SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549
                               ---------
                               FORM 10-K
(Mark One)


/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

For the fiscal year ended March 28, 1997

                                   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

Securities registered pursuant to Section 12(b) of the Act:

                                      Name of each exchange on which
          Title of each class                   registered
          -------------------         ------------------------------
     Common Stock, $.01 Par Value       New York Stock Exchange; Pacific
                                          Stock Exchange
   Preferred Stock Depositary Shares    New York Stock Exchange; Pacific
                                          Stock Exchange
     
Securities registered pursuant to Section 12(g) of the Act:  None

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

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

The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant at June 13, 1997, was approximately
$75,284,000 (based upon the closing sale price of its common stock on
the New York Stock Exchange as reported by The Wall Street Journal on
such date.)

At June 13, 1997 the registrant had issued and outstanding an aggregate
of 9,741,715 shares of its common stock, including 6,208 shares held in
treasury.

                  Documents Incorporated by Reference

Certain information included in the registrant's definitive proxy
statement to be filed with the Securities and Exchange Commission for
the Annual Meeting of Stockholders of the registrant to be held on
September 16, 1997 is incorporated by reference into Part III hereof.

                                       
<PAGE>

              INTERNATIONAL TECHNOLOGY CORPORATION
                   ANNUAL REPORT ON FORM 10-K
            FOR THE FISCAL YEAR ENDED MARCH 28, 1997
  
                       TABLE OF CONTENTS
  
Item                                                             Page
----                                                             ----
                             PART I
  
 1        Business . . . . . . . . . . . . . . . . . . . . .       2
            General. . . . . . . . . . . . . . . . . . . . .       2
            Background . . . . . . . . . . . . . . . . . . .       3
            Operations . . . . . . . . . . . . . . . . . . .       3
            General. . . . . . . . . . . . . . . . . . . . .       3
              Engineering and Construction . . . . . . . . .       4
              Consulting and Ventures. . . . . . . . . . . .       4
              International. . . . . . . . . . . . . . . . .       5
              Customers. . . . . . . . . . . . . . . . . . .       5
              Competition. . . . . . . . . . . . . . . . . .       6
              Technology Development . . . . . . . . . . . .       7
              Regulations. . . . . . . . . . . . . . . . . .       7
              Environmental Contractor Risks . . . . . . . .      10
              Insurance and Risk Management. . . . . . . . .      11
            Discontinued Operations. . . . . . . . . . . . .      11
            Employees. . . . . . . . . . . . . . . . . . . .      11
 2        Properties . . . . . . . . . . . . . . . . . . . .      12
 3        Legal Proceedings. . . . . . . . . . . . . . . . .      12
 4        Submission of Matters to a Vote of Shareholders. .      12
                          -----------
4A        Executive Officers of the Company. . . . . . . . .      13
  
                            PART II
  
 5        Market for the Registrant's Common Stock and 
            Related Shareholder Matters. . . . . . . . . . .      14
 6        Selected Financial Data. . . . . . . . . . . . . .      15
 7        Management's Discussion and Analysis of 
            Results of Operations and Financial Condition. .      15
 8        Financial Statements and Supplementary Data. . . .      23
 9        Changes in and Disagreements with Accountants 
            on Accounting and Financial Disclosure . . . . .      48
  
                            PART III
  
10        Directors and Executive Officers of the Registrant.     48
11        Executive Compensation . . . . . . . . . . . . . .      48
12        Security Ownership of Certain Beneficial Owners 
            and Management . . . . . . . . . . . . . . . . .      48
13        Certain Relationships and Related Transactions . .      48
  
                            PART IV
  
14        Exhibits, Financial Statement Schedule and Reports 
            on Form 8-K . . . . . . . . . . . . . . . . . . .     49
  
                                       1  
<PAGE>
  
                             PART I
  
  ITEM 1. BUSINESS.
  
  GENERAL
  
     International Technology Corporation, a Delaware corporation (the
Company or IT), provides a wide range of environmental management
services and technologies including the assessment, engineering, and
remediation of situations involving hazardous materials and pollution
prevention and minimization.  The Company was incorporated in 1983; the
earliest antecedent of the Company commenced operations in California in
1926.
  
     The Company's services are provided to a broad array of
governmental and commercial entities predominantly in the U.S. market. 
Additionally, the Company pursues selected international business
opportunities.  The Company's business strategy is to provide its
environmental services on a full-service basis, particularly by focusing
on its capabilities to manage complex environmental issues from the
initial assessment of the level and extent of contamination through the
design, engineering and execution of a solution which minimizes the
client's total cost.  In recent years, the Company has worked on several
hundred Superfund sites for various governmental and commercial clients.

     Demand for the Company's services is heavily influenced by the
level of enforcement of environmental laws and regulations, funding
levels for government projects and spending patterns of commercial
clients.  During the 1990's, spending by commercial clients has slowed
primarily due to reduced implementation and enforcement activities by
governmental regulatory agencies and an uncertain regulatory climate. 
The operations of the Company are performed subject to a comprehensive
federal, state, and local environmental regulatory structure.  (See
Business - Operations - Regulations.)  This regulatory structure is a
primary driver of business opportunities for the Company.  The lapse of
the Superfund (see Business - Operations - Regulations - Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (CERCLA))
and uncertainty concerning the form of the future reauthorization of the
Superfund and potential changes in other regulations have dampened
demand for the Company's services.
  
     In recent years, the Company's revenues have been derived primarily
from its business with federal, state and local governmental clients. 
Revenues attributable to contracts with governmental agencies accounted
for 67%,  69% and 71% of total revenues in fiscal years 1997, 1996 and
1995, respectively.  (See Business - Operations - Customers - Federal,
State and Local Governmental Clients.)  The Company expects that
revenues attributable to federal, state and local governmental agency
contracts, particularly those with the U.S. Department of Defense (DOD)
and the U.S.  Department of Energy (DOE), will continue to represent a
substantial but declining percentage of total revenues in the near term.
Efforts to constrain the federal budget deficit have reduced the level
of spending on environmental restoration by the DOD, the DOE and other
federal governmental agencies. Additionally, the delay in the
authorization of the 1996 federal budget reduced the Company's revenues
in late-fiscal year 1996 and early-fiscal year 1997 due to the failure
of the DOD to fund the Company's delivery order contracts as previously
expected.  (See Management's Discussion and Analysis of Results of
Operations and Financial Condition - Results of Operations - Continuing
Operations - Revenues.)
  
      At the November 20, 1996 Annual Meeting of Stockholders, IT's
shareholders voted to approve an investment by The Carlyle Group, a
major Washington, D.C.-based investment bank (the Carlyle Investment). 
The Company issued to Carlyle 45,000 shares of Convertible Preferred
Stock having a liquidation preference of $1,000 per share, and
warrants to purchase 1,250,000 shares of IT common stock at $11.39 per
share.  The $40,609,000 net proceeds to the Company (after related
offering costs of $4,391,000) will be used by IT to finance business
acquisitions, as well as for working capital and general corporate
purposes (see Notes to Consolidated Financial Statements - Preferred
stock - Carlyle Investment).  
  
     Using the proceeds of the Carlyle Investment, the Company expects
to further grow and diversify its business through acquisitions.  In
November 1996, the Company acquired a 50.1% interest in a Taiwanese
wastewater treatment design/build firm (see Business - Operations -
International) and, in May 1997, the Company acquired a consulting firm

                                     2  
<PAGE>

specializing in historical investigation of environmental issues.  (See
Business - Operations - Consulting and Ventures.)  These recent
acquisitions are illustrative of the Company's strategy of directing its
growth and diversification toward economically-driven, value-added
services which are complementary to IT's existing services and which are
synergistic when combined with IT's market position and infrastructure.

  BACKGROUND
  
     Hazardous materials management and remediation, as well as air and
water pollution control, are widely acknowledged as significant national
priorities.  As of March 1997, the U.S. Environmental Protection Agency
(USEPA) had designated approximately 1,372 sites as Superfund
locations with significant concentrations of hazardous materials,
although only approximately 25% of these sites have been remediated.  In
addition, there are a large number of small commercial and governmental
sites that will require cleanup.  The assessment, decontamination and
remediation of hazardous sites are governed by complex environmental and
occupational safety and health regulations administered by numerous
federal, state and local agencies.
  
     Many of the Company's clients, both governmental and commercial,
continue to require a full-service solution, in which a single supplier
manages the entire process from identification and assessment through
remediation.  Successful remediation of hazardous sites requires a
multidisciplinary approach, since such sites typically involve a variety
of waste which affects air, soil and/or water.  Depending on the
circumstances, the required skills may include analytical chemistry,
risk assessment, computer modeling, ambient air monitoring, process and
design engineering, and construction/remediation.  The application of
these disciplines to solve client problems requires substantial
operational knowledge, and the Company believes that it is
well-positioned to solve client problems in a practical, cost-effective
manner because of the combination of its technical capabilities and
experience.  Additionally, the Company's technical expertise and
operational experience are sought by other firms for project-specific
teaming and joint venture relationships, thereby allowing the Company
access to an increased number of large scale governmental and commercial
programs.
  
     Over the past several years, the environmental management and
hazardous waste remediation industry has been characterized by an
increasing number of well-capitalized competitors, reduced government
enforcement of environmental regulations and regulatory uncertainty. 
This has resulted in reduced commercial spending on environmental
cleanup and intense pricing competition for hazardous waste cleanup
projects.  Lower demand in the private sector during the 1990's has been
offset to some extent by new major project opportunities in the public
sector, primarily major cleanup projects at DOD and DOE installations,
which require a broad range of project management and field execution
skills, limiting the number of potential bidders.  As a result of the
changes impacting the industry, consolidation has occurred through
downsizing and mergers.  The Company's strategy is to be a strong
competitor for the major project opportunities offered by the DOD and
DOE, to continue to actively serve the commercial market, to expand and
diversify into economically-driven, value-added services and to achieve
economies of scale by participating in the ongoing consolidation in the
industry using the proceeds of the Carlyle Investment.  (See
Management's Discussion and Analysis of Results of Operations and
Financial Condition - Liquidity and Capital Resources.)
  
  OPERATIONS
  
  General
  
     The Company's operations are managed through two divisions, an
Engineering and Construction division and a Consulting and Ventures
division.  The Engineering and Construction division manages projects of
all sizes, while the Consulting and Ventures division provides
specialized consulting services and focuses on new value-added business
initiatives.  The Company provides these capabilities anywhere in the
United States as well as internationally through appropriate resources
located in the Company's 43 offices and through certain international
affiliates (see International).

                                     3  
<PAGE>
  
  Engineering and Construction
  
     The major part of IT's business is the management of complex
hazardous waste remediation projects involving the assessment, planning
and execution of the decontamination and restoration of property, plant
and equipment that have been contaminated by hazardous substances. 
These projects include the cleanup of land disposal sites where
hazardous or toxic substances have been disposed and pose a threat to
the surrounding environment; rivers, streams and groundwater
contaminated by chemical substances and buildings, production facilities
and storage sites contaminated with hazardous chemical and/or
radioactive materials.  These projects require considerable strategic
environmental management, technical engineering and analytical effort to
determine the substances involved, the extent of the contamination, the
appropriate alternatives for containing or removing the contamination,
and the selection of the technologies for treatment, to perform the
cleanup of the site as well as strong project management and
construction and remediation skills to execute the ultimate remediation
projects in the field.  The Company is involved in all areas of the
United States and in selected areas internationally in the assessment or
cleanup phases of site remedial action projects. 
  
     The Company provides full-service capabilities for these projects,
primarily in the areas of DOD and DOE delivery order program management,
engineering and design services, remedial construction, mobile
treatment, and decontamination/decommissioning capabilities.  In the
area of remedial construction, IT offers diverse services, such
as excavation and isolation, installation of subsurface recovery
systems, thermal treatment solutions, bioremediation approaches,
chemical treatment, soil washing, fixation or stabilization, facility or
site closures, solidification, landfill cell construction, and slurry
wall and cap installation.  The full-service strategy supports the
Company's marketing efforts toward developing partnering arrangements
with clients in which IT is the primary supplier of all client
environmental management services and assists clients to innovatively
reduce total environmental costs.
  
  Consulting and Ventures
  
     The Company provides a wide range of consulting services including
environmental permitting, facility siting and design, strategic
environmental management, environmental compliance/auditing, risk
assessment/management, pollution prevention, waste minimization,
environmental information systems, and data management.
  
     The Company has expanded its air quality business in response to
its clients' needs.  The Company provides services related to pollution
prevention engineering, control technology specification, permit
preparation, emergency release management, emission sampling and
monitoring, leak detection in industrial facilities and overall air
quality management.
  
     Additionally, the Company performs a variety of consulting services
for clients to help them comply with environmental and/or health and
safety regulations.  The Company also provides assistance to these
clients in developing corporate policies and procedures in areas such as
pollution prevention and waste minimization that integrate
environmental regulations into their business decisions.  
  
     The Company has been strategically broadening its capability
through business initiatives which  address the trend toward
economically-driven, value-added environmental solutions.  In March
1996, IT acquired Gradient Corporation, a prominent environmental risk
assessment firm.  Additionally, during fiscal year 1997, the Company
made a 19% investment in LandBank, Inc., a firm pursuing the brownfields
remediation market, a market involving economically-driven cleanup of
impaired properties for future real estate development.  As well as
being an investor in LandBank, IT will be LandBank's preferred
contractor, both for site assessment and remediation activities.  In May
1997, the Company purchased PHR Environmental Consultants, Inc., a
California-based consulting firm which assists business entities to more
economically confront potential or existing environmental liabilities
through an interdisciplinary investigative approach of science, history
and information.
  
                                     4  
<PAGE>  
    
  International
  
     In November 1996, the Company made a 50.1% majority investment in
Chi Mei Scientech/Entech, a Taiwan-based wastewater treatment
design/build firm, which will now do business as Chi Mei International
Technology.  The  Company intends to use this investment as a stepping
stone to project opportunities and other business expansion
possibilities in the Far East.  The Company has entered into a joint
venture agreement with a major Mexican engineering and construction
firm.  This joint venture has performed several projects and is
currently seeking permits to operate a treatment facility using the
Company's incineration capabilities near Mexico City.  The Company has
also entered into a joint venture with a major Korean engineering and
construction firm to pursue, among other things, a major
incineration project.  (See Management's Discussion and Analysis -
Results of Operations - Continuing Operations - Revenues.)
  
  Customers
  
     The Company's services are provided to a broad range of federal,
state and local governmental and commercial clients in the U.S. market. 
During the 1990's, the Company experienced a significant shift in
revenues from the commercial sector to the governmental sector, although
that trend reversed slightly beginning in fiscal year 1996.
  
     Federal, State and Local Governmental Clients
  
     Due to its technical expertise, project management experience and
full-service capabilities, the Company has successfully bid on and
executed contracts with federal and other governmental agencies for the
performance of various  CERCLA and RCRA activities.  (See Business -
Operations - Regulations.)  The Company's governmental contracts
are often multi-year, indefinite delivery order programs (IDOs).  These
programs provide spending budget estimates for which the client expects
to define the scope by working closely with IT's program management and
technical staff.  As projects are defined, the work is awarded to the
Company on a sole source basis.  Government contracts are typically
subject to annual funding limitations and public sector budgeting
constraints.  Some of these contracts provide a maximum contractual
amount of services that may be performed by the Company with the
specific services authorized from time to time by the government agency
through a series of task orders under the master contract.  The Company
may be asked to perform services for the full amount of an IDO or for
amounts greater or less than the full amount.  IDOs generated
approximately 27% of the Company's revenues in fiscal year 1997.  The
programs with federal government agencies typically involve a
competitive bidding process pursuant to federal procurement policies
involving several bidders and result in a period of contract negotiation
after a successful bidder is selected.  Although the Company generally
serves as the prime contractor on its contracts or as a part of a joint
venture which is the prime contractor, the Company serves as a
subcontractor to other prime contractors on some federal government
programs.  As has become typical in the environmental industry, the
Company has entered into joint venture or teaming arrangements with
competitors when bidding on certain of the largest, most complex
contracts, to provide the breadth of technical expertise and, at times,
bonding capacity required for the project.

                                     5  
<PAGE>    

     The following table shows, for the last three years, the Company's
revenues attributable to federal, state and local governmental contracts
as a percentage of the Company's consolidated revenues:

                                                 Year ended
                                      --------------------------------
                                      March 28,   March 29,   March 31,
     Source                             1997        1996        1995     
     ------                           --------    --------    --------
                                                    
     Federal government:
       DOD. . . . . . . . . . . .        42%          51%        47%
       DOE. . . . . . . . . . . .        14           11         12
       Other federal agencies . .         3            3          4
                                        ---          ---        ---
                                         59           65         63
  
     State and local governments.         8            4          8     
                                        ---          ---        ---
     Total. . . . . . . . . . . .        67%          69%        71%
                                        ===          ===        ===  
  
     Commercial Clients
  
     The Company serves numerous commercial clients including chemical,
petroleum and other manufacturing firms, utilities, real estate and
transportation service companies, and law firms.  A substantial portion
of the Company's commercial work represents new contracts awarded by
existing clients.  No single commercial client accounted for 10%
or more of the Company's consolidated revenues in fiscal years 1997,
1996 or 1995.  There is a growing trend in the Company's work for
commercial clients toward strategic environmental management services
and economically-driven solutions to environmental issues (see Business
- Operations - Consulting and Ventures).
  
  Competition
  
     The environmental management industry is very competitive and
requires professional personnel with technical and project management
skills.  The Company believes that the principal competitive factors in
all areas of its business are operational experience, technical
proficiency, breadth of services offered, local presence and, often most
importantly, price.
  
     The Company faces competition from a diverse array of small and
large organizations including national or regional environmental
management firms; national, regional and local architectural,
engineering and construction firms; environmental management divisions
or subsidiaries of international engineering, construction and systems
companies; and hazardous waste generators which have developed in-house
capabilities.  Major competitors in consulting, engineering and design
include Bechtel, CH2M Hill, Dames and Moore, Earth Technology, ERM
Group, Fluor Daniel, Jacobs Engineering, and Roy F. Weston.  Major
competitors in remediation include Bechtel, Fluor Daniel, Foster
Wheeler, Groundwater Technology, Jacobs Engineering, Morrison-Knudsen,
OHM and Sevenson.
  
     Increased competition, combined with changes in client procurement
procedures, has resulted in market trends over the past several years
toward lower contract margins, a client preference for fixed-price or
unit-price contracts and unfavorable changes in contract terms and
conditions in areas such as indemnification of the client by the Company
of liabilities for damage or injury to third parties and property and
for environmental fines and penalties.  Additionally, certain of the
Company's competitors benefit from certain economies of scale and have
better access to bonding and insurance markets at a lower cost.  The
entry of large systems contractors and international  engineering and
construction firms into the environmental management industry has
increased the level of competition for major federal governmental
contracts and programs, which have been the primary source of the
Company's revenue over the past several years.  Over the past several
years, there has been consolidation in the industry as certain of the
larger corporations have acquired smaller firms which, although reducing
the number of industry competitors to some degree, has increased the
number of stronger competitors.

                                     6  
<PAGE>
  
  Technology Development    
  
     IT's Technology Development program focuses on innovative
applications of new and existing technologies and methods, principally
through client projects.  The IT technology development program is
directed in three primary areas:  1) continued improvements to
technologies developed in-house through applications on client
projects,2) the evaluation and implementation of technologies developed
outside the Company which present commercial opportunities for IT,
and 3) improvements to third party technologies for enhanced client
value.  Additionally, the Company continues to defend and expand its
patent position in thermal treatment technology, bioremediation and
various soil cleaning processes.
  
     Through the Company's technology development program, IT has
continued to advance the development and implementation of its
bioremediation programs.  Clean closure of numerous sites have been
accomplished using naturally occurring organisms in the patented BIOFAST
system.  Recent patents for vapor phase nutrient delivery have
successfully demonstrated the ability to expand the range of
applicability to nutrient deficient soils.  Advances in the
understanding and monitoring of natural attenuation processes have
resulted in approval from federal and state agencies for selection of
natural attenuation as the clean-up option of choice for an increasing
number of sites including contaminants such as gasoline, fuel oil, and
chlorinated solvents.  IT is participating in a client funded program
for the applications testing and commercialization of an innovative
bioremediation technology using naturally occurring organisms for the
remediation of metals contaminated soils.  This innovative approach will
provide a new cost effective option to the current practice of
excavation and disposal of metals contaminated soils.
  
     Under license from a third party, IT has completed the largest
installation to date of the "barrier wall and reactive gate technology."
Contaminated groundwater at the site collects against the down gradient
barrier wall and is funneled to the reactive gate where the contaminants
decompose by reaction with the reactive media in the gate. 
  
     The Company continues to enhance the applicability of a licensed
method to identify and treat a specific class of toxic substances
inherent in wastewater discharges from the oil industry.  Pilot-scale
testing at a client refinery is providing a direct comparison of the new
technology capabilities to existing, carbon treatment cost and
effectiveness. 
   
     IT has entered into the first option year of the contract for
operation of the USEPA Test & Evaluation Facility in Cincinnati, Ohio. 
This RCRA Part B permitted, USEPA facility is also available for private
party sponsored technology evaluations, provides treatability testing
and process development services on contaminated waste waters, sludges,
and soils.  Unique accomplishments this year include the development,
construction, and field startup of systems for the production of "safe
drinking water" at three sites in the Peoples Republic of China and one
in the state of Vera Cruz, Mexico under the federally funded United
States Technology for International Environmental Solutions program.
  
     This year the Company has  also improved its position in the
development and commercialization of environmental information
management technology.  IT has received extensive patent coverage for
the ManageIT system which is used for the management and tracking of
Hazardous Waste at client sites.  Through the use of its proprietary IT
Environment Management System (ITEMS) and related systems, the Company
has become a leading user of advanced data base management technology to
serve its clients' needs.  The Company uses various information
management capabilities developed by many vendors, in addition to its
proprietary systems, in implementing environmental information
management systems for its clients.
  
  Regulations
  
     The Company and its clients are subject to extensive and evolving
environmental laws and regulations which affect the demand for many of
the services offered by the Company (see Business - Operations -
Environmental Contractor Risks) and create certain significant risks and
potential opportunities for the Company in providing its services. 
Regulatory changes may also affect the Company's inactive disposal sites
in Northern California.  (See Notes to Consolidated Financial Statements
- Discontinued operations.)  

                                     7  
<PAGE>
  
     Within the past three years, a number of significant changes to
existing environmental legislation have been proposed.  Some of the
proposed changes originated in legislation commonly referred to as the
Republican Party's "Contract With America."  Many of the proposed
changes have been stalled in the Congress.  The proposals would
overhaul the government regulatory process, requiring regulatory risk
assessments and cost-benefit analyses, and reducing requirements for
reporting to the government.  Although the impact of these proposed
changes upon the Company's business cannot yet be fully predicted, the
proposed changes in regulations and reduced enforcement of current
environmental laws appear to have decreased the demand for certain of
the Company's services, as customers anticipate and adjust to the
potential changes.  The Company believes that it generally has
benefitted from increased environmental regulations affecting business,
and from more active enforcement of those regulations.  However,
proposed changes could also result in increased demand for certain of
the Company's  services if regulatory changes decrease the cost of
remediation projects or result in more funds being spent for actual
remediation.  The ultimate impact of the proposed 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 remedies
available under the changed regulations.  
  
     The principal environmental legislation affecting the Company and
its clients is described below:
  
     National Environmental Policy Act of 1969 (NEPA).  Under NEPA, all
federal agencies must consider environmental factors in their decision
making.  Among other things, NEPA established guidelines and
requirements for environmental assessments and mitigation measures for a
variety of projects involving government approval or financing,
including development and construction of power plants and transmission
lines, pipelines, highways, landfills, mines, reservoirs and residential
and commercial developments.
  
     Resource Conservation and Recovery Act of 1976 (RCRA).  RCRA
regulates the treatment, storage and disposal of hazardous and solid
wastes.  The 1984 Hazardous and Solid Waste Amendments to RCRA (HSWA)
expanded RCRA's scope by providing for the regulation of additional
wastes as hazardous and imposing restrictions on land disposal of
certain wastes, prescribing more stringent management standards for
hazardous waste disposal sites, setting standards for underground
storage tank (UST) management and providing for corrective action
procedures.  Under RCRA, liability and stringent management standards
are imposed on generators or transporters of hazardous waste or owners
or operators of waste treatment, storage or disposal facilities.
  
     RCRA's standards for waste treatment, storage and disposal
facilities apply to hazardous waste incinerators.  Changes in these
standards and related changes in CERCLA have impacted the market for the
Company's mobile, on-site incineration services using the Hybrid Thermal
Treatment System  (HTTS ) technology.  In 1994, the USEPA issued a new
policy under RCRA which, while affirming incineration as an allowable
remedy under CERCLA, called for additional procedures and studies to be
conducted before incineration may be selected as a remedy, or which may
result in the deselection of incineration as a remedy, at a Superfund
site.  Additionally, in 1996, the USEPA finalized its policy of favoring
waste minimization over combustion/incineration and of increasing
regulatory burdens upon combustion and incineration facilities, whether
fixed-based or on-site.  Furthermore, incineration as a remediation
remedy continues to be the subject of considerable public opposition and
controversy.   The Company believes that the heightened scrutiny and
higher cost of, and public opposition to, incineration as a remedial
option has led to delays and added costs in permitting the Company's
HTTS units for use on projects, and has also caused the USEPA and/or
private parties to prefer other remedies in Superfund remediations. 
Such actions may have an adverse impact on the Company's business.  (See
Management's Discussion and Analysis of Results of Operations and
Financial Condition - Results of Operations - Continuing Operations -
Revenues.)
  
     Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (CERCLA).  CERCLA addresses cleanup of sites at which there
have been or may be releases or threatened releases of hazardous
substances into the environment.  CERCLA assigns liability for costs of
cleanup and damage to natural resources to any person who, currently or
at the time of disposal of a hazardous substance, owned or operated any
facility at which hazardous substances were released; to any person who
arranged for disposal, treatment, or transportation of hazardous
substances by others; and to certain persons who accepted hazardous
substances for transport to facilities or sites from which there
is a release or threatened release of hazardous substances.  CERCLA
authorizes the federal government either to clean up these sites itself
or to order persons responsible for the situation to do so.  CERCLA
created the Superfund to be used by the federal government to pay for

                                     8  
<PAGE>

certain cleanup efforts.  Where the federal government expends money for
remedial activities, it must seek reimbursement from the potentially
responsible parties (PRPs).  CERCLA generally imposes strict, joint and
several retroactive liability upon such parties.  CERCLA was amended in
1986 by the Superfund Amendments and Reauthorization Act (SARA), which
authorized increased federal expenditures and imposed more stringent
cleanup standards and accelerated timetables.  SARA also contained
provisions which expanded the enforcement powers of the USEPA.  

     While CERCLA's Superfund taxing authority originally expired in
December 1995, and CERCLA's authority to expend funds originally expired
in September 1994, Congress has extended the USEPA's authority to tax
and use funds on an interim basis through September 30, 1997.  Moreover,
the Congressional Budget Office projects that the USEPA has enough
appropriated but unobligated funds to allow USEPA to operate at current
levels for approximately two years after September 30, 1997, should
CERCLA's taxing authority not be reauthorized by then.
 
     The Company believes that failure of Congress to reauthorize
CERCLA, and proposed substantial changes in and continuing uncertainty
concerning the details of the legislation, cleanup standards, and remedy
selection, have resulted in project delays and/or the failure of clients
to initiate or proceed with projects.  A number of changes to CERCLA
have been previously proposed as a part of the reauthorizing
legislation.  Amendments to repeal CERCLA's retroactive liability
provisions have been introduced. It has also been proposed that CERCLA's
preference for permanent treatment remedies such as incineration be
changed to favor confinement and containment remedies.  (See the
discussion of the Resource Conservation and Recovery Act of 1976 (RCRA)
immediately above.)  Standards for acceptable cleanups have also been
the subject of proposals for change.  Although several bills to
reauthorize CERCLA have been introduced in this session of Congress,
including some which propose to maintain or increase previous funding
levels, controversy over the details of the legislation indicate that
there is no clarity when CERCLA may be reauthorized, what changes would
be included in any reauthorization, or what funding levels might be.

     In response to Congressional and private sector pressure and, in
part, to avoid more sweeping legislative changes, the USEPA has
attempted to relax regulatory requirements and enforcement.  For
example, the USEPA has attempted, through various regulatory
initiatives, to make it easier to redevelop "brownfields," i.e., lightly
to moderately contaminated urban sites.  Brownfields sites nationally
have been estimated to number in the hundreds of thousands.  Similar
legislation has also been introduced, and a number of states have
initiated similar programs.  While the Company believes such programs
offer additional opportunities, the ultimate impact of such programs
cannot yet be predicted.
  
     Clean Air Act and 1990 Amendments.  The Clean Air Act requires
compliance with National Ambient Air Quality Standards for specific
pollutants and empowers the USEPA to establish and enforce limits on the
emission of various pollutants from specific types of facilities.  The
Clean Air Act Amendments of 1990 modified the Clean Air Act in a number
of significant areas.  Among other changes, they established emissions
allowances for sulfur and nitrogen oxides, established strict
requirements applicable to emissions of air toxics, established a
facility-wide operating permit program for all major sources of
pollutants, established requirements for management of accidental
releases of toxic air pollutants, and created significant new penalties,
both civil and criminal, for violations of the Clean Air Act.
  
     Although the USEPA has recently proposed a significant tightening
of regulations regarding ozone standards and particulate emissions,
which might eventually increase demand for the Company's air quality
services, the proposals have met with substantial opposition and their
ultimate fate remains uncertain.
  
     Other Federal and State Environmental Laws.  The Company's services
are also utilized by its clients in complying with, and the Company's
operations are subject to regulation under, among others, the following
federal laws:  the Toxic Substances Control Act, the Clean Water Act,
the Safe Drinking Water Act, the Occupational Safety and Health Act
and the Hazardous Materials Transportation Act.  In addition, many
states have passed Superfund-type legislation and other regulations and
policies to cover more detailed aspects of hazardous materials
management.  This legislation addresses such topics as air pollution
control, UST and aboveground storage tank (AST) management, water
quality, solid waste, hazardous waste, surface impoundments, site
cleanup and wastewater discharge.  In addition, many states that passed

                                     9  
<PAGE>

Superfund-type legislation and other environmental regulations are now
reviewing and relaxing those laws and regulations because of their
alleged adverse impact upon business and competitiveness.
  
  Environmental Contractor Risks
  
     Although the Company believes that it generally benefits from
increased environmental regulations affecting business, and from
enforcement of those regulations,  increased regulation, enforcement and
private litigation also create significant risks for the Company.  These
risks include potentially large civil and criminal liabilities from
violations of environmental laws and regulations and liabilities to
customers and to third parties for damages arising from performing
services for clients.  The Company's failure to observe such laws and/or
the terms and conditions of licenses and permits it holds could
adversely impact the Company's ability to carry on one or more of its
businesses as presently constituted.
  
     Liabilities Arising out of Environmental Laws and Regulations
     
     All facets of the Company's business are conducted in the context
of an extensive and rapidly changing statutory and regulatory framework.
The Company's operations and services are affected by and subject to
regulation by a number of federal and other agencies.  There have also
been efforts by litigants to expand the reach of CERCLA and RCRA to make
contractor firms responsible for cleanup costs through claims that
environmental contractors are owners or operators of hazardous waste
facilities or that they arranged for treatment, transportation or
disposal of hazardous substances.  While a few decided CERCLA cases have
shielded cleanup contractors from strict liability, no clear direction
has emerged from the cases decided to-date.
  
     Potential Liabilities Involving Customers and Third Parties
  
     In performing services for its customers, the Company could
potentially be liable for breach of contract, personal injury, property
damage, negligence and other causes of action.  The damages available to
a customer, should it prevail in its claims, are potentially large and
could include consequential damages.  
  
     Many of those contracting for environmental management services,
particularly those involving large scale remediations, seek to shift to
contractors the risk of completing the project in the event the
contamination is either more extensive or difficult to resolve than
originally anticipated.  In the competitive market in which
environmental management services are offered, customer pressure has
increased significantly for contractors to accept greater risk of
performance, liability for damage or injury to third parties or
property, and liability for fines and penalties.  The Company has from
time to time been involved in claims and litigation involving disputes
over such issues.  (See Notes to Consolidated Financial Statements -
Motco litigation settlement.)
  
     Environmental management contractors, in connection with work
performed for customers, also potentially face liabilities to third
parties from various claims including claims for property damage or
personal injury stemming from a release of toxic substances or otherwise
which could arise long after completion of the project.
  
     Over the past several years, the USEPA and other federal agencies
have constricted significantly the circumstances under which they will
indemnify their contractors against liabilities incurred in connection
with CERCLA projects and continue their attempts to renegotiate
previously agreed indemnities.  While future Congressional action to
broaden the availability of indemnification is possible, there is no
assurance that Congress will change federal government indemnification
policies. 
  
     Government Contracting Risk
  
     As a major provider of services to governmental agencies, the
Company also faces the risks associated with government contracting,
which include substantial civil and criminal fines and penalties.
Government contracting requirements are complex, highly technical and
subject to varying interpretations.  As a result of its government
contracting business, the Company has been, is, and expects in the
future to be, the subject of audits and investigations by governmental
agencies.  (See Notes to Consolidated Financial Statements - Commitments

                                     10  
<PAGE>

and contingencies - Helen Kramer contract.)  In addition to the
potential damage to the Company's business reputation, the failure to
comply with the terms of one or more of its government contracts could
also result in the Company's suspension or debarment from future
government contract projects for a significant period of time. 

  
  Insurance and Risk Management
  
     The Company has adopted a range of insurance and risk management
programs designed to reduce potential liabilities, including insurance
policies, programs to seek indemnity where possible in its contracts,
other contract administration procedures, and employee health, safety,
training, and environmental monitoring programs.  In addition, as a
result of the substantial increase over the past several years in the
percentage of the Company's revenues derived from work for governmental
agencies, the Company has developed a company-wide government contracts
compliance program.  The Company cannot assure the adequacy of the
program and compliance failure could have a material adverse effect on
the Company's business.
  
     The Company's insurance program includes $70,000,000 per fiscal
year of excess liability policies, insuring claims in excess of a
$5,000,000 retention level for each of commercial general liability,
product liability and automotive liability.  With respect to the
$5,000,000 retention level for each of such coverages,  the Company's
captive insurance company (the Captive) generally is obligated to
indemnify the Company's insurance carriers against liabilities and costs
of defense, subject to certain limitations.  Letters of credit are
provided to support the indemnity commitment; at present, the aggregate
amount of such letters of credit is approximately $3,500,000.  From a
risk management perspective, the policies reinsured by the Captive are,
in effect, a self-insurance layer.  
  
     The Company also has other insurance policies with various
retentions or deductibles for the management of its risk including but
not limited to all risk property coverage, workers' compensation,
employer's liability, employment practices liability, consultants'
environmental liability (including errors and omissions) and directors'
and officers' liability insurance coverage.  
  
     Although the Company believes its program to be appropriate for the
management of its risk, its insurance policies may not fully cover risks
arising from the Company's operations.  The exclusion of certain
pollution and other liabilities, such as punitive damages, from some
insurance policies, or losses in excess of the coverage, may cause all
or a portion of one or more losses not to be covered by such insurance.  
 
  DISCONTINUED OPERATIONS
  
     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 sale
of some facilities and closure of certain other facilities.  These
operations included the handling and transportation of clients' wastes
and their treatment and/or disposal at Company or third party-owned
facilities.  In June 1989, the Company completed the sale of IT's active
treatment and disposal operations in Imperial Valley and at Bakersfield,
California, as well as its transportation business.  The Company's four
inactive treatment, storage and disposal facilities located in Northern
California were not included in this transaction.  Substantial progress
has been made to date toward the closure of these facilities, with two
of these facilities closed and the others in the process of closure.

     There are substantial financial implications related to the
discontinued operations.  For further information regarding the
Company's discontinued operations, see Notes to Consolidated Financial
Statements - Discontinued operations and Management's Discussion and
Analysis of Results of Operations and Financial Condition - Liquidity
and Capital Resources.
  
  EMPLOYEES  
  
     At March 28, 1997, the Company employed 2,083 regular employees. 
Of these employees, 203 were in sales, corporate office and group
administration and the remainder were in operations.  The Company's

                                     11 
<PAGE>

professional and technical employees engage in disciplines which include
chemical and civil engineering, geology, hydrology/hydrogeology and
computer/data processing.  Over 445 of the Company's employees hold
advanced degrees.  
  
     At March 28, 1997, none of the Company's employees were represented
by labor unions under collective bargaining agreements.  The Company
employs union labor from time to time on a project-specific basis.  The
Company considers its relations with its employees to be good.
  
  ITEM 2.  PROPERTIES.
  
     IT owns or leases property in 25 states, the District of Columbia
and the United Kingdom.  Excluding its discontinued operations, the
Company owns approximately 50 acres and leases approximately 675,000
square feet of property for various uses, including regional and project
offices, technology and process development laboratories, equipment
yards and a corporate office.  Management considers the facilities
adequate for the present and anticipated activities of the Company.
  
     Additionally, the Company owns approximately 2,821 acres related to
its discontinued operations, principally in Northern California, of
which approximately 500 acres have been used for hazardous waste
disposal facilities and approximately 2,200 are adjacent to those
facilities, but were never used for waste disposal.
  
     The Company has announced the relocation and consolidation of its
Torrance, California corporate headquarters into its largest operations
office in Monroeville (Pittsburgh), Pennsylvania.  This process will be
completed by the end of June 1997.   The Company expects to realize
certain cost savings from this consolidation.  (See Management's
Discussion and Analysis - Results of Operations - Continuing Operations
- Restructuring charge.)
  
  ITEM 3.  LEGAL PROCEEDINGS.  
  
  Continuing Operations Legal Proceedings
  
     See Notes to Consolidated Financial Statements - Commitments and
contingencies - Contingencies for information regarding the legal
proceedings related to the continuing operations of the Company.
  
  Discontinued Operations Legal Proceedings
  
     See Notes to Consolidated Financial Statements - Discontinued
operations for information regarding the legal proceedings that relate
to the transportation, treatment and disposal discontinued operations of
the Company.
  
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS.
   
     There were no matters submitted to a vote of the Company's common
shareholders during the fourth quarter of fiscal year 1997.

                                     12
<PAGE>
  
    ITEM 4A.  EXECUTIVE OFFICERS OF THE COMPANY.
  
   The following table provides information as of June 13, 1997
regarding the Company's executive officers and the positions they hold
with the Company.  The officers are appointed annually by the Board of
Directors to serve at the discretion of the Board.
  
                                                              First
                                                             elected 
                                                                as
                                                             director 
                                                                or
                                                   Term as    officer
                                                   director   of the
  Name              Age          Position           expires   Company 
  ----              ---          --------          --------   -------
Anthony J. DeLuca    50    President and Acting        1997      1990
                            Chief Executive Officer                   
Franklin E. Coffman  55    Senior Vice President,      ----      1984
                            DOE Programs, Corporate
                            Business Development                
James R. Mahoney     58    Senior Vice President,      ----      1991
                            Consulting and Ventures
                            and Corporate Development
Raymond J. Pompe     63    Senior Vice President,      ----      1988
                            Engineering and 
                            Construction
James G. Kirk        58    Vice President, General     ----      1996
                            Counsel and Secretary
________________
  
   Mr. Coffman joined the Company in October 1984 as Vice President,
Government Programs, was named Senior Vice President, Government and
Commercial Program Development, in March 1995, and Senior Vice
President, DOE Programs, Corporate Business Development in July 1996.  
Prior to joining the Company, Mr. Coffman served in various capacities
for the DOE including Deputy Assistant Secretary of Waste Management,
Director of the Office of Advanced Nuclear Systems and Projects, and
Director of the Division of Fusion Development and Technology. 
Previously, he was employed in the Atomic Energy Commission as Chief,
Energy Research Development Agency, Fusion Systems and Applications -
Applications Studies Branch, Washington, D.C. and as a health physicist.

   Mr. DeLuca was named President and Acting Chief Executive Officer and
a director of the Company as of July 1, 1996.  Prior thereto, Mr. DeLuca
had been Senior Vice President and Chief Financial Officer of the
Company since March 1990.  Before joining the Company Mr. DeLuca had
been a senior partner at the public accounting firm Ernst & Young LLP.

   Mr. Kirk, who joined the Company as General Counsel, Eastern
Operations, in 1991, was named Vice President, General Counsel and
Secretary in September 1996.  Prior to joining the Company, Mr. Kirk
served as Vice President and General Counsel for Limbach Constructors
from 1978 to 1991.  From 1973 to 1978, Mr. Kirk was Assistant
General Counsel for Dravo Corporation.
  
   Mr. Mahoney, who joined the Company in January 1991 as Senior Vice
President and Director of Technology was named Senior Vice President,
Corporate Development and Sales in April 1992; Senior Vice President,
Technical Operations and Corporate Development in March 1995; and Senior
Vice President, Consulting and Ventures in July 1996.  Prior to joining
the Company, Mr. Mahoney was Director of the National Acid Precipitation
Assessment Program, a U.S. government research and assessment program,
from 1988 to 1991.  From 1984 to 1987, Mr. Mahoney served in various
environmental managerial capacities with Bechtel Group, Incorporated, a
major construction firm.
  
   Mr. Pompe joined the Company in 1988 as Vice President, Construction
and Remediation, was named Senior Vice President, Project Operations, in
March 1995, and Senior Vice President, Engineering and Construction in
July 1996.  Prior to joining the Company, Mr. Pompe was employed by
Dravo Corporation, a major construction firm, from 1956 to 1988 in
various executive capacities, most recently as Senior Vice President
responsible for construction projects.
  

                                     13  
<PAGE>  
                            PART II
  
  
  ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
  SHAREHOLDER MATTERS. 
   
  
   The Company's common stock is listed on the New York Stock Exchange
(NYSE) and Pacific Stock Exchange under the symbol ITX.  The following
table sets forth the high and low sale prices of the common stock, as
reported by the NYSE for the periods indicated, all after adjustment for
a one-for-four reverse stock split effective November 21, 1996.
  
               Quarter ended                 High            Low 
               -------------                 ----            ---
   June 30, 1995 . . . . . . . . . . . .   $ 13 1/2        $ 9 1/2
   September 29, 1995. . . . . . . . . .     15 1/2         11 
   December 29, 1995 . . . . . . . . . .     13 1/2          9 
   March 29, 1996. . . . . . . . . . . .     11              8
   June 28, 1996 . . . . . . . . . . . .     14              9
   September 27, 1996. . . . . . . . . .     12              7 1/2
   December 27, 1996 . . . . . . . . . .     11 1/2          8 3/8
   March 28, 1997. . . . . . . . . . .        8 7/8          6 3/4
     
   On June 13, 1997, the closing sale price of the common stock on the
NYSE as reported by The Wall Street Journal was $7 7/8 per share.  On
that date there were 1,925 stockholders of record.
  
   The Company has not paid a cash dividend on its common stock for the
three years ended March 28, 1997.  The Company has no present intention
to pay cash dividends on its common stock for the foreseeable future in
order to retain all earnings for investment in the Company's business. 
IT's credit agreements prohibit cash dividends on common stock.

                                     14 
<PAGE>
    
     ITEM 6.  SELECTED FINANCIAL DATA.
  
   The following table sets forth income statement information for the
Company's continuing operations and other financial information for each
of the five years in the period ended March 28, 1997.   Share and per
share data have been restated to reflect the one-for-four reverse stock
split effective November 21, 1996.
  
<TABLE>
<CAPTION>
                                                                Year ended               
                                        ---------------------------------------------------------
                                       March 28,    March 29,               March 31,   
                                                                  -------------------------------
                                          1997         1996        1995        1994        1993
                                        ---------    ---------    --------    -------    --------
                                                   (In thousands, except per share data)

INCOME STATEMENT INFORMATION
<S>                                     <C>          <C>          <C>         <C>         <C>
Revenues                                $362,131     $400,042     $423,972    $392,803    $410,539

Loss from continuing operations
  (net of preferred stock dividends)     (13,693)      (3,654)      (7,880)     (3,241)     (2,082)

Loss per share
  from continuing operations               (1.48)        (.41)        (.89)       (.37)       (.25)

Weighted average shares                    9,227        8,982        8,889       8,691       8,383

OTHER FINANCIAL INFORMATION                  
Working capital                         $110,705     $ 89,174     $ 73,838    $ 63,522    $ 60,281

Total assets                             342,531      315,314      362,152     359,203     369,178 
Long-term debt                            65,874       65,611       80,189      68,625     115,811

Long-term accrued liabilities             16,004       30,223       45,207      38,993      52,470

Stockholders' equity                     168,853      140,865      145,921     160,548     106,178
</TABLE>

No cash dividends were paid on common shares for any period.  
  
  ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
  AND FINANCIAL CONDITION.
  
  RESULTS OF OPERATIONS
  
  CONTINUING OPERATIONS
  
  Overview
  
   The Company's services are provided to a broad array of governmental
and commercial entities predominantly in the U.S. market.  Additionally,
the Company pursues selected international business opportunities on a
project-specific basis and has made an investment in a Taiwan-based
company (see Revenues).  The Company's business strategy is to provide
its environmental services on a full-service basis, particularly by
focusing on its capabilities to manage complex environmental issues from
the initial assessment of the level and extent of contamination through
the design, engineering and execution of a solution which minimizes the
client's total cost.   

   In 1996, the Company changed its fiscal year to consist of four
thirteen-week fiscal quarters with the fourth quarter ending on the last
Friday of March.  Previously, the fiscal year ended on March 31 of each
year.

                                     15 
<PAGE>
                   INTERNATIONAL TECHNOLOGY CORPORATION
                     RESULTS OF OPERATIONS (CONTINUED)

  
  Revenues
  
   Revenues for fiscal year 1997 declined by 9.4% compared to a decline
of 5.6% in fiscal year 1996.  This decline in revenues generally
reflected weak demand in both the governmental and commercial markets
the Company serves as well as a change in the Company's approach to the
market in de-emphasizing smaller lower-value projects (see Restructuring
Charge).  During the fourth quarter of fiscal year 1997, however, the
Company experienced an 8% increase in revenues to $95,712,000 from
$88,579,000 in the fourth quarter of fiscal year 1996, principally due
to consistent funding of DOD programs which had been subject to reduced
funding in late fiscal year 1996 and early fiscal year 1997 as a result
of delays in the authorization of the federal budget.  
  
   Although revenue growth in the Company's core business is expected to
be modest in the near future due to the difficult industry-wide
conditions, the Company is actively seeking revenue growth and
diversification through business acquisitions (see Liquidity and Capital
Resources).  The Company took an initial step in this strategy by making
a 50.1% majority investment in a Taiwan-based wastewater treatment
design/build firm in November 1996.  Additionally, in May 1997, the
Company acquired PHR Environmental Consulting, Inc., a small consulting
firm specializing in environmental and historical investigation.
 
   Revenues for fiscal year 1996 of $400,042,000 were $23,930,000 lower
than the $423,972,000 of revenues for fiscal year 1995.  Effective with
the inception of operations for Quanterra in the second quarter of
fiscal year 1995, the Company ceased recording any analytical services
revenue.  However, since a portion of analytical services revenue
historically was derived from the Company's other operations, additional
revenue is now being recorded related to analytical services
subcontracts performed by Quanterra (see Quanterra) for IT, similar to
other third party subcontracts.  After excluding fiscal year 1996 and
1995 analytical services revenues other than those provided to the
Company's other operations, revenues for the Company declined 3.8% for
fiscal year 1996, primarily due to the slowdown of awards of federal
governmental contract delivery orders caused by the delayed
authorization of the federal government budget.
  
   A substantial percentage of the Company's revenues during the three
years ended March 28, 1997 was earned through executing governmental
contracts for various federal, state and local agencies.  Revenues from
governmental contracts accounted for 67% of the Company's revenues in
fiscal year 1997, compared to 69% and 71% in fiscal years 1996 and 1995,
respectively.  See the table in Business - Operations - Customers -
Federal, State and Local Governmental Clients for an analysis of the
Company's revenues attributable to federal, state and local governmental
contracts.  Federal governmental revenues are derived principally from
work performed for the DOD and, to a lesser extent, the DOE.  The
Company expects to increase its revenues from the DOE over time due to
an expected transition by the DOE over the next several years to
emphasize remediation over studies combined with the Company's favorable
experience in winning and executing similar work for the DOD and the
Company's experience with DOE related to its past performance of DOE
studies.  In the near term, the Company expects that the percentage of
total revenues from the execution of federal, state and local
governmental contracts will continue to be substantial. 
  
   Although increasing slightly as a percentage of total revenues,
reflecting management efforts to reduce the Company's reliance on
government contracts, the Company's revenues from commercial clients
declined slightly in fiscal year 1997 compared to fiscal year 1996.  The
Company believes this is partly due to increased emphasis by
commercial clients on cost-effective solutions and partly due to
commercial clients delaying certain work until final Congressional
action is taken on the reauthorization of CERCLA.  The Company is
focusing more on providing value-added consulting service and on
negotiating partnering arrangements with clients in an effort to provide
commercial clients with more cost-effective solutions.  As for CERCLA,
it is uncertain when reauthorization will occur or what the details of
the legislation, including retroactive liability, cleanup standards, and
remedy selection, may include.  Uncertainty regarding possible rollbacks
of environmental regulation and/or reduced enforcement have led
commercial clients to delay projects as well.  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

                                     16 
<PAGE>

                   INTERNATIONAL TECHNOLOGY CORPORATION
                     RESULTS OF OPERATIONS (CONTINUED)

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.   

   Revenues derived from large, complex thermal remediation contracts
Utilizing the Company's HTTS thermal treatment technology were
approximately 10%, 11% and 11% of revenues in fiscal years 1997, 1996
and 1995, respectively.  Incineration as a remedy under CERCLA continues
to come under legislative and regulatory pressures.  Because of this
issue and the relatively higher cost of incineration, there are very few
potential project opportunities in the United States and the Company has
been forced to seek alternative uses for its HTTS equipment.  The
Company is actively pursuing foreign opportunities which utilize the
HTTS equipment.  If alternative uses, such as foreign installations,
cannot be found or are uneconomical, there could be a negative effect to
the Company due to impairment of HTTS assets as well as lost project
opportunities.  At March 28, 1997, the net book value of IT's HTTS
equipment was approximately $11,200,000.  The Company's backlog of
contracts which utilize HTTS equipment was approximately $10,000,000 at
March 28, 1997 with such backlog to be performed early in fiscal year
1998.
  
   The Company's total funded and unfunded backlog at March 28, 1997 was
approximately $1,198,000,000 ($975,000,000 at March 29, 1996) including
approximately $280,000,000 of contracted backlog scheduled to be
completed during fiscal year 1998 and between $40,000,000 and
$60,000,000 of additional project work expected to be defined and
performed in fiscal year 1998 under existing governmental IDO contracts.
Backlog revenues are expected to be earned primarily over the next one
to five years, with a substantial portion of the backlog consisting of
governmental contracts, many of which are subject to annual funding and
definition of project scope.  The backlog amounts at March 28, 1997 and
March 29, 1996 include $785,000,000 and $598,000,000, respectively, of
future work the Company estimates it will receive (based on historical
experience) under existing IDO programs.  In accordance with industry
practices, substantially all of the Company's contracts are subject to
cancellation, delay or modification by the customer. 
  
   The Company's backlog at any given time is subject to changes in
scope of services required by the contracts leading to increases or
decreases in backlog amounts.  These contracts subject to such scope
changes have led to a number of contract claims requiring negotiations
with clients in the ordinary course of business.  (See Notes to
Consolidated Financial Statements - Summary of significant accounting
policies - Contract accounting and accounts receivable.)
  
  Gross Margin
  
      Gross margins were 10.5%, 14.5% and 14.6% of revenues in fiscal
years 1997, 1996 and 1995, respectively.  In the current year, gross
margin was adversely impacted by lower pricing due to competitive
industry conditions and by the continued shift in revenue mix toward
larger projects and programs which involve more subcontracting and carry
a lower margin on revenues.  Gross margin percentage of 11.3% of
revenues for the last six months of fiscal year 1997 improved from the
9.7% of revenues for the first half as overhead costs were reduced due
to organizational streamlining resulting from the recent corporate
restructuring (see Restructuring Charge).  In the near term, the Company
expects to continue to experience the improved gross margins of the past
six months.  The Company's ability to maintain or improve its gross
margins is heavily dependent on increasing utilization of professional
staff, properly executing projects, and successfully bidding new
contracts at adequate margin levels.  
  
   Excluding a $5,300,000 provision for major litigation in fiscal year
1995 (see Notes to Consolidated Financial Statements - Commitments and
contingencies - Central Garden), gross margin would have declined from
15.9% of revenues in fiscal year 1995 to 14.5% in fiscal year 1996,
primarily because of the combination of the declining level of revenues,
lower pricing due to competitive industry conditions and a shift in
revenue mix toward lower margin subcontracted work. 

                                     17 
<PAGE>
  
                   INTERNATIONAL TECHNOLOGY CORPORATION
                     RESULTS OF OPERATIONS (CONTINUED)

  Selling, General and Administrative Expenses
  
   Selling, general and administrative expenses were 9.2%, 9.5% and
10.0% of revenues in fiscal years 1997, 1996 and 1995, respectively. 
Selling, general and administrative expenses of $33,431,000 in
fiscal year 1997 were $4,694,000 or 12.3% lower than the fiscal year
1996 level primarily due to the impact of the corporate restructuring
(see Restructuring Charge) initiated in the second fiscal quarter of
1997.  Selling, general and administrative expenses declined from 10.2%
in the first half of fiscal 1997 to 8.4% in the second half primarily
due to this corporate restructuring.  Fiscal year 1996 selling, general
and administrative expenses of $38,125,000 represented a decrease of
$4,351,000 or 10.2% from the prior year level, due to cost containment
measures resulting from continued management attention to expenses.
  
  Restructuring Charge
  
   In conjunction with the corporate restructuring to position the
Company for growth and diversification which was initiated in the second
quarter of fiscal year 1997, the Company incurred a pre-tax
restructuring charge of $8,403,000.  The restructuring charge included
$3,400,000 of costs for severance, $4,100,000 of costs for closing and
reducing the size of a number of the Company's offices, and $900,000 of
costs for other related items. At March 28, 1997, $3,720,000 of the
charge remained to be paid over the next eight years.  The restructuring
charge was taken in conjunction with an organizational realignment which
is expected to enable the Company to operate in a more efficient and
client-focused manner on an ongoing basis.  
  
   Additionally, during the first quarter of fiscal year 1998, the
Company will be relocating its corporate headquarters from Torrance,
California to Monroeville (Pittsburgh), Pennsylvania where the Company's
largest office is located.  Beginning in the second quarter of fiscal
year 1998, this will result in reduced lease expenses as well as labor
cost savings due to the consolidation of certain functions, and travel
cost savings, since much of the Company's business, as well as its
lenders and largest shareholders, are located in the eastern United
States.  The move is anticipated to result in a charge in the range of
$2,000,000 to $3,000,000.  The Company also anticipates it may take a
smaller charge in connection with the sale in the first quarter of
fiscal year 1998 of its California remediation services business
pursuant to a change in the Company's approach to the market.
  
  Quanterra
  
   In June 1994, the Company and an affiliate of Corning Incorporated
combined the two companies' environmental analytical services businesses
into a 50%/50% jointly-owned company (Quanterra), which was
recapitalized effective December 29, 1995, with IT retaining a 19%
ownership interest.  (See Liquidity and Capital Resources and Notes to
Consolidated Financial Statements - Quanterra.)  IT's 50% investment in
Quanterra was accounted for under the equity method through December 29,
1995, and the remaining 19% investment is now accounted for under
the cost method.  In the nine months ended March 31, 1995, the initial
period of Quanterra's operations, the Company reported equity in net
loss of Quanterra of $9,827,000 (including a $9,264,000 charge for
integration) and, in the six months ended September 29, 1995, the
Company reported equity in net loss of Quanterra of $1,821,000.  In the
quarter ended December 29, 1995, the Company reported equity in net loss
of Quanterra of $24,595,000, principally related to the recapitalization
of Quanterra noted above. 
 
  Other Income (Expense)
  
   In fiscal year 1996, the Company reported in other income a pre-tax
gain of $1,090,000, related to the settlement of certain litigation
concerning the Motco project.  (See Notes to Consolidated Financial
Statements - Motco litigation settlement.)  This gain represented the
settlement proceeds of $41,100,000 in cash, net of the previously

                                     18 
<PAGE>
                   INTERNATIONAL TECHNOLOGY CORPORATION
                     RESULTS OF OPERATIONS (CONTINUED)

recorded $31,200,000 claim amount, $8,000,000 of costs related to
certain equipment specifically constructed for the Motco project which
has been idle since ceasing work on the project, and legal and other
expenses.
  
   In fiscal year 1995, the Company recorded a charge of $3,800,000 to
provide for potential settlement and defense costs related to certain
class action shareholder litigation. 
  
  Interest, Net
  
   Net interest expense was 1.5%, 1.6% and 1.7% of revenues in fiscal
years 1997, 1996 and 1995, respectively.  The following table shows net
interest expense for the three fiscal years ended March 28, 1997.

                                                 Year ended
                                      --------------------------------
                                      March 28,   March 29,   March 31,
                                        1997        1996        1995     
                                      --------    --------    --------
                                               (In thousands)
   Interest incurred . . . . . .       $ 7,168     $ 7,014     $ 8,065
   Capitalized interest. . . . .             -           -        (484)
   Interest income . . . . . . .        (1,908)       (569)       (471)
                                        ------      ------      ------
     Interest, net . . . . . . .       $ 5,260     $ 6,445     $ 7,110
                                        ======      ======      ======
                                      
   During fiscal year 1997, the level of debt outstanding was relatively
unchanged from the prior year end level as the Company's refinancing was
completed in October 1995 and the related initial principal payments are
not due until 2001 on the Company's outstanding $65,000,000 senior
secured notes.  Accordingly, interest incurred in fiscal year 1997
was $154,000 or 2.2% higher than the corresponding amount for fiscal
year 1996.  Interest income of $1,908,000 was $1,339,000 higher than the
$569,000 in fiscal year 1996 due to the full-year investment in cash
equivalents of the excess proceeds of the October 1995 refinancing (as
discussed immediately below) and an increased level of investment in
cash equivalents beginning in November 1996 from the proceeds of the
Carlyle Investment (see Notes to Consolidated Financial Statements -
Preferred stock - Carlyle Investment).
  
   In fiscal year 1996, the decline in interest incurred is due
principally to lower levels of outstanding debt during the second half
of the fiscal year.  This resulted from debt paid down out of the
$41,100,000 proceeds of the Motco settlement.   (See Notes to
Consolidated Financial Statements - Motco litigation settlement.)  This
decline in debt was partially offset by the  refinancing of the
Company's senior notes in October 1995 through a $65,000,000 private
placement, which exceeded the $50,000,000 of debt being refinanced. 
These excess proceeds were invested in cash equivalents which generated
interest income over the remainder of the year.  There was no
capitalized interest in fiscal year 1996 due to the completion of the
Company's major company-wide management information systems project in
fiscal year 1995, on which interest had been capitalized.  

  Income Taxes
  
   For fiscal year 1997, in which the Company reported a loss from
continuing operations before income taxes of $8,956,000, the Company
recorded an income tax benefit of $179,000 which included a $4,602,000
tax charge resulting from the adjustment of IT's deferred tax asset
valuation allowance based on the Company's assessment of the uncertainty
as to when it will generate a sufficient level of future earnings to
realize the deferred tax asset created by the restructuring charge (see
Restructuring Charge).  The Company's effective income tax benefit rate
is 2%, which is less then the 34% federal statutory rate primarily due
to the above tax charge, state income taxes and nondeductible expenses
(See Notes to Consolidated Financial Statements - Income taxes). 
 
   For fiscal year 1996, in which the Company reported a loss from
continuing operations before income taxes of $11,744,000, the Company
recorded an income tax benefit of $12,290,000 which included a

                                     19  
<PAGE>
                   INTERNATIONAL TECHNOLOGY CORPORATION
                     RESULTS OF OPERATIONS (CONTINUED)

$7,781,000 tax benefit resulting from the adjustment of IT's deferred
tax asset valuation allowance based on the Company's reassessment of
its ability to generate a sufficient level of future earnings to realize
a substantial portion of IT's related deferred tax asset. 
  
   For fiscal year 1995, in which the Company reported a loss from
continuing operations before income taxes of $1,297,000, the Company
recorded a $2,383,000 income tax provision from continuing operations
due to the  nondeductibility of certain expenses, including a
significant portion of the charge for integration related to the
formation of Quanterra.  (See Notes to Consolidated Financial Statements
- Quanterra.)
  
   The Company's future tax rate is subject to the full realization of
its deferred tax asset of $32,116,000 (net of a valuation allowance of
$9,741,000).  Realization  of the tax asset is expected by management to
occur principally as closure expenditures related to the Company's
inactive disposal sites over the next several years are deductible in
the years the expenditures are made and upon the ultimate tax
disposition of the Company's interest in Quanterra, but is subject to
the Company having a sufficient level of taxable income and taxable
capital gains. 
  
  Dividends
  
   Dividends for fiscal year 1997 include cash dividends of $4,050,000
($4,200,000 in fiscal years 1996 and 1995) on the Company's outstanding
depositary shares (each representing 1/100 of a share of the Company's
7% Convertible Exchangeable Preferred Stock) and a non-cash imputed
dividend of $866,000 on the newly issued Cumulative Convertible
Participating Preferred Stock (Convertible Preferred Stock) purchased by
Carlyle.  (See Notes to  Consolidated Financial Statements - Preferred
stock - Carlyle Investment.)  During the first two years ended November
21, 1998 in which the Convertible Preferred Stock is outstanding and the
stated annual dividends are 0% and a stock dividend of 3%, respectively,
dividends will be calculated and presented in the statement of
operations at a rate of approximately 6% per annum.  The additional
imputed dividend of approximately 6% in the first year and 3% in the
second year will never be paid in cash or stock.
  
  Loss from Continuing Operations
  
   The Company recorded losses from continuing operations of
$13,693,000, $3,654,000 and $7,880,000 for fiscal years 1997, 1996 and
1995, respectively.  As discussed above, operating income for each of
the years was more than offset by the equity in net loss of Quanterra
and certain special charges.  (See Gross Margin, Restructuring Charge,
Quanterra, and Other Income (Expense).)
  
  DISCONTINUED OPERATIONS
  
   In fiscal year 1995, the Company increased its provision for loss on
disposition of its discontinued transportation, treatment and disposal
business by $10,603,000 (net of income tax benefit of $6,397,000).  This
increased provision primarily related to delays in the regulatory
approval process at the Company's inactive disposal facilities located
in Northern California, an additional accrual for estimated costs
related to certain waste disposal sites where IT has been named as a
PRP, increased closure construction costs due to plan revisions and to
additional costs experienced due to the unusually heavy rainfall
experienced in Northern California in January through March 1995.

   For further information regarding the Company's discontinued
operations, see Notes to Consolidated  Financial Statements -
Discontinued operations.

                                     20 
<PAGE>

                     INTERNATIONAL TECHNOLOGY CORPORATION
                       LIQUIDITY AND CAPITAL RESOURCES
  
  
  LIQUIDITY AND CAPITAL RESOURCES
  
   Working capital increased by $21,531,000 or 24.1%, to $110,705,000 at
March 28, 1997 from $89,174,000 at March 29, 1996.  The current ratio at
March 28, 1997 was 2.21:1 which compares to 2.13:1 at March 29, 1996.

   Cash provided by operating activities for fiscal year 1997 totaled
$38,836,000, a $12,951,000 increase from the $25,885,000 of cash
provided by operating activities in the prior fiscal year principally
due to the improvement in receivables management.  Capital expenditures
were $3,361,000, $4,696,000 and $10,533,000 for fiscal years 1997,
1996 and 1995, respectively.  During fiscal year 1997, capital
expenditures decreased as the Company's decline in revenues reduced the
need for new equipment.  Management believes capital expenditures in
fiscal year 1998 will remain stable or increase slightly from those of
fiscal year 1997, excluding any business acquisitions or strategic
investments which might be made by the Company.  (See below and Business
- Operations - General.)  The Company does not expect to pay significant
cash income taxes over the next several years due to its net operating
loss carryforwards.  (See Notes to Consolidated Financial Statements -
Income taxes and Results of Operations - Continuing Operations - Income
Taxes.)
  
   Long-term debt of $65,874,000 at March 28, 1997 was essentially
unchanged from the $65,611,000 at March 29, 1996.  (See Notes to
Consolidated Financial Statements - Long-term debt.)  The Company's
ratio of debt (including current portion) to equity declined over the
past three years to 0.42:1 at March 28, 1997 from 0.47:1 and  0.56:1 at
March 29, 1996 and March 31, 1995, respectively.
 
   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
inclosure and post-closure costs, realization of excess and residual
land values, demonstration of financial assurance and resolution of
other regulatory and legal contingencies.  (See Notes to Consolidated
Financial Statements - Discontinued operations.)  
  
   The Company's shareholder agreements relating to Quanterra (an
environmental analytical services business 81% owned by an affiliate of
Corning Incorporated and 19% owned by IT) contain certain provisions
which have affected and, in the future, could affect liquidity.  IT was
required by these agreements to contribute $2,500,000 to Quanterra
in October 1995 and an additional $2,500,000 to Quanterra in January
1996.  In connection with a recapitalization of Quanterra in January
1996, the Company committed an additional $2,500,000 to Quanterra, of
which $475,000 was paid in each of March, April and July 1996 and
$1,075,000 was paid in December 1996, completing the commitment. 
Additionally, in the current fiscal year, the Company made a one-time
$1,300,000 contribution to Quanterra in the form of work performed
related to the decommissioning/closure of a Quanterra laboratory
facility.  IT is not committed to make, and does not presently intend to
make, additional contributions to Quanterra, but it has the option
to make future pro rata contributions to maintain its 19% interest. 
Although Quanterra has experienced net losses in the past several
years, the level of net loss has decreased over the past several
quarters, and Quanterra has recently neared break-even operations.
The Company will continue to evaluate the ultimate recoverability of its
investment in Quanterra (which is carried at $16,300,000 on the 
March 28, 1997 consolidated balance sheet) on an ongoing basis and will
recognize any impairment in value should it occur.  (See Notes to
Consolidated Financial Statements - Quanterra.)

  
   On October 25, 1995, the Company executed a combined $125,000,000
financing which includes $65,000,000 of senior secured notes with a
group of major insurance companies and a $60,000,000 syndicated bank
revolving credit facility.  The financing package, which is subject to a
borrowing base, is secured by the accounts receivable and certain fixed
assets of the Company.  The senior secured notes have an eight-year
final maturity with no principal payments until the sixth year, and the
bank line has a term of five years.  

                                     21 
<PAGE>
                   INTERNATIONAL TECHNOLOGY CORPORATION
               LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)  
  
  
   In aggregate, at March 28, 1997, letters of credit totaling
approximately $20,000,000 related to the Company's insurance program,
financial assurance and bonding requirements were outstanding against
the Company's $60,000,000 bank line of credit.  The Company had no
outstanding cash advances under the line at March 28, 1997.  As of that
date, the Company's borrowing base under its combined financing package
allowed for additional letters of credit or borrowings under the line of
credit of up to $580,000.  At certain times (but not at March 28, 1997),
the Company has been required to maintain cash on deposit with its
credit providers, due to the Company's borrowing base being
insufficient to cover the collateral required for the $65,000,000 senior
notes and any outstanding letters of credit, primarily as a result of
reduced accounts receivable, which are the principal component of the
borrowing base.  At March 28, 1997, the Company had invested cash of
approximately $73,000,000.
  
   The Company has total bonding capacity of $135,000,000 at present, of
which approximately $94,000,000 is currently being utilized.  The
Company's bonding lines generally require 5-10% collateral in the form
of letters of credit.
  
    At the November 20, 1996 Annual Meeting of Stockholders, IT's
shareholders voted to approve the Carlyle Investment.  The Company
issued to Carlyle 45,000 shares of Convertible Preferred Stock having a
liquidation preference of $1,000 per share, and warrants to purchase
1,250,000 shares of IT common stock at $11.39 per share.  The
$40,609,000 net proceeds to the Company (after related offering costs of
$4,391,000) will be used by IT to finance business acquisitions, as well
as for working capital and general corporate purposes (see Notes to
Consolidated Financial Statements - Preferred stock - Carlyle
Investment).
  
   The Company continues to have significant cash requirements,
including expenditures for the closure of its inactive disposal sites
and PRP matters (see Notes to Consolidated Financial Statements - 
Discontinued operations), interest, preferred dividend obligations and
contingent liabilities.  The Company's liquidity position is expected to
be sufficient to meet the foreseeable requirements, as well as to fund
expansion and diversification of the Company's business through both
internal growth and acquisitions. 
  
  FORWARD LOOKING STATEMENTS
  
   When used in the preceding discussion, the words "expects,"
"anticipates," "believes" and similar expressions are intended to
identify, and nonhistorical statements are, forward looking statements. 
Such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those expressed in
any of the forward looking statements. Such risks and uncertainties
include, but are not limited to, funding of federal government
contracts, ongoing regulatory uncertainties which affect both
governmental and commercial clients, industry wide market factors,
liabilities and regulatory developments related to the Company's
discontinued operations and financial and liquidity trends.
  

                                     22  
<PAGE>

  ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
  
  
  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
   SCHEDULE FOR THE THREE YEARS IN THE PERIOD ENDED MARCH 28, 1997
  
  
  Consolidated Financial Statements.                              Page
                                                                  ----
   Report of  Ernst & Young LLP, Independent Auditors. . . . . .   24
   Consolidated Balance Sheets ----- March 28, 1997 and 
     March 29, 1996. . . . . . . . . . . . . . . . . . . . . . .   25
   Consolidated Statements of Operations ----- Three Years Ended
     March 28, 1997. . . . . . . . . . . . . . . . . . . . . . .   26
   Consolidated Statements of Stockholders' Equity ----- Three
     Years Ended March 28, 1997. . . . . . . . . . . . . . . . .   27
   Consolidated Statements of Cash Flows ----- Three Years Ended
     March 28, 1997. . . . . . . . . . . . . . . . . . . . . . .   28
   Notes to Consolidated Financial Statements. . . . . . . . . .   29
  
  
  Financial Statement Schedule.
  
   II.  Valuation and qualifying accounts. . . . . . . . . . . .   54
   
   Schedules not filed herewith are omitted because of the absence of
conditions under which they are required or because the information
called for is shown in the consolidated financial statements or notes
thereto.
  
                                     23  
<PAGE>  
    
       REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
  
  
  
The Board of Directors
International Technology Corporation
  
We have audited the accompanying consolidated balance sheets of 
International Technology Corporation as of March 28, 1997 and March 29,
1996 and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the
period ended March 28, 1997.  Our audits also included the financial
statement schedule listed in the index at Item 8.   These consolidated
financial statements and schedule are the responsibility of the
Company's management.  Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.
  
  We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement.  An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.
  
  In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of International Technology Corporation at March 28,
1997 and March 29, 1996 and the consolidated results of operations and
cash flows for each of the three years in the period ended March 28,
1997 in conformity with generally accepted accounting principles.  Also,
in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set
forth therein.
  
  
  
  
  
                                        ERNST & YOUNG LLP
Los Angeles, California
May 13, 1997

                                     24  
<PAGE>
               INTERNATIONAL TECHNOLOGY CORPORATION
                   CONSOLIDATED BALANCE SHEETS
                                               
                                                March 28,     March 29,
                                                  1997          1996   
                                                --------      --------
                             ASSETS                   (In thousands)
Current assets:
  Cash and cash equivalents . . . . . . . . .   $ 78,897      $ 24,493
  Accounts receivable, less allowance for 
    doubtful accounts of $2,055,000 in 1997 
    and $2,943,000 in 1996. . . . . . . . . .    108,207       126,832 
  Prepaid expenses and other current assets .      4,077         4,315 
  Deferred income taxes . . . . . . . . . . .     11,324        12,149
                                                 -------       -------
    Total current assets. . . . . . . . . . .    202,505       167,789
Property, plant and equipment, at cost:
  Land and land improvements. . . . . . . . .      1,330         1,783 
  Buildings and leasehold improvements. . . .      9,232        10,961 
  Machinery and equipment . . . . . . . . . .    140,630       144,218
                                                 -------       -------
                                                 151,192       156,962
    Less accumulated depreciation and 
      amortization. . . . . . . . . . . . . .    106,891       101,201
                                                 -------       -------
      Net property, plant and equipment . . .     44,301        55,761

Cost in excess of net assets of acquired 
  businesses. . . . . . . . . . . . . . . . .      9,363         8,770
Investment in Quanterra . . . . . . . . . . .     16,300        12,975
Other assets. . . . . . . . . . . . . . . . .      9,222         7,987
Deferred income taxes . . . . . . . . . . . .     20,792        20,327
Long-term assets of discontinued operations .     40,048        41,705
                                                 -------       -------
  Total assets. . . . . . . . . . . . . . . .   $342,531      $315,314
                                                 =======       =======
              LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable. . . . . . . . . . . . . .   $ 29,571      $ 27,091
  Accrued wages and related liabilities . . .     18,852        16,363
  Billings in excess of revenues. . . . . . .      7,227         2,044
  Other accrued liabilities . . . . . . . . .     13,788        15,794
  Short-term debt, including current 
    portion of long-term debt . . . . . . . .      5,343            97
  Net current liabilities of discontinued 
    operations. . . . . . . . . . . . . . . .     17,019        17,226
                                                 -------       -------
      Total current liabilities . . . . . . .     91,800        78,615

Long-term debt. . . . . . . . . . . . . . . .     65,874        65,611
Long-term accrued liabilities of 
  discontinued operations, net. . . . . . . .      9,280        24,771
Other long-term accrued liabilities . . . . .      5,904         5,452
Minority interest . . . . . . . . . . . . . .        820             -
Commitments and contingencies
Stockholders' equity:
     Preferred stock, $100 par value; 
       180,000 shares authorized:
       7% cumulative convertible exchangeable, 
         20,556 and 24,000 shares issued and 
         outstanding, respectively. . . . . .      2,056         2,400 
       6% cumulative convertible participating, 
         45,000 shares issued and outstanding.     4,204             -
     Common stock, $.01 par value; 50,000,000 
       shares authorized; 9,744,583 and 
       9,149,552 shares issued and outstanding, 
       respectively. . . . . . . . . . . . . .        97            91
     Treasury stock at cost, 6,208 and 6,953 
       shares, respectively. . . . . . . . . .       (74)          (84)
     Additional paid-in capital. . . . . . . .   244,287       206,465
     Deficit . . . . . . . . . . . . . . . . .   (81,717)      (68,007)
                                                 -------       -------
       Total stockholders' equity. . . . . . .   168,853       140,865
                                                 -------       -------
     Total liabilities and stockholders' 
       equity. . . . . . . . . . . . . . . . .  $342,531      $315,314
                                                 =======       =======

See accompanying notes to consolidated financial statements.

                                     25  
<PAGE>

               INTERNATIONAL TECHNOLOGY CORPORATION
              CONSOLIDATED STATEMENTS OF OPERATIONS
              (In thousands, except per share data)


                                               Year ended
                                     -----------------------------------
                                     March 28,    March 29,    March 31,
                                       1997         1996         1995  
                                     --------     --------     --------

Revenues . . . . . . . . . . . . . . $362,131     $400,042     $423,972
Cost and expenses:
  Cost of revenues . . . . . . . . .  323,993      341,890      362,056
  Selling, general and administrative 
    expenses . . . . . . . . . . . .   33,431       38,125       42,476
  Restructuring charge . . . . . . .    8,403            -            -
                                      -------      -------      -------
Operating income (loss). . . . . . .   (3,696)      20,027       19,440
Equity in net loss of Quanterra, 
  including loss on recapitalization 
  in 1996 and integration charge 
  in 1995. . . . . . . . . . . . . .        -      (26,416)      (9,827)
Other income (expense) . . . . . . .        -        1,090       (3,800)

Interest, net. . . . . . . . . . . .   (5,260)      (6,445)      (7,110)
                                      -------      -------      -------
Loss from continuing operations 
  before income taxes. . . . . . . .   (8,956)     (11,744)      (1,297)
Benefit (provision) for income taxes      179       12,290       (2,383)
                                      -------      -------      -------
Income (loss) from continuing 
  operations . . . . . . . . . . . .   (8,777)         546       (3,680)
Discontinued operations (net of 
  income taxes):
    Loss from disposition. . . . . .        -            -      (10,603)
                                      -------      -------      -------
Net income (loss). . . . . . . . . .   (8,777)         546      (14,283)
Less preferred stock dividends . . .   (4,916)      (4,200)      (4,200)
                                      -------      -------      -------
Net loss applicable to common stock. $(13,693)    $ (3,654)    $(18,483)
                                      =======      =======      =======
Net loss per share:
   Continuing operations (net of 
     preferred stock dividends). . . $  (1.48)    $   (.41)    $   (.89)
   Discontinued operations:
     From disposition. . . . . . . .        -            -        (1.19)
                                      -------      -------      -------
                                     $  (1.48)    $   (.41)    $  (2.08)
                                      =======      =======      =======

See accompanying notes to consolidated financial statements.

                                     26  
<PAGE>

               INTERNATIONAL TECHNOLOGY CORPORATION
         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
             For the three years ended March 28, 1997
                          (In thousands)
<TABLE>
<CAPTION>

                                     7%           6%
                                 cumulative   cumulative         
                                 convertible convertible
                                exchangeable participating                      Additional
                                 preferred    preferred    Common     Treasury    paid-in    
                                   stock        stock      stock        stock     capital     Deficit      Totals 
                                ------------ ------------  ------     --------  ----------    -------      ------
<S>                              <C>         <C>         <C>         <C>         <C>         <C>          <C>
Balance at March 31, 1994. . .   $  2,400    $      -    $     88    $      -    $203,930    $(45,870)    $160,548
 Issuances of common stock . .          -           -           -           -         556           -          556
 Issuance of warrant and 
   common stock related to the 
   formation of Quanterra. . .          -           -           1           -       3,299           -        3,300
 Dividends paid on preferred 
   stock . . . . . . . . . . .          -           -           -           -           -      (4,200)      (4,200)
 Net loss. . . . . . . . . . .          -           -           -           -           -     (14,283)     (14,283)
                                  -------     -------     -------     -------     -------     -------      -------
Balance at March 31, 1995. . .      2,400           -          89           -     207,785     (64,353)      145,921
 Repurchase of common stock. .          -           -           -        (740)          -           -         (740)
 Restricted stock awards, net.          -           -           2         656         238           -          896
 Retirement of warrant and 
   common stock resulting from 
   the recapitalization of 
   Quanterra . . . . . . . . .          -           -          (1)          -      (2,399)          -       (2,400)
 Issuances of common stock . .          -           -           1           -         841           -          842
 Dividends paid on preferred 
  stock. . . . . . . . . . . .          -           -           -           -           -      (4,200)      (4,200)            
 Net income. . . . . . . . . .          -           -           -           -           -         546          546
                                  -------     -------     -------     -------     -------     -------      -------
Balance at March 29, 1996. . .      2,400           -          91         (84)    206,465     (68,007)     140,865
 Net proceeds from preferred 
  stock and warrants issued 
  to Carlyle . . . . . . . . .          -       4,117           -           -      36,492           -       40,609
 Conversion of preferred stock       (344)          -           7           -         337           -            -
 Restricted stock awards, net.          -           -          (1)         10         214           -          223
 Dividends on preferred stock.          -          87           -           -         779      (4,916)      (4,050)
 Cumulative translation 
  adjustment. . . . . . . . .           -           -           -           -           -         (17)         (17)
 Net loss . . . . . . . . . .           -           -           -           -           -      (8,777)      (8,777)
                                  -------     -------     -------     -------     -------     -------      -------
Balance at March 28, 1997 . .    $  2,056    $  4,204    $     97    $    (74)   $244,287    $(81,717)    $168,853
                                  =======     =======     =======     =======     =======     =======      ======= 
</TABLE>
 

 
See accompanying notes to consolidated financial statements.

                                     27 
<PAGE>

              INTERNATIONAL TECHNOLOGY CORPORATION
             CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (In thousands)

                                               Year ended
                                     -----------------------------------
                                     March 28,    March 29,    March 31,
                                       1997         1996         1995  
                                     --------     --------     --------
                                                                       
Cash flows from operating activities:
 Net income (loss). . . . . . . .   $  (8,777)   $      546   $ (14,283)

  Adjustments to reconcile net 
   income (loss) to net cash
    provided by operating 
     activities:
       Net loss from disposition 
        of discontinued operations          -             -      10,603
       Depreciation and amortization   14,363        14,502      19,150
       Deferred income taxes . . . .      360       (13,744)     (4,385)
       Equity in net loss of 
        Quanterra, including loss
        on recapitalization in 1996 
        and integration charge 
        in 1995. . . . . . . . . . .        -        26,416       9,827
       (Gain from) provision for 
         settlement of lawsuits. . .        -        (9,090)      9,100
        Writedown of equipment . . .        -         8,000           -
       Minority interest in 
        subsidiary . . . . . . . . .      (35)            -           -
 Changes in assets and liabilities, 
  net of effects from acquisitions 
  and dispositions of businesses:
       Decrease (increase) in 
        receivables. . . . . . . . .   25,422        12,904     (21,149)
       Decrease in prepaid expenses 
        and other current assets . .      601         1,416         486
       Increase (decrease) in 
        accounts payable . . . . . .      905        (2,204)      2,681 
       Increase (decrease) in 
        accrued wages and related 
        liabilities. . . . . . . . .    2,473        (3,987)      1,636
       Increase (decrease) in 
        billings in excess of 
        revenues . . . . . . . . . .    5,183        (1,986)     (5,338)
       (Decrease) increase in other
        accrued liabilities. . . . .   (2,111)       (6,613)      5,966
       Increase (decrease) in other 
        long-term accrued liabilities     452          (275)       (719)
                                      -------       -------     ------- 
 Net cash provided by operating 
  activities . . . . . . . . . . . .   38,836        25,885      13,575
Cash flows from investing activities:
 Proceeds from Motco settlement. . .        -        41,100           -
 Capital expenditures. . . . . . . .   (3,361)       (4,696)    (10,533)
 Investment in Quanterra . . . . . .   (3,325)       (5,475)     (1,208)
 Acquisition of businesses, net of 
  cash acquired. . . . . . . . . . .   (1,455)       (2,223)          -
 Other, net. . . . . . . . . . . . .      700          (655)      1,198
 Investment activities of 
  transportation, treatment and 
  disposal discontinued operations .  (14,041)      (11,704)    (11,324)
                                      -------       -------     -------
 Net cash (used for) provided by 
  investing activities . . . . . . .  (21,482)       16,347     (21,867)
Cash flows from financing activities:
  Repayments of long-term borrowings     (438)     (110,751)    (55,965)
  Long-term borrowings . . . . . . .      962        89,598      63,802
  Net proceeds from issuance of 
   preferred stock . . . . . . . . .   40,609             -           - 
  Dividends paid on preferred stock    (4,050)       (4,200)     (4,200)
  Issuances of common stock, net . .      (33)        1,807         556
  Repurchase of common stock . . . .        -          (740)          -
                                      -------       -------     -------
 Net cash provided by (used for) 
  financing activities . . . . . . .   37,050       (24,286)      4,193
                                      -------       -------     -------
Net increase (decrease) in cash and 
 cash equivalents. . . . . . . . . .   54,404        17,946      (4,099)
Cash and cash equivalents at 
 beginning of year . . . . . . . . .   24,493         6,547      10,646
                                      -------       -------     -------
Cash and cash equivalents at end 
 of year . . . . . . . . . . . . . . $ 78,897      $ 24,493    $  6,547 
                                      =======       =======     ======= 
 
See accompanying notes to consolidated financial statements.

                                     28  
<PAGE>

              INTERNATIONAL TECHNOLOGY CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
  Summary of significant accounting policies:
  
   Basis of presentation and principles of consolidation
  
   The consolidated financial statements include International
Technology Corporation (IT or the Company) and its wholly-owned and
majority-owned subsidiaries.  The Company also includes its
proportionate interest in joint ventures which were entered into for the
purpose of executing large remediation projects and in which the Company
does not have in excess of 50% of voting control.  Intercompany
transactions are eliminated.  Certain reclassifications have been made
to prior years' consolidated financial statements in order to conform to
the current year presentation.
 
   Beginning in fiscal year 1996, the Company changed its fiscal year to
consist of four thirteen-week fiscal quarters with the fourth quarter
ending on the last Friday of March.  Previously, the fiscal year ended
on March 31 of each year.
  
   Estimates used in the preparation of the consolidated financial
   statements   

   The preparation of consolidated financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and the accompanying notes.  Actual results
inevitably will differ from those estimates and such differences may be
material to the consolidated financial statements.
  
   Cash equivalents
  
   Cash equivalents include highly liquid investments with an original
maturity of three months or less.
  
   Contract accounting and accounts receivable
  
   The Company primarily derives its revenues from providing
environmental management services in the United States, principally to
federal, state and local governmental entities, large industrial
companies, utilities and waste generators.  Services are performed under
time-and-material, cost-reimbursement, fixed-price and unit-bid
contracts.
  
   Revenues from time-and-material and cost-reimbursement contracts are
recognized as costs are incurred.  Estimated fees on such contracts and
revenues on fixed-price and certain unit-bid contracts are recognized
under the percentage-of-completion method determined based on the ratio
of costs incurred to estimated total costs.  Anticipated losses on
contracts are recorded as identified.  Certain contracts include
provisions for revenue adjustments to reflect scope changes and other
matters, including claims, which require negotiations with clients in
the ordinary course of business, leading to some estimates of claim
amounts being included in revenues.  When such amounts are finalized,
any changes from the estimates are reflected in earnings.
  
   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 or completion of the project.  Unbilled receivables,
included in accounts receivable, were $20,287,000 and $20,945,000 at
March 28, 1997 and March 29, 1996, respectively.  Generally, unbilled
receivables are expected to be billed and collected in the subsequent
fiscal year.  Included in unbilled receivables at March 28, 1997 is
approximately $9,200,000 of claims related to the Helen Kramer project
which is subject to a governmental investigation.  (See Commitments and
contingencies - Helen Kramer contract.)
  
   Billings in excess of revenues represent amounts billed in accordance
with contract terms, which are in excess of the amounts includable in
revenue.

                                     29  
<PAGE>  
                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

   At March 28, 1997, accounts receivable are primarily concentrated in
federal, state and local governmental entities and in commercial clients
in which the Company does not believe there is any undue credit risk.

   Property, plant and equipment
  
   The cost of property, plant and equipment is depreciated using the
straight-line method over the estimated useful lives of the individual
assets, except for the Hybrid Thermal Treatment System  (HTTS )
transportable incineration units, which are generally depreciated on the
basis of operating days.  

   Interest
  
   Interest incurred on qualified capital expenditures is capitalized
and included in the cost of such constructed assets.  Interest incurred
was $7,168,000, $7,014,000 and $8,065,000 for fiscal years 1997, 1996 
and 1995, respectively.  No interest was capitalized in fiscal years
1997 or 1996.  Total interest capitalized was $484,000 for fiscal year
1995.
  
   Interest income is principally earned on the Company's investments in
cash equivalents and was $1,908,000, $569,000 and $471,000  in fiscal
years 1997, 1996 and 1995, respectively.  In fiscal year 1995, the
Company received a combined $278,000 of interest income resulting from a
settlement of a lawsuit and an income tax refund.
  
   Intangible assets
  
   Cost in excess of net assets of acquired businesses is amortized over
20 years on a straight-line basis.  At March 28, 1997 and March 29,
1996, accumulated amortization is $8,143,000 and $7,305,000,
respectively.  Other intangibles, arising principally from acquisitions,
are amortized on a straight-line basis over periods not exceeding 20
years.  The Company regularly reviews the individual components of its
intangible assets and recognizes, on a current basis, any diminution in
value.
  
   Per share information
  
   The consolidated financial statements as well as all footnote
references to the Company's common shares and stock options have been
restated to reflect the one-for-four reverse split of IT common shares
and the reduction in par value of the Company's common stock which were
approved by the shareholders at the Annual Meeting of Stockholders on
November 20, 1996.
  
   Per share information is based on the weighted average number of
outstanding common shares and common share equivalents during each
period which aggregated 9,226,596 in 1997, 8,981,827 in 1996 and
8,889,327 in 1995.  Common share equivalents include dilutive stock
options.  For each fiscal year presented, the computation of net income
per share, assuming the conversion into common shares of the Company's
7% Cumulative Convertible Exchangeable Preferred Stock, is antidilutive.
For fiscal year 1997, the computation of net income per share, assuming
the conversion into common shares of the Company's 6% Cumulative
Participating Preferred Stock, is antidilutive.  (See Preferred stock.)
  
   In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted
on December 31, 1997.  At that time, the Company will be required to
change the method currently used to compute earnings per share and to
restate all prior periods.  Under the new requirements for calculating
primary earnings per share, the dilutive effect of stock options will be
excluded.  The impact of Statement 128 on the calculation of basic

                                     30  
<PAGE>
                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

earnings per share and fully diluted earnings per share for fiscal 1997,
1996 and 1995 is not expected to be materially different.
  
   Fair value of financial instruments
  
   The following methods and assumptions were used by the Company in
estimating the fair value of its financial instruments:  
  
   Cash and cash equivalents:  The carrying amount reported in the
balance sheet approximates its fair value.
  
   Investment in Quanterra: The Company has a 19% ownership interest in
Quanterra (see Quanterra), in which the remaining 81% interest is held
by Corning Incorporated.  The determination of fair value of the
Company's investment in this untraded, closely held entity is not
practicable.
  
   Long and short-term debt: A reasonable estimate of the fair value for
the 9.42% senior secured notes was based upon a discounted cash flow
analysis.  The carrying amount of other debt approximates its fair
value.
  
   The carrying amounts and estimated fair values of the Company's
financial instruments are:
<TABLE>
<CAPTION>

                                  March 28, 1997       March 29, 1996 
                              --------------------   -------------------
                              Carrying  Estimated   Carrying  Estimated 
                               amount   fair value   amount   fair value
                               ------   ----------   ------   ----------
                                              (In thousands)
<S>                          <C>        <C>         <C>        <C>
Cash and cash equivalents    $ 78,897   $ 78,897    $ 24,493   $ 24,493
     
Investment in Quanterra        16,300    Not          12,975    Not
                                         practicable            practicable
                                         to determine           to determine
  
Long and short-term debt:
  9.42% senior secured notes   65,000      63,329     65,000     64,759
  Other                         6,217       6,217        708        708
</TABLE>
  
   Long-lived assets
  
     In March 1995, the FASB issued Statement of Accounting Standards
No. 121 (SFAS No. 121), "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to Be Disposed Of," which requires
impairment losses to be recorded on long-lived assets used in operations
when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the
assets' carrying value.  SFAS No. 121 also addresses the accounting for
long-lived assets that are expected to be disposed of.  The Company has
adopted SFAS No. 121 in fiscal year 1997 which did not result in any
material impact on the results of operations or financial position
of the Company.  Long-term assets of discontinued operations (see
Discontinued operations) are accounted for under APB Opinion No. 30,
"Reporting the Results of Operations" and are not subject to SFAS No.
121.

                                     31  
<PAGE>
                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  
  Consolidated statements of cash flows supplemental disclosures:
  
     Supplemental cash flow information is:

                                                 Year ended 
                                      ---------------------------------
                                      March 28,    March 29,   March 31,
                                        1997         1996        1995   
                                      ---------    ---------   -------- 
                                                (In thousands)
       Interest paid, net of amounts
         capitalized                   $ 6,713      $ 7,184      $ 7,230
       Interest received                 1,730          293          317
       Income taxes paid                   287        1,860          782
       Income tax refunds received       1,178            2          989
       Acquisition liabilities assumed   6,346        1,155            -
  
  Quanterra:
  
   In June 1994, the Company and an affiliate of Corning Incorporated
(Corning) combined the two companies' environmental analytical services
businesses into a newly formed 50%/50% jointly-owned company
(Quanterra).  In connection with the formation, the Company contributed
the $38,766,000 net assets of its analytical business into Quanterra. 
Additionally, IT incurred cash costs of $1,208,000, issued to Corning
83,250 shares of IT common stock and a five-year warrant to purchase
500,000 shares of IT common stock at $20.00 per share which were valued
in the aggregate at $3,300,000, and agreed to indemnify Quanterra and
Corning from certain liabilities arising prior to the closing of the
transaction.  Upon the closing of the formation of Quanterra, an
integration plan was implemented to eliminate redundant laboratory
facilities and duplicative overhead and systems.  IT's portion of the
charge for integration was $9,264,000, including $2,869,000 incurred
directly by IT.
  
   In January 1996, the Company and Corning completed an agreement to
recapitalize Quanterra which resulted in a change in Quanterra's
ownership to 19% by IT and 81% by Corning.  The recapitalization
included a $25,000,000 infusion of new equity in Quanterra, of which
$2,500,000 was contributed by IT.  In addition, IT sold a common stock
interest in Quanterra to Corning in consideration of the exchange of
83,250 shares of IT stock and warrants to purchase 500,000 shares of IT
common stock, previously issued to Corning in connection with the
formation of Quanterra.  These shares and warrants were subsequently
retired by IT.  IT also received a put option allowing it to sell its
shares to Quanterra at market value in the year 2003.  The Company
reported a pre-tax charge of $24,595,000 related to the
recapitalization transaction.  As a result of the recapitalization,
IT's investment in Quanterra, which was previously accounted for under
the equity method, is currently accounted for on the cost basis.

   Although Quanterra has experienced net losses in the past several
years, the level of net loss has decreased over the past several
quarters, and Quanterra has recently neared break-even operation.  The
Company will continue to evaluate the ultimate recoverability of its
investment in Quanterra (which is carried at $16,300,000 on the March
28, 1997 consolidated balance sheet) on an ongoing basis and will
recognize any impairment in value should it occur.
 
   Summarized income statement data for Quanterra for fiscal years 1997,
1996 and 1995 (nine months) is the following:  revenues - $72,900,000 in
1997, $94,100,000 in 1996 and $92,400,000 in 1995; operating loss - 
$16,700,000 in 1997, $14,400,000 in 1996 and $18,900,000 in 1995; and
net loss - $10,600,000 in 1997, $11,300,000 in 1996 and $12,900,000 in
1995.  Quanterra's revenues from IT were $8,100,000, $15,700,000 and
$12,000,000 in fiscal years 1997, 1996 and 1995 (nine months),
respectively.

                                     32
<PAGE>
  
                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  
Discontinued operations:
  
   Overview
  
   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 sale of
some facilities and closure of certain other facilities.  In connection
with the divestiture, from December 1987 through March 31, 1994, the
Company cumulatively recorded a provision for loss on disposition of
transportation, treatment and disposal discontinued operations
(including the initial provision and two subsequent adjustments) in the
amount of $149,589,000, net of income tax benefit of $26,482,000.  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 March 31, 1995, the Company
recorded a further increase in the provision for loss on disposition of
$10,603,000, net of income tax benefit of $6,397,000, primarily for
increased closure costs resulting from additional delays in the
regulatory approval process and costs related to certain waste disposal
sites where IT has been named as a PRP.  The Company has incurred costs
of $15,698,000 in 1997, $11,704,000 in 1996 and $11,324,000 in 1995
relating to the closure plans and construction and PRP matters.  The
Company expects to incur significant costs over the next several years. 
At March 28, 1997, the Company's consolidated balance sheet included
accrued liabilities of approximately $26,300,000 to complete the closure
and post-closure of its disposal facilities and the PRP matters, net of
certain trust fund and annuity investments restricted 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, including those discussed below. The adequacy of the
provision for loss has been currently reevaluated in light of the
developments since the adoption of the divestiture plan, and management
believes that the provision as adjusted is reasonable; however, the
ultimate effect of the divestiture on the consolidated financial
condition 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 of the Company.
  
   Northern California Facilities
  
   With regard to the Company's transportation, treatment and disposal
discontinued operations, the Company has previously completed closure of
its Montezuma Hills and Benson Ridge facilities and is pursuing closure
of its inactive Panoche and Vine Hill Complex facilities.  On November
17, 1995, the California EPA, Department of Toxic Substances Control
(DTSC) approved the final closure plan and post-closure plan for the
Vine Hill Complex facility.  The approved final closure plan provides
for solidification and capping  of waste sludges and installation of
underground barriers and groundwater control systems.  Substantial
remediation has already been completed over both the past year since
approval of the plan and over the prior several years based upon
interim approvals by DTSC, and the final closure is scheduled to be
substantially completed in fiscal year 1998 with final completion in
fiscal year 1999.
  
   On June 28, 1996, DTSC released a Draft Environmental Impact Report
(DEIR) and Draft Closure Plan for public comment for the Panoche
facility.  The DEIR evaluates the Company's preferred closure plan as
well as several alternative plans and states that the Company's
preferred closure plan is environmentally superior. The alternative
plans involve excavation and on-site relocation of substantial
quantities of waste materials in addition to landfill capping and
groundwater controls which are common to all alternatives.  If
implemented, the alternative plans would extend the closure construction
schedule and increase the cost of closure.  The DEIR and Draft Closure
Plan were subject to a 90-day comment period which ended September 30,
1996, during which interested parties presented comments including
some supporting alternative plans.  DTSC, after considering all comments
received, will approve a final closure plan and certify the final EIR. 
The DTSC continues to consider comments by the Company, and by other
interested parties supporting alternative plans, and it is uncertain
what plan DTSC may ultimately approve.  The Company expects a plan
and all necessary permits to be approved in mid-fiscal year 1998. 
Closure construction for the Company's preferred plan is scheduled to be
completed within three years of approval of the plan.  If DTSC were to

                                     33  
<PAGE>
                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

approve an alternative plan or fail to timely approve any plan or if
implementation of any plan is delayed by litigation or appeals, the
Company's cost to close the site would increase, which could have a
material adverse impact on the consolidated financial condition of the
Company.  Pending approval of a closure plan, the Company has requested
permission, and the DTSC has agreed through the amendment of a
previously issued consent order, to allow the Company to promptly
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 construction was completed for the Montezuma Hills and Benson
Ridge facilities in December 1991 and December 1992, respectively.  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.  Operation of the facilities in the closure and
post-closure periods is subject to numerous federal, state and local
regulations.  The Company may be required to perform unexpected
remediation work at the facilities in the future or to pay penalties for
alleged noncompliance with regulatory 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 costs at March 1, 1997, 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 $14,900,000, letters of credit
totaling approximately $6,700,000 and a trust fund containing
approximately $12,200,000, and has purchased annuities which will
ultimately mature over the next 30 years to pay for its estimates of
post-closure costs. 
  
   Closure and post-closure costs are incurred over a significant number
of years and are subject to a number of variables including, among
others, completion of negotiations regarding specific site closure
and post-closure plans 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.  Such closure costs are comprised principally of engineering,
design and construction costs and of caretaker and monitoring costs
during closure.  The Company has estimated the impact of closure 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 plans developed by
the Company or if there are additional delays in the closure plan
approval process.  Certain revisions to the closure procedures could
also result in impairment of the residual land values attributed to
certain of the sites.  
  
   The carrying value of the long-term assets of transportation,
treatment and disposal discontinued operations of $40,048,000 at March
28, 1997 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.  The Company has an agreement with a real estate
developer to develop some of this property as part of a larger
development in the local area involving a group of developers.  The
entitlement process has been delayed pending approval of the Company's
closure plan for its adjacent disposal facility and local community
review of growth strategy.  This review is proceeding and initially
recommends, on a non-binding basis, strategies for limiting growth in
the area.  Ultimately, if the developers' plans change or the developers
are unable to obtain entitlements, the carrying value of this property
could be significantly impaired.  With regard to this property or any of
the other residual land, there is no assurance as to the timing of sales
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. 
  
                                     34  
<PAGE>  
  
                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  
   Operating Industries, Inc. Superfund Site
  
   In June 1986, USEPA notified a number of entities, including the
Company, that they were PRPs under the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA) with respect to the
Operating Industries, Inc. (OII) Superfund site in Monterey Park,
California, and as such, faced joint and several liability for the
cost to investigate and clean up this site.  Subsequently, USEPA alleged
that the Company had generated approximately 2% by volume of the
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).  The Company has not been named as a defendant in any of the
several personal injury and property damage lawsuits brought by area
residents.
  
   In October 1995, the Company and the USEPA agreed to a settlement 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.  While resolving the Company's alleged
liability for response costs incurred by the USEPA pursuant to the first
three partial consent decrees, the settlement does 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.
  
   In April 1996, the Company reached a settlement of the lawsuits with
the Steering Committee, pursuant to which the Company paid $250,000 in
settlement of the Steering Committee's claims.  The Company and the
Steering Committee also agreed, as a part of the settlement, to
cooperate and share on a pro-rata basis certain response and other
defense costs with respect to certain groundwater cleanup actions which
may be a part of the  final remedy for the site.  The Company and the
Steering Committee have not agreed to share all costs related to the
final remedy at the site, inasmuch as the Steering Committee claims that
pursuant to earlier consent decrees it is excused from paying for or
performing certain actions which may be required as a part of any final
remedy.  The Company does not agree with these claims.  The Company's
agreement with the Steering Committee to cooperate and share costs may
be terminated voluntarily by either party, including in the event of a
dispute as to the parties' respective obligations to pay for or perform
the final remedy for the site. 
  
   Should the costs of the final remedy be greater than expected, 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, or otherwise), the cost to the Company of
concluding this matter could materially increase.
  
   GBF Pittsburg Site
  
   In September 1987, the Company was 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.  IT and
17 other firms and individuals were characterized as responsible parties
in the RAO and directed to undertake investigation and potential
remediation of the site which consists of two contiguous parcels.  From
the 1960's through 1974, a predecessor to IT Corporation operated a
portion of one parcel 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.

   Additional PRPs, consisting primarily of known waste generators, were
subsequently served with an amended RAO by the DTSC.  IT and these other
PRPs (the PRP group) further investigated the nature and extent of any
subsurface contamination beneath the site and beyond its borders.  The
PRP group submitted Remedial Investigation and Feasibility Study (RI/FS)

                                     35  
<PAGE>

                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

reports which were accepted by the DTSC.  The studies indicate that
groundwater quality impact is not affecting drinking water supplies and
is not attributable solely to the portion of the site previously
operated by IT's predecessor. 
  
   In July 1993, the Company, along with the other PRPs at the site, was
issued a revised RAO and Imminent and Substantial Endangerment Order
that restates previous RAOs and directs all previously named PRPs
to undertake specific additional tasks including the closure of the
municipal landfill.  
  
   In November 1995, the DTSC, by letter, required the PRP group to
submit for public comment and DTSC approval a draft Remedial Action Plan
(RAP) describing a remedial alternative preferred by DTSC but not
supported by the PRP group.  The PRP group disputed the timing and
content of the draft RAP as required by DTSC as not justified by the
RI/FS process, but in January 1996 submitted a draft RAP discussing a
number of remedial alternatives.  After a period of public review and
comment, in June 1997, the DTSC completed and released a final RAP
selecting DTSC's original 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.  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.   As part of the RAP, the DTSC also advised the PRP
group of its position that both the group and the current owner/
operators are responsible for paying the future closure and postclosure
costs of the overlying municipal landfill, which have been estimated at
approximately $4,000,000.
  
   As a part of the draft RAP that the PRP group submitted in January
1996, the group asserted that other PRPs at the site (principally, the
current and past owner/operators of the site) were responsible for
approximately 85% of the site's remediation costs, and that the PRP
group was responsible for no more than approximately 15% of such costs. 
The Company has paid approximately 50% of the PRP group's costs to-date
on an interim basis.  The current owner/operators claimed in response
that the Company and other members of the PRP group were responsible for
at least 89% of the site's remediation costs and that they were
responsible for only a small percentage of such costs.  They also
demanded indemnity from the Company pursuant to the lease agreement
under which IT Corporation's predecessor operated the site, which demand
the Company has rejected.  In the draft RAP released in October 1996 the
DTSC released a draft non-binding allocation suggesting that the Company
is responsible for 15% of the site's response costs, that the generators
and others who are part of the PRP group are responsible for 35% of such
costs and that the current owner/operators and others are responsible
for 50% of such costs.  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.  Although the DTSC's allocation of
responsibility is not binding except in very limited circumstances, the
PRP group continues to believe that the current owner/operators should
pay a larger portion of the site's response costs and the Company is
attempting to continue to cooperate with the generators and other 
members of the PRP group to effect an appropriate allocation of
responsibility for site costs.  
  
   The Company and the PRP group are evaluating their potential
remedies, including judicial review, with respect to the final RAP, and
the ultimate outcome of any available remedies cannot be predicted at
this time.
  
   The PRP group has also 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 DTSC has advised the PRP group that if, at some point,
the RWQCB designates all or part of the site as a containment zone, DTSC
will work with the PRPs to either amend or modify the final RAP as
appropriate.  In the interim, however, DTSC will require that the PRPs
comply with the existing RAO, including implementation of the final RAP.

   The PRP group has initiated litigation against the current owner/
operators of the site and other non-cooperating PRPs to cause them to
bear their proportionate share of site remedial costs.  The current
owner/operators of the site have not cooperated with the PRP group in
its efforts to study and characterize the site, except for limited

                                     36  
<PAGE>
                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 current 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,
which could have a material adverse effect on the Company's consolidated
financial condition. 
  
   Environmental Protection Corporation Sites
  
   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.  The DTSC notice letter states that IT is believed to have
arranged for disposal of hazardous substances at the Eastside Facility
during the period between 1972 and 1985 when it was permitted and
operated as a land treatment facility.  In March 1997, the Company was
notified by a potentially responsible party which performed work at
another site near Bakersfield, California, formerly operated by EPC
known as the Westside Facility, that IT was considered a potentially
responsible party to share in the costs of that cleanup, which has been
completed.
  
   IT transported various waste streams both generated by IT and on
behalf of its customers to the Eastside Facility and the Westside
Facility at various times during those facilities' operations and it was
a minority shareholder in EPC for a period of its operations.  In
January 1996, the PRP group for the Eastside Facility (of which the
Company is a member) and the DTSC entered into an agreement for the
performance of a RI/FS for the site, as well as for cost sharing
for the RI/FS among the group and the DTSC.  IT is cooperating with
other group members to perform the work outlined in the agreement. 
Because of the early stage of the matter, the potential costs associated
with the remediation of the Eastside Facility will not be reasonably
estimable until completion of the RI/FS.
   
   Other Site Cleanup Actions
  
   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 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 allegations 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.

                                     37  
<PAGE>  
                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

  
  Long-term debt:
  
   Long-term debt consists of the following:
                                                March 28,    March 29,
                                                  1997         1996  
                                                --------     --------
                                                   (In thousands)
  
   Senior secured notes, due 2001 - 2003. . .   $ 65,000     $ 65,000
   Other. . . . . . . . . . . . . . . . . . .      6,217          708
                                                 -------      -------
                                                  71,217       65,708
    Less current portion. . . . . . . . . . .      5,343           97
                                                 -------      -------
                                                $ 65,874     $ 65,611
                                                 =======      =======
   
   Aggregate amounts of long-term debt maturing in the five years
following March 28, 1997 are $5,343,000, $749,000, $75,000, $50,000 and
$21,667,000, respectively. 
  
   On October 25, 1995, the Company executed a combined $125,000,000
financing which included $65,000,000 of 8.67% senior secured notes with
a group of major insurance companies and a $60,000,000 syndicated bank
revolving credit facility.  The financing package, which is subject to a
borrowing base, is secured by the accounts receivable and certain fixed
assets of the Company.  The senior secured notes have an eight-year
final maturity with no principal payments until the sixth year, and the
bank line has a term of five years.  In addition, the facilities contain
certain other restrictive covenants, including prohibitions on the
payment of cash dividends on common stock (and, if the Company is in
default under the facilities, on preferred  stock), and on the
repurchase of stock other than to fund IT's compensation plans,
limitations on capital expenditures, the incurrence of other debt and
the purchase or sale of assets and a negative pledge on substantially
all of the Company's assets not pledged to the facilities.  The
Company is in compliance with its covenants as of March 28, 1997.
  
   During the quarter ended December 27, 1996, the Company negotiated
amendments to its lending arrangements to provide enhanced flexibility
in the Company's operations in conjunction with the Carlyle Investment
(see below).  Among other things, the changes modify certain financial
covenants, permit the Carlyle Investment and the payment of dividends on
such investment, increase the Company's allowable debt and permit
proceeds from borrowings to be used to finance acquisitions in certain
circumstances, and increase the cost of the senior secured notes and
credit line based upon certain leverage thresholds.  At March 28, 1997,
this provision increased the cost of the facilities by 0.75% with the
senior notes currently bearing interest at 9.42%.
  
   In aggregate, at March 28, 1997, letters of credit totaling
approximately $20,000,000 related to the Company's insurance program,
financial assurance requirements and bonding requirements were
outstanding against the Company's $60,000,000 bank line of credit.  The
Company had no outstanding cash advances under the line at March 28,
1997.  As of that date, the Company's borrowing base under its combined
financing arrangement allowed for additional letters of credit or
borrowings under the line of credit of up to $580,000.  At March 28,
1997, interest on borrowings under the Company's revolving line of
credit is at the bank's prime rate plus 1.25%, or in the case of
Eurodollar borrowings, at the interbank offered rate plus 2.25%.  The
Company is subject to a 0.5% per annum charge on the unused portion
of the commitment.

                                     38  
<PAGE>

                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

  
Income taxes:

     The benefit for income taxes, net of changes in the deferred tax
valuation allowance, consists of the following:
 
                                                Year ended 
                                     ---------------------------------
                                     March 28,   March 29,    March 31,
                                       1997         1996         1995
                                     --------    --------     --------
                                              (In thousands)
     Current:
      Federal                          $   (764)    $  1,098   $      -
      State                                 215          346        371
                                        -------      -------    -------
                                           (549)       1,444        371
                                        -------      -------    -------  
                                     
     Deferred:
      Federal                               336      (11,942)    (1,828)
      State                                  57       (1,792)    (2,557)
      Foreign                               (23)           -          -
                                        -------      -------    -------
                                            370      (13,734)    (4,385)
                                        -------      -------    -------
     Total benefit                     $   (179)    $(12,290)  $ (4,014)
                                        =======      =======    ======= 

The benefit for income taxes is included in the statements of operations
as follows:

                                                Year ended 
                                     ---------------------------------
                                     March 28,   March 29,    March 31,
                                       1997         1996         1995
                                     --------    --------     --------
                                              (In thousands)

     Continuing operations             $   (179)    $(12,290)  $  2,383
     Discontinued operations                  -            -     (6,397)
                                        -------      -------    -------
     Total benefit                     $   (179)    $(12,290)  $ (4,014)
                                        =======      =======    ======= 


     A reconciliation of the provision (benefit) for income taxes on
continuing operations computed by applying the federal statutory rate of
34% to the loss from continuing operations before income taxes and the
reported provision (benefit)for income taxes of continuing operations is
as follows:

                                                Year ended 
                                     ---------------------------------
                                     March 28,   March 29,    March 31,
                                       1997         1996         1995
                                     --------    --------     --------
                                              (In thousands)

 Income tax benefit computed at 
  statutory federal income tax rate   $ (3,045)  $ (3,993)  $   (441)
 State income taxes, net of federal 
  tax benefit, if any                      179       (954)       424
 Equity in income (loss) of foreign 
  subsidiaries                               -          -         57
 Amortization of cost in excess of 
  net assets of acquired businesses        100        199        200
 Equity in net loss of Quanterra             -     (2,366)     2,366
 Research credit                             -          -       (212)
 Federal deferred tax asset valuation                   
  allowance adjustment                   2,597     (5,539)         -
 Other (principally nondeductible 
  items)                                   (10)       363        (11)
                                       -------    -------    ------- 
 Total provision (benefit)            $   (179)  $(12,290)  $  2,383
                                       =======    =======    =======
  
                                     39  
<PAGE>
                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

   At March 28, 1997, the Company had net operating loss (NOL)
carryforwards of approximately $47,779,000 for tax reporting purposes
expiring primarily in 2007 through 2012.  The Company also has tax
credit carryforwards of approximately $2,601,000 which expire in various
years through 2008 and alternative minimum tax credit carryforwards of
approximately $2,240,000 with no expiration. 

   At March 28, 1997 and March 29, 1996, the Company had deferred tax
assets and liabilities as follows:



                                                    March 28,  March 29,
                                                      1997       1996  
                                                    --------   --------
                                                      (In thousands)
   Deferred tax assets:
     Closure accruals - discontinued operations      $ 18,468  $ 24,854
     NOL carryforwards                                 20,481     9,109
     Tax basis in excess of book basis in Quanterra    11,145    11,145
     Alternative minimum tax credit carryforwards       2,240     3,246
     Investment and other tax credit carryforwards      2,601     2,350
     Other accrued liabilities                         11,193     7,581
     Other, net                                         3,053     2,042
                                                      -------   -------
       Gross deferred tax asset                        69,181    60,327
     Valuation allowance for deferred tax asset        (9,471)   (4,869)
                                                      -------   -------
       Total deferred tax asset                        59,710    55,458

   Deferred tax liabilities:
     Tax depreciation in excess of book depreciation   (9,235)   (6,047)
     Asset basis difference - discontinued operations (13,012)  (11,997)
     Other, net                                        (5,347)   (4,938)
                                                      -------   -------
       Total deferred tax liabilities                 (27,594)  (22,982)
                                                      -------   -------  
 
       Net deferred tax asset                        $ 32,116  $ 32,476
                                                      =======   =======
     Net current asset                               $ 11,324  $ 12,149
     Net noncurrent asset                              20,792    20,327  
                                                      -------   -------  
       Net deferred tax asset                        $ 32,116  $ 32,476
                                                      =======   =======

      During the year ended March 28, 1997, the Company increased its
deferred tax asset valuation allowance from $4,869,000 to $9,471,000. 
This change was principally due to the Company's assessment of the
uncertainty as to when it will generate a sufficient level of future
earnings to realize the deferred tax asset created by the restructuring
charge (see Restructuring Charge).  Management expects that its future
taxable income and the use of tax-planning strategies will more
likely than not allow the Company to fully realize its deferred tax
asset.  The Company evaluates the adequacy of the valuation allowance
and the realizability of the deferred tax asset on an ongoing basis.

      During the year ended March 29, 1996, the Company decreased its
deferred tax asset valuation allowance from $12,650,000 to $4,869,000.  
The cumulative impact of the resolution in fiscal year 1996 of a number
of uncertainties led to a reassessment of the Company's ability to
generate a sufficient level of future earnings to realize a greater
portion of its related deferred tax asset, resulting in the release of
valuation allowance.  Matters resolved in fiscal year 1996 included: 
(1) the $41,100,000 settlement of the Motco Trust lawsuit related to a
major contract performed by the Company, which resulted in a substantial
tax gain (see Motco litigation settlement), (2) the $125,000,000
refinancing of the Company's senior notes and revolving credit line at
efficient rates on a long-term basis thereby mitigating the potential
impact of higher future interest expenses (see Long-term debt), (3) the
final approval from California state regulators for the closure plan
related to the Vine Hill Complex facility, resolving certain of the
uncertainties regarding the ultimate costs for closure of the facility
(see Discontinued operations), (4) the settlement of past costs related
to the OII disposal facility PRP action (see Discontinued operations),

                                     40  
<PAGE>
                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(5) the recapitalization of Quanterra (see Quanterra), and (6) the
settlement of the majority of the lawsuits related to the Central Garden
litigation (see Commitments and contingencies - Central Garden). 

      During the year ended March 31, 1995, the Company decreased the
deferred tax asset valuation allowance to $12,650,000, principally to
offset an adjustment made to reduce the gross deferred tax asset to
recognize the federal benefit of net operating losses for state
purposes.
 
Commitments and contingencies:

      Lease commitments

      The Company's operating lease obligations are principally for
buildings and equipment.  Generally, the Company is responsible for
property taxes and insurance on its leased property.  At March 28, 1997,
future minimum rental commitments under noncancelable operating leases
with terms longer than one year aggregate $34,558,000 and require
payments in the five succeeding years and thereafter of $7,656,000,
$7,022,000, $5,603,000, $4,260,000, $2,966,000, and $7,051,000,
respectively.

      Rental expense related to continuing operations was $12,564,000
(including $2,184,000 of the restructuring charge), $11,037,000 and
$11,550,000 for fiscal years 1997, 1996 and 1995, respectively.  

      Contingencies   

      Helen Kramer contract

      In May 1993, the Company received an administrative subpoena from
the Office of the Inspector General (OIG) of the USEPA seeking documents
relating to certain of the Company's claims which were submitted to the
U.S. Army Corps of Engineers with regard to the Helen Kramer remediation
contract, a completed project which the Company performed in joint
venture.  Since August 1992, the Defense Contract Audit Agency (DCAA)
has been conducting an audit of certain claims submitted by the joint
venture, and the Company has been subject to a continuing investigation
into the claims. Government investigators have interviewed employees of
the joint venture, the Company's joint venture partner, and the Company.
Remedies which the government could pursue as a result of the
investigation include damages, penalties, and forfeiture of all or part
of the Company's claims.  The Company is currently engaged in settlement
discussions concerning these allegations.

      In October 1993, a shareholder of the Company alleged that the
acts giving rise to the Helen Kramer investigation constituted, among
other things, a waste of the Company's assets and demanded that the
Company institute an action against those responsible for the alleged
wrongdoing.  The Audit Committee (Committee) of the Board of Directors
investigated the allegations of the OIG. The Committee, acting with the
assistance of outside counsel and experts, determined that there was
no evidence of intentional wrongdoing or negligence by the Company or
any employee.  The Board approved the report of the Committee and
advised counsel to the shareholder of its conclusions in September 1994.
The Company has not received any further communication from the
shareholder or her counsel.

      Central Garden

      In July 1992, the Company responded to an emergency call to clean
up a chemical spill at a finished product warehouse facility leased by
Central Garden & Pet Supply Company (Central) in Baton Rouge, Louisiana.
While cleanup was under way, a fire began which damaged the warehouse
facility.  A total of nine lawsuits arising from the fire were filed
against the Company including three actions brought by residents of a
nearby apartment complex alleging personal injuries and property

                                     41 
<PAGE>

                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

damage caused by smoke from the fire (including Gravois, Tinnea, and
Gordillo et al. v. IT Corporation, et al., 19th Judicial District,
Parish of East Baton Rouge, Louisiana, Case Nos. 383,887, 396,376 and
396,375).

      The parties to all the lawsuits alleged, among other things, that
the Company was the cause of the fire and of approximately $23,000,000
in damages (not including punitive damages). The Company in pleadings
denied responsibility for the fire and the claimed damages.  In March
and April 1996, the Company and its insurer settled or reached
settlements-in-principle regarding six of the nine lawsuits against the
Company brought by those claiming principally property damage, which
settlements were completed and approved by the court. 

      The Company has not yet been able to reach settlements of the
claims asserted in the Gravois action and in the two other related cases
by nearby apartment dwellers and others who claim personal injuries,
damages to their residences, related personal property damage, and
punitive damages.  While the Company is pursuing settlement of these
matters, the Company is defending them vigorously and believes that it
has meritorious challenges to some of the damages claimed and
meritorious claims for contribution against others.   Trial of the
Gravois case has been set for December 8, 1997.

      The Company's insurance carrier defended the actions which were
settled and is defending the three remaining actions subject to a
reservation of its rights to contest coverage at a later date.  The
Company may face reimbursement claims by its carrier, based on
assertions that the Company's policies do not cover damages resulting
from the fire because of allegations that such damages are excluded
pollution liabilities or punitive damages. 

      In fiscal year 1995, the Company recorded a $5,300,000 charge,
covering both defense and potential settlement costs, to provide for its
self-insured retention under its general liability insurance coverage
for the Central Garden matter.  Based on discovery to-date, should any
of the three remaining cases proceed to trial, there is a risk that the
Company will be found liable for at least some damages.  If the Company
is held liable for damages, there is the further risk that the Company
could be held liable for punitive damages.  Should any of the three
remaining cases proceed to trial and result in a significant award of
damages against the Company, or should the Company be required to pay 
significant amounts in settlement of any of the cases, any of which are
not substantially covered by the Company's insurance policies,
additional litigation costs would be recorded related to the matter.

      Other

      The Company is subject to other claims and lawsuits in the
ordinary course of its business.  In the opinion of management, all such
other pending claims are either adequately covered by insurance or, if
not insured, will not individually or in the aggregate result in a
material adverse effect on the consolidated financial condition of the
Company.

      The Company maintains a liability insurance program which includes
commercial general liability, product liability, automotive liability,
employer's liability, workers' compensation, all risk property coverage,
consultants' environmental liability (including errors and omissions),
employment practices liability and directors' and officers' liability
insurance coverage.  A portion of the Company's commercial general
liability, product liability, automotive liability and workers'
compensation insurance is provided through arrangements which require
the Company to indemnify the insurance carriers for all losses and
expenses under the policies and to support the indemnity commitments
with letters of credit and is, in effect, a self-insurance layer.

      Environmental Impairment Liability coverage for IT's inactive
treatment, storage and disposal facilities located in Northern
California is provided through the Company's captive insurance
subsidiary, which has issued a $32,000,000 policy which meets the
current requirements of both federal and state law.  See Discontinued
operations for information regarding certain legal and governmental
proceedings affecting the Company's treatment, storage and disposal
facilities.

                                     42 
<PAGE>
                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restructuring charge:

      In conjunction with the corporate restructuring to position the
Company for growth and diversification which was initiated in the second
quarter of fiscal year 1997, the Company incurred a pre-tax
restructuring charge of $8,403,000.  The restructuring charge included
$3,400,000 of costs for severance, $4,100,000 of costs for closing and
reducing the size of a number of the Company's offices, and $900,000 of
costs for other related items. At March 28, 1997, $3,720,000 of the
charge remained to be paid over the next eight years.  The restructuring
charge was taken in conjunction with an organizational realignment which
is expected to enable the Company to operate more efficiently and
cost-effectively on an ongoing basis.

Motco litigation settlement:

      Noncurrent other assets at March 31, 1995 included a claim amount
of $31,200,000 representing direct costs incurred in excess of those
recovered to that date under the Motco Site Trust Fund contract.

      On December 4, 1991, the Company announced the suspension of work
at the Motco project, the cleanup of a Superfund site in Texas and the
filing of a $56,000,000 breach of contract lawsuit against the Motco
Trust, the PRP group that agreed to finance remediation of the site, and
Monsanto Company, the leader of the PRP group.  In May 1995, a federal
court judge issued a judgment in favor of IT in the amount of
approximately $66,000,000, including attorneys' fees and interest.

      In August 1995, the Company settled the litigation and received
$41,100,000 of cash from the Motco Trust.  In the second quarter of
fiscal year 1996, the Company reported in other income a pre-tax gain of
$1,090,000, which represented the settlement proceeds, net of the
previously recorded $31,200,000 claim amount, $8,000,000 of costs
related to certain equipment specially constructed for the Motco project
which has been idle since ceasing work on the project, and legal and
other expenses.

Governmental regulation:

      The Company is subject to extensive regulation by applicable
federal, state and local agencies.  All facets of the Company's business
are conducted in the context of a complex statutory, regulatory and
governmental enforcement framework and a highly visible political
environment.  The Company's operations must satisfy stringent laws and
regulations applicable to performance.  Future changes in regulations
may have an adverse effect on the Company's business.

Preferred stock:

      Carlyle Investment

      At the November 20, 1996 Annual Meeting of Stockholders, IT's
shareholders voted to approve a $45,000,000 investment (the Carlyle
Investment) by The Carlyle Group (Carlyle), a Washington, D.C. based
merchant banking firm.  The Carlyle Investment consists of 45,000 shares
of 6% Cumulative Convertible Participating Preferred Stock, par value
$100 per share (Convertible Preferred Stock) and warrants to purchase
1,250,000 shares of IT common stock, par value $.01 per share.  The net
proceeds to IT (after related offering costs of $4,391,000) from the
Carlyle Investment were $40,609,000.

      Assuming the conversion of all of the Convertible Preferred Stock
into IT common stock and the exercise of all of the warrants, Carlyle
would own approximately 43% of the voting power of the Company.  The
terms of the Convertible Preferred Stock provide that, to November 20,
2001, the holders of the Convertible Preferred Stock have the right to
elect a majority of the Board of Directors of the Company, provided that
Carlyle continues to own at least 20% of the voting power of the
Company.

                                     43 
<PAGE>
                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      The Convertible Preferred Stock ranks, as to dividends and
liquidation, pari passu to the Company's 7% Preferred Stock (see 7%
Preferred Stock) and prior to the Company's common stock.  The
Convertible Preferred Stock is entitled to cumulative annual dividends. 
No dividends will be payable in the first year; dividends will be paid
quarterly in kind for the second year at the rate of 3% per annum. 
Thereafter, dividends will be paid quarterly in cash at the rate of 6%
per annum. The Convertible Preferred Stock is entitled to a liquidation
preference of $1,000 per share.

      The Convertible Preferred Stock and warrants may at any time, at
the option of Carlyle, be converted into IT common shares.  The
conversion price of the Convertible Preferred Stock is $7.59 per share
and the exercise price of the warrants is $11.39 per share.  The Company
will be entitled at its option to redeem all of the Convertible
Preferred Stock at its liquidation preference plus accumulated and
unpaid dividends on or after November 21, 2003.

      Although the first two years' dividends are paid at a rate of 0%
and 3%, respectively, dividends will be imputed during this period at a
rate of approximately 6% per annum.  Imputed dividends were $866,000
in fiscal year 1997.  Any imputed dividends will never be paid in cash
or stock.

      7% Preferred stock

      In a September 1993 public offering, the Company issued 2,400,000
depositary shares, each representing a 1/100th interest in a share of
the Company's 7% Cumulative Convertible Exchangeable Preferred Stock (7%
Preferred Stock).  The depositary shares entitle the holder to all
proportional rights and preferences of the 7% Preferred Stock, including
dividend, liquidation, conversion, redemption and voting rights and
preferences. 
 
      The 7% Preferred Stock ranks, as to dividends and liquidation,
pari passu to the Convertible Preferred Stock (see Carlyle Investment)
and prior to the Company's common stock.  The dividend per annum and
liquidation preference for each share of 7% Preferred Stock are $175 and
$2,500, respectively, and for each depositary share are $1.75 and $25,
respectively.  Dividends on the 7% Preferred Stock and depositary shares
are cumulative and payable quarterly.

      The 7% Preferred Stock is convertible at the option of the holder
into shares of the Company's common stock at a conversion price of
$23.36 per share, subject to adjustment under certain circumstances.  On
any dividend payment date, the 7% Preferred Stock is exchangeable at the
option of the Company, in whole but not in part, for 7% Convertible
Subordinated Debentures Due 2008 in a principal amount equal to $2,500
per share of Preferred Stock (equivalent to $25 per depositary
share).  The 7% Preferred Stock may be redeemed at any time, at the
option of the Company, in whole or in part, initially at a price of
$2,622.50 per share of Preferred Stock (equivalent to $26.225 per
depositary share) and thereafter at prices declining to $2,500 per share
of Preferred Stock (equivalent to $25 per depositary share) on or after
September 30, 2003.

      Additionally, the 7% Preferred Stock has a special conversion
right that becomes effective in the event of certain significant
transactions affecting ownership or control of the Company.  In such
situations, the special conversion right would, for a limited period,
reduce the then prevailing conversion price to the greater of the market
value of the common stock or $12.68 per share.   The Carlyle Investment
(see Carlyle Investment) triggered this special conversion right.  On
January 9, 1997, holders of 344,308 depositary shares elected to convert
such shares to 678,816 shares of IT common stock. 

      The 7% Preferred Stock is non-voting, except that holders are
entitled to vote as a separate class to elect two directors if the
equivalent of six or more quarterly dividends (whether consecutive or
not) on the 7% Preferred Stock are in arrears.  Such voting rights will
continue until such time as the dividend arrearage on the 7% Preferred
Stock has been paid in full.

                                     44 
<PAGE>

                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock incentive plans:

      Summary

      At the November 20, 1996 Annual Meeting of Stockholders, IT's
shareholders voted to approve the Company's 1996 Stock Incentive Plan
(1996 Plan) which provides for the issuance of the Company's common
stock or any other security or benefit with a value derived from the
value of its common stock.  Options are granted at exercise prices equal
to or greater than the quoted market price at the date of grant.  At
March 28, 1997, the maximum number of shares of the Company's common
stock that may be issued pursuant to awards granted under the 1996 Plan
is 79,000.  At April 1 of each year, the maximum number of shares
available for award under the 1996 Plan will be increased by an amount
which represents 2% of the number of the Company's common stock which
are issued and outstanding at that date.  During fiscal year 1997,
171,000 stock options were granted under the 1996 Plan, which expires in
fiscal year 2002.

      The Company's 1991 Stock Incentive Plan (1991 Plan) and 1983 Stock
Incentive Plan (1983 Plan) provided for the granting of incentive and
non-qualified stock options and the issuance of the Company's common
stock or any other security or benefit with a value derived from the
value of its common stock.  No shares are available for grant under
these plans as such authority to grant as to the 1991 Plan expired in
March 1996 and as to the 1983 Plan expired in September 1993.  Options
granted under the plans and outstanding at March 28, 1997 will expire at
various dates through March 7, 2006. 

      Changes in the number of shares represented by outstanding options
under the 1996 Plan, the 1991 Plan and the 1983 Plan during the fiscal
years ended March 28, 1997, March 29, 1996 and March 31, 1995 are
summarized as follows:


                                                   Year ended 
                                       --------------------------------
                                       March 28,    March 29,  March 31,
                                         1997         1996       1995
                                        -------      -------    -------
     Outstanding at beginning
      of year                           744,847      784,895    791,191


     Options granted
      (1997, $8.63 per share;
      1996, $10.50 - $13.00 per share;
      1995, $10.00 - $14.50 per share)  171,000       39,750    358,255

     Options exercised
      (1997, 1996, and
      1995 - $11.50 per share)           (3,629)        (575)    (1,794)

     Options expired and forfeited     (164,539)     (79,223)  (362,757)
                                       --------     --------   --------

     Outstanding at end of year (1997,
      $8.63 - $32.50 per share)         747,679      744,847    784,895
                                       ========     ========   ========
     Vested options                     473,257      462,793    371,241
                                       ========     ========   ========

      At March 28, 1997, the outstanding options had an average
remaining life of 6.6 years and an average exercise price of $15.96 per
share.

                                     45 
<PAGE>

                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Compensation cost

      The Company has elected to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and
related interpretations in accounting for its employee stock options
because, as discussed below, the alternative fair value accounting
provided for under FASB Statement No. 123, "Accounting for Stock-Based
Compensation," (SFAS No. 123) requires use of option valuation models
that were not developed for use in valuing employee stock options. 
Under APB 25, because the exercise price of the Company's employee stock
options equals the market price of the underlying stock on the date of
grant, no compensation expense is recognized.

      SFAS No. 123 provides that, if its optional method of accounting
for stock options is not adopted (and which the Company has not
adopted), disclosure is required of pro forma net income and net income
per share.  In determining the pro forma information for stock options
granted in fiscal years 1997 and 1996, the fair value for these options
were estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted average assumptions:  risk-free
interest rate based upon zero-coupon U.S. Treasury Notes of 6.38% in
fiscal years 1996 and 1997; no dividend yield; volatility factor of
the expected market price of the Company's common stock of 0.342 to
0.384; and a weighted average expected life of each option of 6.6 years.

      The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferrable.  In addition, option valuation
models require the input of highly subjective assumptions including the
expected stock price volatility.  Because the Company's employee stock
options have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion,
the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

      For purposes of pro forma disclosures of net income (loss) and net
loss per share, the estimated fair value of the options is amortized to
expense over the vesting period.  The Company's pro forma information
is:

                                              Pro forma
                                              Year ended 
                                 -------------------------------------
                                  March 28, 1997       March 29, 1996
                                 -----------------   -----------------
                                 (In thousands, except per share data)

    Net income (loss)                $ (8,819)             $    529
                                      =======               =======

    Net loss per share               $  (1.49)             $   (.41)
                                       =======              =======

    Additionally, under the 1991 Plan, the Company awarded shares of
nonvested restricted stock to officers and key employees which amounted
to none, 266,019 and 50,000 in fiscal years 1997, 1996 and 1995,
respectively.  Vesting of awards is dependent upon continued employment
and, in the case of certain performance-related awards, the sustained
level of a target market price for the Company's common stock that
exceeds the related market price on the date of grant.  On March 28,
1997, the total number of shares of restricted stock outstanding was
197,638.  The cost of restricted stock awards is generally expensed over
the vesting period, which ranges from two to five years, and amounted to
$575,000 in fiscal year 1997 and $568,000 in fiscal year 1996.

Major customers:

    A total of 59%, 65% and 63% of the Company's revenues during fiscal
years 1997, 1996 and 1995, respectively, were from federal governmental
agencies, primarily the U.S. Department of Defense (DOD) and the U.S.
Department of Energy (DOE).  In fiscal years 1997, 1996 and 1995, the
DOD provided 42%, 51% and 47%, respectively, of the Company's revenues. 

                                     46

<PAGE>

                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The DOE provided 14%, 11% and 12% of the Company's revenues during
fiscal years 1997, 1996 and 1995, respectively.  

Employee benefit plans:

    The Company has a defined contribution, contributory pension and
profit sharing plan (the Plan), covering all employees with one year of
continuous service.  The Company funds current costs as accrued, and
there are no unfunded vested benefits.  Through June 30, 1995, the Plan
required a minimum annual contribution of 4% of participants' eligible
compensation; thereafter, the required minimum annual contribution is 3%
of participants' eligible compensation.  Additionally, beginning July 1,
1995, the Company contributes up to 2% of participants' eligible
compensation by matching 50% of each participant's contribution (up to
4% of eligible compensation) to the Company's voluntary 401(k) savings
plan.  The Plan currently allows a maximum contribution of up to 8% of
participants' eligible compensation up to $150,000 annually.  The
Company's contributions, as a percentage of participants' eligible
compensation, were 4.44%, 4.33% and 5% for fiscal years 1997, 1996 and
1995, respectively.

    Pension and profit sharing expense was $3,614,000, $3,601,000 and
$4,081,000 for fiscal years 1997, 1996 and 1995, respectively.

    The Company presently provides certain health care benefits for
retirees who are over age 60, completed a specified number of years of
service and retired by December 31, 1996, the date upon which the
Company amended the plan to cease allowing new participants to join upon
their retirement.  In fiscal year 1997, the Company made net
contributions of approximately $78,000 toward these benefits. 
Commencing in fiscal year 1994, the Company accrued  the expected cost
of providing these benefits to an employee and the employee's covered
dependents during the years that the employee rendered the necessary
service and recognized its Accumulated Postretirement Benefit Obligation
(APBO) of $733,000 on a delayed basis (over 20 years) as a component of
net periodic postretirement benefit cost.  In fiscal year 1997, upon the
amendment of the plan, the Company estimated its remaining liability to
be $300,000 and adjusted its accrual accordingly.

Quarterly results of operations (In thousands, except per share data)
(unaudited):

                                     First   Second   Third   Fourth
                                    quarter quarter  quarter  quarter 
                                   -------  -------  -------  -------
1997:
  Revenues . . . . . . . . . . .  $ 81,416 $ 92,490 $ 92,513 $ 95,712
  Gross margin . . . . . . . . .     7,779    9,139    9,723   11,497
  Income (loss) from continuing 
    operations . . . . . . . . .    (1,541)  (8,890)     371    1,283
  Net loss applicable to 
    common stock . . . . . . . .    (2,591)  (9,940)    (924)    (238)
  Net loss per share . . . . . .  $   (.28)$  (1.09)$   (.10)$   (.02)
                                   =======  =======  =======  =======

1996:
  Revenues . . . . . . . . . . .  $100,292 $106,259 $104,912 $ 88,579
  Gross margin . . . . . . . . .    16,944   15,174   14,651   11,383
  Income (loss) from 
    continuing operations. . . .     2,345    2,355   (4,687)     533
  Net income (loss) applicable 
    to common stock. . . . . . .     1,295    1,305   (5,737)    (517)
  Net income (loss) per share. .  $    .14 $    .15 $   (.64)$   (.06)
                                   =======  =======  =======  =======

      During the second fiscal quarter of 1997, the Company recorded a
$8,403,000 ($.92 per share) pre-tax and after tax (see Income taxes)
restructuring charge in connection with an organizational realignment
(see Restructuring charge).

                                     47 
<PAGE>

                   INTERNATIONAL TECHNOLOGY CORPORATION
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      In the third quarter of fiscal year 1996, the Company reported a
$14,600,000 ($1.62 per share) after tax loss related to the
recapitalization of Quanterra (see Quanterra) and a $7,500,000 ($.83 per
share) deferred tax asset valuation allowance adjustment.  (See Income
taxes.)

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

      There were none.

                             PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

      The section entitled "Election of Directors" in the registrant's
Definitive Proxy Statement to be filed with the Securities and Exchange
Commission for the Annual Meeting of Stockholders scheduled for
September 16, 1997 (the Proxy Statement) is incorporated herein by
reference.  See also "Executive Officers of the Company" in Part I of
this report for certain information concerning the Company's executive
officers.


ITEM 11.  EXECUTIVE COMPENSATION.

      The section entitled "Executive Compensation" in the Proxy
Statement is incorporated herein by reference.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

      The section entitled "Beneficial Ownership of Shares" in the Proxy
Statement is incorporated herein by reference.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      The section entitled "Certain Transactions" in the Proxy Statement
is incorporated herein by reference.


                                     48 
<PAGE>

                             PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM
8-K.

Exhibits

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

  
Exhibit No.                      Description 
----------    ---------------------------------------------------------
  
 2            Omitted - Inapplicable.

 3(i)         Certificate of Incorporation of the registrant as amended
              by Amendment to Certificate of Incorporation filed
              September 17, 1987, with Delaware Secretary of State.(1)

 3(ii)        Amended and Restated Bylaws of the registrant as amended
              through June 20, 1997.

 4(i)         1. Certificate of Designations with respect to the
                 registrant's 7% Cumulative Convertible Exchangeable
                 Preferred Stock, $100 par value.(2)

              2. Certificate of Designations, Preferences and Relative,
                 Participating, Optional and Other Special Rights and
                 Qualifications, Limitations and Restrictions Thereof of
                 Cumulative, Convertible Participating Preferred Stock
                 of International Technology Corporation, issued
                 November 20, 1996.(3)

 4(ii)        Indenture for the registrant's 7% Convertible Subordinated
              Debentures Due 2008.(2)

 9            Omitted - Inapplicable.                    

 10(ii)       1. Credit Agreement among IT Corporation, the Several
                 Lenders from Time to Time Parties Hereto and
                 The Chase Manhattan Bank (formerly Chemical Bank), as
                 Administrative Agent, dated as of October 24, 1995.(4)

              2. Note Purchase Agreement dated as of October 24, 1995
                 for IT Corporation 8.67% Guaranteed Senior Secured
                 Notes due October 30, 2003.(4)

              3. Master Collateral and Intercreditor Agreement dated as
                 of October 24, 1995 among Certain Participating
                 Creditors of IT Corporation and Chemical Bank, as
                 Collateral Agent.(4)

              4. Amendment No. 1 dated as of January 5, 1996 to the
                 Credit Agreement dated as of October 24, 1995 among IT
                 Corporation, the Lenders party thereto, and Chemical
                 Bank, as Administrative Agent.(5)

              5. Amendment No. 1 dated as of January 5, 1996 to the
                 several Note Purchase Agreements, each dated as of
                 October 24, 1995 between IT Corporation and the
                 respective Purchasers party thereto.(5)

              6. Second Amendment to Credit Agreement, Master Collateral
                 and Intercreditor Agreement and Note Purchase
                 Agreement, dated as of October 30, 1996, among the
                 Lenders, Participating Creditors and IT Corporation.

                                     49 
<PAGE>
  
Exhibit No.                      Description 
----------    ---------------------------------------------------------

              7. Asset Transfer Agreement among MetPath Inc., the
                 registrant and IT Corporation dated as of May 2,
                 1994.(6)

              8. Amended and Restated Shareholders' Agreement between
                 Corning Incorporated, the registrant, IT Corporation
                 and Quanterra Incorporated, dated January 1, 1996.(7)

              9. Amended and Restated Equity Investors' Undertaking,
                 dated January 19, 1996, from the Equity Investors in
                 favor of Quanterra Incorporated, Citibank, N.A., and
                 Citicorp USA, Inc.(7)

             10. Agreement, dated January 19, 1996, related to the
                 ownership of IT Corporation, Corning Clinical
                 Laboratories Inc., and Corning Incorporated in
                 Quanterra Incorporated.(7)

             11. Stock Purchase and Sales Agreement dated as of February
                 21, 1996 by and among IT Corporation, the registrant
                 and the shareholders of Gradient Corporation, a
                 Massachusetts corporation.(5)

             12. Securities Purchase Agreement dated as of August 28,
                 1996 between the registrant and certain Purchasers
                 identified therein affiliated with The Carlyle Group
                 (3), including agreement by and between The Carlyle
                 Group and the registrant re financial advisory and
                 investment banking fees.

             13. Amendment No. 1, dated November 20, 1996, to Securities
                 Purchase Agreement dated August 28, 1996, by and among
                 the registrant and certain Purchasers identified
                 therein affiliated with The Carlyle Group.(8)

             14. Form of Warrant Agreement by and among the Registrant
                 and certain Warrant Holders defined herein affiliated
                 with The Carlyle Group, dated as of November 20,
                 1996.(3)

             15. Form of Registration Rights Agreement by and among the
                 registrant and certain Investors affiliated with The
                 Carlyle Group, dated November 20, 1996.(3)         

10(iii)       1. Non-Employee Directors' Retirement Plan, as amended and
                 restated June 2, 1994 (9)(10), as amended by the
                 Amended and Restated Non-Employee Directors Retirement
                 Plan, Amendment No. 5, dated November 20, 1996.(9)
     
              2. Description of the Special Turn-a-Round Plan (Fiscal
                 Year 1995 Management Incentive Plan) of the
                 registrant.(6)(9)

              3. 1983 Stock Incentive Plan, as amended.(9)(11)

              4. 1991 Stock Incentive Plan (5)(9) as modified by waiver
                 dated November 20, 1996, by certain former Non-Employee
                 Directors, in favor of the registrant.(9)

              5. 1996 Stock Incentive Plan.(9)(16)  

              6. Fiscal Year 1997 Management Incentive Plan.(9)

              7. Fiscal Year 1998 Management Incentive Plan.(9)

              8. Separation Agreement dated July 24, 1996 between Robert
                 B. Sheh and the registrant.(9)(12)

                                     50 
<PAGE>

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

              9. Separation Agreement dated October 1, 1995 between
                 Larry M. Hart and the registrant.(9)(12)

             10. Retirement Agreement dated March 3, 1994 between Murray
                 H. Hutchison and the registrant.(6)(9) as amended by
                 First Amendment dated January 6, 1995 to the Retirement
                 Agreement dated March 3, 1994 between Murray H.
                 Hutchison and the registrant.(9)(13)

             11. Separation Agreement dated as of September 30, 1996
                 between Eric Schwartz and the registrant.(3)(9)

             12. Retirement Plan of IT, 1993 Restatement.(9)(10)


             13. Amendment Number One to IT Corporation Retirement Plan,
                 dated as of July 1, 1995.(9)(14)

             14. Amendment Number Two to IT Corporation Retirement Plan,
                 dated as of October 1, 1995.(9)(14)

             15. Amendment Number Three to IT Corporation Retirement
                 Plan, dated as of July 15, 1996.(9)(15)

             16. Amendment Number Four to IT Corporation Retirement
                 Plan, dated as of February 1, 1997.(9)

             17. Amendment Number Five to IT Corporation Retirement
                 Plan, dated as of May 13, 1997.(9)

             18. Executive Stock Purchase Interest Reimbursement Plan,
                 approved September 6, 1995.(5)(9)

             19. Executive/Directors Deferred Compensation Plan,
                 effective January 1, 1996.(5)(9)

             20. Executive Restoration Plan, effective July 1, 1995 as
                 amended through May 13, 1997.(5)(9)


             21. 1997 International Technology Corporation Non-Employee
                 Directors Stock Plan - Director Fees, dated as of
                 February 26, 1997.(9)(15)

             22. Employment Agreement, dated as of November 20, 1996, by
                 and between the registrant, IT Corporation, and Anthony
                 J. DeLuca.(9)

             23. Employment Agreement, dated as of November 20, 1996, by
                 and between the registrant, IT Corporation, and
                 Franklin E. Coffman.(9)

             24. Employment Agreement, dated as of November 20, 1996, by
                 and between the registrant, IT Corporation, and James
                 R. Mahoney.(9)

             25. Employment Agreement, dated as of November 20, 1996, by
                 and between the registrant, IT Corporation, and Raymond
                 J. Pompe.(9)

 11          Computation of Per Share Earnings for the three years ended
             March 28, 1997.

 12          Omitted - Inapplicable.

 13          Omitted - Inapplicable.

                                     51 
<PAGE>
  
Exhibit No.                      Description 
----------    ---------------------------------------------------------

 16           Omitted - Inapplicable.

 18           Omitted - Inapplicable.

 20           Notice to All Holders of Depositary Shares each
              representing 1/100 of a share of 7% Cumulative
              Convertible Exchangeable Preferred Stock dated November
              25, 1996.(17)

 21           List of the registrant's subsidiaries.

 22           Omitted - Inapplicable.

 23           Consent of Ernst & Young LLP, Independent Auditors.

 24           Omitted - Inapplicable.

 27           1. Financial Data Schedule for the year ended March 28,
                 1997.

              2. Financial Data Schedule for the quarter ended March 28,
                 1997.

 28           Omitted - Inapplicable.

 99           Omitted - Inapplicable.
__________
 (1)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's Annual
              Report on Form 10-K for the year ended March 31, 1988 (No.
              1-9037) and incorporated herein by reference.
 (2)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's Registration
              Statement on Form S-3 (No. 33-65988) and incorporated
              herein by reference.
 (3)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's Form 8-K
              dated September 20, 1996 and incorporated herein by
              reference.
 (4)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's Quarterly
              Report on Form 10-Q for the quarter ended September 29,
              1995.
 (5)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's Annual
              Report on Form 10-K for the year ended March 29, 1996 and
              incorporated herein by reference.
 (6)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's Annual
              Report on Form 10-K for the year ended March 31, 1994 and
              incorporated herein by reference.
 (7)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's Quarterly
              Report on Form 10-Q for the quarter ended December 29,
              1995.
 (8)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's Quarterly
              Report on Form 10-Q for the quarter ended December 27,
              1996 and incorporated herein by reference.
 (9)          Filed as a management compensation plan or arrangement per
              Item 14(a)(3) of the Securities Exchange Act.
(10)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's Annual
              Report on Form 10-K for the year ended March 31, 1995 and
              incorporated herein by reference. 
(11)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's Annual
              Report on Form 10-K for the year ended March 31, 1993 and
              incorporated herein by reference.
(12)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's report on
              Form 10-K/A, Amendment No. 1, dated July 29, 1996, to the
              Annual Report of Form 10-K for the year ended March 29,
              1996 and incorporated herein by reference.

                                     52 
<PAGE>

(13)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's Quarterly
              Report on Form 10-Q for the quarter ended December 31,
              1994 and incorporated herein by reference.
(14)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's Form S-8
              (No. 333-00651) and incorporated herein by reference.
(15)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's
              Registration Statement on Form S-8 (No. 333-26143) and
              incorporated herein by reference.
(16)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's
              Registration Statement on Form S-8 (No. 333-28721) and
              incorporated herein by reference.
(17)          Previously filed with the Securities and Exchange
              Commission as an Exhibit to the registrant's Form 8-K,
              dated January 17, 1997 and incorporated herein by
              reference.

Reports on Form 8-K

1.   Current report on Form 8-K, dated January 17, 1997, reporting under
     Item 5 relating to the Notice to Holders of Depositary Shares
     regarding certain Special Conversion Rights (see Exhibits 20 and
     4(i)(1) above).
2.   Current report on Form 8-K, dated June 19, 1997, reporting under
     Item 5 relating to the completion of the relocation of registrant's
     principal executive office to Monroeville, Pennsylvania.

                                     53  
<PAGE>

               INTERNATIONAL TECHNOLOGY CORPORATION
         Schedule II -- Valuation and qualifying accounts
                          (In thousands)

<TABLE>
<CAPTION>



                            Balance at    Provision    Accounts                   Balance
                            beginning      charged     written                    at end
                            of period     to income      off        Other        of period
                            ---------     ---------    ---------   ---------     ---------   
<S>                         <C>          <C>          <C>          <C>           <C>
Year ended March 28, 1997:
  Allowance for doubtful 
   accounts. . . . . . . .  $  2,943     $    304     $ (1,208)    $     16 (1)  $   2,055
  Valuation allowance for 
   deferred tax asset. . .  $  4,869     $  4,602     $      -     $      -      $   9,471

Year ended March 29, 1996:
  Allowance for doubtful 
   accounts. . . . . . . .  $  3,107     $    614     $   (842)    $     64 (2)  $   2,943
  Valuation allowance for 
   deferred tax asset. . .  $ 12,650     $ (7,781)(3) $      -     $      -      $   4,869

Year ended March 31, 1995:
  Allowance for doubtful 
   accounts. . . . . . . .  $  3,183     $  1,501      $ (1,281)   $   (296)(4)  $   3,107
  Valuation allowance for 
   deferred tax asset. . .  $ 13,519     $   (869)(3)  $      -    $      -      $  12,650
</TABLE>




---------                    

(1) Represents allowance for doubtful accounts at November 1996 for
    receivables acquired in the purchase of Chi Mei.

(2) Represents allowance for doubtful accounts at March 1, 1996 for
    receivables acquired in the purchase of Gradient Corporation.

(3) Represents benefit for income taxes.

(4) Represents allowance for doubtful accounts at June 28, 1994 for
    receivables transferred to Quanterra, an environmental analytical
    services company which is jointly owned by IT and an affiliate of
    Corning Incorporated.  (See Notes to Consolidated Financial
    Statements - Quanterra.)

                                     54 
<PAGE>

                            SIGNATURES


        Pursuant to the requirements of Section 13 or 15(d) 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, in Torrance, California on the 24th day of June
1997.


                                             INTERNATIONAL TECHNOLOGY
                                             CORPORATION 


                                             By /S/ ANTHONY J. DELUCA
                                                ---------------------
                                                Anthony J. DeLuca
                                                President and Acting
                                                Chief Executive Officer


        Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.




/S/ DANIEL A. D'ANIELLO           
-------------------------
Daniel A. D'Aniello           Chairman of the Board of    June 24, 1997
                                Directors                 
                              

/S/ ANTHONY J. DELUCA        
-------------------------     
Anthony J. DeLuca             Director, President and     June 24, 1997
                                Acting Chief Executive 
                                Officer and Principal
                                Financial Officer
                              
/S/ PHILIP B. DOLAN                 
-------------------------                          
Philip B. Dolan               Director                    June 24, 1997


/S/ E. MARTIN GIBSON          
-------------------------
E. Martin Gibson              Director                    June 24, 1997


/S/ JAMES C. MCGILL                                           
-------------------------
James C. McGill               Director                    June 24, 1997


/S/ ROBERT F. PUGLIESE                                        
-------------------------
Robert F. Pugliese            Director                    June 24, 1997


/S/ JAMES DAVID WATKINS           
-------------------------
James David Watkins           Director                    June 24, 1997


                                                               
/s/ PHILIP H. OCKELMANN                                   June 24, 1997
------------------------
Philip H. Ockelmann           Vice President, Finance
                                and Treasurer and
                                Principal Accounting
                                Officer    


                                     
<PAGE>
                                                         Exhibit 11.1

                INTERNATIONAL TECHNOLOGY CORPORATION
                 COMPUTATION OF PER SHARE EARNINGS
               (In thousands, except per share data)


                                                 Year ended
                                         ----------------------------
                                         March 28, March 29, March 31,
                                           1997      1996      1995
                                         --------  --------  --------
Primary earnings per share:

  Income (loss) from continuing 
    operations . . . . . . . . . . . . $ (8,777)  $    546   $ (3,680) 
  Discontinued operations 
   (net of income taxes):
   Loss from disposition. . . . . . .         -          -    (10,603)
                                        -------    -------    -------
   Net income (loss). . . . . . . . .    (8,777)       546    (14,283)
   Less preferred stock dividends . .    (4,916     (4,200)    (4,200)
                                        -------    -------    -------
Net loss applicable to common stock .  $(13,693)  $ (3,654)  $(18,483)
                                        =======    =======    =======

   Average number of common shares 
     outstanding. . . . . . . . . . .     9,227      8,971      8,868
   Average common equivalent shares 
     from stock options computed on 
     the treasury stock method using 
     average market prices. . . . . .         -         11         21   
                                        -------    -------    -------
Shares used in computation (1). . . .     9,227      8,982      8,889
                                        =======    =======    =======
Net loss per share:
   Continuing operations (net of 
     preferred stock dividends) . . .  $  (1.48)  $   (.41)  $   (.89)
   Discontinued operations:
     From disposition . . . . . . . .         -          -      (1.19)
                                        -------    -------    -------
Net loss per share. . . . . . . . . .  $  (1.48)  $   (.41)  $  (2.08)
                                        =======    =======    =======

                                    
--------
(1)  Share data have been restated to reflect the one-for-four reverse
     stock split effective November 21, 1996.

Fully diluted earnings per share result in less than 3% dilution and
therefore are not presented.

                                       
<PAGE>
                                                            Exhibit 21.1

               INTERNATIONAL TECHNOLOGY CORPORATION 

                    LIST OF SUBSIDIARY COMPANIES

                                  

Chi Mei Entech, Ltd.
Chi Mei Scientech, Ltd.
Gradient Corporation
IT Corporation
IT Hanford, Inc. 
IT Tulsa Holdings, Inc. (formerly IT-McGill Pollution Control Systems,
  Inc.)
International Technology Europe Ltd.
Universal Professional Insurance Company
IT Brownfields Services Corporation
IT Corporation de Mexico, S.A. de C.V.
IT Corporation of North Carolina
IT Corporation Limited (formerly IT-McGill Limited)
IT Europe Pollution Control Engineering, Ltd. (formerly IT-McGill
  Pollution Control Systems, Ltd.)
IT International Holdings, Inc.
IT Investment Holdings, Inc.
PHR Environmental Consultants, Inc.

                                       
<PAGE>

                                                      EXHIBIT 23
  
  
                                
  
       CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
  
  
  We consent to the incorporation by reference in the Registration
Statements (Form S-8; No. 2-95647 and No. 33-11486) and in the related
Prospectuses pertaining to the International Technology Corporation 1983
Stock Incentive Plan, in the Registration Statement (Form S-8; No.
33-52974) and in the related Prospectus pertaining to the International
Technology Corporation 1991 Stock Option Plan  in the Registration
Statement (Form S-8; No. 33-60861) relating to the shares of restricted
stock to be issued under the Special Turnaround Plan, in the
Registration Statement (Form S-8; No. 33-60881) relating to the
additional shares under the 1991 Stock Incentive Plan, in the
Registration Statement (Form S-8; No. 333-00651) relating to the shares
issued under the IT Corporation Retirement Plan, in the Registration
Statement (Form S-8, No. 333-28721) and in the related Prospectus 
pertaining to the 1996 Stock Incentive Plan, and in the Registration 
Statement (Form S-8, No. 333-26143), and in the related Prospectus 
pertaining to the 1997 International Technology Corporation Non-Employee 
Director Stock Plan Director Fees, of our report dated May 13, 1997, 
with respect to the consolidated financial statements of International 
Technology Corporation included in this Annual Report (Form 10-K) for 
the year ended March 28, 1997.
  
  
  
  
  
                                            ERNST & YOUNG LLP
  Los Angeles, California
  June 20, 1997
                                       
<PAGE>