<PAGE>
 
================================================================================
 

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

 
                                   FORM 10-Q

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

 
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
 
For the quarterly period ended November 30, 1995    Commission File No. 1-12248
 


                        ICF KAISER INTERNATIONAL, INC.
            (Exact name of registrant as specified in its charter)


               Delaware                                    54-1437073
               --------                                    ----------
     (State or other jurisdiction of                    (I.R.S. Employer
      incorporation or organization)                  Identification No.)


   9300 Lee Highway, Fairfax, Virginia                     22031-1207
   -----------------------------------                     ----------
 (Address of principal executive offices)                  (Zip Code)


      Registrant's telephone number including area code:  (703) 934-3600


     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes     X      No _________
    ---------              

 
     On December 31, 1995, there were 21,263,828 shares of ICF Kaiser
International, Inc. Common Stock, par value $0.01 per share, outstanding.

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

<PAGE>
 
                        ICF KAISER INTERNATIONAL, INC.

                              INDEX TO FORM 10-Q


<TABLE> 
<CAPTION>
                                                                           Page
                                                                           ----
<S>            <C>                                                         <C>  
PART I - FINANCIAL INFORMATION

     Item 1.   Financial Statements:

               Consolidated Balance Sheets -
               November 30, 1995 and February 28, 1995........................3

               Consolidated Statements of Operations -
               Nine Months Ended November 30, 1995 and 1994...................4

               Consolidated Statements of Operations -
               Three Months Ended November 30, 1995 and 1994..................5

               Consolidated Statements of Cash Flows -
               Nine Months Ended November 30, 1995 and 1994...................6

               Notes to Consolidated Financial Statements...................7-8

     Item 2.   Management's Discussion and Analysis of
               Financial Condition and Results of Operations...............8-12


PART II - OTHER INFORMATION


     Item 1.   Legal Proceedings.............................................12

     Item 2.   Changes in Securities.........................................12

     Item 3.   Defaults Upon Senior Securities...............................12

     Item 4.   Submission of Matters to a Vote of Security Holders...........12

     Item 5.   Other Information.............................................12

     Item 6.   Exhibits and Reports on Form 8-K..............................12
</TABLE>

                                       2
<PAGE>
 
                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                (In thousands)

<TABLE>
<CAPTION>
                                                                          November 30,               February 28,
                                                                              1995                       1995    
                                                                           (Unaudited)                           
-----------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                        <C> 
  ASSETS                                                                                                         
  Current Assets                                                                                                 
    Cash and cash equivalents                                             $    23,105                $   28,233   
    Contract receivables, net                                                 205,583                   139,860   
    Prepaid expenses and other current assets                                  14,970                    10,872   
    Deferred income taxes                                                      11,420                    13,553   
                                                                          -----------                ----------  
          Total Current Assets                                                255,078                   192,518   
                                                                          -----------                ----------   
Fixed Assets                                                                                                     
    Furniture, equipment, and leasehold improvements                           43,254                    42,557   
    Less depreciation and amortization                                        (33,392)                  (29,648)  
                                                                          -----------                ----------   
                                                                                9,862                    12,909   
                                                                          -----------                ----------   
  Other Assets                                                                                                   
    Goodwill, net                                                              48,489                    47,945   
    Investments in and advances to affiliates                                   9,859                     8,022   
    Due from officers and employees                                             1,024                     1,826   
    Other                                                                      21,535                    18,202   
                                                                          -----------                ----------  
                                                                               80,907                    75,995   
                                                                          -----------                ----------  
                                                                          $   345,847                $  281,422   
LIABILITIES AND SHAREHOLDERS' EQUITY                                      ===========                ==========  
Current Liabilities                                                                                              
  Accounts payable and accrued expenses                                   $    86,533                $   46,811   
  Accrued salaries and employee benefits                                       57,760                    30,549   
  Accrued interest                                                              6,180                     2,528   
  Current portion of long-term debt                                                44                       578   
  Income taxes payable                                                            231                       644   
  Deferred revenue                                                             12,734                    11,013   
  Other                                                                         8,535                     8,755   
                                                                          -----------                ----------  
          Total Current Liabilities                                           172,017                   100,878   
                                                                          -----------                ----------  
Long-term Liabilities                                                                                            
  Long-term debt, less current portion                                        120,096                   126,733   
  Other                                                                         4,523                     6,397   
                                                                          -----------                ----------  
                                                                              124,619                   133,130   
                                                                          -----------                ----------  
Commitments and Contingencies                                                                                    
                                                                                                                 
Minority Interests in Subsidiaries                                              1,797                       173   
                                                                                                                 
Redeemable Preferred Stock                                                     19,770                    19,617   
Common Stock, par value $.01 per share:                                                                           
  Authorized-90,000,000 shares                                                                                   
  Issued and outstanding- 21,260,430 and 21,011,369 shares                        213                       210  
Additional Paid-in Capital                                                     64,666                    63,786  
Notes Receivable Related to Common Stock                                       (1,732)                   (1,732) 
Retained Earnings (Deficit)                                                   (33,332)                  (33,343) 
Cumulative Translation Adjustment                                              (2,171)                   (1,297) 
                                                                          -----------                ---------- 
                                                                          $   345,847                $  281,422  
                                                                          ===========                ==========  
</TABLE>
 
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
                                       3
<PAGE>
 
                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands, except per share amounts)
 
 
 
<TABLE> 
<CAPTION> 
                                                                   NINE MONTHS ENDED NOVEMBER 30,
                                                                     1995                1994
                                                                   ==============================
                                                                            (Unaudited)
<S>                                                                <C>                <C>          
GROSS REVENUE                                                      $  781,127        $   655,364   
 Subcontract and direct material costs                               (413,257)          (309,643)  
 Equity in income of joint ventures                                                                
  and affiliated companies                                              2,664              2,693   
                                                                   ----------         ---------- 
SERVICE REVENUE                                                       370,534            348,414   
                                                                                                   
OPERATING EXPENSES                                                                                 
 Direct cost of services and overhead                                 312,704            299,877   
 Administrative and general                                            35,249             31,142   
 Depreciation and amortization                                          7,507              6,941   
                                                                   ----------         ----------  
OPERATING INCOME                                                       15,074             10,454   
                                                                                                   
OTHER INCOME (EXPENSE)                                                                             
 Gain on sale of investment                                                 -                551   
 Interest income                                                        1,884              1,381   
 Interest expense                                                     (11,943)           (10,857)  
                                                                   ----------         ----------    
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS                       5,015              1,529   
Income tax provision                                                    2,257              2,247   
                                                                   ----------         ----------  
INCOME (LOSS) BEFORE MINORITY INTERESTS                                 2,758               (718)  
Minority interests in net income of subsidiaries                        1,124                  -   
                                                                   ----------         ----------  
NET INCOME (LOSS)                                                       1,634               (718)  
Preferred stock dividends and accretion                                 1,623              1,616   
                                                                   ----------         ----------   
NET INCOME (LOSS) AVAILABLE FOR COMMON SHAREHOLDERS                $       11         $   (2,334)  
                                                                   ==========         ========== 
Primary and Fully Diluted                                                                          
 Net Income (Loss) Per Common Share                                $     0.00         $    (0.11)  
                                                                   ==========         ========== 
Primary and Fully Diluted Weighted Average                                                         
 Common and Common Equivalent                                                                      
 Shares Outstanding                                                    21,503             20,945   
                                                                   ==========         ==========  
</TABLE> 
 

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
                                       4
 
<PAGE>
 
                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands, except per share amounts)
 
 
<TABLE> 
<CAPTION> 
                                                            Three Months Ended November 30,
                                                                1995                1994
                                                            ===============================
                                                                      (Unaudited)
 
<S>                                                          <C>              <C>               
GROSS REVENUE                                                $  319,870       $  235,912        
 Subcontract and direct material costs                         (173,430)        (111,240)       
 Equity in income of joint ventures                                                             
  and affiliated companies                                          951              673        
                                                             ----------       ----------        
SERVICE REVENUE                                                 147,391          125,345        
                                                                                                
OPERATING EXPENSES                                                                              
 Direct cost of services and overhead                           126,359          110,445        
 Administrative and general                                      12,632            9,581        
 Depreciation and amortization                                    2,585            2,357        
                                                             ----------       ----------        
OPERATING INCOME                                                  5,815            2,962        
                                                                                                
OTHER INCOME (EXPENSE)                                                                          
                                                                                                
 Interest income                                                    852              624        
 Interest expense                                                (3,866)          (2,993)       
                                                             ----------       ----------        
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS                 2,801              593        
 Income tax provision                                             1,261              916        
                                                             ----------       ----------        
INCOME (LOSS) BEFORE MINORITY INTERESTS                           1,540             (323)       
 Minority interests in net income of subsidiaries                   644                -        
                                                             ----------       ----------        
NET INCOME (LOSS)                                                   896             (323)       
 Preferred stock dividends and accretion                            546              539        
                                                             ----------       ----------        
NET INCOME (LOSS) AVAILABLE FOR COMMON SHAREHOLDERS          $      350       $     (862)       
                                                             ==========       ==========        
Primary and Fully Diluted                                                                       
 Net Income (Loss) Per Common Share                          $     0.02       $    (0.04)       
                                                             ==========       ==========        
Primary and Fully Diluted                                                                       
 Weighted Average Common and                                                                    
 Common Equivalent Shares Outstanding                            21,636           20,948        
                                                             ==========       ==========         
</TABLE>
 
 
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
                                       5
<PAGE>
                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)

<TABLE> 
<CAPTION> 
                                                                               Nine Months Ended November 30,
                                                                                  1995                1994
                                                                             =================================
                                                                                        (Unaudited)
<S>                                                                          <C>                 <C>      
OPERATING ACTIVITIES
  Net income (loss)                                                          $       1,634      $        (718)
  Adjustments to reconcile net income (loss) to net cash                                               
     provided by (used in) operating activities:                                                       
      Depreciation and amortization                                                  7,507              6,941 
      Provision for losses on contract receivables                                   1,440                908 
      Provision for deferred income taxes                                            2,257              2,247 
      Earnings less than (in excess of) cash distributions from joint                                         
        ventures and affiliated companies                                           (1,055)             1,712 
      Gain on sale of investment                                                         -               (551)
      Minority interests in net income of subsidiaries                               1,124                  - 
      Changes in operating assets and liabilities related to                                                  
        operating activities, net of acquisitions:                                                         
          Contract receivables, net                                                (66,981)           (18,014) 
          Prepaid expenses and other current assets                                 (5,298)             4,294  
          Other assets                                                              (3,854)            (1,442) 
          Accounts payable and accrued expenses                                     69,744              5,278  
          Income taxes payable                                                        (413)                31  
          Deferred revenue                                                           1,721                513   
          Other liabilities                                                         (1,825)            (5,077)
                                                                             --------------     --------------    
      Net Cash Provided by (Used in) Operating Activities                            6,001             (3,878)
                                                                             --------------     -------------- 
                                                                                                       
INVESTING ACTIVITIES                                                                                   
  Investments in subsidiaries and affiliates, net of cash acquired                  (2,060)              (400)
  Sale of subsidiaries and subsidiary assets                                           735              2,600
  Purchases of fixed assets, net                                                      (638)            (1,731)
                                                                             --------------     --------------     
      Net Cash Provided by (Used in) Investing Activities                           (1,963)               469 
                                                                             --------------     -------------- 
FINANCING ACTIVITIES                                                                                   
  Principal payments on credit facility                                            (16,000)                 -
  Principal payments on other borrowings                                            (1,149)              (914)
  Proceeds from borrowings on credit facility                                       11,000                  -
  Proceeds from other borrowings                                                        55                  -
  Reacquisition of senior subordinated notes and related warrants                   (1,363)                 -
  Subsidiary capital contribution from minority interest                               500                  -
  Proceeds from issuances of common stock                                              392                298
  Repurchases of common stock                                                         (256)              (180)
  Redemptions of redeemable preferred stock                                              -               (799)
  Preferred stock dividends                                                         (1,471)            (1,463)
                                                                             --------------     -------------- 
      Net Cash Used in Financing Activities                                         (8,292)            (3,058)
                                                                             --------------     -------------- 
Effect of Exchange Rate Changes on Cash                                               (874)               419
                                                                             --------------     -------------- 
Decrease in Cash and Cash Equivalents                                               (5,128)            (6,048)
Cash and Cash Equivalents at Beginning of Period                                    28,233             25,509
                                                                             --------------     -------------- 
Cash and Cash Equivalents at End of Period                                   $      23,105      $      19,461
                                                                             --------------     -------------- 
                                                                                                       
SUPPLEMENTAL INFORMATION:                                                                              
Cash payments for interest                                                   $       7,839      $       7,385
Cash payments (refunds) for income taxes                                     $         401      $        (152)
                                                                                                       
NON-CASH TRANSACTION:                                                                                  
Sale of investment                                                           $           -      $         735
</TABLE> 



See notes to consolidated financial statements.

                                       6




<PAGE>
 
                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
NOTE A - BASIS OF PRESENTATION

The accompanying consolidated financial statements of ICF Kaiser International,
Inc. (ICF Kaiser or the Company) and subsidiaries (including Kaiser-Hill
Company, LLC, effective July 1, 1995), except for the February 28, 1995 balance
sheet, are unaudited and have been prepared in accordance with generally
accepted accounting principles for interim financial information.  Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.  In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included.  These statements should be read in conjunction
with the Company's audited consolidated financial statements and footnotes
thereto for the year ended February 28, 1995 and the information included in the
Company's Annual Report to the Securities and Exchange Commission on Form 10-K
for the fiscal year ended February 28, 1995.  Certain reclassifications have
been made to the prior period financial statements to conform to the
presentation used in the November 30, 1995 financial statements.

NOTE B - MINORITY INTERESTS

Certain of ICF Kaiser's subsidiaries are partially owned by outside parties.
For financial reporting purposes, the assets, liabilities, results of operations
and cash flows of these subsidiaries are included in ICF Kaiser's consolidated
financial statements and the outside parties' interests are reflected as
minority interests.

NOTE C - NET INCOME (LOSS) PER COMMON SHARE

Net income (loss) per common share is computed using net income (loss) available
for common shareholders, as adjusted under the modified treasury stock method,
and the weighted average number of common stock and common stock equivalents
outstanding during the periods presented.  Common stock equivalents include
stock options and warrants and additional shares which will be or may be issued
in connection with acquisitions.  The adjustments required by the modified
treasury stock method and for acquisition-related contingencies were anti-
dilutive for all loss periods presented and immaterial to the income periods
presented.  Therefore, the adjustments were excluded from earnings per share
computations.

NOTE D - CONTINGENCIES

Normally in the Company's business, various claims or charges are asserted and
litigation commenced against the Company arising from or related to properties,
injuries to persons, and breaches of contract, as well as claims related to
acquisitions and dispositions.  Claimed amounts may not bear any reasonable
relationship to the merits of the claim or to a final court award.  In the
opinion of management, an adequate reserve has been provided for final
judgments, if any, in excess of insurance coverage, that might be rendered
against the Company in such litigation.

The Company may from time to time, either individually or in conjunction with
other government contractors operating in similar types of businesses, be
involved in U.S. government investigations for alleged violations of procurement
or other federal laws and regulations.  The Company currently is the subject of
a number of U.S. government investigations and is cooperating with the
responsible government agencies involved.  No charges presently are known to
have been filed against the Company by these agencies.  Management does not
believe that there will be any material adverse effect on the Company's
financial position, operations, or cash flows as a result of these
investigations.
                                            
                                       7
<PAGE>
 
The Company has a substantial number of cost-reimbursement contracts with the
U.S. government, the costs of which are subject to audit by the U.S. government.
As a result of such audits, the government asserts, from time to time, that
certain costs claimed as reimbursable under government contracts either were not
allowable or not allocated in accordance with federal procurement regulations.
Management believes that the potential effect of disallowed costs, if any, for
the periods currently under audit and for periods not yet audited, has been
provided for adequately and will not have a material adverse effect on the
Company's financial position, operations, or cash flows.


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

OVERVIEW

ICF Kaiser is one of the nation's largest engineering, construction, and
consulting services companies, providing fully integrated capabilities to
clients in four related market areas:  environment, infrastructure, industry,
and energy.  The Company provides services to domestic and foreign clients in
both the private and public sectors.

Results for Nine Months

ICF Kaiser's operating income of $15.1 million for the nine months ended
November 30, 1995 was a $4.6 million increase from the $10.5 million of
operating income reported for the nine months ended November 30, 1994. The
increase in operating income primarily resulted from a $6.2 million improvement
in engineering and construction operations. This operating income improvement
was partially due to a major transit project to be constructed in the
Philippines, operating revenues of which had been previously deferred. Costs
related to the development of this transit project had been expensed in prior
periods. Further improvements in engineering and construction operations were
due to substantial growth in the group's industrial sector and a reduction in
the group's overhead.

An additional reason for the improvement in operating income (before minority
interests) for the nine months ended November 30, 1995 was $4.1 million in
earnings from the Performance Based Integrating Management Contract at the U.S.
Department of Energy's (DOE) Rocky Flats Environmental Technology Site in
Colorado. This DOE contract was awarded in April 1995 to Kaiser-Hill Company,
LLC (Kaiser-Hill), a limited liability company owned equally by ICF Kaiser and
CH2M Hill Companies, Ltd. (CH2M Hill). A further $1.8 million increase in ICF
Kaiser's operating income was realized from the Company's operations at the U.S.
Department of Energy's (DOE) Hanford, Washington site (Hanford). During the
quarter ended November 30, 1994, income from Hanford had been reduced by an
adjustment in estimated fees earned.

The improvements in operating income in 1995 as compared to 1994 were partially
offset by a $4.2 million decline in operating income from private-sector
environmental work, increases in bidding and proposal efforts required by large
scale U.S. Department of Defense (DOD) and DOE contracts; and temporary delays
in federal environmental projects due to federal government budgetary
uncertainties.

The Company's consulting operations experienced a $2.7 million decrease in
operating income between the nine-month periods ended November 30, 1995 and
1994, caused by a delay in task order assignments under new contract awards and
a significant increase in levels of business development activity. The federal
government's fiscal 1996 budget was not finalized during the period ended
November 30, 1995, which led to the federal government's operating under an
existing continuing resolution (including one no-work furlough period) since
October 1, 1995. While under this resolution, the assignment of work under task
order contracts has been delayed.

                                       8
<PAGE>
 
A significant company-wide increase in marketing efforts further negatively
impacted operating results in 1995 as compared to 1994 in addition to the
activities discussed above within the environmental and consulting operations.
Management believes that ICF Kaiser's increasing investment in its business
development activities should result in additional contract awards in both the
public and private sectors of its business.

Results for Third Quarter

Operating income for the quarter ended November 30, 1995 increased $2.8 million
to $5.8 million, compared to $3.0 million of operating income reported for the
quarter ended November 30, 1994. The increase in operating income between the
three-month periods was primarily due to the factors discussed above. The
engineering and construction group's operating income increased by $0.7 million,
operating income from Hanford increased by $1.8 million, and Kaiser-Hill
produced $2.3 million of operating results for the quarter ended November 30,
1995. These increases were partially offset by lower operating results from
other environmental operations ($0.5 million) and consulting services ($1.5
million). The decrease in consulting services for the quarter ended November 30,
1995 as compared to the quarter ended November 30, 1994 was due to the temporary
shutdown of the federal government in November 1995 and increases in business
development efforts as discussed above.

Business Conditions and Backlog

The Company's contract backlog increased significantly to $4.3 billion at
November 30, 1995 compared to $1.4 billion at February 28, 1995. The increase in
backlog primarily resulted from the April 1995 award of the five-year Kaiser-
Hill contract which increased contract backlog by approximately $3.0 billion. In
August 1995, ICF Kaiser signed a contract estimated at $330 million to perform
environmental restoration work at federal installations for the U.S. Army Corps
of Engineers (USACE), Baltimore District. This Total Environmental Restoration
Contract (TERC) is for four years with two, three-year options. The contract is
a cost reimbursement delivery order contract, and the fee structure includes a
combination of cost plus fixed fee, award fee, and incentive fees. Also, In
August 1995, ICF Kaiser signed a five-year contract estimated at $50 million to
provide environmental services to USACE, Savannah District.

With the award of the Kaiser-Hill contract and the Company's continued work at
DOE's Hanford, ICF Kaiser is now actively participating in two of DOE's major
environmental cleanup efforts and at eight of DOE's other 18 major weapons
facilities.  ICF Kaiser recently expanded its environmental cleanup contract
base with DOD with the award of the USACE Baltimore TERC and USACE Savannah
contracts discussed above.  The Company expects that the experience and
reputation it earns under these contracts will continue to enhance its position
as a major participant in the field of environmental cleanup and large program
management.

The Company also expects to continue its increased level of business development
activity in the consulting group and expects that such activity will result in
expanded public and private sector consulting services. In October 1995, the
Company's consulting group was awarded a contract worth up to $111 million to
support the marketing and communication efforts of the U.S. Environmental
Protection Agency's Energy Star programs. The contract is for one year, with
four additional one-year options. Other major current business initiatives
include a significant effort to enhance the Company's internal management
information systems. ICF Kaiser believes these endeavors, combined with other
ongoing efforts described above, should positively impact the Company's future
performance.

                                       9
<PAGE>
 
RESULTS OF OPERATIONS

The following table summarizes key elements in the Consolidated Statements of
Operations for the nine months ended November 30, 1995 and 1994.

<TABLE>
<CAPTION>
 
                                                 Nine Months         Nine Months      
                                                    Ended               Ended         
                                              November 30, 1995   November 30, 1994   
                                            -----------------------------------------  
                                                      (Dollars in millions)           
          <S>                                <C>                  <C> 
          GROSS REVENUE                                   $781.1              $655.4    
          SERVICE REVENUE                                 $370.5              $348.4    
          SERVICE REVENUE AS A                                                          
            PERCENTAGE OF GROSS REVENUE                     47.4%               53.2%   
          OPERATING EXPENSES AS A                                                       
            PERCENTAGE OF SERVICE REVENUE:                                              
            Direct cost of services                                                     
              and overhead                                  84.4%               86.1%   
            Administrative and general                       9.5%                8.9%   
            Depreciation and amortization                    2.0%                2.0%   
          OPERATING INCOME                                   4.1%                3.0%    
</TABLE>

Gross revenue represents services provided to customers with whom the Company
has a primary contractual relationship.  Included in gross revenue are costs of
certain services subcontracted to third parties and other reimbursable direct
project costs, such as materials procured by the Company on behalf of its
customers.

Service revenue is derived by deducting the costs of subcontracted services and
direct project costs from gross revenue and adding the Company's share of the
equity in income of unconsolidated joint ventures and affiliated companies.  ICF
Kaiser believes that it is appropriate to analyze operating margins and other
ratios in relation to service revenue because such revenue and ratios reflect
the work performed directly by the Company.

Operating profits (fees) generated by the Hanford and Kaiser-Hill contracts are
based on performance and not revenue.  A change in revenue between periods is
likely to be disproportionate to the change in the fees. Consequently, changes
in revenue may have an exaggerated impact on the Company's margins as measured
on a percentage basis.  In addition, because Kaiser-Hill is a consolidated
subsidiary of ICF Kaiser, the operating income includes the portion of income
generated under the Kaiser-Hill contract attributable to CH2M Hill.  CH2M Hill's
interest in Kaiser-Hill is reflected as a minority interest in ICF Kaiser's
financial statements (see Note B).

Revenue

Gross revenue for the nine months ended November 30, 1995 increased $125.7
million, or 19.2%, to $781.1 million. The increase in gross revenue was
attributable to the commencement of work under the Kaiser-Hill contract which
generated $216.5 million in gross revenue during the current fiscal year ($133.7
million in the quarter ended November 30, 1995). The increase was partially
offset by a $90.4 million reduction in gross revenue under the Hanford contract
due to federal budget reductions at the Hanford site. This reduced level of
Hanford activity is expected to continue and may be reduced further in future
periods; however, a reduction in the Hanford budget is not currently expected to
have a significant impact on operating income due to the nature of the fee
structure under this particular the DOE contract. In October 1995, the Company
announced that its subsidiary ICF Kaiser Hanford Company was teaming with five
other nationally known firms in bidding on the DOE's new management and
integration contract at Hanford. The response to the DOE's request for proposals
is due in March 1996.

                                      10
<PAGE>
 
Service revenue increased by $22.1 million for the nine-month period ended
November 30, 1995 as compared to the nine months ended November 30, 1994. The
$22.1 million increase in service revenue was due primarily to $71.4 million
generated under the Kaiser-Hill contract, offset by a $49.3 million decrease in
service revenue under the Hanford contract. Service revenue as a percentage of
gross revenue decreased to 47.4% for the nine months ended November 30, 1995
from 53.2% for the nine months ended November 30, 1994 as a result of the nature
of the Kaiser-Hill contract. A significant portion of the gross revenue derived
from the Kaiser-Hill contract includes the costs of services subcontracted to
third parties.

Operating Expenses

Direct cost of services and overhead increased $12.8 million between the nine-
month periods ended November 30, 1995 and 1994. Costs on the new Kaiser-Hill
contract ($66.9 million) were offset by a $51.3 million reduction in the Hanford
contract costs (attributable to the federal budget reductions discussed above).
The remainder of the Company's direct cost of services and overhead as a
percentage of service revenue for the nine months ended November 30, 1995 was
comparable to the same period in the prior year.

Administrative and general expense increased $4.1 million, or 13.2%, between the
nine-month periods ended November 30, 1995 and 1994 and increased from 8.9% to
9.5% as a percentage of service revenue.  The increase in these costs is
primarily attributable to the Company's increased commitment to its marketing
activities, including filling several key marketing positions within the Company
and the relatively high level of marketing expense associated with proposing and
bidding large scale DOD and DOE contracts.

Income Tax Expense

ICF Kaiser's income tax provision was $2.3 million and $2.2 million for the nine
months ended November 30, 1995 and 1994, respectively. Although pretax income
for the nine months ended November 30, 1995 was $3.5 million greater than pretax
income for the comparable period ended November 30, 1994, the Company's
effective tax rate decreased due to a reduction in permanent differences (such
as the nondeductibility of goodwill) as a percentage of pretax income and a
reduction in controlled foreign corporation losses. The nine months ended
November 30, 1994 also included a repatriation of overseas funds to the U.S.,
which could not then be currently offset by foreign tax credits, resulting in
additional income taxes for that period.

LIQUIDITY AND CAPITAL RESOURCES

During the nine months ended November 30, 1995, cash and cash equivalents
decreased $5.1 million to $23.1 million. Cash was primarily used for net
repayments on the Company's Credit Facility ($5.0 million); acquisitions and
investments in joint ventures and affiliates ($2.1 million); payment or accrual
of dividends ($1.5 million); repurchases by the Company's insurance subsidiary
of a portion of the Company's outstanding 12% Senior Subordinated Notes and
related warrants ($1.4 million); and payments of other outstanding debt ($1.1
million). These uses were offset by $6.0 million resulting from operating
activities, including receipt of $13.4 million from DOE for payment of accrued
employee benefits acquired pursuant to the Kaiser-Hill contract, offset by cash
used in other operating activities at Kaiser-Hill and an interest payment of
$7.5 million on the Company's 12% Senior Subordinated Notes. The next $7.5
million interest payment on the Notes was due and paid on January 2, 1996.

For the past several years, the Company has had ongoing negotiations, filings,
and litigation with the Internal Revenue Service (IRS) related to settlement of
its tax liabilities and the liabilities associated with acquired predecessor
companies. The cash and income impact have generally been favorable to the
Company. Further , the Company's previous tax losses and its resultant net
operating loss carryforward position, will limit federal income tax payments
required in the near future.

In one recent tax case, the Company prevailed at the trial court level in a tax
refund litigation matter against the IRS. The Company is currently engaged in
discussions with the Department of Justice concerning the possible settlement of
this litigation in order to avoid a further appeal. It cannot be predicted
whether or when this matter will be resolved; however, the resolution of this
matter could have a material favorable impact on the Company's liquidity and
financial results.

                                      11
<PAGE>
 
Management believes that current projected level of cash flows and the
availability of financing, including borrowings under the Company's Credit
Facility, will be adequate to fund operations throughout the next twelve months.
As of November 30, 1995, there were no outstanding borrowings under the Credit
Facility, except for letters of credit.  As of the date of this filing, the
Company had $7 million of borrowings, excluding letters of credit, outstanding
under its Credit Facility.

ICF Kaiser is currently considering alternative financing sources to achieve
cost savings and provide greater flexibility in growing and managing the
Company's businesses. This process includes an active search for a replacement
for or extension of the current Credit Facility which expires on October 31,
1996. Management expects to have a firm commitment for a replacement for or
extension of the Company's existing Credit Facility by March 31, 1996.

                          PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

          As previously reported in the Report on Form 10-K for the year ended
          February 28, 1995.
 

Item 2.   Changes in Securities

          None

Item 3.   Defaults Upon Senior Securities

          Because of technical limitations on the payment of dividends contained
          in the agreement governing the Company's 12% Senior Subordinated Notes
          due 2003 (12% Notes), the Company did not pay the November 30, 1995
          accrued dividend on its outstanding Series 2D Senior Preferred Stock,
          in the aggregate amount of $487,500. In this regard, the Company has
          internally reserved cash in the amount of this dividend arrearage for
          future payment. If the dividend arrearage is not cured by March 10,
          1996, the holder of the Series 2D Senior Preferred Stock will have
          certain additional rights, including the right to prohibit the Company
          from engaging in various corporate actions without the prior consent
          of such holder and to elect two directors. The Company is continuing
          in its attempts to satisfactorily resolve this matter.

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

          None.

Item 5.   Other Information

          None


Item 6.   Exhibits and Reports on Form 8-K


     (a)  The exhibits filed as part of this report are listed below:
          -----------------------------------------------------------

     No. 27 Financial Data Schedule

     (b)  Report on Form 8-K
          ------------------

     None.

                                      12
<PAGE>
 
                                  SIGNATURES
                                  ----------


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report of Form 10-Q to be signed on its behalf
by the undersigned thereunto duly authorized.

                                       ICF KAISER INTERNATIONAL, INC.
                                          (Registrant)



Date:  January 16, 1996                  /s/ Richard K. Nason
                                       -----------------------------
                                       Richard K. Nason
 
                                       Executive Vice President and
                                       Chief Financial Officer
                                       (Duly authorized officer and
                                        principal financial officer)

                                      13