                                 ----------    ----------
                                                                     41,885        38,776
Less: Accumulated depletion, depreciation and amortization          (23,397)      (25,958)
                                                                 ----------    ----------

                                                                 $   18,488    $   12,818
                                                                 ==========    ==========


Depreciation expense was $1,439,000, $1,433,000, and $1,958,000 for 2000, 1999,
and 1998 respectively.

The Company leases equipment under various noncancellable capital leases. The
cost and accumulated depreciation are as follows at December 31, 2000:



                                                                        Accumulated
                                                        Cost            Depreciation
                                                     ----------        -------------
                                                                  
Capitalized Cost                                     $3,260,000         $538,000
                                                     ==========         ========


NOTE 7.  FACILITY DEVELOPMENT COSTS.

The Company has been licensed to construct and operate the low-level radioactive
waste ("LLRW") facility for the Southwestern Compact ("Ward Valley facility"),
and been selected to obtain a license to develop and operate the Central
Interstate Compact LLRW facility ("Butte facility").

The State of California, where the Ward Valley Site is located, has not obtained
the project property from the U.S. Department of the Interior. For the Company
to realize its investment, the US Government will need to transfer the land to
the State of California, or the Company will need to recover monetary damages
from the U.S. Government, the State of California or both. The Company has taken
steps to protect its investment in Ward Valley and will continue to do so.

In the first quarter of 1997, the Company filed two lawsuits against the United
States. In the first case, US Ecology is suing to recover approximately $73.1
million of Ward Valley site development costs as well as lost profits and lost
opportunity costs. US Ecology lost this case at the trial court level and has
appealed to the Federal Circuit Court of Appeals. In the second case US Ecology
sought an order (writ of mandamus) from a federal court to compel the transfer
of the Ward Valley LLRW site. Both the trial court and the D.C. Circuit Court of
Appeals have ruled against US Ecology in this second case and such rulings are
now final. The Company also filed a lawsuit against the State of California on
May 2, 2000, seeking to compel California to acquire the property to build the
Ward Valley project and monetary damages in excess of $162 million. On October
24, 2000, the California trial court granted the state's motion to dismiss the
case on demurrer, and the Company has appealed the trial court's decision.

All costs through July 31, 1999 related to the development of the Ward Valley
facility had been capitalized, and since then have been expensed as incurred.
After adjusting for the bank settlement in November 1998, and as of December 31,
2000, the Company had deferred $20,952,000 (32% of total assets) of
pre-operational facility development costs of which $895,000 represents
capitalized interest. These deferred costs are to be recovered during the
facility's first 20 years of operation from disposal fees approved by the
Department of Health Services (DHS). The approval process is to include a
prudency review of pre-operational costs incurred by the Company. The Company
expects all costs that it has deferred for this facility, and uncapitalized
project interest costs, to be included in the rate-base. However, there can be
no assurance that California will complete the land transfer, that all of these
costs will be approved by the DHS, or that the facility will ever be
constructed. From the beginning of 2000, the Company is no longer required to
pay the $250,000 annual license fee to the state of California, Department of
Health Services, pending further notice.



                                       26


The Company has incurred reimbursable costs and received revenues for the
development of the Butte, Nebraska facility under a contract with the Central
Interstate LLRW Compact Commission ("CIC"). While US Ecology has a minor equity
position in the Butte, Nebraska project, it has acted principally as a
contractor to the Central Interstate Low-Level Radioactive Waste Commission.
Major generators of waste within the CIC's five-state region have provided
substantially all funding to develop the Butte facility. As of December 30,
2000, the Company has contributed and capitalized approximately $6,478,000 of
costs (9.9% of total assets), $386,000 of which is capitalized interest toward
development of the Butte facility. In December 1998, the State of Nebraska
denied US Ecology's license application to build and operate the facility. The
CIC directed US Ecology to pursue a Petition for a contested case challenging
the State's denial. US Ecology filed its Petition pursuant to Nebraska law on
January 15, 1999.

The Major Generators funding the development project filed suit in the Federal
District Court for Nebraska on December 30, 1998, seeking to recover certain
costs expended on the Nebraska licensing process and prevent the State of
Nebraska from proceeding with the contested case. US Ecology intervened as a
plaintiff to protect the Company's interest and is seeking relief. The Contested
Case is stayed by a preliminary injunction issued by the presiding federal
judge. The Company believes the case will go to trial in 2002. In the meantime,
the major generators have only been willing to fund the minimum amounts
necessary to maintain the project. Consequently, the Company's revenue from this
project has declined substantially since April 1999.

The timing and outcome of the above matters are unknown. The Company continues
to pursue the conveyance of the land from the federal government to California
as well as its remedies in federal and state court, and, if necessary in the
future, will attempt to cure alleged defects in the State of Nebraska's
licensing process for the Butte, Nebraska facility. The Company believes that
the deferred site development costs for both facilities will be realized. In the
event the Butte facility license is not granted, operations of either facility
do not commence or the Company is unable to recoup its investments through legal
recourse, it may have an adverse effect on its financial position.

The following table shows the ending capitalized balances for facility
development costs for the periods ended December 31, 2000 and December 31, 1999
(in thousands):




December 31,                         Capitalized   Capitalized
2000 and 1999                           Costs        Interest         Total
- -------------                       ------------   ------------   ------------

                                                         
Ward Valley, CA Project             $     20,057   $        895   $     20,952
Butte, Nebraska Project                    6,092            386          6,478
                                    ------------   ------------   ------------
          Total                     $     26,149   $      1,281   $     27,430
                                    ============   ============   ============



NOTE 8.  ACCRUED CLOSURE AND POST CLOSURE OBLIGATION.

Closure and post closure obligation accruals at December 31, 2000 and 1999 were
as follows (in thousands):




                                                                         2000          1999
                                                                     ----------    ----------

                                                                             
Accrued costs associated with open facilities                        $    8,993    $   10,376
Accrued costs associated with closed facilities                           6,960         6,909
                                                                     ----------    ----------
    Sub-total                                                            15,953        17,285
Less: current portion                                                      (700)         (700)
                                                                     ----------    ----------
Closure and post closure obligation, excluding current portion       $   15,253    $   16,585
                                                                     ==========    ==========


Closure and post closure obligation includes the accruals associated with
obligations and liabilities of the Company's operating and closed disposal sites
and for corrective actions and remediation. The Company generally provides
accruals for the estimated costs of closures and post-closures monitoring and
maintenance as permitted airspace of such sites is consumed. Liabilities are
recorded when environmental assessments and/or remedial efforts are probable,
and the costs can be reasonably estimated. These estimates are made by third
party engineering companies.

The Company does not bear responsibility for closure and post-closure costs for
the state owned land used for waste disposal. The Company leases two such
facilities at Beatty, Nevada and Richland, Washington. The State of Nevada



                                       27



and the State of Washington have collected money from a portion of the tipping
fees on disposal for these two facilities and ultimately controls the
dispensation of those funds for proper closure. The funds are maintained in
segregated accounts for the future costs of closure and post-closure care and
maintenance of the Richland, Washington and Beatty, Nevada facilities. The
Company currently submits waste volume-based fees to these state maintained
funds. Such fees are periodically negotiated with, or established by, the states
and are based upon engineering cost estimates provided by the Company and
approved by the state.

The Texas Natural Resources Conservation Commission (TNRCC) issued to Texas
Ecologists a permit on December 15, 1999, for the El Centro Municipal Waste
Landfill and then on February 9, 2000, a permit for vertically stacking
hazardous and non-hazardous waste on current existing closed cells. In 2000, the
Company engaged an independent engineer to assess the closure and post closure
costs for these facilities, and a $105,000 reduction was made to the closure and
post-closure accrual.

NOTE 9. LONG TERM DEBT.

Long term debt at December 31, 2000 and 1999 consisted of the following (in
thousands):



                                               2000          1999
                                           ----------    ----------

                                                   
Notes payable                              $      792    $    1,847
Credit facility loan                            4,093            --
Capital lease obligations and other             6,984         2,503
                                           ----------    ----------
                                               11,869         4,350
 Less: Current maturities                      (1,094)         (781)
                                           ----------    ----------
 Long term debt                            $   10,775    $    3,569
                                           ==========    ==========




Aggregate maturity of future minimum payments under notes payable and capital
leases is as follows (in thousands):



 Year Ended
December 31,
- ------------
                        
    2001                    $    1,094
    2002                         8,586
    2003                           805
    2004                           621
    2005                            19
                            ----------
   TOTAL                    $   11,869
                            ==========




In December 2000 the Company repaid $1,431,000 including $131,000 of interest
for two notes payable to two of the Company's shareholders and board members.
These notes were issued in March 1999 with an eighteen-month term, 9% interest,
and $1.3 million principal, and prohibited the Company from paying dividends on
common or preferred shares. In April 1999, the Company issued a note with AFCO
Finance for a one-year term for $705,000 financing an insurance premium, with an
average interest rate of 9% to 10.5%.

The Company has several long-term capital leases. The value of these leases is
approximately $2.5 million. These leases are at Oak Ridge, Tennessee with 10%
interest, at Beatty, Nevada at 5.8% and 8.9%, Richland, Washington with 5.25%
through 6.14% and at Robstown, Texas at rates between 6% and 14% interest
expiring over the next 5 years.

On August 17, 2000, the Company entered into a 2-year, revolving line of credit
with a local bank. The line of credit is secured by the Company's accounts
receivable and is governed by a Credit Agreement. Under the terms of the Credit
Agreement, borrowings cannot exceed 80% of eligible accounts receivable or $5.0
million, whichever is less. Interest on borrowings under the Credit Agreement
are based on a 'pricing grid,' whereby after the first 6 months, the interest
rate decreases or increases based on the Company's ratio of funded debt to
earnings before interest, taxes, depreciation and amortization (EBITDA). The
Company can elect to borrow monies utilizing the Prime Rate or the offshore
London



                                       28



Inter-Bank Offering Rate (LIBOR) plus an applicable spread. During the first six
months of the credit facility, borrowings are Prime plus 0.75% or LIBOR plus
3.25%, at the election of the Company, subject to certain conditions. The Credit
Agreement contains certain financial covenants that the Company must adhere to
quarterly, including a maximum leverage ratio, a minimum current ratio and a
debt service coverage ratio. At December 31, 2000, the Company was in compliance
with all applicable bank financial covenants.

At December 31, 2000, the outstanding balance on principal loan and revolving
line of credit was $4,093,000, with $807,000 available with any balance due June
30, 2002. During the fourth quarter, the interest rate on borrowings ranged from
9.8% to 10.5%. The Company has continued to borrow and repay according to
business demands and availability of cash. The Company anticipates that with the
new acquisition of Envirosafe of Idaho that borrowings as such will continue to
fluctuate and with the continued plans for growth that additional borrowing
capacity will be required in the future. Subsequent to year end the Company
increased the line of credit to $8.0 million. There can be no assurance that the
Company can raise additional financing beyond the current $8.0 million line of
credit, and if the Company is not successful it will reassess its current plans
for expansion and growth.

The Company expects to refinance approximately $2.8 million of current
liabilities with its long-term revolving line of credit. These liabilities have
been reclassified to long-term debt as of December 31, 2000.

NOTE 10. SALE LEASEBACK.

On August 3, 2000, the Company entered into a $2 million equipment sale and
leaseback transaction. The Company sold various Company-owned equipment and
rolling stock to a third party lessor. The Company received $2,000,000 in
proceeds from the asset sale and entered into an operating lease for the use of
the equipment beginning August 8, 2000 with monthly payments through January 8,
2006, with no security deposit. The lease allows for the early buyout of the
equipment at a fixed price at the 60th month. The lease requires the Company to
pay customary operating and repair expenses and to observe certain operating
restrictions and covenants.



At December 31:                                    Minimum Lease Payment

                                                 
2000                                                         $   173,971
2001                                                             417,529
2002                                                             417,530
2003                                                             417,530
2004                                                             417,530
2005                                                             417,530
2006                                                              34,794
                                                             -----------
Total Minimum Payments                                       $ 2,296,414


The Company realized a $1,098,000 gain on the sale of the equipment that will be
amortized over the life of the lease. The gain will be recognized proportionate
to the gross rental charged over the 66-month lease life. Proceeds from this
sale of assets were used to fund expansion of the El Centro facility and other
general business obligations.

NOTE 11.  PREFERRED STOCK.

In November 1996, the Company issued 300,000 shares of Series E Redeemable
Convertible Preferred Stock ("Series E") in a private offering to four of its
directors for $3,000,000 in cash. The Series E bore an 11.25% annual dividend,
paid quarterly in shares of the Company's common stock. The Series E was issued
to fulfill a prior banking requirement. There were no voting rights or powers
attached to this 11.25% Series E Preferred Stock.

There was a partial redemption and mandatory conversion of the remaining Series
E at the conclusion of the rights offering on February 10, 1998, as a term of
the Series E Designation Certificate. The Series E stock is now retired but
carries 3,000,000 warrants with no assigned value and a $1.50 per share exercise
price, which expire June 2008.

In September 1995, the Board of Directors authorized 105,264 shares of preferred
stock designated as 8 3/8% Series D Cumulative Convertible Preferred Stock ("8
3/8% Preferred Stock") and authorized the issuance of 105,264 of such shares and
warrants to purchase 1,052,640 shares of the Company's common stock. The Company
sold 105,264 of 8 3/8% Preferred Stock with warrants in a private offering to a
group of members or past members of the Board of


                                       29



Directors for $4,759,000. Offering expenses of $101,000 and $140,000 in
settlement of liabilities was deducted from the proceeds. At December 31, 2000,
each 8 3/8% Preferred Stock share is convertible at any time at the option of
the holder into 14.52 shares of the Company's common stock, equivalent to a
conversion price of $5.50 on the $47.50 total per share offering price plus
accrued dividends times 1.44 due to dilution by later securities sales.

Dividends on the 8 3/8% Preferred Stock are cumulative from the date of issuance
and payable quarterly commencing on October 15, 1995. Current bank credit
facility covenants prohibit the payment of dividends. Accrued dividends at
December 31, 2000 totaled $796,000.

On September 12, 1999, the warrants on the 8 3/8% Preferred Stock expired except
for those belonging to one Series D holder. The Company extended an offer to all
Series D holders that if they converted their Series D to common stock the
warrants would be extended until September 13, 2002. One holder converted
5,263.2 preferred shares for 69,264 common shares and extended 64,211 warrants.
Each warrant has an exercise price of $4.75. No value was assigned to the
warrants in the accompanying consolidated financial statements as the value is
deemed de minimus. The remaining Series D preferred stock outstanding is 100,001
shares.

NOTE 12.  STOCK OPTION PLANS.

The Company presently maintains three stock option plans. One, which expired in
1998, afforded employees and outside directors of the Company the right to
purchase shares of its common stock. The exercise price, term and other
conditions applicable to each option granted under the Company's plans are
generally determined by the Compensation Committee of the Board of Directors at
the time of the grant of each option and may vary with each option granted. No
option may be granted at a price less than the fair market value of the shares
when the option is granted, and no options may have a term longer than ten
years.

The first plan is the 1988 plan that provided a 10-year life and all but 260,000
options have expired. In 1992, the Company adopted the second and third plans as
the 1992 Stock Option Plan for Employees and the 1992 Stock Option Plan for
Directors. On May 13, 1999, 500,000 options were added to the Employee's Plan of
1992. Options under the employee plan are designated as incentive or
non-qualified in nature at the discretion of the Compensation Committee, and
only employees will receive options under the 1992 Stock Option Plan for
Employees. Only directors will receive options under the Director's Plan.

As of December 31, 2000, the 1992 Stock Option Plan for Employees had issued
777,498 options with 522,502 remaining available and under the Stock Option Plan
for Directors, 542,500 options had been issued with 107,500 available.

The Company accounts for these plans under APB Opinion No. 25, "Accounting for
Stock Issued to Employees". Under this opinion, the Company recorded
compensation cost for 2000, and none for 1999, and 1998. Had compensation cost
for the plans been determined consistent with FASB Statement No. 123,
"Accounting for Stock-Based Compensation", the Company's 2000, 1999, and 1998
net income would have been decreased by $354,000, $316,000, and $661,000
respectively. Basic income per share would have decreased $.03, $.02, and $.05
for 2000, 1999, and 1998 respectively. Diluted income per share would have been
decreased by the same amount per share as basic income per share as the common
stock equivalents are anti-dilutive. The pro forma compensation cost may not be
representative of that to be expected in future years.

The fair value of each option grant is estimated using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
grants in 2000, 1999, and 1998:



                                       30




                                                                       2000               1999                1998
                                                                    ----------        -----------          ----------

                                                                                                  
Expected volatility                                                        116%               136%                213%
Risk-free interest rates                                                  5.01%               6.3%                6.0%
Expected lives                                                         3 YEARS            3 years             3 years
Dividend yield                                                               0%                 0%                  0%
Weighted-average fair value of options granted
     during the year (Black-Scholes)                                $     2.23         $     1.94          $     1.14

Under option:
Options outstanding, beginning of year                               1,326,572          1,186,572             688,650
Granted                                                                135,926            147,500             607,922
Exercised                                                              (13,600)             7,500            (110,000)
Canceled
                                                                            --                 --                  --
                                                                    ----------         ----------          ----------
Options outstanding, end of year                                     1,448,898          1,326,572           1,186,572
                                                                    ==========         ==========          ==========

Price range per share of outstanding options                        $     1.00         $     1.00          $    1.00-
                                                                    $    14.75         $    14.75          $    14.75
                                                                    ==========         ==========          ==========


Price range per share of options exercised                           $    1.25         $     1.25           $      --
                                                                     $    2.00         $     1.25           $      --
                                                                     =========         ==========           =========

Price range per share of options canceled                            $      --         $     1.25          $    8.58-
                                                                     $      --         $     7.13          $    8.58-
                                                                     =========         ==========          ==========

Options exercisable at end of year                                   1,448,898          1,121,872           1,124,772
                                                                    ==========         ==========          ==========

Options available for future grant at end of year                      630,002            852,728             461,928
                                                                    ==========         ==========          ==========


NOTE 13.  EMPLOYEE'S BENEFIT PLANS.

401(k) Plan. The Company maintains a 401(k) plan for employees who voluntarily
contribute a portion of their compensation, thereby deferring income for federal
income tax purposes. The plan is called The American Ecology Corporation 401(k)
Savings Plan.

The Plan covers substantially all of the Company's employees after one full year
of employment. Participants may contribute a percentage of salary up to the IRS
limits. The Company's contribution matches 55% of participant contributions up
to 6% of deferred compensation.

The Company contributions for the 401(k) plan were $176,000, $181,000, and
$119,000 for 2000, 1999 and 1998 respectively. The Company has no
post-retirement or post-employment benefit plan.



                                       31



NOTE 14.  INCOME TAXES.

The components of the income tax provision (benefit) were as follows (in
thousands):




                                                                       Year Ended December 31,
                                                                2000               1999           1998
                                                              --------          ---------      ---------

                                                                                      
Current  -  Federal                                           $     --          $      --      $      --
         -  State                                                  (12)               195             55
                                                              --------          ---------      ---------

                                                                   (12)               195             55
                                                              --------          ---------      ---------

Deferred  -  Federal                                                --                 --             --
                                                              --------          ---------      ---------

                                                              $    (12)         $     195      $      55
                                                              --------          ---------      ---------


The following reconciles between the effective income tax (benefit) rate and the
applicable statutory federal and state income tax (benefit) rate:



                                                                      Year Ended December 31,
                                                                2000              1999           1998
                                                              --------          ---------      ---------

                                                                                      
Income tax (benefit) - statutory rate                             34.0%              34.0%          34.0%
Valuation allowance for deferred tax assets                      (20.7)             (33.1)         (38.7)
State income tax and loss carry forward                          (11.8)               8.4           12.2
Other, net                                                        (1.3)              (5.1)           6.8
                                                              --------          ---------      ---------
                         Total effective tax rate                   .2%               4.2%          14.3%
                                                              --------          ---------      ---------


The tax effects of temporary differences between income for financial reporting
and taxes that gave rise to significant portions of the deferred tax assets and
liabilities and their changes during the year were as follows (in thousands):



                                                                             DEFERRED
                                                        DECEMBER 31, 2000   PROVISION     December 31, 1999
                                                        -----------------  ------------   -----------------

                                                                                  
DEFERRED TAX ASSETS
Environmental compliance and other site related
     costs, principally due to accruals for financial
     reporting purposes                                    $      4,405    $     (1,371)   $      5,776
Depreciation and amortization                                     3,568            (495)          4,063
State operating loss carry forward                                  952             952              --
Net operating loss carryforward                                  11,593              30          11,563
Other                                                               880              84             796
                                                           ------------    ------------    ------------
Total gross deferred tax assets                                  21,398            (800)         22,198
Less valuation allowance                                        (19,799)            858         (20,657)
                                                           ------------    ------------    ------------
Net deferred tax assets                                           1,599              58           1,541

DEFERRED TAX LIABILITY
Site development costs                                           (1,230)            (58)         (1,172)
Capitalized interest                                               (369)             --            (369)
                                                           ------------    ------------    ------------

Total gross deferred tax liabilities                             (1,599)            (58)         (1,541)
                                                           ------------    ------------    ------------


Net deferred tax assets                                    $         --    $         --    $         --
                                                           ============    ============    ============


The Company has established a valuation allowance for certain deferred tax
assets due to realization uncertainties inherent with the long-term nature of
deferred site maintenance costs, uncertainties regarding future operating
results and for limitations on utilization of acquired net operating loss carry
forwards for tax purposes. The realization of a significant portion of net
deferred tax assets is based in part on the Company's estimates of the timing of
reversals of




                                       32



certain temporary differences and on the generation of taxable income before
such reversals. The net operating loss carry forward of approximately
$34,097,000 at December 31, 2000, begins to expire in the year 2006. Of this
carry forward, $2,745,000 is limited pursuant to the net operating loss
limitation rules of Internal Revenue Code Section 382. The portion of the carry
forward limited under Internal Revenue Code Section 382 expires $793,000 in
2006, $1,079,000 in 2007, and $872,000 in 2008. The remaining unrestricted net
operating loss carry forward expires $4,280,000 in 2010, $8,657,000 in 2011,
$7,828,000 in 2012, $6,927,000 in 2018, $3,574,000 in 2019, and $454,000 in
2020. The amount of the Company's net operating loss carry forwards could be
reduced if the Company is ultimately unsuccessful in pursuing the refund claim
discussed below.

The Company filed an amended federal income tax refund claim in 1996 for
approximately $740,000. On September 29, 1999 the Internal Revenue Service
("IRS") proposed to deny this claim, sought to recover portions of tentative
refunds previously received by the Company and proposed to reduce the Company's
net operating loss carryforwards. On November 29, 1999 the Company protested
this denial which is currently pending with the IRS. The Company has tentatively
settled this claim on a basis which would allow a partial refund, retain a
portion of the tentative refunds already received and retain the net operating
loss carryforwards. This settlement requires the approval of the Congressional
Joint Committee on Taxation.

NOTE 15.  COMMITMENTS AND CONTINGENCIES.

In the ordinary course of conducting business, the Company becomes involved in
judicial and administrative proceedings involving federal, state, and local
governmental authorities. There may also be actions brought by individuals or
groups in connection with permitting of planned facilities, alleging violations
of existing permits, or alleging damages suffered from exposure to hazardous
substances purportedly released from Company operated sites, and other
litigation. The Company maintains insurance intended to cover property and
damage claims asserted as a result of its operations.

Periodically management reviews and may establish reserves for legal and
administrative matters, or fees expected to be incurred in connection therewith.
At this time, management believes that resolution of these matters will not have
a material adverse effect on the Company's financial position, results of
operations or cash flows.

LITIGATION

One of the Company's principal subsidiaries is a plaintiff in a case against the
United States and in a case against the State of California seeking to protect
its interest in the Ward Valley site. In the federal case, US Ecology is suing
to recover approximately $73.1 million of Ward Valley site development costs as
well as lost profits and lost opportunity costs. US Ecology lost this case at
the trial court level and has appealed to the Federal Circuit Court of Appeals.
The Company was also a plaintiff in a second case where US Ecology sought an
order (writ of mandamus) to compel the federal land transfer required for
construction of the state licensed facility to proceed. Both the trial court and
the D.C. Circuit Court of Appeals ruled against US Ecology in this case. This
decision is now final. The Company also filed a lawsuit against the State of
California on May 2, 2000, seeking to compel California to acquire the property
to build the Ward Valley project and monetary damages in excess of $162 million.
On October 24, 2000, the California trial court granted the state's motion to
dismiss the case on demurrer, and the Company has appealed the trial court's
decision. If the Company is unsuccessful in this litigation and in other avenues
available to it for recovery, the Company might be required to write-off a
portion of its deferred site development cost. A similar situation exists in
regard to the litigation relating to the Company's Butte, Nebraska site. See
Note 7 above.

Zurich American Insurance Company v. National Union Fire Insurance Company of
Pittsburgh, et al incl. AEC, AEESC, AEMC and AESC; Supreme Court of State of New
York, County of New York; Case No. 604662/99

In an action filed October 12, 1999, Plaintiff Zurich American Insurance Co.
("Zurich"), seeks declaratory and other relief against National Union Fire
Insurance Company of Pittsburgh ("National Union"), AEC and named subsidiaries
("AEC Defendants") and Doe Insurers 1-50 ("Doe Defendants") with respect to
Zurich's defense coverage in the Virgie Adams and the General Motors action. In
December 2000, Zurich filed a motion with the court for leave to amend its
complaint to seek recoupment of moneys paid to defend and settle the Adams case
and to defend the General Motors case. The Company intends to vigorously defend
this action.

General Motors Corporation v. American Ecology Environmental Services Corp., et
al., Case No. 3-99CV2626-L, U.S. District Court, Northern District of Texas.




                                       33


The Complaint names the Company and certain named subsidiaries as defendants in
the suit. The former owner of the Winona Facility and its associated business
entities settled their portion of the suit in November 2000. General Motors
seeks contribution and indemnity, including reimbursement of defense costs,
attorneys' fees, court costs and a settlement payment to the Adams plaintiffs,
incurred by General Motors. In December 2000, the Company's insurance carrier,
Zurich, notified the Company that it was disclaiming coverage for the suit and
would not indemnify the Company or its subsidiaries. The Company does not
believe it breached the contract or was negligent, and intends to vigorously
defend the case.

Mattie Cuba, et al. v. American Ecology Environmental Services Corporation, et
al., Cause No. 2000-092, 4th Judicial District Court, Rusk County, Texas.

The complaint in this legal proceeding was served on the Company and its
subsidiaries, American Ecology Environmental Services Corporation, American
Ecology Management Corporation and American Ecology Services Corporation on
November 20, 2000. The lawsuit is a toxic tort lawsuit brought by 28 named
plaintiffs against the Company and the named subsidiaries, as well as the former
facility owners and potentially approximately 60 former customers of the Winona,
Texas facility. The plaintiffs seek damages based generally on intentional and
negligence tort claims, as well as punitive damages. The Company believes it has
conducted its operations in accordance with applicable laws and regulations that
the lawsuit is without merit and intends to vigorously defend the action. The
Company's current insurance carrier has agreed to pay for the defense of this
matter, subject to the Company's $250,000 deductible. The Company timely filed
an answer on December 27, 2000, and intends to defend the case vigorously.
Discovery is in the very early stages.

ENVIRONMENTAL MATTERS

The United States Environmental Protection Agency (EPA) has requested
information regarding waste the Company may have shipped to a former LLRW
storage facility near Denver, Colorado, which is now a Superfund site. The EPA
has subsequently informed the Company it may be liable for approximately $29,000
for clean-up costs as a potentially responsible party. The Company does not
believe these amounts are material.

On September 29, 1999, investigators associated with the Federal Bureau of
Investigation, EPA, and Tennessee Valley Authority arrived at the Oak Ridge
Facility to investigate the site in connection with a search warrant issued by
the U.S. District Court, Eastern District of Tennessee. The Company fully
cooperated with the investigators and provided requested information. Since the
initial visit, the Company has not been asked to provide additional information
and has no information regarding outcome at this time. The Company currently is
conducting an internal investigation as a precautionary measure, believes it has
conducted its operations in compliance with the applicable statutes and
regulations, and intends to vigorously contest any allegations arising from the
investigation.

In the Matter of American Ecology Recycle Center, Inc., RCRA Docket No.:
RCRA-4-99-0020

On July 18, 2000, In the Matter of American Ecology Recycle Center, Inc., RCRA
Docket No.: RCRA-4-99-0020 was settled. The settlement did not have a material
adverse impact on the Company's financial position, results of operations, or
cash flows.



                                       34

NOTE 16.  ALLOWANCE FOR DOUBTFUL ACCOUNTS.

The allowance for doubtful accounts is made up of three components. There is the
continuing allowance or reserve for bad debts, which may carry on from one year
to the next. Adjustments to the allowance account were $1,299,480 and $1,385,425
for the years ending December 31, 1999, and 2000, respectively. These
adjustments are the result of management's evaluation and the independent
auditor's review of the accounts receivable and collection process to determine
if the accounts were being collected were increasing or decreasing in relation
to sales. In these two years collections of accounts receivable had improved and
sales began to increase in 2000.

The allowance for doubtful accounts is generally increased by credits to the
provision during the current year. There may be certain charges that affect the
provision but for simplification in the table below these charges were netted
with the account adjustments. The provision, as a general company policy, is a
monthly accrual equal to 1 1/2 % of sales, and 100% reserve for accounts over
150 days old. The account increased by these credits of $762,608 and $966,399
for the years ending December 31, 1999, and 2000.

The allowance account will increase or decrease by accounts written off or
collected, or by a change in the status of a customer's accounts receivable if
determined the collection prospects have improved or declined. The accounts
written off increased the allowance account by $854,260 and $811,650 in each
respective year of 1999, and 2000. The collection of accounts previously written
off accounted for decreases in the allowance for doubtful accounts of $745,483
and $443,369 for each of the years ending December 31, 1999, and 2000.

The Company believes with the historical trends it has experienced the allowance
account is adequate.

 (reported in whole dollars)



                                              Balance at      Increase in       Decrease in
                                              January 1,       Allowance         Allowance      Balance at
Description                                      1999           Account           Account       December 31
- -----------                                   ----------     ------------     --------------   -------------

                                                                                   

Adjustments to allowance account              $1,047,000                      $    1,299,480
Provision for the current year                               $    762,608
Accounts written off current year                                 854,260
Collection of accounts previously
  written off                                                                        745,483
                                              ----------     ------------     --------------   -------------
                Balance December 31, 1999                    $  1,616,868     $    2,044,963   $     618,905

Adjustments to allowance account                                              $    1,385,425
Provision for the current year                                    966,399
Accounts written off current year                                 811,650
Collection of accounts previously
  written off                                                                        443,469
                                              ----------     ------------     --------------   -------------
                Balance December 31, 2000                    $  1,778,049     $    1,828,894   $     568,060



NOTE 17. SUBSEQUENT EVENT.

On February 1, 2001, the Company, by its wholly-owned subsidiary American
Ecology Environmental Services Corporation, a Texas corporation, acquired
Envirosafe Services of Idaho, Inc. a Delaware corporation ("ESII"), pursuant to
a Stock Purchase Agreement from Envirosource Technologies Inc., a Delaware
corporation and Envirosource, Inc., a Delaware corporation, and parent company
of Envirosource Technologies Inc.

Under the terms of the Agreement, the Company paid One Thousand and 00/100
dollars ($1,000.00) in cash for all of the outstanding shares of ESII, a
subsidiary of Envirosource Technologies Inc., subject to approximately $20.4
million in liabilities. This acquisition was accounted for as a purchase. The
acquisition was approved by the respective board of directors of each company
and is now complete. There was no prior relationship between the Company and
Envirosource, Inc.

Pursuant to the Agreement, the Company acquired all of the authorized and issued
stock of ESII, thereby obtaining ownership of all ESII assets and liabilities.
The principal ESII assets are a RCRA and TSCA permitted hazardous and PCB waste
treatment and disposal facility located in southwestern Idaho, a hazardous waste
treatment facility operating





                                       35



under contract at an Illinois steel mill site, and exclusive rights to use a
patented hazardous waste treatment process for steel mill electric arc furnace
waste within a defined service territory in the western United States. The
assets acquired totaled approximately $20.4 million as of the December 31, 2000,
unaudited balance sheet date. This purchase increased the Company's asset base
by approximately 25%.

ESII currently provides commercial hazardous and PCB waste treatment, storage
and disposal services and intends to increase its share of the U.S. market for
this business through the acquired assets and continued operation of its
existing hazardous and PCB waste treatment and disposal facilities.

Balukoff, Lindstrom & Co., P.A., the independent auditors for the Company are
currently conducting an audit of ESII in March 2001. The required financial
statements will be prepared by management and filed in a Form 8-K on or within
60 days from February 15, 2001, the date the initial report on Form 8-K was
required to be filed.




                                       36



Exhibits
- --------
  23           Consent of Independent Public Auditors







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 thereunto duly authorized.



                               AMERICAN ECOLOGY CORPORATION
                                      (Registrant)


Date:  December 13, 2001       By:  /s/ Stephen A. Romano
                                  ---------------------
                                        Stephen A. Romano
                                        President and Chief Operating Officer


Date:  December 13, 2001       By:  /s/ James R. Baumgardner
                                   ------------------------
                                        James R. Baumgardner
                                        Senior Vice President, Chief Financial
                                        Officer, Secretary and Treasurer


                                       37



                                 EXHIBIT INDEX

Exhibit
- --------
  23           Consent of Independent Public Auditors