<PAGE>   1



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  --------------
                                    FORM 10-Q

(MARK ONE)

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

FOR QUARTER ENDED JUNE 26, 1998
                                       OR

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

FOR THE TRANSITION PERIOD FROM                    TO
                              --------------------  -------------------

COMMISSION FILE NUMBER    1-9037
                       -------------

                      INTERNATIONAL TECHNOLOGY CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

         Delaware                                             33-0001212
(STATE OR OTHER JURISDICTION OF                            (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                            IDENTIFICATION NO.)

          2790 Mosside Boulevard, Monroeville, Pennsylvania 15146-2792
    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:   (412) 372-7701

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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       
                                      ------     -------

At July 31, 1998 the registrant had issued and outstanding an aggregate of
22,628,433 shares of its common stock.

                                        1

<PAGE>   2





                      INTERNATIONAL TECHNOLOGY CORPORATION

                     INDEX TO QUARTERLY REPORT ON FORM 10-Q
                         FOR QUARTER ENDED JUNE 26, 1998


<TABLE>
<CAPTION>
                                                                                                          Page
                                                                                                          ----
<S>     <C>        <C>                                                                                     <C>
PART I.  FINANCIAL INFORMATION
         Item 1.    Financial Statements.

                    Condensed Consolidated Balance Sheets
                    as of June 26, 1998 (unaudited) and
                    March 27, 1998.                                                                          3

                    Condensed Consolidated Statements of Operations
                    for the First Fiscal Quarters ended
                    June 26, 1998 and June 27, 1997 (unaudited).                                             4

                    Condensed Consolidated Statements of Cash Flows
                    for the First Fiscal Quarters ended June 26, 1998
                    and June 27, 1997 (unaudited).                                                           5

                    Notes to Condensed Consolidated Financial
                    Statements (unaudited).                                                               6-10

         Item 2.    Management's Discussion and Analysis of
                    Results of Operations and Financial Condition.                                       11-19


PART II. OTHER INFORMATION

         Item 1.    Legal Proceedings                                                                       20

         Item 4.    Submission of Matters to a Vote of Security Holders                                     21

         Item 6.    Exhibits and Reports on Form 8-K.                                                       22

                    Signatures                                                                              23
</TABLE>






                                        2

<PAGE>   3





                                     PART I
ITEM 1. FINANCIAL STATEMENTS

                      INTERNATIONAL TECHNOLOGY CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                             June 26,        March 27,
                                                                                               1998            1998
                                                                                             --------        ---------
                                                                                            (Unaudited)
                                         ASSETS                                                    (In thousands)
<S>                                                                                       <C>              <C>      
Current assets:
      Cash and cash equivalents                                                            $  21,958        $  24,765
      Receivables, net                                                                       252,398          210,630
      Prepaid expenses and other current assets                                               20,309           25,523
      Deferred income taxes                                                                   14,164           12,750
                                                                                           ---------        ---------
          Total current assets                                                               308,829          273,668
Property, plant and equipment, at cost:
      Land and land improvements                                                                 456              846
      Buildings and leasehold improvements                                                    13,497           18,222
      Machinery and equipment                                                                 82,818          159,433
                                                                                           ---------        ---------
                                                                                              96,771          178,501
          Less accumulated depreciation and amortization                                      49,018          102,480
                                                                                           ---------        ---------
               Net property, plant and equipment                                              47,753           76,021

Cost in excess of net assets of acquired businesses                                          332,621          211,878
Investment in Quanterra                                                                            -           16,300
Other assets                                                                                  16,856           17,557
Deferred income taxes                                                                         88,050           73,745
Long-term assets of discontinued operations                                                   40,048           40,048
                                                                                           ---------        ---------
                   Total assets                                                            $ 834,157        $ 709,217
                                                                                           =========        =========

                        LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
      Accounts payable                                                                     $  93,365        $  82,597
      Accrued liabilities                                                                     74,277           80,486
      Billings in excess of revenues                                                           4,718            3,723
      Short-term debt, including current portion of long-term debt                            13,239           16,738
      Current liabilities of discontinued operations, net                                     15,200           15,200
                                                                                           ---------        ---------
          Total current liabilities                                                          200,799          198,744

Long-term debt                                                                               324,659          240,147
8% convertible subordinated debentures                                                        44,550           44,550
Long-term accrued liabilities of discontinued operations, net                                  1,226            3,773
Other long-term accrued liabilities                                                           33,878           23,755
Minority interest                                                                                434           50,098
Commitments and contingencies
Stockholders' equity:
      Preferred stock, $100 par value; 180,000 shared authorized:
          7% cumulative convertible exchangeable, 20,556 shares issued
               and outstanding                                                                 2,056            2,056
          6% cumulative convertible participating, 45,544 and 45,271 shares issued
               and outstanding, respectively                                                   4,511            4,451
      Common stock, $.01 par value; 50,000,000 shares authorized;
          22,645,852 and 9,737,589 shares issued, respectively                                   226               97
      Treasury stock at cost, 8,078 shares                                                       (74)             (74)
      Additional paid-in capital                                                             347,903          246,681
      Deficit                                                                               (126,011)        (105,061)
                                                                                           ---------        ---------
          Total stockholders' equity                                                         228,611          148,150
                                                                                           ---------        ---------
          Total liabilities and stockholders' equity                                       $ 834,157        $ 709,217
                                                                                           =========        =========
</TABLE>

                             See accompanying notes

                                        3

<PAGE>   4



                      INTERNATIONAL TECHNOLOGY CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)


<TABLE>
<CAPTION>
                                                                             First fiscal quarter ended
                                                                             --------------------------
                                                                             June 26,          June 27,
                                                                               1998              1997
                                                                             --------          --------
                                                                                    (Unaudited)
<S>                                                                          <C>               <C>   
Revenues                                                                      $225,188          $98,181
Cost and expenses:
      Cost of revenues                                                         198,130           86,757
      Selling, general and administrative expenses                              13,878            7,419
      Special charges                                                           24,971            4,611
                                                                              --------          -------
Operating loss                                                                 (11,791)            (606)
Other income                                                                       189                -
Interest, net                                                                   (8,902)          (1,028)
                                                                              --------          -------
Loss before income taxes                                                       (20,504)          (1,634)
(Provision) benefit for income taxes                                             1,213           (1,280)
                                                                              --------          -------
Net loss                                                                       (19,291)          (2,914)
Less preferred stock dividends                                                  (1,569)          (1,533)
                                                                              --------          -------
Net loss applicable to common stock                                           $(20,860)         $(4,447)
                                                                              ========          =======

Per share data (basic and diluted):
      Historical (1998 includes OHM merger)                                   $  (1.76)         $  (.46)
                                                                              ========          =======

Common share data:
      Historical (weighted average number of common shares 
      outstanding for basic and dilutive includes the 12,911,000
      shares issued for OHM merger as of June 11, 1998.
      See footnote 4.)                                                      11,880,888        9,741,715
                                                                            ==========       ==========
</TABLE>


                             See accompanying notes


                                        4

<PAGE>   5



                      INTERNATIONAL TECHNOLOGY CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                            First fiscal quarter ended
                                                                                            --------------------------
                                                                                              June 26,       June 27,
                                                                                               1998            1997
                                                                                              --------       --------
                                                                                                    (Unaudited)
<S>                                                                                          <C>            <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                                                                $(19,291)      $ (2,914)
      Adjustments to reconcile net loss to net cash
       provided by operating activities:
           Depreciation and amortization                                                         8,556          3,009
           Special charges                                                                      24,971          1,800
           Deferred income taxes                                                                (1,463)         1,280
           Other                                                                                   119             50
      Changes in assets and liabilities, net of effects from acquisitions and
        dispositions of businesses:
           Changes in assets and liabilities                                                   (22,907)          (583)
           Effects of acquisition and sale of businesses                                       (32,231)        (4,721)
           Decrease in site closure costs of discontinued operation                             (2,547)        (2,633)
                                                                                              --------       --------
      Net cash used for operating activities                                                   (44,793)        (4,712)
CASH FLOWS FROM INVESTING ACTIVITIES:
      Proceeds from disposition of remediation business                                              -          2,800
      Acquisition of businesses                                                                (38,193)        (1,250)
      Capital expenditures                                                                      (1,466)        (1,025)
      Proceeds from sale of Quanterra                                                            5,750              -
      Cash on deposit as collateral                                                                  -         (9,794)
      Other, net                                                                                   493            275
                                                                                              --------       --------
      Net cash used for investing activities                                                   (33,416)        (8,994)
CASH FLOWS FROM FINANCING ACTIVITIES:
      Financing costs                                                                           (4,694)             -
      Net borrowing (repayments) of long-term debt                                              81,001            (15)
      Dividends paid on preferred stock                                                           (905)          (899)
                                                                                              --------       --------
      Net cash provided by (used for) financing activities                                      75,402           (914)
                                                                                              --------       --------
Net decrease in cash and cash equivalents                                                       (2,807)       (14,620)


Cash and cash equivalents at beginning of period                                                24,765         78,897
                                                                                              --------       --------
Cash and cash equivalents at end of period                                                    $ 21,958       $ 64,277
                                                                                              ========       ========
</TABLE>

                             See accompanying notes.




                                        5

<PAGE>   6


                      INTERNATIONAL TECHNOLOGY CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.   The condensed consolidated financial statements included herein have been
     prepared by International Technology Corporation (Company or IT), without
     audit, and include all adjustments of a normal, recurring nature which are,
     in the opinion of management, necessary for a fair presentation of the
     results of operations for the fiscal quarter ended June 26, 1998, pursuant
     to the rules of the Securities and Exchange Commission. Certain information
     and footnote disclosures normally included in financial statements prepared
     in accordance with generally accepted accounting principles have been
     condensed or omitted pursuant to such rules and regulations although the
     Company believes that the disclosures in such financial statements are
     adequate to make the information presented not misleading.

     The Company's fiscal year included four thirteen-week fiscal quarters with
     the fourth quarter ending on the last Friday in March. On June 9, 1998, the
     Board of Directors of IT approved a change in IT's fiscal year end from the
     last Friday in March of each year to the last Friday of December of each
     year. The report covering the transition period will be IT's Annual Report
     on Form 10-K for the nine month period ending December 25, 1998.

     These condensed consolidated financial statements should be read in
     conjunction with the Company's annual report on Form 10-K, as amended, for
     the fiscal year ended March 27, 1998. The results of operations for the
     fiscal period ended June 26, 1998 are not necessarily indicative of the
     results for the full fiscal year.

2.   In January 1998, the Company entered into a merger agreement to
     acquire OHM Corporation (OHM), an environmental and hazardous waste
     remediation services company servicing primarily industrial, federal
     government and local government agencies located primarily in the United
     States. The transaction was effected through a two-step process for a total
     purchase price of approximately $303,400,000 consisting of (a) the
     acquisition of 54% of the total outstanding shares through a cash tender
     offer, which was consummated on February 25, 1998, at $11.50 per share for
     13,933,000 shares of OHM common stock, for a total consideration of
     approximately $160,200,000 plus, approximately $4,600,000 in asset
     acquisition costs and (b) the acquisition on June 11, 1998 of the remaining
     46% of the total outstanding shares through the exchange of approximately
     12,900,000 shares of Company common stock valued at $8.04 per share, or
     $103,800,000 and payment of approximately $30,800,000 plus approximately
     $4,000,000 in asset acquisition costs.

     This transaction was accounted for as a step acquisition purchase and
     therefore the effects of the first step of the merger were included in the
     March 27, 1998 financial statements and the effects of both steps were
     included in the June 26, 1998 financial statements. The excess of the
     purchase price over the fair value of assets acquired and liabilities
     assumed in the merger of approximately $317,000,000 is classified as cost
     in excess of net assets of acquired businesses and is being amortized over
     forty years. Results of operations include OHM assuming 100% ownership for
     the entire first fiscal quarter ended June 26, 1998.

     The estimated fair value of the assets acquired and liabilities assumed of
     OHM are as follows:

          Description                                                Amount
          -----------                                                ------
                                                                  (In thousands)
          Current assets                                            $138,431
          Property and equipment                                      21,295
          Cost in excess of net assets of acquired businesses        317,093
          Other long term assets                                      58,030
          Current liabilities                                        124,096
          Long term liabilities, primarily debt                      107,268

     As a result of the Merger, the Company has plans to close specific
     overlapping properties and reduce consolidated employment. The acquired
     balance sheet includes an accrual of approximately $13,300,000 for the
     estimated OHM severance, office closure costs and lease termination costs
     of which $4,203,000 has been paid through June 26, 1998.



                                        6

<PAGE>   7


                      INTERNATIONAL TECHNOLOGY CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

     The purchase price allocation is preliminary and based upon information
     currently available. Management is continuing to gather and evaluate
     information regarding the valuation of assets and liabilities at the dates
     of both the first and second steps of the acquisition. Management does not
     anticipate material changes to the preliminary allocation.

     The following unaudited pro forma condensed statement of operations gives
     effect to the OHM merger as if the transaction occurred at the beginning of
     the first fiscal quarter ended June 27, 1997.



                                                       June 27, 1997
                                                         Pro Forma
                                                       -------------
                                           (In thousands, except per share data)
      Revenues                                           $236,862
      Net loss                                            (26,300)
      Net loss applicable to common stock                 (27,833)
      Loss per share:
         Basic and diluted                                  (1.23)

     The above amounts are based upon certain assumptions and estimates which
     the Company believes are reasonable. The pro forma results do not reflect
     anticipated cost savings and do not necessarily represent results which
     would have occurred if the merger had taken place at the date and on the
     basis assumed above.

3.   In June 1997, the Financial Accounting Standards Board ("FASB") issued
     Statements No. 130, "Reporting Comprehensive Income," and Statement No.
     131, "Disclosures about Segments of an Enterprise and Related Information."
     Statement No. 130 which does not materially impact the Company and is
     effective for fiscal years beginning after December 15, 1997, requires
     separate reporting of certain items affecting shareholders' equity outside
     of those included in arriving at net earnings. Statement No. 131, effective
     for the period ending December 25, 1998, establishes requirements for
     reporting information about operating segments in annual and interim
     statements. This statement may require additional footnote disclosure
     relating to certain operating segments of the Company, however, the extent
     of this change, if any, has not been determined.

4.   In February 1997, FASB issued Statement No. 128, Earnings per Share, which
     was required to be adopted for periods ending after December 14, 1997. The
     Company has changed the method used to compute earnings per share and
     restated all prior periods. Under the new requirements for calculating
     basic earnings per share, the dilutive effect of stock options is excluded.
     For all periods presented, shares of common stock issuable upon conversion
     of the Company's convertible preferred stock, common stock warrants and
     common stock options are antidilutive, and therefore excluded from the
     diluted earnings per share calculation. 
 
     The weighted average number of common shares outstanding increased
     significantly on June 11, 1998 as a result of the Company issuing
     12,911,000 common shares in exchange for the remaining 46% of the
     outstanding OHM shares. As of June 26, 1998, the number of IT common shares
     outstanding is 22,637,774. Generally Accepted Accounting Principals require
     per share data be calculated utilizing the weighted average number of
     shares outstanding during the reporting period. For IT, this calculation
     results in a weighted average number of common shares outstanding of
     11,880,888 for the quarter ending June 26, 1998.
 
     The weighted monthly average number of shares outstanding during the 
     quarter ended June 26, 1998 are as follows:
 
                                                         Number of 
                                                       common shares
                                                        outstanding
                                                        -----------
                   April 1998                             9,729,511
                   May 1998                               9,729,511
                   June 1998                             16,183,643 
                                                         ---------- 
                        Average                          11,880,888 
 
 
     Assuming on a proforma basis the June 11, 1998 newly issued shares were
     issued at the beginning of the June 1998 quarter, the weighted average
     common shares outstanding for the quarter would be 22,637,774. 

     Excluding special charges of $24,971,000 and non-recurring tender loan 
     origination costs of $2,198,000 for the quarter ended June 26, 1998 and 
     special charges of $4,611,000 for the quarter ended June 27, 1997, the net 
     income applicable to common stock on a proforma basis would be $2,430,000 
     and $164,000, respectively. This proforma information is summarized below: 
 
<TABLE> 
<CAPTION> 
                                                                         Proforma net income per share 
                                             Average                       excluding special charges 
         Fiscal quarter ended            common shares outstanding             basic and diluted 
         --------------------            -------------------------       ----------------------------- 
         <S>                                   <C>                              <C>       
         June 26, 1998                         22,637,774                       $     .11 
         June 27, 1997                          9,741,715                       $     .02 
</TABLE> 
 
     Per share information discussed above is the same for basic and dilutive.



                                       7

<PAGE>   8


                      INTERNATIONAL TECHNOLOGY CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

     On June 11, 1998, the Company issued approximately 12,911,000 IT common
     shares in exchange for the remaining 46% of the outstanding OHM common
     shares. Assuming these shares were issued on March 28, 1998, the weighted
     average number of common shares outstanding and the basic and diluted
     earnings (loss) per common share would be:


<TABLE>
<CAPTION>
                                                     Average                     Net loss per share
                Fiscal quarter ended         common shares outstanding            basic and diluted
                --------------------         -------------------------            -----------------
                  <S>                              <C>                                 <C>
                   June 26, 1998                    22,640,598                          $(.92)
                   June 27, 1997                     9,741,715                          $(.46)
</TABLE>

     The weighted average number of common shares outstanding and the basic and
     diluted earnings (loss) per common share excluding special charges are as
     follows:
<TABLE>
<CAPTION>
                                                                               Net income per share  
                                                     Average                 excluding special charges 
                Fiscal quarter ended         common shares outstanding           basic and diluted 
                --------------------         -------------------------           -----------------
                  <S>                              <C>                                 <C>
                   June 26, 1998                    11,880,888                          $.20
                   June 27, 1997                     9,741,715                          $.02
</TABLE>

     Assuming the 12,911,000 IT common shares were issued on March 28, 1998, the
     weighted average number of common shares outstanding and the basic and
     diluted earnings (loss) per common share excluding special charges would
     be:

<TABLE>
<CAPTION>
                                                                               Net income per share  
                                                     Average                 excluding special charges 
                Fiscal quarter ended         common shares outstanding           basic and diluted 
                --------------------         -------------------------           -----------------
                  <S>                              <C>                                 <C>
                   June 26, 1998                    22,640,598                          $.11
                   June 27, 1997                     9,741,715                          $.02
</TABLE>

     For the quarter ended June 26, 1998, special charges of $23,290,000 (net of
     taxes) were excluded from the net loss in the calculation of the net income
     (loss) per share basic and diluted excluding special charges. For the
     quarter ended June 27, 1997, special charges of $4,611,000 (net of taxes)
     were excluded from the net income (loss) per share basic and diluted
     excluding special charges.

     The weighted monthly average number of shares for the quarter ended June
     26, 1998 are as follows:

                                                          Number of
                                                        common shares
                                                         outstanding
                                                         -----------
                   April 1998                             9,729,511
                   May 1998                               9,729,511
                   June 1998                             16,183,643
                                                         ----------
                        Average                          11,880,888
                                                         ==========

     The weighted average number of common shares outstanding increased
     significantly on June 11, 1998 as a result of the Company issuing
     12,911,000 common shares in exchange for the remaining 46% of the
     outstanding OHM shares. As of June 26, 1998, the number of IT common shares
     outstanding is 22,640,598.

5.   In December 1987 the Company's Board of Directors adopted a strategic
     restructuring program which included a formal plan to divest the
     transportation, treatment and disposal operations through the sale of some
     facilities and closure of certain other facilities. Subsequent to this
     date, the Company ceased obtaining new business for these operations. As of
     June 26, 1998, two of the Company's inactive disposal sites have been
     formally closed and the other two are in the process of closure. In
     connection with the plan of divestiture, from December 1987 through March
     27, 1998, the Company recorded a provision for loss on disposition of
     transportation, treatment and disposal discontinued operations

                                        8

<PAGE>   9


                      INTERNATIONAL TECHNOLOGY CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

     (including the initial provision and three subsequent adjustments) in the
     amount of $168,192,000, net of income tax benefit of $35,919,000. The
     adjustments principally related to a writeoff of the contingent purchase
     price from the earlier sale of certain assets, increased closure costs
     principally due to delays in the regulatory approval process, and costs
     related to certain waste disposal sites where IT has been named a
     potentially responsible party (PRP). At June 26, 1998, the Company's
     condensed consolidated balance sheet included accrued liabilities of
     $16,426,000 to complete the closure and related post-closure of its
     inactive disposal sites and related matters, net of certain trust fund and
     annuity investments which are legally restricted by trust agreements with
     the California EPA Department of Toxic Substance Control to closure and
     post-closure use.

     The provision for loss on disposition of transportation, treatment and
     disposal discontinued operations is based on various assumptions and
     estimates. The adequacy of the provision for loss has been currently
     evaluated in light of developments since the adoption of the divestiture
     plan and management believes the provision, as adjusted, is reasonable;
     however, the ultimate effect of the divestiture on the consolidated
     financial condition, liquidity and results of operations of the Company is
     dependent upon future events, the outcome of which cannot be determined at
     this time. Outcomes significantly different from those used to estimate the
     provision for loss could result in a material adverse effect on the
     consolidated financial condition, liquidity and results of operations of
     the Company.

6.   For information regarding legal proceedings of the Company's continuing
     operations, please see the note "Commitments and contingencies" in the
     Notes to Consolidated Financial Statements in the Company's Annual Report
     on Form 10-K, as amended, for the fiscal year ended March 27, 1998; current
     developments regarding continuing operations' legal proceedings are
     discussed in Part II of this filing. See Management's Discussion and
     Analysis of Results of Operations and Financial Condition - Financial
     Condition - Transportation, Treatment and Disposal Discontinued Operations
     for information regarding the legal proceedings of the discontinued
     operations of the Company.

7.   Included in accounts receivable, net at June 26, 1998 are billed
     receivables, unbilled receivables and retention in the amounts of
     $209,761,000, $30,509,000 and $12,128,000, respectively. Billed
     receivables, unbilled receivables and retention from the U.S. Government as
     of June 26, 1998 were $115,742,000, $11,570,000 and $2,481,000,
     respectively. At March 27, 1998, billed receivables, unbilled receivables
     and retention were $172,747,000, $26,996,000 and $10,887,000, respectively.
     Billed receivables, unbilled receivables and retention from the U.S.
     Government as of March 27, 1998 were $93,111,000, $9,908,000 and
     $2,201,000, respectively.

     Unbilled receivables typically represent amounts earned under the Company's
     contracts but not yet billable according to the contract terms, which
     usually consider the passage of time, achievement of certain milestones,
     negotiation of change orders, or the completion of the projects. Generally,
     receivables are expected to be billed and collected in the subsequent year.
     Included in accounts receivable at June 26, 1998 is approximately
     $18,000,000 associated with unapproved change order claims performed by the
     Company, which management believes to be probable of realization. This
     approximate $18,000,000 includes contract claims in litigation (see Note 6
     to the Condensed Consolidated Financial Statements). While management
     believes no material loss will be incurred related to these unapproved
     change order claims the actual amounts realized could be materially
     different than the amounts recorded.

     8.   On May 27, 1998, IT's Board of Directors considered and approved the
     divestiture of certain non-core assets. The non- core assets primarily
     include the Company's 19% common stock ownership interest in Quanterra,
     Inc., an environmental laboratory business, and the assets associated with
     IT's Hybrid Thermal Treatment System (HTTS(R)) business. As a result of
     these actions, the Company recorded a non-cash charge of $24,971,000 in the
     quarter ending June 26, 1998 including $10,550,000 (net of cash proceeds of
     $5,750,000) related to the sale of the Quanterra investment and
     $14,421,000, primarily related to assets associated with IT's HTTS(R)
     business.

     Special charges of $4,611,000 were recorded in the fiscal quarter ended
     June 27, 1997. These special items included a $2,811,000 charge associated
     with the relocation of the Company's corporate headquarters, and a
     $1,800,000 loss from the sale of a small remediation services business. The
     relocation of the Company's headquarters from Torrance,


                                        9

<PAGE>   10


                      INTERNATIONAL TECHNOLOGY CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)

     California to Monroeville (Pittsburgh), Pennsylvania has enabled the
     Company to consolidate corporate overhead functions. As a result of
     this relocation, the Company incurred a pre-tax charge of $2,811,000. The
     relocation charge included $790,000 of costs for severance, $953,000 of
     costs for the relocation of IT employees, $710,000 of costs related to the
     closure of the offices in Torrance, California and $358,000 of other
     related costs. As part of this relocation, 32 employees were laid off,
     primarily corporate management and administrative support personnel. As of
     June 26, 1998, $271,000 of the charge remained to be paid.

9.   For the first quarter ended June 26, 1998, the Company recorded an
     income tax benefit of $1,213,000, reflecting an income tax rate of 40% on
     income of $2,977,000 excluding special charges of $24,971,000. The income
     tax benefit related to the special charges was offset by an increase in
     IT's deferred tax valuation allowance of $6,889,000 based on the Company's
     assessment of the uncertainty as to when it will generate a sufficient
     level of future earnings of applicable character to realize a portion of
     the deferred tax asset created by the special charges.

     For the first quarter ended June 27, 1997, the Company recorded an income
     tax charge of $1,280,000, on income of $2,977,000, excluding special
     charges of $4,611,000. The related income tax benefit from the special
     charge in the prior quarter was offset by an increase in IT's deferred tax
     valuation allowance of $1,826,000.

     Based on a net deferred tax asset of $102,214,000 (net of a valuation
     allowance of $44,863,000), at June 26, 1998, and assuming a net federal and
     state effective tax rate of 40%, the level of future earnings necessary to
     fully realize the deferred tax asset would be approximately $256,000,000.
     The Company evaluates the adequacy of the valuation allowance and the
     realizability of the deferred tax asset on an ongoing basis. Because of the
     Company's position in the industry, recent acquisitions, restructuring and
     existing backlog, management expects that its future taxable income will
     more likely than not allow the Company to fully realize its net deferred
     tax asset.

10.  On June 11, 1998, upon consummation of the second step of the OHM
     acquisition (see Note 2 above), the Company effected a $378,000,000
     refinancing (the "Merger Credit Facilities").

     The Merger Credit Facilities consist of an eight-year amortizing term loan
     (term loans) of $228,000,000 and a six-year revolving credit facility
     (revolving loans) of $150,000,000 that contains a sublimit of $50,000,000
     for letter of credit issuance. The term loans made under the Merger Credit
     Facilities bear interest at a rate equal to LIBOR plus 2.50% per annum (or
     Citibank's base rate plus 1.50% per annum) and amortize on a semi annual
     basis in aggregate annual installments of $4,500,000 for the first six
     years after the Merger, with the remainder payable in eight equal quarterly
     installments in the seventh and eighth years after the Merger. The
     revolving loans made under the Merger Credit Facilities bear interest at a
     rate equal to LIBOR plus 2.00% per annum (or Citibank's base rate plus
     1.00% per annum). Six months after completion of the merger, adjustments to
     the interest rates will be made based on the ratio of IT's consolidated
     total debt to consolidated earnings before interest, taxes, depreciation
     and amortization. The Merger Credit Facilities are secured by a security
     interest in substantially all of the assets of the Company and its
     subsidiaries. In addition, the facilities also contain certain restrictive
     covenants that, among other things, prohibit the payment of cash dividends
     on common stock, limit capital expenditures, and require the Company to
     meet certain financial targets.

     The Merger Credit Facilities include certain representations, warranties
     and covenants customary for facilities of this type. The Merger Credit
     Facilities also include customary events of default as well as upon a
     change of control of IT including among other things, on or after the
     funding of the Merger Credit Facilities on June 11, 1998, the disposition
     of the 6% Cumulative Convertible Participating Preferred Stock or the
     Carlyle Warrants to a person other than the Preferred Stock Group (any
     person or group of persons other than the Convertible Preferred Stock or
     the Carlyle Warrants to a person other than the Parent Stockholders or
     certain persons affiliated with the Parent Stockholders).


                                       10

<PAGE>   11


ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
                  OF OPERATIONS AND FINANCIAL CONDITION.

                      INTERNATIONAL TECHNOLOGY CORPORATION

                         FOR QUARTER ENDED JUNE 26, 1998

RESULTS OF OPERATIONS

OVERVIEW

The Company provides a full range of technology-driven, value-added consulting,
engineering and construction capabilities through a network of 67 offices in the
United States and selected international locations. The Company's services
include construction and remediation, risk assessment, air quality management,
pollution prevention and waste minimization, information management, land-use
planning and restoration services of impaired properties, decontamination and
decommissioning, design/build, wastewater treatment, historical research and
investigation, environmental consulting and advocacy services, engineering
services and facility outsourcing for operation, maintenance and construction.
The Company's business strategy is to be a global provider of environmental and
infrastructure solutions to both the government and private industry clients. As
part of this strategy, the Company entered into a definitive agreement to
acquire OHM Corporation (OHM) on January 15, 1998 and the first step of the
Merger Agreement was completed through a tender offer on February 25, 1998 at
which time the Company owned approximately 54% of the outstanding shares of OHM.
The second step of the acquisition was completed on June 11, 1998. During fiscal
year 1998, the Company has also diversified through several acquisitions of
specialized consulting companies primarily serving targeted commercial markets.

REVENUES

Revenues for the three months ended June 26, 1998 increased $127,007,000 or
129.4% to $225,188,000, compared to revenues of $98,181,000 reported in the
first quarter of fiscal year 1998. This revenue growth is primarily attributable
to revenues generated by the OHM acquisition.

Revenue from the Company's federal government contracts increased 155 percent in
the first quarter ended June 26, 1998 when compared to the same period last
year. Revenue from the Company's federal government contracts excluding OHM,
increased 12.6 percent during these same comparative periods.

The Company's revenues attributable to U.S. federal, state and local
governmental contracts as a percentage of the Company's consolidated revenues
for the first fiscal quarters ended June 26, 1998 and June 27, 1997 is outlined
in the table below:

                                                        FISCAL QUARTER ENDED
                                                        --------------------
                                                        JUNE 26,     JUNE 27,
                                                         1998          1997
                                                        --------     --------
         U.S. Department of Defense (DOD).............    53%           45%
         U.S. Department of Energy (DOE)...............    8            10
         Other federal agencies........................    6             2
                                                          --            --
                                                          67            57

         State and local governments.....................  4             6
                                                          --            --

         Total........................................... 71%           63%
                                                          ==            ==

                                       11

<PAGE>   12


                      INTERNATIONAL TECHNOLOGY CORPORATION

                        RESULTS OF OPERATIONS (CONTINUED)


The Company's revenues attributable to U.S. federal, state and local government
contracts as a percentage of the Company's consolidated revenues increased to 71
percent in the three months ended June 26, 1998 compared to 63 percent in the
first quarter of last year. In the quarter ended June 26, 1998, DOD revenues of
$119,267,000 were $75,226,000 higher than the $44,041,000 in revenues reported
in the first quarter of the prior year. This increase is attributable to the OHM
acquisition. The Company expects to continue to derive a substantial portion of
its revenues from the DOD indefinite delivery order contracts, which are
primarily related to remedial action work.

DOE revenues increased by 90 percent from $9,529,000 in the first quarter of
fiscal year 1998 to $18,088,000 in the first quarter of this year. The increase
in the DOE revenues is due to the OHM acquisition and to the Fernald OU1 Project
that was awarded to the Company in October 1997. Revenues from other federal
agencies increased by $10,535,000 in the first quarter this year compared to
last year primarily related to the OHM merger.

The Company's revenues from commercial clients and international operations were
$66,525,000 for the quarter ended June 26, 1998 compared to $35,956,000 in
revenues during the first fiscal quarter of last year. Revenues from the
commercial and international sectors were $36,094,000 excluding OHM, or about
the same as last year. Revenue growth from the commercial and international
markets is uncertain partly due to increased emphasis on competitively bid lower
cost solutions and partly due to uncertainty regarding possible rollbacks of
environmental regulation and /or delaying certain work until final Congressional
action is taken on the reauthorization of CERCLA. Contemplated changes in
regulations could decrease the demand for certain of the Company's services, as
customers anticipate and adjust to the new regulations. However, legislative or
regulatory changes could also result in increased demand for certain of the
Company's services if such changes decrease the cost of remediation projects or
result in more funds being spent for actual remediation. The ultimate impact of
any such changes will depend upon a number of factors, including the overall
strength of the U.S. economy and customers' views on the cost effectiveness of
the remedies available. The Company believes that, as a result of greater
flexibility by regulators on acceptable cleanup standards, the overall strength
of the U.S. economy and increased corporate profits, in the near term at least,
commercial opportunities are expanding. It is uncertain, however, how long and
to what extent this perceived expansion will continue.

The Company's total contract backlog at June 26, 1998 was approximately
$3,657,000,000 of which approximately $2,891,000,000 is future project work the
Company estimates it will receive (based on historical experience) under
existing governmental indefinite delivery order (IDO) programs which provide for
a general undefined scope of work. Revenues from backlog and IDO contracts are
expected to be earned over the next one to five years. Continued funding of
existing backlog could be negatively impacted in the future due to reductions in
current and future federal government environmental restoration budgets.

GROSS MARGIN

Gross margin for the first quarter ended June 26, 1998 increased slightly to 12%
of revenues from 11.6% of revenues for the corresponding period of the prior
fiscal year. The improvement in gross margin is primarily due to the overhead
cost efficiencies achieved as a result of the OHM acquisition. In the short
term, the Company expects to maintain the improved gross margin levels achieved
as a result of this acquisition. The Company's ability to maintain or improve
its gross margin is heavily dependent on increasing utilization of professional
staff, properly executing projects, and successfully bidding new contracts at
adequate margin levels.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In the three months ended June 26, 1998, selling, general and administrative
(SG&A) expenses as a percentage of revenues decreased to 6.2% from the 7.5%
reported during the same period last year. Excluding goodwill amortization
resulting from the OHM acquisition, SG&A expenses were 5.1% of revenues in the
three months ended June 26, 1998. This decrease is primarily due to the
elimination of certain duplicative overhead functions and other synergies
achieved as a result of the OHM acquisition. In total, selling, general and
administrative expenses increased by $6,459,000 or 87% during these same
comparative periods as a result of the OHM acquisition. In the near term,
selling, general and administrative expenses are expected to decrease as a
percentage of revenue due to spreading fixed overhead costs over higher revenue
levels.


                                       12

<PAGE>   13


                      INTERNATIONAL TECHNOLOGY CORPORATION

                        RESULTS OF OPERATIONS (CONTINUED)


SPECIAL CHARGES

On May 27, 1998, IT's board of Directors considered and approved the divestiture
of certain non-core assets. The non-core assets primarily include the Company's
19% common stock ownership interest in Quanterra, Inc., an environmental
laboratory business, and the assets associated with IT's Hybrid Thermal
Treatment System (HTTS(R)) business. As a result of these actions, the Company
recorded a non-cash charge of approximately $24,971,000 in the quarter ending
June 26, 1998 including $10,550,000 (net of cash proceeds of $5,750,000) related
to the sale of the Quanterra investment and $14,421,000, primarily related to
assets associated with IT's HTTS(R) business.

Special charges of $4,611,000 were recorded in the fiscal quarter ended June 27,
1997. These special items included a $2,811,000 charge associated with the
relocation of the Company's corporate headquarters, and a $1,800,000 loss from
the sale of a small remediation services business. The relocation of the
Company's headquarters from Torrance, California to Monroeville (Pittsburgh),
Pennsylvania has enabled the Company to consolidate corporate overhead
functions. As a result of this relocation, the Company incurred a pre-tax charge
of $2,811,000. The relocation charge included $790,000 of costs for severance,
$953,000 of costs for the relocation of IT employees, $710,000 of costs related
to the closure of the offices in Torrance, California and $358,000 of other
related costs. As part of this relocation, 32 employees were laid off, primarily
corporate management and administrative support personnel. As of June 26, 1998,
$271,000 of the charge remained to be paid.

INTEREST, NET

For the first quarter ended June 26, 1998, net interest expense represented 4.0%
of revenues compared to the 1.0% of revenues reported in the first quarter of
last year. The increase in the first quarter net interest expense level compared
to a year ago is due principally to an increased level of debt required to
finance the OHM acquisition and also due to nonrecurring amortization of debt
origination costs of $1,909,000 related to the Tender Offer Credit Facilities
utilized by the Company to finance step one of the OHM acquisition from February
25, 1998 through June 11, 1998.

INCOME TAXES

For the first quarter ended June 26, 1998, the Company recorded an income tax
benefit of $1,213,000, reflecting an income tax rate of 40% on income of
$2,977,000 excluding special charges of $24,971,000. The income tax benefit
related to the special charges was offset by an increase in IT's deferred tax
valuation allowance of $6,889,000 based on the Company's assessment of the
uncertainty as to when it will generate a sufficient level of future earnings of
applicable character to realize a portion of the deferred tax asset created by
the special charges.

For the first quarter ended June 27, 1997, the Company recorded an income tax
charge of $1,280,000, on income of $2,977,000, excluding special charges of
$4,611,000. The related income tax benefit from the special charge in the prior
quarter was offset by an increase in IT's deferred tax valuation allowance of
$1,826,000.

Based on a net deferred tax asset of $102,214,000 (net of a valuation allowance
of $44,863,000), at June 26, 1998, and assuming a net federal and state
effective tax rate of 40%, the level of future earnings necessary to fully
realize the deferred tax asset would be approximately $256,000,000. The Company
evaluates the adequacy of the valuation allowance and the realizability of the
deferred tax asset on an ongoing basis. Because of the Company's position in the
industry, recent acquisitions, restructuring and existing backlog, management
expects that its future taxable income will more likely than not allow the
Company to fully realize its deferred tax asset.

DIVIDENDS

The reported dividends for the three months ended June 26, 1998 and June 27,
1997 were $1,569,000 and $1,533,000, respectively. The reported dividends in the
first quarter ended June 26, 1998 include imputed dividends of $330,000, which
are never payable in cash or stock.


                                       13

<PAGE>   14


                      INTERNATIONAL TECHNOLOGY CORPORATION

                        RESULTS OF OPERATIONS (CONTINUED)


Commencing with November 21, 1997, the 6% Cumulative Preferred Stock outstanding
accrues an annual 3% in kind stock dividend payable quarterly for one year
during which the statement of operations will also include an imputed dividend
expense at a rate of approximately 3% per annum. This additional imputed
dividend of approximately 3% will never be paid in cash and simply represents
the amortization of the fair market value adjustment recorded at the date of
issuance. After November 21, 1998, the outstanding 6% Preferred Stock is
entitled to a 6% cumulative cash dividend payable quarterly.

The Company's dividends are summarized below:

                                                      Fiscal quarter ended
                                                    ------------------------
                                                    June 26,        June 27,
   Dividend Summary                                  1998             1997
   ----------------                                 --------        --------
Cash 7% Preferred                                 $  899,000      $  899,000

Non-cash 6%
    Imputed                                          330,000               -
    In kind common 3% stock dividend                 340,000         634,000
                                                  ----------      ----------

         Total                                    $1,569,000      $1,533,000
                                                  ==========      ==========



                                       14

<PAGE>   15


                      INTERNATIONAL TECHNOLOGY CORPORATION

FINANCIAL CONDITION

Working capital at June 26, 1998 was $108,030,000 which is an increase of
$33,106,000 from the March 27, 1998 working capital of $74,924,000. The current
ratio at June 26, 1998 was 1.54:1 which compares to 1.38:1 at March 27, 1998.

Cash used by operating activities, which includes cash outflows related to
discontinued operations, for the first quarter ended June 26, 1998 totaled
$44,793,000 compared to $4,712,000 used by operating activities in the prior
year first quarter primarily due to the increase in accounts receivable
resulting from the seasonal increase in revenues, payment of liabilities accrued
in connection with the merger and payment of certain transaction and financing
costs previously accrued. Capital expenditures of $1,466,000 for the current
first fiscal quarter were $441,000 greater than the prior fiscal year
principally due to increased capital expenditure requirements due to the
acquisition of OHM. On June 25, 1998 the Company sold its investment in
Quanterra and received cash proceeds of $5,750,000. 

In addition to the OHM acquisition, the Company acquired four specialty
consulting firms during the year ended March 27, 1998. The acquisition
agreements related to these firms, along with the acquisition of Beneco by OHM,
include potential future earnout payments ranging from a low of zero to a
maximum of approximately $19,600,000 of which $13,600,000 can be payable in the
Company's common stock over the next three years.

On June 11, 1998, the Company completed the second step of the Merger Agreement
to acquire OHM. At that time, the Company replaced the $240,000,000 credit
facility ("Tender Offer Credit Facilities") with a $378,000,000 refinancing
("Merger Credit Facilities") and initially borrowed $228,000,000 under the term
loan provisions and approximately $87,000,000 through the revolving credit
facility. The proceeds of the loans made under the Merger Credit Facilities were
used to finance the cash consideration paid in the Merger, to pay related
expenses and costs, to refinance loans outstanding under the Tender Offer Credit
Facilities and OHM's loans outstanding under its then existing credit facility.
The Merger Credit Facilities consist of an eight-year amortizing term loan of
$228,000,000 and a six-year revolving credit facility of $150,000,000. The
$150,000,000 revolving facility provides working capital for IT and its
subsidiaries (including OHM and its subsidiaries) and for general corporate
purposes. The Merger Credit Facilities are secured by an interest in
substantially all of the assets of IT and its subsidiaries.

The term loans made under the Merger Credit Facilities bear interest at a rate
equal to LIBOR plus 2.50% per annum (or Citibank's base rate plus 1.50% per
annum), and revolving loans made under the Merger Credit Facilities bear
interest at a rate equal to LIBOR plus 2.00% per annum (or Citibank's base rate
plus 1.00% per annum), from June 11, 1998 through January 25, 1999, with upward
or downward adjustments thereafter based on the ratio of IT's consolidated total
debt to consolidated earnings before interest and taxes and depreciation and
amortization, as defined by the Merger Credit Facilities loan agreement.

The Merger Credit Facilities amortize on a semi annual basis in aggregate annual
installments of $4,500,000 during the first six years after the Merger, with the
remainder payable in eight equal quarterly installments in the seventh and
eighth years after the Merger. IT is required to prepay the loans under the
Merger Credit Facilities with the net proceeds of asset sales and certain debt
and equity financing, and with a portion of IT's consolidated excess cash flow.
In addition, the terms of OHM's 8% Convertible Subordinated Debentures
(guaranteed by IT) require annual sinking fund payments in an amount equal to
approximately $4,300,000. The Company has satisfied the sinking fund
requirements for this year. These Debentures are callable by the Company at par
and are convertible at the option of the holders into a combination of IT common
stock that converts each $1,000 8% debenture into 45.04 IT common shares and
$107.50 in cash.

The Credit Facilities include certain representations, warranties and covenants
customary for facilities of this type. The Credit Facilities also include
customary events of default as well as upon a change of control of IT including
among other


                                       15

<PAGE>   16


                      INTERNATIONAL TECHNOLOGY CORPORATION
                   LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)


things, on or after the funding of the Merger Credit Facilities on June 11,
1998, the disposition of the 6% Cumulative Convertible Participating Preferred
Stock or the Carlyle Warrants to a person other than the Preferred Stock Group
(any person or group of persons other than the Convertible Preferred Stock or
the Carlyle Warrants to a person other than the Parent Stockholders or certain
persons affiliated with the Parent Stockholders).

Long-term debt (including the 8% convertible subordinated debentures) of
$369,209,000 at June 26, 1998 increased from the $284,697,000 at March 27, 1998
primarily due to the acquisition of OHM and increased working capital
requirements resulting from the acquisition. The Company's ratio of debt
(including current portion) to equity decreased to 1.67:1 at June 26, 1998 from
2.03:1 at March 27, 1998.

With regard to the transportation, treatment and disposal discontinued
operations, a number of items could potentially affect the liquidity and capital
resources of the Company, including changes in closure and post-closure costs,
realization of excess and residual land values, demonstration of financial
assurance and resolution of other regulatory and legal contingencies.
(See Transportation, Treatment and Disposal Discontinued Operations.)

On June 26, 1998, giving effect to borrowings made in connection with the
consummation of the Merger, the Company had $26,400,000 of availability under
its revolving credit facility and $4,400,000 in cash and short-term investments.
The Company continues to have significant cash requirements, including
expenditures for the closure of its inactive disposal sites and PRP matters (see
Transportation, Treatment and Disposal Discontinued Operations), interest,
required term loan and subordinated debenture principal payments, preferred
dividend obligations, operating lease payments, contingent liabilities and
potential future acquisitions. The Company's liquidity position with the
availability of the Merger Credit Facilities and cash generated from operations
is expected to be sufficient to meet the foreseeable requirements, as well as to
in part fund expansion and diversification of the Company's business through
both internal growth and acquisitions but will require careful management,
particularly during periods of integration of major acquisitions. In connection
with the Company's plans for continued growth through acquisition, additional
capital sources will be required. The Merger Credit Facility permits
$150,000,000 of senior subordinated debt, and Carlyle has the option to invest
an additional $15,000,000 as part of the November 20, 1996 investment.

TRANSPORTATION, TREATMENT AND DISPOSAL DISCONTINUED OPERATION

As a part of the Company's discontinued transportation, treatment, and disposal
operations, the Company operated a series of treatment, storage and disposal
facilities in California, including four (4) major disposal facilities. Closure
plans for all four of these facilities have now been approved by all applicable
regulatory agencies. Closure construction has been completed at two of these
facilities (Montezuma Hills and Benson Ridge) and is substantially completed at
a third (Vine Hill), with final completion expected by the spring of 1999.

On March 18, 1998, the DTSC certified the Environmental Impact Report and
approved the Closure Plan for the Panoche facility. The approved plans provide
for submittal of technical studies that will be utilized to determine final
aspects, details and costs of closure construction and monitoring programs.
While IT believes that the approved closure plans substantially reduce future
cost uncertainties to complete the closure of the Panoche facility, the ultimate
costs will depend upon the results of the technical studies called for in the
approved plans. Closure construction for the plan is scheduled to be completed
within three years of approval of the plan. As a part of the closure process,
the Company will excavate drums buried in a portion of the facility. The drums
are the alleged source of low levels of contaminants which have migrated through
groundwater underneath a portion of municipally-owned land adjacent to the
facility.

Closure and post-closure costs are incurred over a significant number of years
and are subject to a number of variables including, among others, negotiations
regarding the details of site closure and post-closure, with DTSC, USEPA, the
California State Water Resources Control Board, the California Air Resources
Board, Regional Water Quality Control Boards (RWQCBs), Air Quality Management
Districts, various other state authorities and certain applicable local
regulatory agencies. Operation of the facilities in the closure and post-closure
periods is also subject to regulation by the same agencies. Closure costs are
comprised principally of engineering, design and construction costs and of
caretaker and monitoring costs during closure. Upon completion of closure
construction, the Company is required to perform post-closure monitoring and
maintenance of its disposal facilities for at least 30 years. The Company has
estimated the impact of closure


                                       16

<PAGE>   17


                      INTERNATIONAL TECHNOLOGY CORPORATION
                   LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)


and post-closure costs in the provision for loss on disposition of
transportation, treatment and disposal discontinued operations; however, closure
and post-closure costs could be higher than estimated if regulatory agencies
were to require closure and/or post-closure procedures significantly different
than those in the approved plans, or if the Company is required to perform
unexpected remediation work at the facilities in the future or to pay penalties
for alleged noncompliance with regulations or permit conditions.

Regulations of the DTSC and the United States Environmental Protection Agency
(USEPA) require that owners and operators of hazardous waste treatment, storage
and disposal facilities provide financial assurance for closure and post-closure
costs of those facilities. The Company has provided such financial assurance
equal to its estimate for closure and post closure costs at March 1, 1998, which
could be subject to increase at a later time as a result of regulatory
requirements, in the form of a corporate guarantee of approximately $18,000,000,
and approximately $25,600,000 in trust funds and purchased annuities which will
ultimately mature over the next 30 years to pay for its estimates of
post-closure costs. Following the Merger and write down of certain assets in
June 1998, the Company has notified DTSC that it will no longer use the
financial test and corporate guarantee. Although the Company believes that the
ongoing closure work at the Panoche and Vine Hill Complex facilities will reduce
the amount of required financial assurance to a level less than the balance in
the trust funds prior to any requirement to replace the guarantee with alternate
mechanisms, it may be required to provide additional financial assurance on an
interim basis.

The carrying value of the long-term assets of transportation, treatment and
disposal discontinued operations of $40,048,000 at June 26, 1998 is principally
comprised of residual land at the inactive disposal facilities (a substantial
component of which is adjacent to those facilities and was never used for waste
disposal) and assumes that sales will occur at market prices estimated by the
Company based on certain assumptions (entitlements, development agreements,
etc.), taking into account market value information provided by independent real
estate appraisers. A portion of the residual land is the subject of a local
community review of growth strategy. This review has recommended strategies for
limiting growth in the area applicable to certain of the Company's property,
which have been incorporated in a draft general plan and environmental impact
report which were released for public comment in the spring of 1998. Ultimately,
if development plans are materially restricted or acceptable entitlements are
unobtainable, the carrying value of this property could be significantly
impaired. The Company is also pursuing favorable planning changes with respect
to certain other nearby property. None of these strategies or changes have been
finalized but are anticipated to be formally considered by the community in the
fall of 1998. There is no assurance as to the timing of development or sales of
any of the Company's residual land, or the Company's ability to ultimately
liquidate the land for the sale prices assumed. If the assumptions used to
determine such prices are not realized, the value of the land could be
materially different from the current carrying value.

The Company maintains Environmental Impairment Liability coverage for the
Northern California facilities through the Company's captive insurance company.
The limits of the policy are $32,000,000 which meet the current requirements of
both federal and state law.

In June 1986, USEPA notified a number of entities, including the Company, that
they were PRPs with respect to the Operating Industries, Inc. (OII) Superfund
site in Monterey Park, California. Subsequently, USEPA alleged that the Company
had generated approximately 2% by volume of the manifested hazardous wastes
disposed of at the site, and the Company was also served with lawsuits brought
by members of a group of PRPs (the Steering Committee).

Between October 1995 and April 1996, the Company, the USEPA and the Steering
Committee agreed to settlements of the Company's alleged liability for response
costs incurred by the USEPA pursuant to the first three partial consent decrees
entered into in connection with the OII site pursuant to which the Company paid
$5,400,000 to the USEPA and $250,000 to the Steering Committee. While resolving
the Company's alleged liability for these response costs, the settlement did not
include a release of liability for future or final OII remedies. In September
1996, the USEPA released a final record of decision selecting the final remedy
for the site. Response costs for the final remedy are estimated by USEPA to be
approximately $161,800,000. The Company believes that this estimate does not
take into account the benefits of certain work to be performed under the
previous consent decrees and therefore substantially overstates the remaining
cost. The USEPA has requested, and the Steering Committee and the Company have
submitted, proposals to work cooperatively with interested parties respect to
the final remedy.


                                       17

<PAGE>   18


                      INTERNATIONAL TECHNOLOGY CORPORATION
                   LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)


Should the costs of the final remedy be greater than the amounts recognized or
should the Company be forced to assume a disproportionate share of the costs of
the final remedy (whether because of differences in the protections obtained by
the Steering Committee and the Company under the various consent decrees to
which Steering Committee members and the Company are subject, failure of other
PRPs to pay their proportionate shares, or otherwise), the cost to the Company
of concluding this matter could materially increase.

In September 1987, the Company and 17 other companies were served with a
Remedial Action Order (RAO) issued by the DTSC, concerning the GBF Pittsburg
landfill site near Antioch, California, a site which had been proposed by the
USEPA to be added to the National Priorities List under CERCLA. (Additional
PRPs, consisting primarily of known waste generators, were subsequently served
with amended RAOs by the DTSC.) From the 1960's through 1974, a predecessor to
IT Corporation operated a portion of one of the two parcels as a liquid
hazardous waste site. The activity ceased in 1974, and the Company's
predecessor's facility was closed pursuant to a closure plan approved by the
appropriate RWQCB. Both of the parcels were then operated by other parties as a
municipal and industrial waste site (overlying the former liquid hazardous waste
site) and, until 1992, continued to accept municipal waste. Water quality
samples from monitoring wells in the vicinity of the site were analyzed by the
property owner in August 1986 and indicated the presence of volatile organics
and heavy metals along the periphery of the site.

In June 1997, the DTSC completed and released a final Remedial Action Plan (RAP)
selecting DTSC's preferred alternative of actively pumping and treating
groundwater from both the alleged source points of contamination and the edge of
the allegedly contaminated groundwater plume emanating from the site, which DTSC
estimated to cost between $18,000,000 and $33,000,000, depending upon whether
certain options for discharge of produced waters are available. As part of the
RAP, the DTSC also advised the PRP group of its position that all PRPs,
including the Company, are responsible for paying the future closure and
postclosure costs of the overlying municipal landfill, which have been estimated
at approximately $4,000,000. (The DTSC and the USEPA also seek approximately
$1,000,000 and $250,000, respectively, in oversight costs from all PRPs.) The
PRP group continues to believe that its preferred alternative of continued
limited site monitoring, which was estimated to cost approximately $4,000,000,
is appropriate in part because the studies conducted by the PRP group indicate
that any impacts are not affecting drinking water supplies or other groundwater
uses and it has filed an application with the appropriate RWQCB for designation
of the site as a containment zone which, if approved, would facilitate the PRP
group's preferred remedial alternative.

The Company and the PRP group initiated litigation (Members of the GBF/Pittsburg
Landfill(s) Respondents Group, etc., et al, v. State of California Environmental
Protection Agency Contra Costa County, California Superior Court Case No.
C97-02936) challenging the final RAP, and the PRP group and the DTSC have agreed
to stay this litigation and implementation of major RAP elements pending the
RWQCB's review of the containment zone application.

In the final RAP the DTSC assigned the Company and the other members of the PRP
group collective responsibility for 50% of the site's response costs. The DTSC's
allocation of responsibility is not binding except in very limited
circumstances. The PRP group continues to believe that the DTSC allocation is
inappropriate and current owner/operators should pay a larger portion of the
site's response costs because, among other things, any ground water quality
impacts are not attributable solely to the portion of the site previously
operated by IT's predecessor, and the PRP group has initiated litigation
(Members of the GBF/Pittsburg Landfill(s) Respondents Group, etc., et al, v.
Contra Costa Waste Service, etc., et al. U.S.D.C., N.D. CA, Case No.
C96-03147SI) against the owner/operators of the site and other non-cooperating
PRPs to cause them to bear their proportionate share of site remedial costs. The
owner/operators of the site have denied responsibility and have not cooperated
with the PRP group in its efforts to study and characterize the site, except for
limited cooperation which was offered shortly after the September 1987 RAO and,
currently, with respect to DTSC's attempts to cause the selection of its
preferred remedial alternative. The owner/operators are vigorously defending the
PRP group's litigation, and the outcome of the litigation cannot be determined
at this time.

Failure of the PRP group to effect a satisfactory resolution with respect to the
choice of appropriate remedial alternatives or to obtain an appropriate
contribution towards site remedial costs from the current owner/operators of the
site and other non-cooperating PRPs, could substantially increase the cost to
the Company of remediating the site.


                                       18

<PAGE>   19


                      INTERNATIONAL TECHNOLOGY CORPORATION
                   LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)


In March 1995, IT was notified by the DTSC that it was among 13 companies
identified as potentially responsible for costs associated with investigation
and cleanup of the Environmental Protection Corporation (EPC) site known as the
Eastside Facility near Bakersfield, California. IT transported various waste
streams both generated by IT and on behalf of its customers to the Eastside
Facility at various times during that facility's operation and it was a minority
shareholder in EPC for a period of its operations. Because of the early stage of
the matter, the potential costs associated with the remediation of the Eastside
facility cannot be reasonably estimated.

The Company, as a major provider of hazardous waste transportation, treatment
and disposal operations in California prior to the December 1987 adoption of its
strategic restructuring program, has been named a PRP at a number of other sites
and may from time to time be so named at additional sites and may also face
damage claims by third parties for alleged releases or discharges of
contaminants or pollutants arising out of its transportation, treatment and
disposal discontinued operations. The Company has either denied responsibility
and/or is participating with others named by the USEPA and/or the DTSC in
conducting investigations as to the nature and extent of contamination at the
sites. Based on the Company's experience in resolving claims against it at a
number of sites and upon current information, in the opinion of management, with
advice of counsel, claims with respect to sites not described above at which the
Company has been notified of its alleged status as a PRP will not individually
or in the aggregate result in a material adverse effect on the consolidated
financial condition, liquidity and results of operations of the Company.

The Company has initiated against a number of its past insurers claims for
recovery of certain damages and costs with respect to both its Northern
California sites and certain PRP matters. The carriers dispute their obligations
to the Company and the Company expects them to continue to contest the claims.
The Company has included in its provision for loss on disposition of
discontinued operations (as adjusted) an amount that, in the opinion of
management, with advice of counsel, represents a probable recovery with respect
to those claims.

FORWARD LOOKING STATEMENTS

Statements of the Company's or management's intentions, beliefs, expectations or
predictions for the future, denoted by the words "anticipate", "believe",
"estimate", "expect", "project", "imply", "intend", "foresee", and similar
expressions are forward-looking statements that reflect the current views of the
Company and its management about future events and are subject to certain risks,
uncertainties and assumptions. Such risks, uncertainties and assumptions include
those identified in the "Business - Operations" - "Regulations", -
"Environmental Contractor Risks", - "Insurance and Risk Management", "Risk of
Achievement of Synergies and Integration of Operations", - "Leverage" - "History
of Losses", and "Legal Proceedings" sections of the Company's Report on Form
10-K (as amended) for the year ended March 27, 1998, and the business
opportunities (or lack thereof) that may be presented to and pursued by the
Company, changes in laws or regulations affecting the Company's operations, as
well as competitive factors and pricing pressures, bidding opportunities and
success, project results, management's judgment regarding revenue recognition
and adequacy of reserves, success in pursuing claims and change orders, results
of litigation, funding of backlog, matters affecting contracting and engineering
businesses generally, such as the seasonality of work and weather and clients'
timing of projects, the ability to generate a sufficient level of future
earnings to utilize the Company's deferred tax assets, and the ultimate costs
and results of closure and divestiture of the Company's discontinued operations,
the effects of the integration of OHM and any other major acquisitions, and
achievement of expected synergies therefrom, and industry-wide market factors
other general economic and business conditions and other factors, many of which
are beyond the control of the Company. The Company's actual results could differ
materially from those projected in such forward-looking statements as a result
of such factors.


                                       19

<PAGE>   20



                                     PART II

                      INTERNATIONAL TECHNOLOGY CORPORATION

ITEM 1.  LEGAL PROCEEDINGS.

The continuing operations litigation to which the Company is a party is more
fully discussed in the note"Commitments and Contingencies" in the Notes to
Consolidated Financial Statements in the Company's annual Report on Form 10-K,
as amended, for the fiscal year ended March 27, 1998. See also Management's
Discussion and Analysis of Results of Operations and Financial Condition -
Transportation, Treatment and Disposal Discontinued Operations for information
regarding litigation related to the discontinued operations of the Company.

Sikes Claims Action

In July 1998 IT- Davy, a joint venture of which IT Corporation is a member,
filed suit against the State of Texas' agency (the Texas Natural Resources
Conservation Commission) for which the joint venture performed the Sikes
Disposal Pits incineration project beginning in 1990 (IT-Davy v. Texas Natural
Resources Conservation Commission, Travis County District Court, 200th Judicial
District, Case No. 98-07589). The joint venture's lawsuit seeks recovery of
approximately $6,450,000 in claims for additional costs and/or lost profits
resulting from the performance of the project. Due to the early stage of the
case, the ultimate outcome of the matter cannot be predicted.

Coakley Landfill Action

Although discovery in the case is ongoing, and a trial date of March 2000 has
been set, due to the early stage of the matter, its ultimate outcome cannot yet
be predicted.

Occidental Chemical Litigation

OHM Remediation Services Corporation and Occidental Chemical Corporation have
filed cross-motions for summary judgement on their various claims and anticipate
rulings on the motions in the late summer of 1998.

GM - Hughes Massena Litigation

The parties have agreed to non-binding mediation, commencing in the fall of
1998, with respect to the case.




                                       20

<PAGE>   21



                      INTERNATIONAL TECHNOLOGY CORPORATION

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

In connection with the Company's Special Meeting of Shareholders, held June 11,
1998, the Company submitted the following three (3) matters to a vote of the
holders of its Common and Convertible Preferred Stock. The holders of shares of
Common Stock and Convertible Preferred Stock voted together as a class with
respect to all three proposals. Only holders of any such shares of Common Stock
or Convertible Preferred Stock at the close of business on May 20, 1998 were
entitled to notice of and to vote at the Special Meeting.

Proposal 1:       To consider and vote upon the issuance of Common Stock, $0.01
                  par value of the Company pursuant to the Agreement and Plan of
                  Merger, dated as of January 15, 1998 relating to the merger of
                  IT-Ohio, Inc., an Ohio corporation and a wholly owned
                  subsidiary of the Company (the "Merger"), with and into OHM
                  Corporation, an Ohio corporation ("OHM"), pursuant to which
                  each outstanding share of common stock, $0.10 par value, of
                  OHM would be converted into a combination of cash and shares
                  of Common Stock as more fully set forth in the Joint Proxy
                  Statement/Prospectus dated May 11, 1998 and in the Merger
                  Agreement included therewith.

Proposal 1 was approved by the affirmative vote of the holders of shares of
capital stock representing a majority of the voting power of the Company, as
follows:

For                            Withheld                      Abstained
---                            --------                      ---------
11,642,649                      49,158                         61,514

Proposal 2:       To consider and vote upon amendments to the Company's 1996
                  Stock Incentive Plan to: (a) increase the number of authorized
                  shares issuable thereunder after the consummation of the
                  Merger; and (b) change the date of annual automatic increases
                  in the number of authorized shares issuable thereunder.

Proposal 2 was approved by the affirmative vote of the holders of shares of
capital stock representing a majority of the voting power of the Company, as
follows:

For                            Withheld                      Abstained
---                            --------                      ---------
10,415,989                    1,272,153                       65,179

Proposal 3:       To consider and vote upon an amendment to the Company's
                  Certificate of Incorporation to eliminate provisions therein
                  that provide for a classified board of directors with respect
                  to directors elected by common stockholders.

Proposal 3 was approved by the affirmative vote of the holders of shares of
capital stock representing not less than two-thirds of the voting power of the
Company, as follows:

For                            Withheld                      Abstained
---                            --------                      ---------
11,637,353                      44,650                         71,318



                                       21

<PAGE>   22



                      INTERNATIONAL TECHNOLOGY CORPORATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

         (a)  Exhibits. These exhibits are numbered in accordance with the
              Exhibit Table of Item 601 of Regulation S-K.

              Exhibit No.                      Description
              -----------  -----------------------------------------------------

              10(ii)       24.   Stock Redemption Agreement dated as of June 26,
                                 1998, between Quanterra Incorporated, the
                                 registrant, and IT Corporation.

              10(iii)      40.   Amendment Number Four to the OHM Corporation
                                 Retirement Savings Plan, as amended and
                                 restated as of January 1, 1994.*

              27            1.   Financial Data Schedule for the quarter ended
                                 June 26, 1998.

               *            Filed as a management compensation plan or
                            arrangement per Item 14(a)(3) of the Securities
                            Exchange Act.

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


         (b)  Reports on Form 8-K

              1.  Current Report on Form 8-K/A, dated May 11, 1998, under Item 7
                  amending and supplementing the Current Report on Form 8-K
                  filed by the Registrant on March 5, 1998.

              2.  Current Report on Form 8-K, dated May 28, 1998, reporting
                  under Item 5 relating to the announcement of the registrant's
                  financial results for the fourth fiscal quarter and the year
                  ended March 27, 1998 and its intention to divest itself of
                  certain non-core assets.

              3.  Current Report on Form 8-K, dated June 11, 1998, reporting
                  under Item 2 the merger of the registrant's wholly owned
                  subsidiary, IT-Ohio, Inc. ("IT-Ohio") into OHM Corporation
                  ("OHM") pursuant to the previously announced Agreement and
                  Plan of Merger dated as of January 15, 1998, among the
                  registrant, IT-Ohio and OHM and Item 7 the Financial
                  Statements of Businesses Acquired and Pro Forma Financial
                  Information. In addition, reported under Item 8 is the change
                  in the registrant's fiscal year end.



                                       22

<PAGE>   23


                      INTERNATIONAL TECHNOLOGY CORPORATION


                                   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.



      INTERNATIONAL TECHNOLOGY CORPORATION
                  (Registrant)




           ANTHONY J. DELUCA                                     August 10, 1998
  -------------------------------------                          ---------------
           Anthony J. DeLuca
  President and Chief Executive Officer
      and Duly Authorized Officer



         PHILIP O. STRAWBRIDGE                                   August 10, 1998
  -------------------------------------                          ---------------
         Philip O. Strawbridge
     Senior Vice President, Chief
      Administrative Officer and
      Principal Financial Officer



           HARRY J. SOOSE, JR.                                   August 10, 1998
  -------------------------------------                          ---------------
           Harry J. Soose, Jr.
       Vice President, Finance and
       Principal Accounting Officer



                                       23