<PAGE>
 
                                   FORM 10-K

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
             THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from March 1, 1995
to December 31, 1995                                 Commission File No. 1-12248


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

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

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

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

          Securities registered pursuant to Section 12(b) of the Act:
                    Common Stock, par value $0.01 per share
                        Preferred Stock Purchase Rights

       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 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 the 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 Common Stock held by non-affiliates of
the registrant was $48.6 million based on the New York Stock Exchange Composite
Tape closing price of such stock ($2.75) on March 6, 1996.

          On March 6, 1996, there were 21,794,220 shares of Common Stock
outstanding.
                      DOCUMENTS INCORPORATED BY REFERENCE

          Portions of the ICF Kaiser International, Inc. Proxy Statement for the
1996 Annual Meeting of Shareholders are incorporated by reference in Part III
hereof.


--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                               Page 1
<PAGE>
 
                                    PART I

Item 1.   Business

          ICF Kaiser International, Inc., through ICF Kaiser Engineers, Inc. and
its other operating subsidiaries, is one of the nation's largest engineering,
construction, and consulting services companies, providing fully integrated
engineering, construction, program management, and consulting services to
public- and private-sector clients in the related markets of environment,
infrastructure, energy, and industry. The "Company" or "ICF Kaiser" in this
Report refers to ICF Kaiser International, Inc. and/or any of its consolidated
subsidiaries.  The Company changed its fiscal year to a calendar-based fiscal
year effective December 31, 1995.  Consequently, this Report on Form 10-K is a
transition report covering the period from March 1, 1995, to December 31, 1995.

          For the ten months ended December 31, 1995, ICF Kaiser reported gross
and service revenue of $917 million and $426 million, respectively. Service
revenue is derived by deducting the costs of subcontracted services and direct
project costs from gross revenue and adding the Company's share of the income of
unconsolidated joint ventures and affiliated companies.  During the ten months
ended December 31, 1995, and the two years ended February 28, 1995, the Company
operated predominantly in one industry segment, in which it provided
engineering, construction, program management, consulting, and other
professional services.
<TABLE>
<CAPTION>
 
                                                        Fiscal Year Ended
                           Ten Months Ended   ------------------------------------
                           December 31, 1995  February 28, 1995  February 28, 1994
                           -----------------  -----------------  ------------------
 
<S>                        <C>                <C>                <C>
Gross revenue............       $916,744,000       $861,518,000       $651,657,000
Service revenue..........       $425,896,000       $459,786,000       $382,708,000
Operating income (loss)..       $ 17,505,000       $ 13,688,000       $ (5,230,000)
Assets...................       $369,517,000       $281,422,000       $281,198,000
</TABLE>

     As of December 31, 1995, the Company's contract backlog totaled
approximately $4.4 billion compared to $1.4 billion as of February 28, 1995.
Most of the Company's backlog relates to public-sector environmental projects
that span from one to five years.  Approximately 30% of the $4.4 billion backlog
is expected to be worked off during the fiscal year ending December 31, 1996.
See "Backlog" section of this Report.

     The Company's headquarters is located at 9300 Lee Highway, Fairfax,
Virginia 22031-1207, and its telephone number is (703) 934-3600.  The Company's
four regional headquarters are located at 1800 Harrison St., Oakland, California
94612-3430 Telephone (510) 419-6000; 6440 Southpoint Parkway, Jacksonville, FL
32216 Telephone (904) 279-7200; Four Gateway Center, Pittsburgh, Pennsylvania
15222-1207 Telephone (412) 497-2000; and 3D International Tower, 1900 West Loop
South, Suite 1350, Houston, TX 77027 Telephone (713) 623-5000.  Other offices
include Tempe, Arizona; Livermore, Los Angeles, Rancho Cordova, Richmond, San
Diego, San Francisco, San Rafael, and Universal City, California; Golden and
Lakewood, Colorado; Washington, DC; Ft. Lauderdale, Miami, Orlando and Tampa,
Florida; Atlanta, Georgia; Idaho Falls, Idaho; Chicago, Illinois; Gary, Indiana;
Ruston, Louisiana; Abingdon, Baltimore, and Silver Spring, Maryland; Boston,
Massachusetts; Kansas City, Missouri; Ely and Las Vegas, Nevada; Iselin, New
Jersey; New York, New York; Albuquerque and Los Alamos, New Mexico; Morrisville,
North Carolina; Cincinnati, Ohio; Dallas, Texas; Richmond, Virginia; Port
Orchard, Richland, and Seattle, Washington.  The Company's international offices
are located in Brisbane, Perth and Sydney, Australia; Rio de Janeiro, Brazil;
Prague, Czech Republic; London, England; Paris, France; Mexico City, Mexico;
Lisbon, Portugal; Moscow, Russia; and Taipei, Taiwan.  As of March 1, 1996, ICF
Kaiser employed approximately 7,500 persons.

     ICF Kaiser International, Inc. is a Delaware corporation incorporated in
1987 under the name American Capital and Research Corporation.  It is the
successor to ICF Incorporated, a nationwide consulting firm organized in 1969.
In 1988, the Company acquired the Kaiser Engineers business which dates from
1914.

--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                               Page 2
<PAGE>
 
Strategic Considerations

     The following points are important to understanding the Company's business
and strategy:

     Full Front-end Capability. The Company's front-end skills include policy
     -------------------------                                               
analysis and consulting; scientific analysis and health/risk assessments;
facility siting and environmental assessments; remedial investigations and
feasibility studies; and engineering design.  By possessing these skills, the
Company's involvement at the outset of any project places it in a position to
participate in any follow-on engineering and construction work.

     High Value-added Services. The Company adds high value within those markets
     -------------------------                                                  
that relate to environmental services through specialized environmental
knowledge that (i) helps clients understand environmental threats and
opportunities and alternative ways in which each can be managed; (ii) allows
creation of customized solutions for the clients' environmental problems; and
(iii) combines problem identification, solution, and implementation.

     Access to Technologies. The Company has access to technologies that play a
     ----------------------                                                    
critical role in both the cleanup of existing waste sites and in the reduction
of waste generated by ongoing and new production processes. These technologies
relate to reducing and monitoring emissions, bioremediation, and industrial
process technologies that can help minimize waste, reduce costs, and improve the
quality of a finished product. To assist clients better and to increase its
overall participation in clients' projects, the Company continues to expand its
access to environmental and process technologies through various methods,
including licensing and joint ventures.

     Strategic Relationships.  The Company has established business
     -----------------------                                       
relationships through joint ventures, marketing agreements, and direct equity
investments that extend its presence and reduce its business development risks.
These relationships are particularly important in the management of the
Company's international operations, and they help reduce the cost and risks
associated with the Company's entering new geographic regions.

     The Company provides its fully integrated capabilities to clients through
its operating groups.

FEDERAL PROGRAMS GROUP

     U.S. Department of Energy (DOE).  An important DOE mission has changed over
     -------------------------------                                            
the years--from nuclear weapons production to environmental cleanup of former
nuclear weapons production sites.  To help accomplish DOE's cleanup goals
pursuant to this new mission, the Company actively supports DOE at the following
facilities: the Argonne National Laboratory,  the Idaho National Engineering
Laboratory, Lawrence Livermore National Laboratory, the Los Alamos National
Laboratory, the Mound Plant Site, the Oak Ridge National Laboratory, the two
Sandia National Laboratories, the Rocky Flats Environmental Technology Site, and
the Hanford Nuclear Reservation (the last two facilities are described in more
detail below).  The services provided by the Company include (i) conducting
comprehensive assessments related to environment, safety, and health; (ii)
quality assurance; (iii) security and safeguards; (iv) assessing, managing, and
remediating existing hazardous and solid wastes, radioactive materials, highly
volatile chemical compounds, unidentified mixed wastes, and exploded/unexploded
munitions; and (v) architect, engineer, construction, and site operations
services.

     During the ten months ended December 31, 1995, the Company, through Kaiser-
Hill Company, a limited liability company owned equally by the Company and CH2M
Hill Companies, Ltd. (Kaiser-Hill), won DOE's Performance Based Integrating
Management contract at the DOE's Rocky Flats Environmental Technology Site near
Golden, Colorado.  Rocky Flats is a former DOE nuclear weapons production
facility.  Under the five-year contract which began on July 1, 1995, Kaiser-Hill
oversees plutonium stabilization and storage, environmental restoration, waste
management, decontamination and decommissioning, site safety and security, and
construction activities of subcontractor companies.  Under the performance-based
contract signed by Kaiser-Hill, the concept of which was developed in the DOE's
1994 Contract Reform Initiative, 85% of Kaiser-Hill's fees are based on
performance, while only 15% are fixed.  Kaiser-Hill's contract commits it to
dealing with urgent risks first, and measurable results in the following "urgent
risk" areas will help determine its incentive fee:  stabilize plutonium and
plutonium residues for specified time frames; consolidate plutonium in a single
building; and clean up and remove all high-risk "hot spot" contamination.
Finally, Kaiser-Hill is expected to reduce the number of employees at the site
within the first 18 months of the contract, with a further reduction by the end
of the contract term.

--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                               Page 3
<PAGE>
 
     Since 1987, the Company, through its wholly owned subsidiary ICF Kaiser
Hanford Company, has been assisting DOE clean up its former nuclear weapons
production site at the Hanford Nuclear Reservation in Richland, Washington.
Under its contract, ICF Kaiser Hanford Company will provide architect, engineer,
construction, and site operation services at the site through March 1997.  The
fees the Company is eligible to earn are based on six-month performance reviews;
the Company also has the opportunity to earn incentive fees related to
technology transfers and efficiency savings.  In October 1995, the Company
announced that ICF Kaiser Hanford Company was teaming with Raytheon and other
nationally known firms in bidding on the DOE's request for proposals for its new
management and integration contract at the Hanford Site.  Assuming there is no
delay in the bidding process, DOE expects that the new contract could be in
place as early as October 1996.

     U.S. Department of Defense.  DOD estimates that its environmental expense
     --------------------------                                               
will be directed primarily to cleaning up hundreds of military bases with
thousands of contaminated sites.  There is an urgent need to ensure that the
hazardous wastes present at these sites (often located near population centers)
do not pose a threat to the surrounding population, and, in connection with the
closure of many of the bases, there is an economic incentive to make sure that
the environmental restoration enables the sites of the former bases to be
developed commercially by the private sector.

     In August 1995, the Company was awarded a contract estimated at $330
million to perform environmental restoration work at Federal installations for
the U.S. Army Corps of Engineers (USACE), Baltimore District.  This Total
Environmental Restoration Contract (TERC) is for four years with two, three-year
options.  The contract is a cost reimbursement delivery order contract, and the
fee structure includes a combination of cost plus fixed fee, award fee, and
incentive fees.  In August 1995, the Company also signed a five-year contract
estimated at $50 million to provide environmental services to USACE, Savannah
District.

     Other Federal Government Work.  Under a variety of smaller contracts, the
     -----------------------------                                            
Company provides the Federal government with numerous other services.  Under a
contract with the U.S. Environmental Protection Agency (EPA) awarded in 1995,
the Company will continue to manage the EPA's quality assurance laboratory in
Las Vegas, Nevada, and provide the laboratory with analytical support.  The
Company also supports the EPA's Superfund program under several Alternative
Remedial Contracting Strategy  (ARCS) contracts for remedial planning services.
Architectural, engineering, and construction management services for facilities
and infrastructure (such as post offices, court houses, and prisons) are
provided to the U.S. Postal Service, Department of Justice, and General Services
Administration.

ICF KAISER ENGINEERS GROUP

     Environmental Consulting and Engineering Services.  Demand for the
     -------------------------------------------------                 
Company's non-Federal environmental consulting and engineering services is
driven by a number of factors: the need to improve the quality of the
environment; environmental regulation and enforcement; and increased liability
associated with pollution-related injury and damage. Significant environmental
laws have been enacted in response to public concern over the environment, and
these laws and the implementing regulations affect nearly every industrial
activity.  Increasingly strict Federal, state, and local government regulation
has forced private industry and state and local agencies to clean up
contaminated sites, to bring production facilities into compliance with current
environmental regulations, and to minimize waste generation on an ongoing basis.
Although growth in this private-sector market is being hampered by uncertainty
over continuing Federal regulations, the Company generates new business by
increasing the types of services it sells to existing clients, by targeting new
markets for the Company's full-service capabilities, and by expanding the types
of services the Company offers.

     The Company's environmental services have progressed beyond study and
analysis to remediation. Following on its established market position in the
consulting and front-end analysis phase of environmental services, the Company
now offers alternative remediation approaches that may involve providing on-site
waste containment, on-site treatment, management of on-site/off-site
remediation, or waste removal. The Company also designs new processes (and
redesigns ongoing production processes) to minimize or eliminate the generation
of hazardous waste.  Currently the Company provides site investigations and
feasibility studies, compliance planning and audits, risk assessment,
permitting, community relations services, and construction and construction
management. See "Potential Environmental Liability" section of this Report.

--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                               Page 4
<PAGE>
 
     Industry Services.  ICF Kaiser's engineering design, project management,
     -----------------                                                       
and construction services to the industrial market involve work with the steel,
aluminum, alumina, copper, iron, and other minerals and metals industries as
well as chemicals, petrochemicals, and refineries.  In the coke, coal, and coal
chemicals area, ICF Kaiser's services have included inspection of coke plants
for environmental compliance, facility design and construction, and equipment
sales and services. The Company has provided services related to coal cleaning,
handling, and environmental controls. ICF Kaiser also designed, built, and now
operates and jointly owns a pulverized coal injection facility under a multiyear
tolling agreement.

     The international industry market provides opportunities for the Company's
industrial services.  The Company's largest industrial project will be a mini-
mill project for Nova Hut, a.s, an integrated steel maker based in the Ostrava
region of the Czech Republic.  Under a two-year contract signed in March 1996,
the Company will oversee the construction of the mini-mill as well as future
production and environmental upgrades to Nova Hut's existing integrated steel-
making facilities.  The Company will provide project management, engineering,
procurement, construction management, start-up, commissioning, and training
services.  This initial phase of the mini-mill project, which is scheduled to
initiate production in December 1997, is part of a two-phase endeavor in which
the second phase will provide Nova Hut with the capability of producing 1
million metric tons per year of hot rolled steel product.  The Company also is
assisting the International Finance Corporation in securing the financing for
the mini-mill that has an estimated initial phase capital cost of approximately
$275 million.

     Infrastructure Services.   The Company also is helping rebuild the
     -----------------------                                           
infrastructure of roads, highways, transit systems, harbors, airports,
facilities, and buildings in domestic and international markets.  Budget
constraints at the Federal, state, and local government levels have hindered
infrastructure market growth, but the Company remains active in major U.S.
metropolitan areas: Chicago (light rail transit system); Pittsburgh (busway and
light rail projects); San Francisco (commuter rail line extension); Atlanta
(general engineering consulting services to the Metropolitan Atlanta Rapid
Transit Authority); Miami (Intermodal Transit Center, a project that will tie
together air, light/heavy rail, buses, highway systems, and parking facilities).

     The major ports of many of the world's cities have serious water pollution
problems, and ICF Kaiser is helping to improve the condition of many harbors and
waterways. In its largest harbor project, the Company continues as the
construction manager of the cleanup of Boston Harbor, one of the largest
environmental projects in the country, under a contract extension that runs
through 1998.  Since the inception of the project in 1988, the Company has
served as its construction manager, and currently manages construction workers,
engineers, architects, and support personnel working to construct a wastewater
treatment plant on Deer Island in Boston Harbor.

     Internationally, the Company's large-scale construction infrastructure
skills are at work in Portugal where the Company as part of a joint venture
provides project and construction management services for the modification and
reconstruction of the main rail link between the cities of Lisbon and Oporto.
Those skills also are at work in the Philippines where the Company as part of a
joint venture provides front-to-back-end services for a light rail transit line
in Manila.

CONSULTING GROUP

     The ICF Kaiser Consulting Group draws upon the talents of its multi-
disciplinary professional staff to support customers within four primary lines
of business.

     Environmental consulting services assist customers in developing plans and
     ---------------------------------                                         
policies, evaluating options for managing environmental responsibilities in the
most cost-effective manner, and identifying and employing the best available
technologies and practices.  Life-cycle management strategies are emphasized.
The group has special expertise in such areas as industrial and municipal waste
management, air pollution control, chemical accident prevention, and ground-
water and drinking water management.

     Global environmental issues are also a particular area of focus within the
group.  Working with U.S. and international organizations that fund global
environmental work and with numerous private sector organizations, the
Consulting Group has conducted projects in over thirty countries and has been
actively involved in supporting international environmental treaties.  The group
has achieved great success in implementing technology transfer programs through
the creation of effective public-private partnerships.

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ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                               Page 5
<PAGE>
 
     Working on global change issues for the EPA since 1982, the Company
supports the EPA's Global Change Division, providing services related to the
reduction of methane and other greenhouse gases.  The Consulting Group also
provides technical and regulatory support to the EPA's Office of Solid Waste,
focusing on human health and ecological risk assessment and waste
characterization.

     In-career education and training programs range in subject matter from
     -----------------------------------------                             
highly technical areas to broader, skill-based and management-oriented training.
The Consulting Group's expertise in the development and delivery of workplace
training, combined with expert knowledge in a wide variety of technologies and
programmatic areas, enables it to provide high impact training that is
specifically tailored to the needs of each customer organization.  Environmental
management programs cover regulation, technology, information reporting,
emergency response, and pollution prevention.

     Information management programs assist clients in developing decision
     -------------------------------                                      
support systems which facilitate the collection and use of information to track
performance, identify opportunities, and improve decision making.  The group
offers a number of sophisticated simulation models and proprietary applications,
such as its electric utility Integrated Planning Model.  By combining consulting
expertise with information technology skills, the group helps its customers deal
with the unique challenges of their business environment.

     Energy and natural resource management services support the development of
     -----------------------------------------------                           
corporate and technical plans for managing power resources and energy projects,
provide economic assessments of short- and long-term market conditions for
various fuels, and serve as an expert foundation in litigation and regulatory
proceedings.  The group assists its customers in identifying market
opportunities, commercializing new technologies, and developing public policy.
Its contributions involve linking an in-depth understanding of the energy
markets with an ongoing involvement with energy technology.

     The ICF Kaiser Consulting Group serves customers in domestic and
international markets, including both public- and private-sector organizations.
Among its major customers are U.S. government agencies, especially the EPA; U.S.
private sector organizations, particularly major energy producers such as
utilities and oil companies; and governments and businesses around the world, as
well as various multinational banks, development organizations, and treaty
organizations.

Competition and Contract Award Process

     The markets in which the Company operates are very competitive. The
Company's competitors range from small local firms to large multinational
companies. The Company believes that no single firm or small number of firms
dominates its markets.

     Competition for private-sector work generally is based on several factors,
including quality of work, reputation, price, and marketing approach. The
Company's objective is to establish and maintain a strong competitive position
in its areas of operations by adhering to its basic philosophy of delivering
high-quality work in a timely fashion within its clients' budget constraints.

     Most of the Company's contracts with public-sector clients are awarded
through a competitive bidding process that places no limit on the number or type
of offerors. The process usually begins with a government Request for Proposal
(RFP) that delineates the size and scope of the proposed contract. Proposals are
evaluated by the government on the basis of technical merit (for example,
response to mandatory solicitation provisions, corporate and personnel
qualifications, and experience) and cost. The Company believes that its
experience and ongoing work strengthen its technical qualifications and,
thereby, enhance its ability to compete successfully for future government work.

     In both the private and public sectors, the Company, acting either as a
prime contractor or as a subcontractor, may join with other firms to form a team
that competes for a single contract or submits a single proposal. Because a team
of firms almost always can offer a stronger set of qualifications than any firm
standing alone, these teaming arrangements often are very important to the
success of a particular competition or proposal. The Company maintains a large
network of business relationships with other companies and has drawn repeatedly
upon these relationships to form winning teams.

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ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                               Page 6
<PAGE>
 
     The Company's subsidiaries operate under a number of different types of
contract structures with its private- and public-sector clients, the most common
of which are Cost Plus and Fixed Price. Under Cost Plus contracts, the Company's
costs are reimbursed with a fee (either fixed or percentage of cost) and/or an
incentive or award fee offered to provide inducement for effective project
management. A variation of Cost Plus contracts are time and materials contracts
under which the Company is paid at a specified fixed hourly rate for direct
labor hours worked. Under Fixed Price contracts, the Company is paid a
predetermined amount for all services provided as detailed in the design and
performance specifications agreed to at the project's inception.

Customers

     The Company's clients include: DOE, EPA, and DOD; major corporations in the
energy, transportation, chemical, steel, aluminum, mining, and manufacturing
industries; utilities; and a variety of state and local government agencies
throughout the United States. A substantial portion of the Company's work is
repeat business from existing clients.  In many cases, the Company has worked
for the same client for many years, providing different services at different
times. DOE accounted for approximately 68% of the Company's consolidated gross
revenue for the ten-month period ended December 31, 1995; EPA accounted for
another approximately 6%; and DOD and other Federal agencies collectively
accounted for another approximately 4%.  The Federal government accounted for
approximately 73% of the Company's consolidated gross revenue for the year ended
February 28, 1995, and 65%  for the year ended February 28, 1994.

     The Company's international clients include both private firms and foreign
government agencies in such countries as Australia, France, Portugal, and
Taiwan.  For the ten-month period ended December 31, 1995, foreign operations
accounted for approximately 4.7% of the Company's consolidated gross revenue.
For information concerning gross revenue, operating income, and identifiable
assets of the Company's business by geographic area, see Note O to the
Consolidated Financial Statements.

Backlog

     Backlog refers to the aggregate amount of gross contract revenue remaining
to be earned pursuant to signed contracts extending beyond one year. At December
31, 1995, the Company's contract backlog was approximately $4.4 billion in gross
revenue, up from approximately $1.4 billion in gross revenue at February 28,
1995.  In April 1995, Kaiser-Hill was awarded the DOE's Performance Based
Integrating Management contract at Rocky Flats near Denver, Colorado.  This
contract represents approximately 62% of the Company's total backlog at December
31, 1995. The Company expects that approximately 30% of the backlog at December
31, 1995, will be worked off during calendar year 1996. Because of the nature of
its contracts, the Company is unable to calculate the amount or timing of
service revenue that might be earned pursuant to these contracts.  The Company
believes that backlog is not a predictor of future gross or service revenue.

     Differences in contracting practices between the public and private sectors
result in the Company's backlog being weighted heavily toward contracts
associated with agencies of the Federal government.   Backlog under contracts
with agencies of the Federal government that extend beyond the government's
current fiscal year includes the full contract amount, including in many cases
amounts anticipated to be earned in option periods and certain performance fees,
even though annual funding of the amounts under such contracts generally must be
appropriated by Congress before the agency may expend funds during any year
under such contracts.  In addition, the agency must allocate the appropriated
funds to these specific contracts and thereafter authorize work or task orders
to be performed under these specific contracts.  Such authorizations are
generally for periods considerably shorter than the duration of the work the
Company expects to perform under a particular contract and generally cover only
a percentage of the contract revenue.  Because of these factors, the amount of
Federal government contract backlog for which funds have been appropriated and
allocated, and task orders issued, at any given date is a substantially smaller
amount than the total Federal government contract backlog as of that date.  In
the event that option periods under any given contract are not exercised or
funds are not appropriated, allocated, or authorized to be spent under any given
contract, the amount of backlog attributable to that contract would not result
in revenue to the Company.  All contracts and subcontracts with agencies of the
Federal government are subject to termination, reduction, or modification at any
time at the discretion of the government agency.

--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                               Page 7
<PAGE>
 
Environmental Regulation

     Significant environmental laws have been enacted in response to public
concern over the environment. These laws and the implementing regulations affect
nearly every industrial activity. Efforts to comply with the requirements of
these laws have increased demand for the Company's services. The principal
Federal legislation having the most significant effect on the Company's business
includes the following:

     The Comprehensive Environmental Response, Compensation and Liability Act
     ------------------------------------------------------------------------
(CERCLA).  CERCLA, as amended by the Superfund Amendments and Reauthorization
---------                                                                    
Act, established the Superfund program to clean up hazardous waste sites and
provides for penalties and punitive damages for noncompliance with EPA orders.
Superfund may impose strict liability (joint and several as well as individual)
on certain hazardous substance waste owners, operators, disposal "arrangers,"
transporters, and disposal facility owners and operators (Potentially
Responsible Parties or PRPs) for the costs of removal or remedial action; for
other necessary response costs and damages for injury, destruction, or loss of
natural resources; and for the cost of any health effects study. Under certain
circumstances Federal funds may be used to pay for the cleanup.

     The Resource Conservation and Recovery Act (RCRA).  RCRA, as amended by the
     --------------------------------------------------                         
Hazardous and Solid Waste Amendments of 1984 (HSWA), provides a comprehensive
scheme for the regulation of hazardous waste from the time of generation to its
ultimate disposal (and sometimes thereafter), as well as the regulation of
persons engaged in the treatment, storage, and disposal of hazardous waste. The
RCRA scheme includes both a permitting and a manifest tracking system and
detailed regulations on the handling, treatment, transportation, storage, and
disposal of hazardous waste. Regulations have been issued pursuant to RCRA in
the following areas (among others) of importance to the Company: permitting
remediation of releases associated with underground storage tanks; municipal
solid waste disposal; waste minimization; and treatment, transportation, and
disposal of hazardous waste.  HSWA has increased the number of hazardous waste
generators subject to RCRA. HSWA also imposes land disposal restrictions/bans on
certain listed and characteristic hazardous wastes that do not meet specified
treatment standards.

     The Clean Air Act.  Under the Clean Air Act of 1970, as amended, EPA is
     ------------------                                                     
empowered to establish and enforce National Ambient Air Quality Standards and
limits on the emissions of various pollutants from specific types of facilities.
The Clean Air Act Amendments of 1990 require certain sources emitting an air
pollutant regulated under the Clean Air Act to obtain an operating permit, which
includes enforceable emissions limitations and compliance schedules. The  Clean
Air Act also addresses substantial expanded regulation of vehicle emissions,
hazardous air pollutant emissions, stratospheric ozone protection, acid rain
minimization (through the use of limitations on sulfur dioxide and nitrogen
oxide emissions) and related enforcement issues.  The use of "marketable
allowances" to establish limits on total emissions while maintaining maximum
market flexibility reflects a shift in environmental policy from command and
control management to a more flexible approach.

     The Safe Drinking Water Act.  Under the Safe Drinking Water Act and its
     ----------------------------                                           
subsequent reauthorizations, EPA is empowered to set drinking water standards
for community water supply systems in the United States. The Act requires that
EPA set maximum ground-water contamination levels for specified, and previously
unregulated, toxic substances and also requires EPA to establish a priority list
every three years of contaminants that may cause adverse health effects and may
require regulation.  Water supply systems are required to begin monitoring
within defined time limits following the publication of the final regulations.
The Act also requires that EPA set criteria specifying when utilities using
surface water supplies should filter their water and issue national primary
drinking water regulations requiring all utilities to disinfect their water.

     The Clean Water Act.  The Clean Water Act established a system of
     --------------------                                             
standards, permits, and enforcement procedures for the discharge of pollutants
to surface water from industrial, municipal, and other wastewater sources. EPA
sets discharge standards for certain industrial and municipal wastewater
discharges and provides for Federal grants to assist municipalities in complying
with treatment requirements. Key areas for which regulations recently have been
issued or are proposed include industrial wastewater pretreatment, surface water
toxics control, wastewater sludge disposal, and stormwater discharges. In cases
of noncompliance, EPA may assess administrative penalties and may sue for court-
ordered compliance and penalties. Under the Ocean Dumping Ban Act of 1988,
regulatory revisions to the Clean Water Act were made to eliminate ocean dumping
of sludge.

--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                               Page 8
<PAGE>
 
     The Toxic Substance Control Act (TSCA).  TSCA, enacted in 1976, establishes
     ---------------------------------------                                    
requirements for identifying and controlling toxic chemical hazards to human
health and the environment. EPA has identified more than 60,000 chemical
substances (out of more than five million known chemical compounds) that were
manufactured or processed for commercial use in the United States in 1985. In
addition, more than 1,000 new chemicals are introduced each year. TSCA
authorizes EPA, in certain circumstances, to require testing of existing and new
chemicals used in commerce to determine their human health and environmental
effects. TSCA also gives EPA authority to prohibit or limit certain activities
associated with producing, distributing, and using a chemical that is found to
pose an unreasonable risk of injury to human health or the environment.

     The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).  FIFRA
     ----------------------------------------------------------------       
focuses on the health-based risk of pesticides and requires the registration of
all pesticides, with a heavy emphasis on scientific data and risk assessment.
Under FIFRA, EPA establishes regulations that can include labeling restrictions,
use restrictions, or an outright ban of the pesticide following a risk/benefit
analysis.  The 1972 amendments substantially increased the scope of the Act to
include biotechnology and to expand the authority of EPA.

Potential Environmental Liability

     The assessment, analysis, remediation, handling, management, and disposal
of hazardous substances necessarily involve significant risks, including the
possibility of damages or personal injuries caused by the escape of hazardous
materials into the environment, and the possibility of fines, penalties or other
regulatory action. These risks include potentially large civil and criminal
liabilities for violations of environmental laws and regulations, and
liabilities to customers and to third parties for damages arising from
performing services for clients.

     Potential Liabilities Arising Out of Environmental Laws and Regulations
     -----------------------------------------------------------------------

     All facets of the Company's business are conducted in the context of a
rapidly developing and changing statutory and regulatory framework. The
Company's operations and services are affected by and subject to regulation by a
number of Federal agencies, including EPA and the Occupational Safety and Health
Administration, as well as applicable state and local regulatory agencies.

     As discussed above, CERCLA addresses cleanup of sites at which there has
been a release or threatened release of hazardous substances into the
environment. Increasingly, there are efforts to expand the reach of CERCLA to
make environmental contractors responsible for cleanup costs by claiming that
environmental contractors are owners or operators of hazardous waste facilities
or that they arranged for treatment, transportation, or disposal of hazardous
substances. Several recent court decisions have accepted these claims. Should
the Company be held responsible under CERCLA for damages caused while performing
services or otherwise, it may be forced to bear such liability by itself,
notwithstanding the potential availability of contribution or indemnity from
other parties.

     RCRA, also discussed above, governs hazardous waste generation, treatment,
transportation, storage, and disposal. RCRA, or EPA-approved state programs at
least as stringent, govern waste handling activities involving wastes classified
as "hazardous." Substantial fees and penalties may be imposed under RCRA and
similar state statutes for any violation of such statutes and the regulations
thereunder.

     Potential Liabilities Involving Clients and Third Parties
     ---------------------------------------------------------

     In performing services for its clients, the Company could potentially be
liable for breach of contract, personal injury, property damage, and negligence
(including improper or negligent performance or design, failure to meet
specifications, and breaches of express or implied warranties).  The damages
available to a client, should it prevail in its claims, are potentially large
and could include consequential damages.

     Environmental contractors, in connection with work performed for clients,
potentially face liabilities to third parties from various claims, including
claims for property damage or personal injury stemming from a release of
hazardous substances or otherwise. Claims for damage to third parties could
arise in a number of ways, including through a sudden and accidental release or
discharge of contaminants or pollutants during the performance of services;
through the inability, despite reasonable care, of a remedial plan to contain or
correct an ongoing seepage or release of pollutants; through the inadvertent
exacerbation of an existing contamination problem; or through reliance on
reports or

--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                               Page 9
<PAGE>
 
recommendations prepared by the Company. Personal injury claims could arise
contemporaneously with performance of the work or long after completion of the
project as a result of alleged exposure to toxic or hazardous substances. In
addition, increasing numbers of claimants assert that companies performing
environmental remediation should be adjudged strictly liable, i.e., liable for
damages even though its services were performed using reasonable care, on the
grounds that such services involved "abnormally dangerous activities."

     Clients frequently attempt to shift various of the liabilities arising out
of remediation of their own environmental problems to contractors through
contractual indemnities. Such provisions seek to require the Company to assume
liabilities for damage or personal injury to third parties and property and for
environmental fines and penalties.  The Company has endeavored to protect itself
from potential liabilities resulting from pollution or environmental damage by
obtaining indemnification from its private-sector clients and intends to
continue this practice in the future. Under most of these contracts, the Company
has been successful in obtaining such indemnification; however, such
indemnification generally is not available if such liabilities arise as a result
of breaches by the Company of specified standards of care or if the indemnifying
party has insufficient assets to cover the liability.  In 1994 the Company
formed a new subsidiary, ICF Kaiser Remediation Company, through which the
Company intends to increase its remediation activities performed for public- and
private-sector clients.  The Company will continue its efforts to minimize the
risks and potential liability associated with its remediation activities by
performing all remediation contracts in a professional manner and by carefully
reviewing any and all remediation contracts it signs in an effort to ensure that
its environmental clients accept responsibility for their own environmental
problems.

     For EPA contracts involving field services in connection with Superfund
response actions, the Company is eligible for indemnification under Section 119
of CERCLA for pollution and environmental damage liability resulting from
release or threatened release of hazardous substances. Some of the Company's
clients (including private clients, DOE, and DOD) are Potentially Responsible
Parties (PRPs) under CERCLA. Under the Company's contracts with these PRPs, the
Company has the right to seek contribution from these PRPs for liability imposed
on the Company in connection with its work at these clients' CERCLA sites and
generally qualifies for the limitations on liabilities under CERCLA Section
119(a).  In addition, in connection with contracts involving field services at
10 of DOE's weapons facilities, including the DOE's Hanford site, the Company is
indemnified under the Price-Anderson Act, as amended, against liability claims
arising out of contractual activities involving a nuclear incident.  Recently,
EPA has constricted significantly the circumstances under which it will
indemnify its contractors against liabilities incurred in connection with CERCLA
projects. There are other proposals both in Congress and at the regulatory
agencies to further restrict indemnification of contractors from third-party
claims.

     As discussed above, Kaiser-Hill signed a Performance Based Integrating
Management contract with the DOE. The terms of that contract provide that
Kaiser-Hill shall not be held responsible for, and DOE shall pay all costs
associated with, any liability (including without limitation, a claim involving
strict or absolute liability and any civil fine or penalty, expense, or
remediation cost, but limited to those of a civil nature), which may be incurred
by, imposed on, or asserted against Kaiser-Hill arising out of any act or
failure to act, condition, or exposure which occurred before Kaiser-Hill assumed
responsibility on July 1, 1995 ("pre-existing conditions").  To the extent the
acts or omissions of Kaiser-Hill constitute willful misconduct, lack of good
faith, or failure to exercise prudent business judgment on the part of Kaiser-
Hill's managerial personnel and cause or add to any liability, expense, or
remediation cost resulting from pre-existing conditions, Kaiser-Hill shall be
responsible, but only for the incremental liability, expense, or remediation
caused by Kaiser-Hill.

     The Kaiser-Hill contract further provides that Kaiser-Hill shall be
reimbursed for the reasonable cost of bonds and insurance allocable to the Rocky
Flats contract and for liabilities (and expenses incidental to such liabilities,
including litigation costs) to third parties not compensated by insurance or
otherwise.  The exception to this reimbursement provision applies to liabilities
caused by the willful misconduct or lack of good faith of Kaiser-Hill's
managerial personnel or the failure to exercise prudent business judgment by
Kaiser-Hill's managerial personnel.

     In connection with its services to its environmental, infrastructure, and
industrial clients, the Company works closely with Federal and state government
environmental compliance agencies, and occasionally contests the conclusions
those agencies reach regarding the Company's compliance with permits and related
regulations. To date, the Company never has paid a fine in a material amount or
had liability imposed on it for pollution or environmental damage in connection
with its services. However, there can be no assurance that the Company will not
have substantial liability imposed on it for any such damage in the future.

--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 10
<PAGE>
 
Insurance

     The Company has a comprehensive risk management and insurance program that
provides a structured approach to protecting the Company. Included in this
program are coverages for general, automobile, pollution impairment, and
professional liability; for workers' compensation; and for employers and
property liability. The Company believes that the insurance it maintains,
including self-insurance, is in such amounts and protects against such risks as
is customarily maintained by similar businesses operating in comparable markets.
At this time, the Company expects to continue to be able to obtain general,
automobile, and professional liability; workers' compensation; and employers and
property insurance in amounts generally available to firms in its industry.
There can be no assurance that this situation will continue, and if insurance of
these types is not available, it could have a material adverse effect on the
Company.

     Consistent with industry experience and trends, the Company has found it
difficult to obtain pollution insurance coverage, in amounts and on terms that
are economically reasonable, against possible liabilities that may be incurred
in connection with its conduct of its environmental business. An uninsured claim
arising out of the Company's environmental activities, if successful and of
sufficient magnitude, could have a material adverse effect on the Company.

Regulation of the Company's Business

     The Company is subject to general Federal regulation with respect to its
contracting activities with the Federal government. For example, the Company has
a substantial number of cost-reimbursement contracts with the U.S. government,
the costs of which are subject to audit by the U.S. government.  As a result of
such audits, the Federal government asserts, from time to time, that certain
costs claimed as reimbursable under government contracts either were not
allowable or not allocated in accordance with Federal procurement regulations.
Management believes that the potential effect of disallowed costs, if any, for
the periods currently under audit and for periods not yet audited has been
provided for adequately and will not have a material adverse effect on the
Company's financial position, operations, or cash flows.

     The Company may from time to time, either individually or in conjunction
with other government contractors operating in similar types of businesses, be
involved in U.S. government investigations for alleged violations of procurement
or other Federal laws and regulations.  The Company currently is the subject of
a number of U.S. government investigations and is cooperating with the
responsible government agencies involved.  No charges presently are known to
have been filed against the Company by these agencies.  Management does not
believe that there will be any material adverse effect on the Company's
financial position, operations, or cash flows as a result of these
investigations.

     Federal agencies that are the Company's regular customers (including DOE,
EPA, and DOD) have formal policies against awarding contracts that would present
actual or potential conflicts of interest with other activities of the
contractor. Because the Company provides a broad range of services in
environmental and related fields for the Federal government, state governments,
and private customers, there can be no assurance that government conflict-of-
interest policies will not restrict the Company's ability to pursue business in
the future.

     Because some of the Company's subsidiaries provide the Federal government
with nuclear energy and defense-related services, these subsidiaries and a
substantial number of their employees are required to have and maintain security
clearances from the Federal government. These subsidiaries and their employees
have been able to obtain these security clearances in the past, and the Company
has no reason to believe that there would be any problems in this area in the
future. However, there can be no assurance that the required security clearances
will be obtained and maintained in the future. Because of its nuclear energy and
defense-related services, the Company is subject to foreign ownership, control,
and influence (FOCI) regulations imposed by the Federal government and designed
to prevent the release of classified information to contractors who are under
foreign control or influence.  Under these regulations, FOCI concerns may arise
as a result of a variety of factors, including foreign ownership of substantial
percentages of the Company's equity securities or debt, a high percentage of
foreign revenue, and the number of directors and officers who are not U.S.
citizens. Subsidiaries of the Company with facility security clearances or
sensitive contracts file reports with the DOE and DOD with respect to events and
changes that affect the potential for FOCI.  The Company has implemented
procedures designed to insulate such subsidiaries from any FOCI that might
affect the Company.
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 11
<PAGE>
 
There can be no assurance that such measures will prevent FOCI policies from
affecting the ability of the Company's subsidiaries to secure and maintain
certain types of DOE and DOD contracts.

Employees

     As of March 1, 1996, ICF Kaiser employed approximately 7,500 persons, and
the Company believes that its relations with its employees are good.
Approximately one-half of the 2,300 employees at the Company's ICF Kaiser
Hanford Company subsidiary are represented by unions, including unions under the
Hanford Atomic Metals Trades Council (HAMTC), National Building and Construction
Trades (BCT), and the Office and Professional Employees International Union
(OPEIU).  Collective bargaining agreements are in place with the HAMTC, the BCT,
the OPEIU, NDT/QC Inspectors, and Escorts/International Guards Units.  Of the
7,500 employees, approximately 2,400 persons are employed at Kaiser-Hill in
Colorado, of which approximately 1,400 are represented by the United
Steelworkers of America, Local 8031.

Item 2.   Properties

     All of the Company's operations are conducted either in leased facilities
or in facilities provided by the Federal government or other clients. As of
December 31, 1995, the Company leased an aggregate of approximately one million
square feet of space. The terms of these leases range from month-to-month to 15
years, and some may be renewed for additional periods. Some of the space leased
by the Company has been subleased to other entities under subleases expiring
from 1996 to 2000.

     The Company's headquarters is located at 9300 Lee Highway, Fairfax,
Virginia 22031-1207, and its telephone number is (703) 934-3600.  The Company's
regional headquarters and other offices are listed on page 2 of this Report.
Because the Company's operations generally do not require the maintenance of
unique facilities, suitable office space is readily available for lease in most
of the areas served. The Company believes that adequate space to conduct its
operations will be available for the foreseeable future. In 1987, the Company
entered into a 15-year lease agreement for its headquarters building in Fairfax,
Virginia, containing approximately 200,000 square feet of office space. In 1988,
the Company signed a 15-year lease agreement to occupy approximately 100,000
square feet of office space in a new building adjacent to the Virginia
headquarters building. In connection with the acquisition of ICF Kaiser
Engineers in 1988, ICF Kaiser acquired the lease for ICF Kaiser Engineers'
offices in Oakland, California. The lease provides for approximately 142,000
square feet of office space and expires in June 2000.  In February 1996, the
Company announced that it would re-locate its regional headquarters in
Pittsburgh to a new address in Pittsburgh in the second half of 1996 under a
lease for 75,000 square feet of office space.  The new address will be Gateway
View Plaza, 1600 West Carson Street, Pittsburgh, PA  15220.  The telephone
number will remain the same.  The leases for the Company's regional headquarters
in Jacksonville, FL, and Houston, TX, expire in 1996 and 1998, respectively.

Item 3.   Legal Proceedings

     The Company and its subsidiaries are involved in a number of lawsuits and
government regulatory proceedings arising in the ordinary course of its business
or arising in connection with the disposition or acquisition of certain
businesses and investments. The Company believes that any ultimate liability
resulting therefrom will not have a material adverse effect on its financial
position, operations, or cash flows.

    The Company may from time to time, either individually or in conjunction
with other government contractors operating in similar types of businesses, be
involved in U.S. government investigations for alleged violations of procurement
or other Federal laws and regulations. The Company currently is the subject of a
number of U.S. government investigations and is cooperating with the responsible
government agencies involved. No charges presently are known to have been filed
against the Company by these agencies.  Management does not believe there will
be any material adverse effect on the Company's financial position, operations,
or cash flows as a result of these investigations.
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 12
<PAGE>
 
Item 4.   Submission of Matters to a Vote of Security Holders

     None

Item 10.   Executive Officers of the Registrant

     The names of the Company's executive officers and their ages (as of March
6, 1996), principal corporate positions, and business experience are set forth
below.

     George F. Brown, Jr., 49, has been an Executive Vice President of the
Company and President of the Company's Consulting Group since 1994.  From 1979
to 1994, Dr. Brown had worked with DRI/McGraw-Hill, a consulting services firm.
As executive vice president, a position he held with that company since 1985,
Dr. Brown had general management responsibilities for strategy and operations
worldwide.  Before that, he served as group vice president, Government and
Health Markets, with overall responsibility for sales, consulting, and products
for government and healthcare industry clients.  Dr. Brown graduated from
Carnegie-Mellon University (B.S., M.S., Ph.D.).

     Kenneth L. Campbell, 39, has been a Senior Vice President since 1992 and
the Treasurer of the Company since 1994.  He has held a number of senior
management positions with the Company since 1988.  From May 1993 to his recent
appointment as Treasurer, Mr. Campbell was responsible for the project finance
and acquisition activities of the Company.  Mr. Campbell first worked for the
Company in the early 1980's in a variety of economic consulting positions,
rejoining the Company in 1988 to assist with the acquisition of ICF Kaiser
Engineers.  Mr. Campbell graduated from Wesleyan University (B.A.) and the
University of Pennsylvania, Wharton Graduate School of Finance (M.B.A.).

     James O. Edwards, 52, has been Chairman of the Board and Chief Executive
Officer of ICF Kaiser International, Inc. since 1987. He also was President of
ICF Kaiser International, Inc. from 1987 to 1990.  In 1974, he joined ICF
Incorporated, the predecessor of ICF Kaiser International, Inc. and was its
Chairman and Chief Executive Officer from 1986 until the 1987 establishment of
ICF Kaiser International, Inc.  Mr. Edwards graduated from Northwestern
University (B.S.I.E.) and Harvard University (M.B.A., High Distinction, George
F. Baker Scholar).

     Michael K. Goldman, 43, has been an Executive Vice President since 1990 and
the Chief Administrative Officer of the Company since 1995.  He has held senior
management positions in several of the Company's operating subsidiaries since
1980.  Prior to joining the Company, Mr. Goldman was in the private practice of
law.  Mr. Goldman graduated from Harvard University (B.A., M.B.A. High
Distinction, George F. Baker Scholar) and the University of California at
Berkeley (J.D.).

     Stephen W. Kahane, 45, has been an Executive Vice President of the Company
since 1993 and President of the Company's Federal Programs Group since its
creation in 1995.  He has held senior management positions in several of the
Company's operating subsidiaries since 1985.  From 1981 to 1985, Dr. Kahane held
a number of management positions at Jacobs Engineering Group, Inc.; he headed
Environmental and Hazardous Waste Programs and was a Vice President when he left
that firm.  Dr. Kahane graduated from the University of California (B.A.,
M.S.P.H., D.Env.).

     Richard K. Nason, 54, has been an Executive Vice President and the Chief
Financial Officer of the Company since December 1994; he had been a Senior Vice
President and the Treasurer of the Company from April to December 1994.  He
joined the Company as Senior Vice President - Internal Audit in June 1993.  From
1991 to 1993, Mr. Nason was Executive Vice President and Chief Financial Officer
for The Artery Organization, Inc., a private real estate development and
management company in Bethesda, Maryland.  From 1988 to 1991, Mr. Nason was
Senior Vice President for Finance and Planning for Griffin Homes, a real estate
development and home building company in California.  Mr. Nason was Senior Vice
President of Marriott Corporation and its subsidiary Host International, Inc.
from 1977 to 1988.  Mr. Nason has been a director of ICF Kaiser International,
Inc. since June 1995.  Mr. Nason graduated cum laude from Washington and
Jefferson College (B.A.) and the Wharton Graduate School of Finance and
Commerce, University of Pennsylvania (M.B.A.).  He also attended the Executive
Program at The Darden School, University of Virginia.
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 13
<PAGE>
 
     Alvin S. Rapp, 55, has been an Executive Vice President and President of
the Company's ICF Kaiser Engineers Group since November 1993.  Prior to joining
the Company, he was a regional group vice president of Jacobs Engineering Group,
Inc., an engineering services firm, having joined Jacobs in 1981 as manager of
engineering in that company's Baton Rouge, Louisiana office.  Prior to joining
Jacobs, Mr. Rapp held a variety of management positions with Ciba-Geigy
Corporation, U.S.S. Agri-Chemicals, and E.I. du Pont de Nemours & Company, Inc.
Mr. Rapp graduated from Christian Brothers College (B.S.E.E.), Memphis,
Tennessee.

     Marcy A. Romm, 37, has been Senior Vice President and Director of Human
Resources of the Company since 1993. She has held Human Resources positions at
ICF Kaiser since 1984. Ms. Romm graduated from George Washington University
(B.A., M.B.A.).

     Marc Tipermas, 48, has been Executive Vice President and Director of
Corporate Development for ICF Kaiser International, Inc. since 1993.  He has
held senior management positions in several of ICF Kaiser's operating
subsidiaries since joining the Company in 1981.  From 1977 to 1981, Dr. Tipermas
was employed by the U.S. Environmental Protection Agency where he was the
Director of the Superfund Policy and Program Management Office from 1980 to
1981.  Prior to joining EPA, he was Assistant Professor of Political Science at
the State University of New York at Buffalo from 1975 to 1977.  Dr. Tipermas has
been a director of ICF Kaiser International, Inc. since 1993.  Dr. Tipermas
graduated from the Massachusetts Institute of Technology (S.B.) and Harvard
University (A.M., Ph.D.).

     David Watson, 52, has been an Executive Vice President and President of the
Company's International Operations Group since December 1995.  From 1989 to
November 1995, he was with Day & Zimmerman International, Inc., an engineering
and construction firm.  From 1989 to 1993 he was President of that firm's
Advanced Dzign Systems; in 1993 he led that firm's venture into the
international marketplace by taking the position of President of D&Z
International, an off-shore international unit, where he established a strategy
to pursue engineering and construction work in China and Russia.  Prior to
joining Day & Zimmerman, Mr. Watson was with Stearns Catalytic, Inc. and Burmah
Oil Company.  Mr. Watson graduated from Loughborough University of Technology,
Loughborough, Leicestershire, England (B. Tech).

     Paul Weeks, II, 52, has been Senior Vice President, General Counsel, and
Secretary of ICF Kaiser International, Inc. since 1990. He joined ICF
Incorporated in May 1987 as its Vice President, General Counsel, and Secretary.
From 1973 to 1987 he was employed by Communications Satellite Corporation, where
from 1983 to 1987 he was Assistant General Counsel for Corporate Matters. Mr.
Weeks graduated from Princeton University (B.S.E.E.) and The National Law Center
of George Washington University (J.D.).
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 14
<PAGE>
 
                                     PART II

Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters

     Since September 14, 1993, the Common Stock has been traded on the New York
Stock Exchange (NYSE) under the symbol "ICF".  Prior to that date, the Common
Stock was traded on the NASDAQ National Market System.  At March 6, 1995, the
Company's record date for its 1996 Annual Meeting of Shareholders, there were
1,353 shareholders of record; the Company believes that there are approximately
4,850 beneficial owners of Common Stock.

     On March 18, 1996, the closing price of the Common Stock as reported by the
NYSE was $3.00.  The following table sets forth, for the periods indicated, the
high and low bid information for the Common Stock as reported on the NASDAQ
National Market System and the high and low sales prices on the NYSE:
<TABLE>
<CAPTION>
 
 
                   Common Stock Price
                                                             High       Low
<S>                                                         <C>        <C>  
Fiscal Year Ended February 28, 1994                                         
              First Quarter...............................  $6.875     $ 4.75
              Second Quarter                                 5.50        3.75
              Third Quarter (September 1 - September 13)..   4.875       4.375
              Third Quarter (September 14 - November 30)..   5.375       4.00
              Fourth Quarter..............................   5.00        3.625
Fiscal Year Ended February 28, 1995                                         
              First Quarter...............................  $3.875     $ 2.25
              Second Quarter..............................   2.625       2.00
              Third Quarter...............................   4.125       2.375
              Fourth Quarter..............................   4.375       2.625
March 1 to December 31, 1995                                                
              First Quarter...............................  $5.00      $ 3.75
              Second Quarter..............................   4.625       3.75
              Third Quarter...............................   4.75        3.25
              December....................................   4.25        3.125
</TABLE>

     The Company's Transfer Agent and Registrar is First Chicago Trust Company
of New York, Mail Suite 4692, P.O. Box 2534, Jersey City, NJ 07303-2534.  The
Shareholder Relations telephone number is (201) 324-0498.

     The Company has never paid cash dividends on its Common Stock. The Board of
Directors anticipates that no cash dividends will be paid on its Common Stock
for the foreseeable future and that the Company's earnings will be retained for
use in the business.

     The Board of Directors determines the Company's Common Stock dividend
policy based on the Company's results of operations, payment of dividends on
preferred stock, financial condition, capital requirements, and other
circumstances. The Company's debt agreements allow dividends to be paid on its
capital stock provided that the Company complies with certain limitations
imposed by the terms of such agreements.  See Notes F and I to the Consolidated
Financial Statements.
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 15
<PAGE>
 
Item 6.   Selected Financial Data

     The selected consolidated financial data of the Company for the ten months
ended December 31, 1995, and each year in the four-year period ended February
28, 1995, have been derived from the Company's audited consolidated financial
statements.  This information should be read in conjunction with the
Consolidated Financial Statements and the related notes thereto appearing
elsewhere in this Report and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."  Certain reclassifications have been made
to the prior period financial statements to conform to the presentation used in
the December 31, 1995, financial statements.
 
                     SELECTED CONSOLIDATED FINANCIAL DATA
                     (in thousands, except per share data)
<TABLE>
<CAPTION>
                                                                                                                                    

                                                          Ten Months                       Year Ended February 28,       
                                                             Ended          ----------------------------------------------------
                                                       December 31, 1995    1995          1994/(1)/     1993           1992/(2)/   
                                                       -----------------    ----          ----          ----           ----    
<S>                                                    <C>                 <C>          <C>           <C>             <C>
Statement of Operations Data:
Gross revenue.........................................       $916,744      $861,518      $651,657     $678,882        $710,873
Service revenue /(3)/.................................        425,896       459,786       382,708      391,528         385,942
Operating income (loss)...............................         17,505        13,688        (5,230)      22,744         (43,963)
Income (loss) before income taxes, minority interests,                                                                          
 and extraordinary item...............................          6,303         1,239       (12,877)      14,894         (54,310) 
Income (loss) before minority interests and                     
 extraordinary item...................................          4,212        (1,661)      (12,528)       8,639         (40,516)
Net income (loss) before extraordinary item...........          2,252        (1,661)      (12,528)       8,639         (40,516)
Net income (loss) /(2)/...............................          2,252        (1,661)      (18,497)       8,639         (40,516)
Net income (loss) available for common shareholders...            449        (3,815)      (25,322)       3,346         (42,932)
 
Primary and Fully Diluted Net Income (Loss)                                                                                   
 Per Common Share:                                                                                    
 Before extraordinary item............................          $0.02        $(0.18)       $(0.92)       $0.16          $(2.25)
 Extraordinary loss on early extinguishment of debt...            ---           ---         (0.29)         ---             ---
                                                             --------      --------      --------     --------        --------
       Total..........................................          $0.02        $(0.18)       $(1.21)       $0.16          $(2.25)
                                                             ========      ========      ========     ========        ========
Weighted average common and common equivalent                                                        
shares outstanding, assuming full dilution............         21,517        20,957        20,886       21,272          19,085
                                                                                                     
Balance Sheet Data (end of period):                                                                 
Total assets..........................................       $369,517      $281,422      $281,198     $293,076        $318,947
Working capital.......................................         84,589        91,640        87,648       85,861          65,623
Long-term liabilities.................................        125,818       133,130       130,752       75,602          85,675
Redeemable preferred stock............................         19,787        19,617        20,212       44,824          45,161
Shareholders' equity..................................         28,427        27,624        30,780       58,521          51,151
</TABLE>  
__________________
(1)   In fiscal year 1994, the Company adopted Statement of Financial
      Accounting Standards No. 106, "Employers' Accounting for Postretirement
      Benefits Other than Pensions."

(2)   Fiscal year 1992 reflects an after-tax charge of $52.4 million associated
      with the disposal and restructuring of certain businesses.

(3)   Service revenue is derived by deducting the costs of subcontracted
      services and direct project costs from gross revenue and adding the
      Company's share of the equity in income of unconsolidated joint ventures
      and affiliated companies.
  
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 16
<PAGE>
 
Item 7.   Management's Discussion and Analysis of Financial Condition and
Results of Operations

OVERVIEW

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

                             Change in Fiscal Year

     The Company changed from a fiscal year ending February 28 to a fiscal year
ending December 31, effective December 31, 1995.  As a result, the accompanying
financial statements include consolidated operations for the ten months ended
December 31, 1995 and for the years ended February 28, 1995 and 1994.  See Note
S to the consolidated financial statements for unaudited comparative operating
results for the ten months ended December 31, 1994.

                                Financial Review

     ICF Kaiser's operating income of $17.5 million for the ten months ended
December 31, 1995 was a $4.6 million increase from the $12.9 million recorded
for the ten months ended December 31, 1994.  The increase in operating income
(before minority interests) primarily resulted from a $5.7 million improvement
in engineering and construction operations and $5.3 million in earnings from the
Performance Based Integrating Management Contract at the U.S. Department of
Energy's (DOE) Rocky Flats Environmental Technology Site in Colorado (Rocky
Flats).  The improvement in engineering and construction operations was
partially due to a major transit project in the Philippines, operating revenue
of which had been previously deferred.  Other improvements in engineering and
construction operations were due to substantial growth in the group's industrial
sector and a reduction in the group's overhead.  The Rocky Flats contract was
awarded in April 1995 to Kaiser-Hill Company, LLC (Kaiser-Hill), a limited
liability company owned equally by ICF Kaiser and CH2M Hill Companies, Ltd.
(CH2M Hill).

     An additional $3.0 million increase in operating income resulted from the
Company's operations at DOE's Hanford, Washington site (Hanford). The 1995
results reflect higher award fees earned.

     A $4.9 million decline in the Company's operating income from other
environmental work (excluding the Rocky Flats and Hanford contracts) partially
offset the improvements in operating income discussed above between the ten-
month periods ended December 31, 1995 and 1994.  This decrease in other
environmental operations was primarily due to a decline in operating income from
private-sector environmental work, increases in bidding and proposal efforts
required by large scale U.S. Department of Defense (DOD) and DOE contracts, and
temporary delays in Federal environmental projects due to Federal government
budgetary uncertainties.

     The Company's consulting operations also experienced a decline in operating
revenues between the ten-month periods ended December 31, 1995 and 1994,
resulting in a $0.9 million decrease in operating income for this group.  The
decrease was caused by a delay in task-order assignments under new contract
awards and a significant increase in levels of business development activity.
The Federal government's fiscal 1996 budget was not finalized during the ten
months ended December 31, 1995, which led to the Federal government operating
under a continuing resolution (including two no-work furlough periods) since
October 1, 1995.  While under this resolution, the assignment of work under
task-order contracts has been delayed.

     A significant company-wide increase in marketing efforts further negatively
impacted operating results for the ten months ended December 31, 1995 as
compared to the ten months ended December 31, 1994.  These efforts were in
addition to the marketing activities discussed above within the environmental
and consulting operations.  Management believes that ICF Kaiser's increased
efforts in its business development activities should result in additional
contract awards in both the public and private sectors of its business.
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 17
<PAGE>
 
                                    Outlook

     The Company's contract backlog increased significantly to $4.4 billion at
December 31, 1995 compared to $1.4 billion at February 28, 1995. The increase in
backlog primarily resulted from the April 1995 award of the Rocky Flats
contract, which added $3.0 billion to contract backlog.  The fee structure for
this five-year contract provides for a mixture of base and incentive fees earned
through the achievement of cost reductions, attainment of certain milestones,
and accomplishment of other goals.  In August 1995, ICF Kaiser signed a contract
estimated at $330 million to perform environmental restoration work at Federal
installations for the U.S. Army Corps of Engineers (USACE), Baltimore District.
This Total Environmental Restoration Contract (TERC) is for four years with two,
three-year options.  The contract is a cost reimbursement delivery order
contract, and the fee structure includes a combination of cost plus fixed fee,
award fee, and incentive fees.  In August 1995, ICF Kaiser also signed a five-
year contract estimated at $50 million to provide environmental services to
USACE, Savannah District.

     The Company, through its subsidiary, ICF Kaiser Hanford Company, is
currently teaming with five other nationally known firms in bidding on DOE's new
management and integration contract at Hanford.  The response to DOE's request
for proposals is due in March 1996.  DOE has indicated that it would like the
new contract to be in place in October 1996.  The Company's existing contract to
perform services at Hanford terminates in March 1997.  It is expected that two
other teams also will bid on the new contract; one of those teams already has
been announced and includes Westinghouse Hanford Company (the incumbent
management and operations contractor at the site).   If the Company is
unsuccessful in its bidding efforts on the new Hanford contract, the impact on
ICF Kaiser's operating income after 1996 could be significant.

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

     The Company plans to continue its increased level of business development
activity in the consulting group and expects that such activity will result in
expanded public and private sector consulting services.  In October 1995, the
Company was awarded a consulting contract worth up to $111 million to support
the marketing and communication efforts of the U.S. Environmental Protection
Agency's Energy Star programs. The contract is for one year, with four
additional one-year options.

     Other major current business initiatives include  significant efforts to
enhance the Company's management information systems and increase international
marketing.  Also, in its efforts to enhance profitability, the Company expects
to realign several of its offices and terminate more than 100 employees by
December 31, 1996 (see "Unusual Items under Results of Operations").  ICF Kaiser
believes these endeavors, combined with other ongoing efforts described above,
should positively impact the Company's future performance.
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 18
<PAGE>
 
RESULTS OF OPERATIONS

     The following table summarizes key elements in the Consolidated Statements
of Operations for the ten months ended December 31, 1995 and December 31, 1994
(unaudited), and the years ended February 28, 1995 and 1994 (dollars in
millions).
<TABLE>
<CAPTION>
                                                                 Ten Months Ended             Year Ended
                                                                    December 31,             February 28,
                                                                 -----------------         -----------------
                                                                 1995         1994         1995         1994
                                                                 ----         ----         ----         ----       
<S>                                                             <C>           <C>          <C>          <C>
Gross revenue                                                   $916.7        $732.4       $861.5       $651.7
Service revenue                                                 $425.9        $392.0       $459.8       $382.7
Service revenue as a percentage of gross revenue                  46.5%         53.5%        53.4%        58.7%
Operating expenses as a percentage of service revenue:                                                     
    Direct cost of services and overhead                          84.5%         86.0%        85.5%        84.6%
    Administrative and general                                     9.5%          8.7%         9.5%        12.0%
    Depreciation and amortization                                  2.0%          2.0%         2.0%         2.5%
    Unusual items, net                                           (0.1)%           --           --          2.3%
Operating income (loss) as a percentage                                                                    
 of service revenue                                                4.1%          3.3%         3.0%        (1.4)%
 
</TABLE>

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

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

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

  Ten Months Ended December 31, 1995 Versus Ten Months Ended December 31, 1994

Revenue

     Gross revenue for the ten months ended December 31, 1995 increased $184.3
million, or 25.2%, to $916.7 million. The increase in gross revenue was
attributable to the commencement of work under the Kaiser-Hill contract which
generated $277.7 million in gross revenue during the current year.  The increase
was partially offset by a $98.6 million reduction in gross revenue under the
Hanford contract due to Federal budget reductions at the Hanford site.  This
reduced level of Hanford activity is expected to continue and may be reduced
further during the contract period; however, a reduction in the Hanford budget
is not currently expected to have a significant impact on operating income due
to the nature of the fee structure under this particular DOE contract.

     Service revenue increased by $33.9 million for the ten-month period ended
December 31, 1995 as compared to the ten months ended December 31, 1994.  The
increase was due primarily to $91.2 million of service revenue
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 19
<PAGE>
 
generated under the Rocky Flats contract, offset by a $57.8 million decrease in
service revenue under the Hanford contract. Service revenue as a percentage of
gross revenue decreased to 46.5% for the ten months ended December 31, 1995 from
53.5% for the ten months ended December 31, 1994 as a result of the nature of
the Rocky Flats contract. A significant portion of the gross revenue derived
from the Rocky Flats contract includes the costs of services subcontracted to
third parties.

Operating Expenses

       Direct cost of services and overhead increased $22.8 million between the
ten-month periods ended December 31, 1995 and 1994.  Costs on the new Rocky
Flats contract ($85.3 million) were offset by a $60.9 million reduction in the
Hanford contract costs (attributable to the Federal budget reductions discussed
above).  The remainder of the Company's direct cost of services and overhead as
a percentage of service revenue for the ten months ended December 31, 1995 was
comparable to the same period in the prior year.

     Administrative and general expenses increased $6.4 million, or 18.5%,
between the ten-month periods ended December 31, 1995 and 1994 and increased
from 8.7% to 9.5% as a percentage of service revenue.  The increase in these
costs is primarily attributable to the Company's increased marketing activities,
including filling several key marketing positions and incurring relatively high
levels of marketing expense associated with proposing and bidding large-scale
DOD and DOE contracts.

Interest Expense

     ICF Kaiser's average debt outstanding and average effective interest rate
for the ten months ended December 31, 1995 and 1994 were as follows.
<TABLE>
<CAPTION>
 
                                              Ten Months Ended
                                   -------------------------------------
                                   December 31, 1995   December 31, 1994
                                   -----------------   -----------------
 
<S>                                <C>                 <C>
Average debt outstanding                $123,701,000        $122,674,000
Average effective interest rate                 12.9%               12.8%
</TABLE>

     The average effective interest rate was comparable between the ten-month
periods ended December 31, 1995 and 1994 due to consistent interest rates and
indebtedness outstanding between the ten-month periods.  The Company's principal
debt outstanding consists of 12% Senior Subordinated Notes due 2003 (12% Notes)
(see "Liquidity and Capital Resources" for further discussion).

Income Tax Expense

     ICF Kaiser's income tax provision  was $2.1 million and $3.0 million for
the ten months ended December 31, 1995 and 1994, respectively.  Although pretax
income for the ten months ended December 31, 1995 was $3.5 million greater than
pretax income for the comparable period ended December 31, 1994, the Company's
effective tax rate decreased due to a reduction in permanent differences (such
as the nondeductibility of goodwill) as a percentage of pretax income, increased
foreign tax benefits, and minority interest earnings of a consolidated
subsidiary (see Note H to the consolidated financial statements).  The ten
months ended December 31, 1994 also included a repatriation of overseas funds to
the United States which could not then be currently offset by foreign tax
credits, resulting in additional income taxes for that period (see "Income Tax
Expense" under "Year Ended February 28, 1995 Versus Year Ended February 28,
1994").

     Because of the reported losses for the year ended February 28, 1994, a $3.3
million valuation allowance was established in that year for deferred tax
assets.  Although the level of pretax income has increased substantially since
that period (with a corresponding increase in taxable income), the Company has
maintained the valuation allowance as of December 31, 1995.  At December 31,
1995, the Company had deferred tax assets of $0.7 million related to net
operating loss carryforwards, of which $0.5 million expire in the next five
years and $0.2 million expire in 2008.  Additionally, the Company had deferred
tax assets of $2.1 million related to tax credit carryforwards, the majority of
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 20
<PAGE>
 
which expire in 1998 to 2009.  Management believes that the Company's expected
levels of pretax earnings, when adjusted for nondeductible expenses such as
goodwill amortization, will generate sufficient future taxable income to realize
the $11.9 million deferred tax asset (net) within the next five years.

Unusual Items

       During the ten months ended December 31, 1995, the Company recorded $0.5
million in additional income (net), consisting of the following unusual items:
income in settlement of litigation against the Internal Revenue Service (IRS),
associated with an affiliate of an acquired company, net of an accrual for
related expenses  ($6.8 million) (see "Liquidity and Capital Resources"); a
charge to accrue the net settlement cost and legal expenses of other litigation
($4.6 million); a charge to accrue for severance for the termination of 110
employees in the engineering and international groups ($1.0 million); and a
charge to accrue for consolidation of office space ($0.7 million).  Management
expects that all actions associated with the termination of employees and office
space consolidation will be completed by December 31, 1996.

       Year Ended February 28, 1995 Versus Year Ended February 28, 1994

Revenue

     Gross revenue for the year ended February 28, 1995 increased 32.2% to
$861.5 million, while service revenue increased 20.1% to $459.8 million, versus
the year ended February 28, 1994.  These increases were attributable to the work
performed at Hanford ($208.8 million of the gross revenue increase and $97.4
million of the service revenue increase).  The Hanford revenue increases were
offset partially by a decrease in the Company's engineering and construction
revenue ($14.1 million gross revenue and $10.8 million service revenue).

     Service revenue as a percentage of gross revenue decreased to 53.4% for the
year ended February 28, 1995, from 58.7% for the previous year, primarily
because under an October 1993 amendment to the Hanford contract, ICF Kaiser
absorbed tasks utilizing a much higher proportion of subcontractors than Company
personnel.

Operating Expenses

     The Company's direct cost of services and overhead was relatively flat as a
percentage of service revenue for the year ended February 28, 1995 versus the
previous year.  Excluding Hanford, direct cost of services and overhead
decreased to 76.2% of service revenue for the year ended February 28, 1995 from
79.2% for the year ended February 28, 1994.  Administrative and general expense
decreased $2.1 million.  The decrease in these costs is attributable primarily
to management cost-cutting initiatives.

     A restructuring plan initiated during the year ended February 28, 1994 to
respond to operating losses included downsizing the work force, consolidating
office space, renegotiating significant leases, and restructuring certain
international operations.  All actions have been completed, and there is no
further liability outstanding as of December 31, 1995 associated with this plan.

Interest Expense

     ICF Kaiser's interest expense net of interest income (net interest) for the
year ended February 28, 1995, increased $6.3 million from the prior year due to
a recapitalization that took place in the fourth quarter of the year ended
February 28, 1994 (also see "Liquidity and Capital Resources").  The increase in
net interest was impacted favorably by $1.3 million in refunds of interest from
the IRS recorded in the third quarter of the year ended February 28, 1995
associated with the Company's tax liabilities and those of an acquired company.
The increase in net interest was offset partially by a reduction in preferred
stock dividends.

Income Tax Expense

     ICF Kaiser's income tax provision for the year ended February 28, 1995 was
$2.9 million, even though pretax income was $1.2 million.  This is due to
several factors including the deemed dividend from the repatriation of overseas
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 21
<PAGE>
 
funds to the United States during the year ended February 28, 1995 that
currently could not be offset by foreign tax credits and permanent differences,
such as the nondeductibility of goodwill amortization.  Nondeductible permanent
differences comprised a very high percentage of pretax income.  As such, the
traditional percentage relationship between income tax expense and pretax income
was not meaningful.

LIQUIDITY AND CAPITAL RESOURCES

     During the ten months ended December 31, 1995, cash and cash equivalents
decreased $11.9 million to $16.4 million.  Cash was primarily used in investing
and financing activities for acquisitions and investments in joint ventures and
affiliates ($2.0 million); purchases of fixed assets ($1.8 million); payments of
dividends ($1.5 million); repurchases by the Company's insurance subsidiary of a
portion of the Company's outstanding 12% Notes and related warrants ($1.4
million); and payments of other outstanding debt ($1.2 million).  In addition,
$6.1 million was used in operating activities.  An interest payment of $7.5
million on the Company's 12% Notes was made in June 1995.  An additional $7.5
million interest payment on the 12% Notes was due and paid on January 2, 1996.

     An increase in contract receivables, net between February 28, 1995 and
December 31, 1995 was primarily due to $71.9 million in receivables from the
commencement of work by Kaiser-Hill under the Rocky Flats contract. An increase
in accounts payable, accrued expenses, and accrued salaries and employee
benefits was also primarily due to the Rocky Flats contract which had $70.6
million of accounts payable, accrued expenses, and accrued salaries and employee
benefits as of December 31, 1995.

     During the year ended February 28, 1995, the U.S. Environmental Protection
Agency approved the Company's revised provisional billing rates for fiscal years
1991 through 1994, thus authorizing the Company to submit invoices on cost-plus
contracts with U.S. government agencies for work performed during these approved
years.  The Company has collected in excess of $4 million as of December 31,
1995 on these contracts.

     The Company has a $60 million revolving credit facility (the Credit
Facility) provided by a consortium of banks (the Banks).  ICF Kaiser
International, Inc. and certain of its subsidiaries, which are guarantors of the
Credit Facility, have granted the Banks a security interest in their accounts
receivable and certain other assets.  The Credit Facility limits the payment of
cash dividends, requires the maintenance of specified financial ratios, and has
a $20 million limitation on cash borrowings.  Total available credit is
determined from a borrowing base calculation based on accounts receivable. The
Credit Facility was amended in 1995 to modify ratios and certain terms.  As of
December 31, 1995, the Company had $5.0 million in borrowings outstanding under
the Credit Facility, in addition to $7.1 million in letters of credit, and the
Company had $23.5 million of available credit under the Credit Facility.  As of
February 29, 1996, the Company had $9.0 million of borrowings, excluding letters
of credit, outstanding under its Credit Facility.  The Credit Facility contains
Eurodollar and alternate base interest rate alternatives with margins dependent
upon the Company's financial operating results, and expires on October 31, 1996.

     Kaiser-Hill has a $50 million receivables purchase facility to support its
working capital requirements under the Rocky Flats contract.  The receivables
purchase facility requires Kaiser-Hill to maintain a specified tangible net
worth and contains certain default provisions for delinquent receivables.
Program fees consist of 0.30% per annum of the unused portion of the facility
and 0.45% per annum of the used portion of the facility.  The receivables
purchase facility is non-recourse to Kaiser-Hill's owners, ICF Kaiser and CH2M
Hill, and expires on June 30, 1998.

     In January 1994, the Company issued $125,000,000 of 12% Notes and 600,000
warrants, each to purchase one share of the Company's common stock at $5.00 per
share.  The net proceeds were used, in part, to retire senior subordinated notes
and associated warrants, to repurchase preferred stock, and to repay the
outstanding balance on the Company's then-existing revolving credit facility.
The recapitalization resulted in a $6.0 million extraordinary charge (net of $0
tax benefit) for the early extinguishment of debt and a $1.9 million charge to
net income available for common shareholders to repurchase redeemable preferred
stock.  As noted above, in November 1995, the Company's insurance subsidiary
repurchased $1,450,000 of the 12% Notes and related warrants for $1.4 million.
In March 1996, the interest rate on the 12% Notes was increased by one percent
until the Company achieves and maintains a specified level of earnings (see
Notes F and I to the consolidated financial statements).  The 12% Notes mature
on December 31, 2003 with semi-annual interest  payments.
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 22
<PAGE>
 
     For the past several years, the Company has had ongoing negotiations,
filings, and litigation with the IRS related to settlement of its tax
liabilities and the liabilities associated with affiliates of acquired
companies.  As noted in the "Results of Operations", the cash and income impact
have generally been favorable to the Company.  Further, the Company's previous
tax losses and its resultant net operating loss carryforward position, combined
with the effect of tax credit carryovers, should limit Federal income tax
payments required in the near future.

     In one recent tax case, the Company prevailed at the trial court level in a
tax refund litigation matter against the IRS.  As discussed under "Unusual
Items" under "Results of Operations," the Department of Justice recently agreed
to pay $6.8 million, net of related expenses, to the Company in settlement of
this matter.

     Management believes that current projected levels of cash flows and the
availability of financing, including borrowings under the Company's Credit
Facility, will be adequate to fund operations throughout the next twelve months.
The Company's Series 2D Senior Preferred Stock is subject to mandatory
redemption on January 13, 1997 in the amount of $20 million plus accrued
dividends.  Because of technical limitations on the payment of dividends
contained in the Indenture governing the Company's 12% Notes, the Company did
not pay the November 30, 1995 and February 29, 1996 accrued dividends in the
aggregate amount of $975,000 until March 1996, following the signing of an
amendment to the Indenture which permitted the payment of all accrued and future
dividends.  As consideration for this amendment, the interest rate on the 12%
Notes was increased as discussed above.  The Company currently intends to use
cash generated from operations (including cash received from the tax refund
litigation discussed in the immediately preceding paragraph) to redeem a portion
of this preferred stock on or before the redemption date.  To redeem the balance
of the preferred stock, the Company expects to use funds generated from
alternative financing sources.  The Company is currently negotiating for
replacement or extension of the current Credit Facility and the possible
issuance of new equity.  Management received a commitment for a replacement of
the Company's existing Credit Facility in March 1996 with terms and covenants
similar to the existing Credit Facility.

IMPACT OF NEW ACCOUNTING STANDARDS

     The Financial Accounting Standards Board (FASB) recently issued  Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," effective for
financial statements for fiscal years beginning after December 15, 1995.  It is
the Company's current policy to evaluate all long-lived assets on a periodic
basis for asset impairment.  Therefore, upon formal adoption of this statement
in 1996, management does not expect that there will  be a material adverse
effect on the Company's financial position or operations.

     The FASB also  recently issued  Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123), which
encourages companies to adopt a fair value method of  accounting for employee
stock options and similar equity instruments.  The fair value method requires
compensation cost to be measured at the grant date based on the value of the
award and is recognized over the service period. Alternatively, SFAS No. 123
requires the provision of pro forma disclosures of net income and earnings per
share as if the fair value method had been adopted when the fair value method is
not reflected in the financial statements. The Company has not yet determined
whether it will adopt a fair value method of accounting for stock-based
compensation or provide pro forma disclosures.  The impact of the adoption of
this statement on the financial statements cannot be reasonably estimated at
this time.  The requirements of  SFAS No. 123 are effective for financial
statements for fiscal years beginning after December 15, 1995.

 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 23
<PAGE>
 
Item 8.  Financial Statements and Supplementary Data

     The Financial Statements and Supplementary Data appear on pages F-1 through
F-25 and S-1 hereto.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures

     None



                                    PART III


Item 10.   Directors and Executive Officers of the Registrant

          Information regarding the directors of the Registrant is included
under the caption "Election of Directors" in the Company's Proxy Statement for
the 1996 Annual Meeting of Shareholders (the "Proxy Statement) and is
incorporated herein by reference.  Information regarding executive officers of
the Registrant is included under a separate caption in Part I hereof.
Information regarding compliance with Section 16(a) of the Exchange Act is
included under the caption "Compliance with Section 16(a) of the Securities
Exchange Act" in the Company's Proxy Statement and is incorporated herein by
reference.

Item 11.   Executive Compensation

          Information regarding this item is included under the caption
"Executive Compensation" in the Company's Proxy Statement and is incorporated
herein by reference.

Item 12.   Security Ownership of Certain Beneficial Owners and Management

          Information regarding this item is included under the caption "Voting
Securities of the Company and Certain Shareholdings" in the Company's Proxy
Statement and is incorporated herein by reference.

Item 13.   Certain Relationships and Related Transactions

          Information regarding this item is included under the captions
"Compensation Committee Interlocks and Insider Participation," "Certain
Transactions with Certain Directors," "Agreements and Transactions with
Executive Officers Named in the Summary Compensation Table," and "Agreements and
Transactions with Other Executive Officers" in the Company's Proxy Statement and
is incorporated herein by reference.
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 24
<PAGE>
 
                                 PART IV


Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K

               (a) Documents filed as part of this Report
<TABLE>
<CAPTION>
                                                                                                    Page
<S>                                                                                                 <C>
1. Consolidated Financial Statements of ICF Kaiser International, Inc. and Subsidiaries
   a. Report of Independent Accountants............................................................  F-1
   b. Consolidated Balance Sheets as of December 31, 1995, and February 28, 1995...................  F-2
   c. Consolidated Statements of Operations for the ten months ended December 31, 1995, and for
      the years ended February 28, 1995 and February 28, 1994......................................  F-3
   d. Consolidated Statements of Shareholders' Equity for the ten months ended December 31, 1995,
      and for the years ended February 28, 1995 and February 28, 1994..............................  F-4
   e. Consolidated Statements of Cash Flows for the ten months ended December 31, 1995, and
      for the years ended February 28, 1995 and February 28, 1994..................................  F-5
   f. Notes to Consolidated Financial Statements...................................................  F-6
 
2. Supplemental Schedule Relating to the Consolidated Financial Statements of ICF Kaiser
   International, Inc. and Subsidiaries for the ten months ended December 31, 1995, and for each
   of the two years in the period ended February 28, 1995
   a. Schedule II: Valuation and qualifying accounts...............................................  S-1
 
      All Schedules except the one listed above have been omitted because they
      are not applicable or not required or because the required information is
      included elsewhere in the financial statements in this filing.

3. Exhibits (listed according to the number assigned in the table in Item 601 of Regulation S-K).
</TABLE>
                                 (b) Exhibits

Exhibit No. 3 -- Articles of Incorporation and By-laws

  3(a) Certificate of Incorporation of ICF Kaiser International, Inc.
       (restated through June 26, 1993) (Incorporated by reference to Exhibit
       No. 3(a) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the
       second quarter of fiscal 1994 filed with the Commission on October 15,
       1993)

  3(b) Amended and Restated By-laws of ICF Kaiser International, Inc. (as
       amended through June 23, 1995)  (Incorporated by reference to Exhibit No.
       3(b) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the
       second quarter of fiscal 1995 filed with the Commission on October 13,
       1995)

Exhibit No. 4 -- Instruments Defining the Rights of Security Holders, including
Indentures

  4(a) Indenture dated as of January 11, 1994, between the Registrant and The
       Bank of New York, as Trustee (Incorporated by reference to Exhibit No.
       4(a) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the
       third quarter of fiscal 1994 filed with the Commission on January 14,
       1994)
    1. First Supplemental Indenture dated as of February 17, 1995.
       (Incorporated by reference to Exhibit No. 4(a)(1) to Annual Report on
       Form 10-K Registrant No. 1-12248 for fiscal year 1995 filed with the
       Commission on May 23, 1995)
    2. Second Supplemental Indenture dated September 1, 1995 (Incorporated by
       reference to Exhibit No. 4(a) (2) to Registration Statement on Form S-1
       Registration No. 33-64655 filed with the Commission on November 30, 1995)
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 25
<PAGE>
 
    3. Third Supplemental Indenture dated October 20, 1995 (Incorporated by
       reference to Exhibit No. 4(a)(3) to Registration Statement on Form S-1
       Registration No. 33-64655 filed with the Commission on November 30, 1995)
    4. Fourth Supplemental Indenture dated as of March 8, 1996

  4(b) Form of 12% Senior Subordinated Note due 2003 (Incorporated by
       reference to Exhibit No. 4(b) to Quarterly Report on Form 10-Q Registrant
       No. 1-12248 for the third quarter of fiscal 1994 filed with the
       Commission on January 14, 1994)

  4(c) Form of Common Stock Purchase Warrant expiring May 15, 1999 (as
       amended and restated through January 11, 1994) (Incorporated by reference
       to Exhibit No. 4(e) to Quarterly Report on Form 10-Q Registrant No.
       1-2248 for the third quarter of fiscal 1994 filed with the Commission
       on January 14, 1994)

  4(d) Credit Agreement among ICF Kaiser International, Inc., certain Banks,
       and Chemical Bank (Delaware), as Agent, dated as of December 8, 1993, as
       amended (see Exhibit No. 10(a))

  4(e) ICF Kaiser International, Inc. Series 2D Warrant, No. 2D-2, dated
       January 11, 1994 (Incorporated by reference to Exhibit No. 4(f) to
       Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third
       quarter of fiscal 1994 filed with the Commission on January 14, 1994)

  4(f) Securities Purchase Agreement by and among ICF Kaiser International,
       Inc., IFINT-USA Inc., and FIMA Finance Management Inc., B.V.I. dated as
       of December 20, 1990 (Incorporated by reference to Exhibit No. 4(b) to
       Quarterly Report on Form 10-Q Registrant No. 0-18025 for the third
       quarter of fiscal 1991 filed with the Commission on January 14, 1991)
    1. Amendment No. 1 to Securities Purchase Agreement dated as of January 13,
       1992 (Incorporated by reference to Exhibit No. 4(e)(1) to Quarterly
       Report on Form 10-Q Registrant No. 0-18025 for the third quarter of
       fiscal 1992 filed with the Commission on January 14, 1992)
    2. Amendment No. 2 to Securities Purchase Agreement (Incorporated by
       reference to Exhibit 4(g)(2) to Amendment No. 2 to Registration Statement
       on Form S-1 (No. 33-70986) filed with the Commission on December 23,
       1993)

  4(g) Amended and Restated Registration Rights Agreement dated as of January
       13, 1992, between ICF Kaiser International, Inc. and FIMA Finance
       Management Inc., (Incorporated by reference to Exhibit No. 4(f) to
       Quarterly Report on Form 10-Q Registrant No. 0-18025 for the third
       quarter of fiscal 1992 filed with the Commission on January 14, 1992)

  4(h) Rights Agreement, dated as of January 13, 1992, between ICF Kaiser
       International, Inc. and Office of the Secretary, ICF Kaiser
       International, Inc. as Rights Agent, including
    1. Form of Certificate of Designations of Series 4 Junior Preferred Stock
    2. Form of Rights Certificate
    3. Summary of Rights to Purchase Preferred Stock (Incorporated by reference
       to Exhibit No. 4(h) to Quarterly Report on Form 10-Q Registrant No.
       0-18025 for the third quarter of fiscal 1992 filed with the Commission
       on January 14, 1992)

  4(i) Warrant Agreement dated as of January 11, 1994, between the Registrant
       and The Bank of New York, as Warrant Agent (Incorporated by reference to
       Exhibit No. 4(c) to Quarterly Report on Form 10-Q Registrant No. 1-12248
       for the third quarter of fiscal 1994 filed with the Commission on January
       14, 1994)

  4(j) Form of Warrant expiring December 31, 1998 (Incorporated by reference
       to Exhibit No. 4(d) to Quarterly Report on Form 10-Q Registrant No.
       1-12248 for the third quarter of fiscal 1994 filed with the Commission
       on January 14, 1994)
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 26
<PAGE>
 
Exhibit No. 10 -- Material Contracts

 10(a) Amended and Restated Credit Agreement dated as of December 8, 1993,
       among the Registrant, the several Lenders from time to time parties
       thereto, and Chemical Bank, as Agent, including Exhibits thereto (Closing
       Date:  January 11, 1994) (Incorporated by reference to Exhibit No. 10(a)
       to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third
       quarter of fiscal 1994 filed with the Commission on January 14, 1994)
    1. Waiver and First Amendment dated as of April 18, 1994  (Incorporated by
       reference to Exhibit No. 10(a)(1) to Annual Report on Form 10-K
       Registrant No. 1-12248 filed with the Commission on May 25, 1995.)
    2. Second Amendment dated as of August 31, 1994 (Incorporated by reference
       to Exhibit No. 10(a)(2) to Annual Report on Form 10-K Registrant No.
       1-12248 filed with the Commission on May 23, 1995.)
    3. Third Amendment dated as of February 28, 1995 (Incorporated by reference
       to Exhibit No. 10(a)(3) to Annual Report on Form 10-K Registrant No.
       1-12248 filed with the Commission on May 23, 1995.)
    4. Fourth Amendment dated as of June 28, 1995 (Incorporated by reference to
       Exhibit No. 10(a)(4) to Registration Statement on Form S-1 Registrant
       No. 33-64655 filed with the Commission on November 30, 1995.)
    5. Fifth Amendment dated as of November 30, 1995

 10(b) ICF Kaiser International, Inc. Employee Stock Ownership Plan (as
       amended and restated as of March 1, 1993) (and further amended with
       respect to name change only as of June 26, 1993) (Incorporated by
       reference to Exhibit No. 10(c) to Quarterly Report on Form 10-Q
       Registrant No. 1-12248 for the second quarter of fiscal 1994 filed with
       the Commission on October 15, 1993)
    1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to
       Exhibit No. 10(l)(1) to Annual Report on Form 10-K Registrant No. 1-12248
       for fiscal 1995 filed with the Commission on May 23, 1995)
    2. Amendment No. 2 dated December 15, 1995

 10(c) Trust Agreement with Vanguard Fiduciary Trust Company dated as of
       August 31, 1995, for ICF Kaiser International Employee Stock Ownership
       Plan (Incorporated by reference to Exhibit No. 10(c) to Registration
       Statement on Form S-1 Registrant No. 33-64655 filed with the Commission
       on November 30, 1995)

 10(d) ICF Kaiser International, Inc. Retirement Plan (as amended and restated
       as of March 1, 1993) (and further amended with respect to name change
       only as of June 26, 1993) (Incorporated by reference to Exhibit No. 10(d)
       to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second
       quarter of fiscal 1994 filed with the Commission on October 15, 1993)
    1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to
       Exhibit No. 10(d)(1) to Annual Report on Form 10-K Registrant No. 1-12248
       filed with the Commission on May 23, 1995.)
    2. Amendment No. 2 dated December 15, 1995

 10(e) Trust Agreement with Vanguard Fiduciary Trust Company dated as of
       August 31, 1995, for ICF Kaiser International, Inc. Retirement Plan
       (Incorporated by reference to Exhibit No. 10(e) to Registration Statement
       on Form S-1 (Registrant No. 33-64655) filed with the Commission on
       November 30, 1995)

 10(f) Lease Agreement between HMCE Associates (as Landlord) and ICF Kaiser
       Incorporated (as Tenant), dated January 30, 1987, for the lease of the
       Registrant's headquarters in Fairfax, Virginia (Incorporated by reference
       to Exhibit No. 10(a) to Registration Statement on Form S-1 (No. 33-31473)
       filed with the Commission on October 6, 1989)
    1. First Amendment entered into August 31, 1987 (Incorporated by reference
       to Exhibit No. 10(a) to Registration Statement on Form S-1 (No. 33-31473)
       filed with the Commission on October 6, 1989)
    2. Second Amendment entered into September 23, 1987 (Incorporated by
       reference to Exhibit No. 10(a) to Registration Statement on Form S-1 (No.
       33-31473) filed with the Commission on October 6, 1989)
    3. Third Amendment entered into as of February 12, 1990 (Incorporated by
       reference to Exhibit No. 10(a) to Annual Report on Form 10-K filed with
       the Commission on April 25, 1990)
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 27
<PAGE>
 
 10(g) Lease Agreement between HMCE Associates Limited Partnership (as
       Landlord) and American Capital and Research Corporation (as Tenant),
       dated April 27, 1988, for the lease of space in the building adjacent to
       the Registrant's headquarters in Fairfax, Virginia (Incorporated by
       reference to Exhibit No. 10(b) to Registration Statement on Form S-1 (No.
       33-31473) filed with the Commission on October 6, 1989)
    1. First Amendment entered into July 29, 1988. (Incorporated by reference
       to Exhibit No. 10(b) to Annual Report on Form 10-K filed with the
       Commission on April 25, 1990)
    2. Second Amendment entered into as of February 12, 1990 (Incorporated by
       reference to Exhibit No. 10(b) to Annual Report on Form 10-K filed with
       the Commission on April 25, 1990)
    3. Third Amendment entered into as of December 22, 1992 (Incorporated by
       reference to Exhibit No. 10(h)(3) to Annual Report on Form 10-K
       (Registrant No. 1-12248) for the fiscal year ended February 28, 1993
       filed with the Commission on May 21, 1993)

 10(h) Amended and Restated Lease Agreement by and between Kaiser Engineers,
       Inc. and 1800 Harrison Limited Partnership, dated as of July 1, 1988, for
       the lease of the Registrant's offices in Oakland, California
       (Incorporated by reference to Exhibit No. 10(c) to Registration Statement
       on Form S-1 (No. 33-31576) filed with the Commission on October 13, 1989)
    1. First Amendment made as of March 27, 1991 (Incorporated by reference to
       Exhibit No. 10(a)(1) to Quarterly Report on Form 10-Q (Registrant No.
       0-18025) for the first quarter of fiscal 1993 filed with the Commission
       on July 10, 1992)
    2. Second Amendment made as of June 1992 (Incorporated by reference to
       Exhibit No. 10(a)(2) to Quarterly Report on Form 10-Q (Registrant No.
       0-18025) for the first quarter of fiscal 1993 filed with the Commission
       on July 10, 1992)
    3. Third Amendment made as of April 27, 1993 (Incorporated by reference to
       Exhibit No. 10(i)(3) to Annual Report on Form 10-K (Registrant No.
       1-12248) for the fiscal year ended February 28, 1993 filed with the
       Commission on May 21, 1993)

 10(i) Guaranty provided by American Capital and Research Corporation to 1800
       Harrison Limited Partnership, dated as of March 27, 1991, and First
       Amendment thereto dated as of June 1992, guaranteeing the performance of
       Kaiser Engineers, Inc. under an Amended and Restated Lease Agreement by
       and between Kaiser Engineers, Inc. and the California Public Employee's
       Retirement System, dated as of July 1, 1988, for the lease of the
       Registrant's offices in Oakland, California (Incorporated by reference to
       Exhibit No. 10(b) to Quarterly Report on Form 10-Q Registrant No. 0-18025
       for the first quarter of fiscal 1993 filed with the Commission on July
       10, 1992)

 10(j) ICF Kaiser International, Inc. Stock Incentive Plan (as amended and
       restated as of April 24, 1995) (Incorporated by reference to Exhibit No.
       10(k) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal
       year 1995 filed with the Commission on May 23, 1995)
    1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to
       Exhibit No. 10(l)(1) to Annual Report on Form 10-K Registrant No.
       1-12248 for fiscal 1995 filed with the Commission on May 23, 1995)

 10(l) Purchase Order dated March 8, 1995 (WHC-380393, Mod. 1) issued by
       Westinghouse Hanford Company to ICF Kaiser Hanford Company (DOE Reference
       No. DE-AC06-87RL1930) (Incorporated by reference to Exhibit No. 10(m) to
       Annual Report on Form 10-K Registrant No. 1-12248 for fiscal year 1995
       filed with the Commission on May 23, 1995)

 10(m) Assignment Agreement between the U.S. Department of Energy, Kaiser
       Engineers Hanford Company, and Westinghouse Hanford Company, with an
       effective date of October 1, 1993 (Contract No. DE-A06-93RL12359)
       (Incorporated by reference to Exhibit No. 10(a) to Quarterly Report on
       Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1994
       filed with the Commission on October 15, 1993)
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 28
<PAGE>
 
    1. Modification No. 1 dated October 25, 1993 (Incorporated by reference to
       Exhibit No. 10(n)(1) to Annual Report on Form 10-K Registrant No. 1-12248
       filed with the Commission on May 25, 1994.)

 10(n) Massachusetts Water Resources Authority Agreement with ICF Kaiser
       Engineers, Inc. through its wholly owned subsidiary of ICF Kaiser
       Engineers of Massachusetts, Inc. for construction management services for
       Boston Harbor Project--Deer Island Related Facilities, Contract No. 5622
       (June 1990) (Incorporated by reference to Exhibit No. 10(h) to Quarterly
       Report on Form 10-Q Registrant No. 0-18025 for the second quarter of
       fiscal 1991 filed with the Commission on October 12, 1990) (Amendment
       Nos. 1-3 incorporated by reference to Exhibit No. 10(n)(1-3) to Annual
       Report on Form 10-K Registrant No. 0-18025 for the fiscal year ended
       February 28, 1993 filed with the Commission on May 21, 1993)
       1. Amendment No. 4 and Amendment No. 4A each dated December 2, 1993
          [IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO.
          10(n)(1) to Annual Report on Form 10-K Registrant No. 1-12248 for
          fiscal 1994 FILED IN PAPER ON MAY 20, 1994, ON FORM SE PURSUANT TO A
          CONTINUING HARDSHIP EXEMPTION is incorporated herein by reference
          thereto]
       2. Amendment No. 5 dated December 6, 1994 [IN ACCORDANCE WITH RULE 202 OF
          REGULATION S-T, THIS EXHIBIT NO. 10(n)(2) to Annual Report on Form
          10-K Registrant No. 1-12248 for fiscal 1995 FILED IN PAPER ON MAY 23,
          1995, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION is
          incorporated herein by reference thereto]

 10(o) Contract (#DE-AC3495RF00825) between Kaiser-Hill Company, LLC, a
       subsidiary of the Corporation, and the U.S. Department of Energy dated as
       of April 4, 1995. [IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS
       EXHIBIT NO. 10(o) WAS FILED IN PAPER ON MAY 23, 1995, ON FORM SE PURSUANT
       TO A CONTINUING HARDSHIP EXEMPTION is incorporated herein by reference
       thereto]

 10(p) ICF Kaiser International, Inc. Section 401(k) Plan (as amended and
       restated as of March 1, 1993) (and further amended with respect to name
       change only as of June 26, 1993) (Incorporated by reference to Exhibit
       No. 10(f) to Quarterly Report on Form 10-Q Registrant No. 1-12248
       (Registrant No. 1-12248) for the second quarter of fiscal 1994 filed with
       the Commission on October 15, 1993)
    1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to
       Exhibit No. 10(p)(1) to Annual Report on Form 10-K Registrant No. 1-12248
       for fiscal 1995 filed with the Commission on May 23, 1995)
    2. Amendment No. 2 dated December 15, 1995

 10(q) Trust Agreement with Vanguard Fiduciary Trust Company dated as of March
       1, 1989, for the ICF Kaiser International, Inc. Section 401(k) Plan
       (Incorporated by reference to Exhibit No. 28(b) to Registration Statement
       on Form S-8 (Registration No. 33-51460) filed with the Commission on
       August 31, 1992)

Exhibit No. 10 -- Material Contracts (management contracts, compensatory plans,
or arrangements.)

10(aa) Employment Agreement with James O. Edwards dated as of December 31,
       1994 (Incorporated by reference to Exhibit No. 10 (bb) to Annual Report
       on Form 10-K for fiscal 1995 Registrant No. 1-12248 filed with the
       Commission on May 23, 1995)

10(bb) ICF Kaiser International, Inc. Corporate Incentive Compensation Plan:
       Annual Incentive Plan (dated as of September 29, 1993) (Incorporated by
       reference to Exhibit No. 10(aa) to Quarterly Report on Form 10-Q
       Registrant No. 1-12248 for the second quarter of fiscal 1994 filed with
       the Commission on October 15, 1993)

10(cc) ICF Kaiser International, Inc. Non-employee Director Stock Option Plan
       (as amended and restated as of June 26, 1993) (Incorporated by reference
       to Exhibit No. 10(bb) to Quarterly Report on Form 10-Q (Registrant No.
       1-12248) for the second quarter of fiscal 1994 filed with the Commission
       on October 15, 1993)
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 29
<PAGE>
 
10(dd) Agreement with Alvin S. Rapp, Executive Vice President of the
       Registrant, dated November 1, 1993 (Incorporated by reference to Exhibit
       No. 10(ll) to Amendment No. 1 to Registration Statement on Form S-1 (No.
       33-70986) filed with the Commission on November 22, 1993)

10(ee) Employment Agreement with Marc Tipermas, Executive Vice President of
       the Registrant, effective as of March 1, 1994 (Incorporated by reference
       to Exhibit No. 10(ll) to Annual Report on Form 10-K (Registrant No.
       1-12248) filed with the Commission on May 25, 1994).

10(ff) Employment Agreement with Stephen W. Kahane, Executive Vice President
       of the Registrant, effective as of March 1, 1994 (Incorporated by
       reference to Exhibit No. 10(mm) to Annual Report on Form 10-K (Registrant
       No. 1-12248) filed with the Commission on May 25, 1994).

10(gg) ICF Kaiser International, Inc. Senior Executive Officers Severance
       Plan as approved by the Compensation Committee of the Board of Directors
       on April 4, 1994, and adopted by the Board of Directors on May 5, 1994
       (Incorporated by reference to Exhibit No. 10(nn) to Annual Report on Form
       10-K (Registrant No. 1-12248) filed with the Commission on May 25, 1994).

10(hh) Employment Agreement with Michael K. Goldman, Executive Vice President
       of the Registrant, effective as of February 28, 1994. (Incorporated by
       reference to Exhibit No. 10(jj) to Annual Report on Form 10-K Registrant
       No. 1-12248 for fiscal 1995 filed with the Commission on May 23, 1995).

10(ii) Employment Agreement dated May 17, 1993, and February 1, 1995, with
       Richard K. Nason, Executive Vice President and Chief Financial Officer of
       the Registrant

Exhibit No. 11 -- Computation of Primary and Fully Diluted Earnings Per Share

Exhibit No. 21 -- Subsidiaries of the Registrant as of  March 1, 1996

Exhibit No. 23 -- Consent of Coopers & Lybrand L.L.P.

Exhibit No. 27 -- Financial Data Schedule



                                 (c) Reports on Form 8-K

     None

 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 30
<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.


                                              ICF Kaiser International, Inc.
                                                        (Registrant)



Date:  March 25, 1996                       By      /s/ James O. Edwards
                                               ---------------------------------
                                                       James O. Edwards,
                                            Chairman and 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.
 
                        (1) Principal executive officer
 
 
Date:  March 25, 1996                       By      /s/ James O. Edwards
                                               ---------------------------------
                                                       James O. Edwards,
                                            Chairman and Chief Executive Officer
 
 
                (2) Principal financial and accounting officer
 
 
Date: March 25, 1996                        By       /s/ Richard K. Nason
                                               ---------------------------------
                                                       Richard K. Nason,
                                                 Executive Vice President and
                                                    Chief Financial Officer

 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 31
<PAGE>
 
                            (3) Board of Directors
 
Date: March 25, 1996                By
                                       --------------------------------
                                              Gian Andrea Botta,
                                                 Director
                                   
Date: March 25, 1996                By       /s/ Tony Coelho
                                       --------------------------------
                                                 Tony Coelho,
                                                  Director
                                   
Date: March 25, 1996                By      /s/ James O. Edwards
                                       --------------------------------
                                              James O. Edwards,
                                                  Director
                                   
Date: March 25, 1996                By     /s/ Maynard H. Jackson
                                       --------------------------------
                                            Maynard H. Jackson,
                                                 Director
                                   
Date: March 25, 1996                By      /s/ Thomas C. Jorling
                                       --------------------------------
                                              Thomas C. Jorling,
                                                   Director
                                   
Date: March 25, 1996                By      /s/ Frederic V. Malek
                                       --------------------------------
                                               Frederic V. Malek,
                                                    Director
                                   
Date: March 25, 1996                By       /s/ Rebecca P. Mark
                                       --------------------------------
                                               Rebecca P. Mark,
                                                   Director
                                   
Date: March 25, 1996                By      /s/ Richard K. Nason
                                       --------------------------------
                                               Richard K. Nason,
                                                    Director
                                   
Date: March 25, 1996                By     /s/ Robert W. Page, Sr.
                                       --------------------------------
                                             Robert W. Page, Sr.,
                                                   Director
                                   
Date: March 25, 1996                By        /s/ Marc Tipermas
                                       --------------------------------
                                                Marc Tipermas,
                                                   Director
 
 
--------------------------------------------------------------------------------
ICF Kaiser International, Inc. Report on Form 10-K
for the ten months ended December 31, 1995.                              Page 32
<PAGE>
 
                       Report of Independent Accountants
                       ---------------------------------



To the Board of Directors and Shareholders
ICF Kaiser International, Inc.


          We have audited the consolidated financial statements and financial
statement schedule of ICF Kaiser International, Inc. and subsidiaries listed in
Item 14(a) of this Form 10-K.  These financial statements and financial
statement schedule are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements and
financial statement 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 financial statements referred to above present
fairly, in all material respects, the consolidated financial position of ICF
Kaiser International, Inc. and subsidiaries as of December 31, 1995 and February
28, 1995, and the consolidated results of their operations and their cash flows
for the ten months ended December 31, 1995, and for each of the two years in the
period ended February 28, 1995, in conformity with generally accepted accounting
principles.  In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the information
required to be included therein.



                                                        COOPERS & LYBRAND L.L.P.

Washington, D.C.
March 8, 1996

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

                                      F-1
<PAGE>
                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                         (In thousands, except shares)

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

<TABLE> 
<CAPTION> 
                                                      December 31, February 28,
                                                          1995         1995
                                                      -----------  -----------
<S>                                                   <C>          <C> 
 ASSETS
 Current Assets
     Cash and cash equivalents                          $ 16,357     $ 28,233
     Contract receivables, net                           228,239      139,860
     Prepaid expenses and other current assets            20,911       10,872
     Deferred income taxes                                11,934       13,553
                                                        --------     -------- 
             Total Current Assets                        277,441      192,518
                                                        --------     -------- 
                                                                 
 Fixed Assets                                                    
     Furniture, equipment, and leasehold improvements     42,909       42,557
     Less depreciation and amortization                  (33,369)     (29,648)
                                                        --------     -------- 
                                                           9,540       12,909
                                                        --------     -------- 
                                                                 
 Other Assets                                                    
     Goodwill, net                                        49,259       47,945
     Investments in and advances to affiliates            10,213        8,022
     Due from officers and employees                       1,053        1,826
     Other                                                22,011       18,202
                                                        --------     -------- 
                                                          82,536       75,995
                                                        --------     -------- 
                                                        $369,517     $281,422
                                                        ========     ======== 
                                                                 
 LIABILITIES AND SHAREHOLDERS' EQUITY                            
 Current Liabilities                                             
     Current portion of long-term debt                  $  5,041     $    578
     Accounts payable and subcontractors payable          86,429       33,452
     Accrued salaries and employee benefits               53,060       30,549
     Accrued interest                                      7,414        2,528
     Other accrued expenses                               18,594       13,359
     Income taxes payable                                    801          644
     Deferred revenue                                     14,327       11,013
     Other                                                 7,186        8,755
                                                        --------     -------- 
             Total Current Liabilities                   192,852      100,878
                                                        --------     -------- 
                                                                 
 Long-term Liabilities                                           
     Long-term debt, less current portion                120,112      126,733
     Other                                                 5,706        6,397
                                                        --------     -------- 
                                                         125,818      133,130
                                                        --------     -------- 
                                                                 
 Commitments and Contingencies                                   
                                                                 
 Minority Interests in Subsidiaries                        2,633          173
                                                                 
 Redeemable Preferred Stock,                                     
     liquidation value $20,000                            19,787       19,617
 Common Stock, par value $.01 per share:                         
     Authorized-90,000,000 shares                                
     Issued and outstanding-21,263,828 and                       
      21,011,369 shares                                      213          210
 Additional Paid-in Capital                               64,654       63,786
 Notes Receivable Related to Common Stock                 (1,732)      (1,732)
 Retained Earnings (Deficit)                             (32,894)     (33,343)
 Cumulative Translation Adjustment                        (1,814)      (1,297)
                                                        --------     -------- 
                                                        $369,517     $281,422
                                                        ========     ======== 
</TABLE> 

--------------------------------------------------------------------------------
See notes to consolidated financial statements.

                                      F-2
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands, except per share amounts)

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

<TABLE> 
<CAPTION> 
                                                         Ten Months
                                                            Ended      Year Ended February 28,
                                                         December 31,  -----------------------
                                                             1995           1995         1994
-----------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>           <C> 
 Gross Revenue                                          $    916,744   $   861,518   $  651,657
   Subcontract and direct material costs                    (493,971)     (405,819)    (272,169)
   Equity in income of joint ventures                    
       and affiliated companies                                3,123         4,087        3,220
                                                        ------------   -----------   ----------
 Service Revenue                                             425,896       459,786      382,708
                                                         
 Operating Expenses                                      
   Direct cost of services and overhead                      359,887       393,096      323,828
   Administrative and general                                 40,647        43,770       45,842
   Depreciation and amortization                               8,357         9,232        9,559
   Unusual items, net                                           (500)            -        8,709
                                                        ------------   -----------   ----------
 Operating Income (Loss)                                      17,505        13,688       (5,230)
                                                         
 Other Income (Expense)                                  
   Gain (loss) on sale of investment                               -           551         (925)
   Interest income                                             2,053         1,799        1,490
   Interest expense                                          (13,255)      (14,799)      (8,212)
                                                        ------------   -----------   ----------
 Income (Loss) Before Income Taxes,                      
   Minority Interests, and Extraordinary Item                  6,303         1,239      (12,877)
   Income tax provision (benefit)                              2,091         2,900         (349)
                                                        ------------   -----------   ----------
 Income (Loss) Before Minority Interests                 
   and Extraordinary Item                                      4,212        (1,661)     (12,528)
   Minority interests in net income of subsidiaries            1,960             -            -
                                                        ------------   -----------   ----------

 Net Income (Loss) Before Extraordinary Item                   2,252        (1,661)     (12,528)
   Extraordinary loss on early extinguishment of debt              -             -       (5,969)
                                                        ------------   -----------   ----------
                                                         
 Net Income (Loss)                                             2,252        (1,661)     (18,497)
   Preferred stock dividends and accretion                     1,803         2,154        4,896
   Redemption of redeemable preferred stock                        -             -        1,929
                                                        ------------   -----------   ----------
                                                         
 Net Income (Loss) Available for Common Shareholders    $        449   $    (3,815)  $  (25,322)
                                                        ============   ===========   ==========
                                                         
                                                         
 Primary and Fully Diluted Net Income (Loss)             
   Per Common Share:                                     
   Before extraordinary item                            $       0.02   $     (0.18)  $    (0.92)
   Extraordinary loss on early extinguishment of debt              -             -        (0.29)
                                                        ------------   -----------   ----------
       Total                                            $       0.02   $     (0.18)  $    (1.21)
                                                        ============   ===========   ==========
                                                         
                                                         
 Primary and Fully Diluted Weighted Average              
   Common and Common Equivalent                          
   Shares Outstanding                                         21,517        20,957       20,886
                                                        ============   ===========   ==========
</TABLE> 

--------------------------------------------------------------------------------
See notes to consolidated financial statements.

                                      F-3
<PAGE>
                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                         (In thousands, except shares)

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

<TABLE> 
<CAPTION> 
                                  Series 1 Junior                                      Notes
                                    Convertible                                      Receivable                                  
                                  Preferred Stock        Common Stock     Additional   Related   Retained   Cumulative   ESOP      
                                 -----------------  ---------------------   Paid-in   to Common  Earnings  Translation Guaranteed 
                                 Shares  Par Value    Shares    Par Value   Capital     Stock    (Deficit)  Adjustment Bank Loan
                                 ------  ---------  ----------  --------- ---------- ---------- ---------- ----------- ----------
<S>                              <C>     <C>        <C>         <C>       <C>        <C>        <C>        <C>         <C> 
 Balance, March 1, 1993              69  $   6,900  21,303,807  $   213   $  65,040  $ (2,725)  $  (4,206) $   (1,701) $  (5,000)
   Net loss                           -          -           -        -           -         -     (18,497)          -          -
   Preferred stock dividends          -          -           -        -           -         -      (4,670)          -          -
   Preferred stock accretion          -          -           -        -           -         -        (226)          -          -
   Redemption of redeemable                                                                                            
      preferred stock                 -          -           -        -           -         -      (1,929)          -          -
   Repurchase of preferred stock    (69)    (6,900)          -        -       2,050         -           -           -          -
   Issuances of common stock          -          -     231,249        2       1,056         -           -           -          -
   Repurchases of                                                                                                     
      common stock                    -          -    (610,468)      (6)     (3,716)        -           -           -          -
   Issuance of warrants               -          -           -        -         900         -           -           -          -
   Repurchase of warrants             -          -           -        -      (1,909)        -           -           -          -
   Payments received on notes                                                                                         
      receivable                      -          -           -        -           -       993           -           -          -
   Decrease in loan balance           -          -           -        -           -         -           -           -      5,000
   Foreign currency translation                                                                                       
      adjustment                      -          -           -        -           -         -           -         (40)         -
   Other                              -          -           -        -         151         -           -           -          -
                                 ------  ---------  ----------  --------- ---------- ---------- ---------- ----------- ----------
                                                                                                                      
 Balance, February 28, 1994           -          -  20,924,588      209      63,572    (1,732)    (29,528)     (1,741)         -
                                                                                                                      
   Net loss                           -          -           -        -           -         -      (1,661)          -          -
   Preferred stock dividends          -          -           -        -           -         -      (1,950)          -          -
   Preferred stock accretion          -          -           -        -           -         -        (204)          -          -
   Issuances of common stock          -          -     161,781        2         393         -           -           -          -
   Repurchases of                                                                                                     
      common stock                    -          -     (75,000)      (1)       (179)        -           -           -          -
   Foreign currency translation                                                                                       
      adjustment                      -          -           -        -           -         -           -         444          -
                                 ------  ---------  ----------  --------- ---------- ---------- ---------- ----------- ----------
                                                                                                                      
 Balance, February 28, 1995           -          -  21,011,369      210      63,786    (1,732)    (33,343)     (1,297)         - 

   Net income                         -          -           -        -           -         -       2,252           -          -
   Preferred stock dividends          -          -           -        -           -         -      (1,633)          -          -
   Preferred stock accretion          -          -           -        -           -         -        (170)          -          -
   Issuances of common stock          -          -     314,422        4       1,167         -           -           -          -
   Repurchases of                                                                                                     
      common stock                    -          -     (61,963)      (1)       (256)        -           -           -          -
   Foreign currency translation                                                                                       
      adjustment                      -          -           -        -           -         -           -        (517)         -
  Other                               -          -           -        -         (43)        -           -           -          -
                                 ------  ---------  ----------  --------- ---------- ---------- ---------- ----------- ----------
 Balance, December 31, 1995           -  $       -  21,263,828  $   213   $  64,654  $ (1,732) $  (32,894) $   (1,814)  $      -
                                 ======  =========  ==========  ========= ========== ========== ========== =========== ==========
</TABLE> 

--------------------------------------------------------------------------------
See notes to consolidated financial statements.

                                      F-4
<PAGE>
                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)

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

<TABLE> 
<CAPTION> 
                                                                           Ten Months
                                                                              Ended           Year Ended February 28,               
                                                                           December 31,     -------------------------- 
                                                                               1995            1995            1994  
                                                                           ------------      ---------       ---------
<S>                                                                        <C>               <C>             <C> 
 OPERATING ACTIVITIES                                                                                  
 Net income (loss)                                                             $  2,252      $ (1,661)       $(18,497)
 Adjustments to reconcile net income (loss) to net cash                                                       
   provided by (used in) operating activities:                                                                
   Depreciation and amortization                                                  8,357         9,232           9,559
   Provision for losses on contract receivables                                     601         1,320           2,241
   Provision for deferred income taxes                                            1,253         2,500            (714)
   Earnings less than (in excess of) cash distributions from                                                  
      joint ventures and affiliated companies                                    (1,105)          972          (1,708)
   Minority interests in net income of subsidiaries                               1,960            --              --
   (Gain) loss on sale of investment                                                 --          (551)            925
   Unusual items, net of cash                                                      (500)           --           7,786
   Extraordinary loss on early extinguishment of debt                                --            --           5,969
   Premium paid on reacquisition of senior subordinated notes                        --            --          (4,250)
   Changes in operating assets and liabilities, net of acquisitions:                                          
      Contract receivables, net                                                 (88,743)      (13,014)         26,292
      Prepaid expenses and other current assets                                  (3,826)        4,471           4,614
      Other assets                                                               (4,953)       (1,268)           (745)
      Accounts payable and accrued expenses                                      78,801         2,218         (10,233)
      Income taxes payable                                                          157           297          (2,478)
      Deferred revenue                                                            3,314         2,551          (2,412)
      Other liabilities                                                          (3,625)       (5,103)         (2,660)
   Other operating activities                                                        --           219             418
                                                                               --------      --------        -------- 
      Net Cash Provided by (Used in) Operating Activities                        (6,057)        2,183          14,107
                                                                               --------      --------        -------- 
 INVESTING ACTIVITIES                                                                                         
 Investments in subsidiaries and affiliates, net of cash acquired                (2,010)         (622)         (2,755)
 Sales of subsidiaries and subsidiary assets                                        735         2,600              --
 Purchases of fixed assets                                                       (1,759)       (2,426)         (1,388)
 Proceeds from sales of fixed assets                                              1,035            --              --
 Other investing activities                                                          --          (600)             --
                                                                               --------      --------        -------- 
      Net Cash Used in Investing Activities                                      (1,999)       (1,048)         (4,143)
                                                                               --------      --------        -------- 
                                                                                                              
 FINANCING ACTIVITIES                                                                                         
 Borrowings under credit facility agreement                                      16,000         5,000          10,000
 Principal payments on credit facility agreement and other borrowings           (17,173)       (1,172)        (47,010)
 Proceeds from issuance of senior subordinated notes and related warrants            --            --         121,488
 Reacquisition of senior subordinated notes and related warrants                 (1,363)           --         (31,559)
 Repurchases of redeemable preferred stock and related warrants                      --          (799)        (27,363)
 Repurchase of preferred stock                                                       --            --          (4,850)
 Subsidiary capital contribution from minority interest                             500            --              --
 Proceeds from issuances of common stock                                            406           395             640
 Repurchases of common stock                                                       (257)         (180)         (3,722)
 Principal payments from notes receivable related to common stock                    --            --             993
 Preferred stock dividends                                                       (1,471)       (1,950)         (5,321)
 Debt issuance costs                                                                 --          (149)         (6,307)
 Other financing activities                                                          55            --             151
                                                                               --------      --------        -------- 
      Net Cash Provided by (Used in) Financing Activities                        (3,303)        1,145           7,140
                                                                               --------      --------        -------- 
 Effect of Exchange Rate Changes on Cash                                           (517)          444             (40)
                                                                               --------      --------        -------- 
 Increase (Decrease) in Cash and Cash Equivalents                               (11,876)        2,724          17,064
 Cash and Cash Equivalents, Beginning of Period                                  28,233        25,509           8,445
                                                                               --------      --------        -------- 
 Cash and Cash Equivalents, End of Period                                      $ 16,357      $ 28,233        $ 25,509
                                                                               --------      --------        -------- 
</TABLE> 

--------------------------------------------------------------------------------
See notes to consolidated financial statements.


                                      F-5
<PAGE>
                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE A--ORGANIZATION AND NATURE OF OPERATIONS

          ICF Kaiser International, Inc. (ICF Kaiser or the Company) was formed
on October 19, 1987, as a holding company for the ICF Kaiser family of companies
developed and acquired.  These companies provide engineering, construction,
program management, and consulting services primarily to the public and private
environmental, infrastructure, industry, and energy markets domestically and
internationally.

NOTE B--SIGNIFICANT ACCOUNTING POLICIES

          Principles of Consolidation:  The consolidated financial statements
include all subsidiaries (including Kaiser-Hill Company, LLC, effective July 1,
1995) that are controlled by ICF Kaiser. Certain of ICF Kaiser's subsidiaries
are partially owned by outside parties.  For financial reporting purposes, the
assets, liabilities, results of operations, and cash flows of these subsidiaries
are included in ICF Kaiser's consolidated financial statements and the outside
parties' interests are reflected as minority interests.  Investments in
unconsolidated joint ventures and affiliated companies are accounted for using
the equity method.  The difference between the carrying value of investments
accounted for under the equity method and the Company's underlying equity is
amortized on a straight-line basis over the lives of the underlying assets.  All
significant intercompany balances and transactions have been eliminated.

          Significant Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those estimates.

          Change in Fiscal Year:  The Company changed from a fiscal year ending
February 28 to a fiscal year ending December 31, effective December 31, 1995.
As a result, the accompanying financial statements include consolidated
operations for the ten months ended December 31, 1995 and for the years ended
February 28, 1995 and 1994.

          Revenue Recognition:  Revenue is recorded on cost-type contracts as
costs are incurred.  Revenue on time-and-materials contracts is recognized to
the extent of billable rates times hours delivered plus materials expense
incurred.  Revenue on long-term, fixed-price contracts is recognized generally
using the percentage-of-completion method and, therefore, includes a proportion
of expected earnings based on costs incurred to total estimated costs.

          Foreign Currency Translation:  Results of operations for foreign
entities are translated using the average exchange rates during the period.
Assets and liabilities are translated to U.S. dollars using the exchange rate in
effect at the balance sheet date.  Resulting translation adjustments are
reflected in shareholders' equity as cumulative translation adjustment.

          Cash Equivalents and Restricted Cash:  ICF Kaiser considers all highly
liquid financial instruments purchased with original maturities of three months
or less to be cash equivalents.  Other assets as of December 31, 1995 and
February 28, 1995 included $600,000 of restricted cash and short-term
investments, which supported a letter of credit for one of ICF Kaiser's
subsidiaries.

          Fixed Assets:  Furniture and equipment are carried at cost, or fair
value at acquisition if acquired through a purchase of a business, and are
depreciated using the straight-line method over their estimated useful lives
ranging from three to ten years.  Leasehold improvements are carried at cost and
are amortized using the straight-line method over the remaining lease term.

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

                                      F-6
<PAGE>
                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

          Goodwill:  Goodwill represents the excess of cost over the fair value
of the net assets of acquired businesses and is amortized using the straight-
line method over periods ranging from five to 40 years.  The Company evaluates
the recoverability of goodwill on an annual basis by examining undiscounted
operating income.  Accumulated amortization was $12,785,000 and $11,148,000 at
December 31, 1995 and February 28, 1995, respectively.

          Income Taxes:  The Company provides for deferred income taxes using
the liability method on temporary differences between financial reporting and
income tax reporting, which primarily relate to reserves for adjustments and
allowances.  If necessary, management records a valuation allowance for deferred
tax assets.  The most significant permanent differences between book and taxable
income are nondeductible goodwill amortization, minority interest earnings of a
consolidated subsidiary, the effect of foreign taxes, and differences between
the book and tax basis of businesses sold.

          Income taxes have not been provided for the undistributed earnings of
the Company's foreign subsidiaries, because the Company intends to continue the
operations and reinvest the undistributed earnings indefinitely.  Undistributed
earnings of foreign subsidiaries for which income taxes have not been provided
amounted to approximately $5.7 million at December 31, 1995.

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

          Concentrations of Credit Risk:  The Company maintains cash balances
primarily in overnight Eurodollar deposits, investment-grade commercial paper,
bank certificates of deposit, and U.S. government securities.  ICF Kaiser grants
uncollateralized credit to its customers.  Approximately 64% of ICF Kaiser's
contract receivables at December 31, 1995 are from the U.S. government (see Note
D).  When practical and in order to mitigate its credit risk to commercial
customers, ICF Kaiser obtains advance funding of costs for industrial
construction work.

          Long-Lived Assets:  The Financial Accounting Standards Board (FASB)
recently issued  Statement of Financial Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of, effective for financial statements for fiscal years beginning after December
15, 1995.  It is the Company's current policy to evaluate all long-lived assets
on a periodic basis for asset impairment.  Therefore, upon formal adoption of
this statement in 1996, management does not expect that there will  be a
material adverse effect on the Company's financial position or operations.

          Stock-Based Compensation:  The FASB also  recently issued  Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS No. 123), which encourages companies to adopt a fair value
method of  accounting for employee stock options and similar equity instruments.
The fair value method requires compensation cost to be measured at the grant
date based on the value of the award and is recognized over the service period.
Alternatively, SFAS No. 123 requires the provision of pro forma disclosures of
net income and earnings per share as if the fair value method had been adopted
when the fair value method is not reflected in the financial statements.  The
Company has not yet determined whether it will adopt a fair value method of
accounting for stock-based compensation or provide pro forma disclosures.  The
impact of the adoption of this statement on the financial statements cannot be
reasonably estimated at this time.  The requirements of  SFAS No. 123 are
effective for financial statements for fiscal years beginning after December 15,
1995.

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

                                      F-7
<PAGE>
 
                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

          Reclassifications:  Certain reclassifications have been made to the
prior period financial statements to conform to the presentation used in the
December 31, 1995 financial statements.

NOTE C--DIVESTITURES

          The Company sold a 20% interest in a subsidiary during the year ended
February 28, 1995, resulting in a $551,000 pretax gain.  During the year ended
February 28, 1994, ICF Kaiser sold a portion of its energy engineering business,
resulting in a $925,000 pretax loss.

NOTE D--CONTRACT RECEIVABLES

     Contract receivables consist of the following (in thousands):

--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                 December 31,  February 28,
                                     1995          1995
                                 ------------  ------------
<S>                              <C>           <C>  
U.S. government agencies:
   Currently due                   $ 26,162      $ 36,752
   Retention                          1,870         2,026
   Unbilled                         123,890        34,273
                                   --------      --------
   
                                    151,922        73,051
                                   --------      --------
Commercial clients and state
   and municipal governments:
   Currently due                     64,121        69,317
   Retention                          5,361         4,522
   Unbilled                          16,270         2,834
                                   --------      --------
   
                                     85,752        76,673
                                   --------      --------
   
                                    237,674       149,724
Less allowances for
   uncollectible receivables          9,435         9,864
                                   --------      --------
   
                                   $228,239      $139,860
                                   ========      ========

</TABLE> 
--------------------------------------------------------------------------------
 
     U.S. government receivables arise from U.S. government prime contracts and
subcontracts.  The significant increase in the unbilled U.S. government
receivables is due primarily to a contract between the U.S. Department of Energy
(DOE) and Kaiser-Hill Company, LLC (Kaiser-Hill) to perform services at DOE's
Rocky Flats Environmental Technology Site in Colorado.  Unbilled  receivables
result from revenue that has been earned but was not billed as of the end of the
period.  The unbilled receivables can be invoiced at contractually defined
intervals and milestones, as well as upon completion of the contract or the
federal government cost audit.  Generally, retention is not expected to be
realized within one year; consistent with industry practice, these receivables
are classified as current.  Management anticipates that the remaining unbilled
receivables will be substantially billed and collected within one year.

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

                                      F-8
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

NOTE E--JOINT  VENTURES AND AFFILIATED COMPANIES

   ICF Kaiser has ownership interests in certain unconsolidated corporate joint
ventures and affiliated companies.  The Company's net investments in and
advances to these corporate joint ventures and affiliated companies are
summarized as follows (in thousands):

--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                              Ownership
                             Interest at
                             December 31,     December 31,  February 28,
                                 1995             1995          1995
                             ------------     ------------  ------------
<S>                          <C>              <C>           <C>          
Gary PCI Ltd. L.P.                50%           $ 5,257       $ 4,315
LIFAC North America               50%             1,535         1,914
Other                         20% to 50%          3,421         1,793
                                                -------       -------
                             
                                                $10,213       $ 8,022
                                                =======       =======
</TABLE> 
--------------------------------------------------------------------------------

   Combined summarized financial information of all of ICF Kaiser's corporate
joint ventures and affiliated companies is as follows (in thousands):

--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                             December 31,     February 28,  February 28,
                                 1995             1995          1994
                             ------------     ------------  ------------
<S>                          <C>              <C>           <C>  
Current assets                  $19,082         $15,103       $27,041
Non-current assets               42,400          12,723         6,608
Current liabilities              31,703          15,875        19,034
Non-current  liabilities            446              55           455
Gross revenue                    41,262          52,616        51,282
Net income                        6,606           8,430         8,908
</TABLE> 
--------------------------------------------------------------------------------

                                      F-9
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

NOTE F--LONG-TERM DEBT

     ICF Kaiser's long-term debt is as follows (in thousands):

--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                      December 31,  February 28,
                                                          1995          1995
                                                      ------------  ------------
<S>                                                   <C>           <C>  
12% senior subordinated notes due 2003                  $123,550      $125,000
Revolving credit facility (interest at 9.0% at             
 December 31, 1995)                                        5,000         5,000
Other notes, with interest at varying rates,                       
 payable in installments through 1998                         92         1,209
                                                        --------      --------
                                                                   
                                                                   
                                                         128,642       131,209
Less unamortized discount on 12%  senior                   3,489         3,898
 subordinated notes                                     --------      --------
                                                                   
                                                         125,153       127,311
Less current maturities                                    5,041           578
                                                        --------      --------
                                                                   
  Long-term debt                                        $120,112      $126,733
                                                        ========      ========
</TABLE> 
--------------------------------------------------------------------------------

     Scheduled maturities of long-term debt outstanding at December 31, 1995,
are as follows: $5,041,000 in 1996, $21,000 in 1997, $30,000 in 1998, and
$123,550,000 in 2003.

     On January 11, 1994, ICF Kaiser issued 125,000 Units, each Unit consisting
of $1,000 principal amount of the Company's 12% Senior Subordinated Notes due
2003 (12% Notes) and 4.8 warrants, each to purchase one share of the Company's
common stock at an exercise price of $5.00 per share. The warrants expire on
December 31, 1998, and additional warrants may be issued under certain anti-
dilution provisions. Of the net issue price of $121,487,500 ($125,000,000 less a
$3,512,500 discount), $900,000 was allocated to the value of the 600,000
warrants and $120,587,500 to the 12% Notes. The net proceeds were used, in part,
to retire the Company's 13.5% Senior Subordinated Notes due 1999 (13.5% Notes),
to repurchase preferred stock, to repay the outstanding balance on the Company's
then-existing revolving credit facility, and to repurchase warrants associated
with the 13.5% Notes and preferred stock. The recapitalization resulted in a
$6.0 million extraordinary charge (net of $0 tax benefit due to the
unanticipated decline in fiscal 1994's fourth-quarter results) for the early
extinguishment of debt and a $1.9 million charge to net income available for
common shareholders to repurchase the Series 2C Senior Preferred Stock. In
November 1995, the Company's insurance subsidiary repurchased 1,450 of the Units
for $1.4 million. In March 1996, the interest rate on the 12% Notes was
increased by one percent until the Company achieves and maintains a specified
level of earnings (see Note I).

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

                                      F-10
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

  The Company's obligations under the 12% Notes are subordinate to its
obligations under the Company's revolving credit facility.  Interest payments
are due semiannually.  The 12% Notes may not be prepaid at the Company's option
prior to December 31, 1998.  Subsequent to that date, the Company may prepay the
12% Notes at a premium.  In addition, the Company agreed to certain business and
financial covenants, including restrictions on indebtedness, dividends,
acquisitions, and certain types of investments and asset sales.  At December 31,
1995, the fair value of the 12% Notes was approximately $116.4 million.  The
fair value was computed using an average of recently quoted market prices
obtained from financial institutions.  Net debt issuance costs of $3.8 million
and $4.2 million associated with the 12% Notes are classified as other assets at
December 31, 1995 and February 28, 1995, respectively, in the accompanying
balance sheets.  These costs and the discount on the 12% Notes are being
amortized over the life of the notes.

  The Company has a $60 million revolving credit facility (the Credit Facility)
provided by a consortium of banks (the Banks).  ICF Kaiser International, Inc.
and certain of its subsidiaries, which are guarantors of the Credit Facility,
granted the Banks a security interest in their accounts receivable and certain
other assets.  The Credit Facility limits the payment of cash dividends,
requires the maintenance of specified financial ratios, and has a $20 million
limitation on cash borrowings.  Total available credit is determined from a
borrowing base calculation based on accounts receivable.  ICF Kaiser and the
Banks entered into amendments in 1995 that modified financial ratios and other
terms of the Credit Facility. As of December  31, 1995, there were $5.0 million
in borrowings outstanding under the Credit Facility, in addition to letters of
credit, and the Company had $23.5    million of available credit under the
Credit Facility.  The Credit Facility contains Eurodollar and alternate base
interest rate alternatives with margins dependent upon the Company's financial
operating results, and expires on October 31, 1996.  The outstanding letters of
credit were $7.1 million at December 31, 1995, and issued principally to support
performance guarantees under certain contracts.

  One of the Company's subsidiaries has a $50 million receivables purchase
facility to support the working capital requirements of the subsidiary under its
contract.  The receivables purchase facility requires the subsidiary to maintain
a specified tangible net worth and contains certain default provisions for
delinquent receivables.  Program fees consist of 0.30% per annum of the unused
portion of the facility and 0.45% per annum of the used portion of the facility.
The receivables purchase facility is non-recourse to ICF Kaiser International,
Inc. and expires on June 30, 1998.

  There are 275,088 common stock warrants that were issued with the 13.5% Notes
that remained outstanding following the repurchase of the other warrants in
January 1994.  The warrants expire on May 15, 1999, and are exercisable at any
time for shares of ICF Kaiser Common Stock at $6.87 per share.  Additional
warrants may be required to be issued under certain anti-dilution provisions.

NOTE G--CONTINGENCIES

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

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

                                      F-11
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

  The Company may from time to time, either individually or in conjunction with
other government contractors operating in similar types of businesses, be
involved in U.S. government investigations for alleged violations of procurement
or other federal laws and regulations.  The Company currently is the subject of
a number of U.S. government investigations and is cooperating with the
responsible government agencies involved.  No charges presently are known to
have been filed against the Company by these agencies.  Management does not
believe that there will be any material adverse effect on the Company's
financial position, operations, or cash flows as a result of these
investigations.

  The Company has a substantial number of cost-reimbursement contracts with the
U.S. government, the costs of which are subject to audit by the U.S. government.
As a result of such audits, the government asserts, from time to time, that
certain costs claimed as reimbursable under government contracts either were not
allowable or not allocated in accordance with federal procurement regulations.
Management believes that the potential effect of disallowed costs, if any, for
the periods currently under audit and for periods not yet audited, has been
provided for adequately and will not have a material adverse effect on the
Company's financial position, operations, or cash flows.

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

                                      F-12
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

NOTE H--INCOME TAXES

  The components of income (loss) before income taxes and minority interests and
the related provision (benefit) for income taxes are as follows (in thousands):

--------------------------------------------------------------------------------
                                                      
                                      Ten Months    
                                        Ended       Year Ended February 28,
                                     December 31,   ----------------------
                                         1995          1995       1994
                                       -------        ------    --------
                                                  
Income (loss) before income          
 taxes, minority interests, and      
 extraordinary item:                 
  Domestic                             $ 7,419        $1,217    $(11,894)
  Foreign                               (1,116)           22        (983)
                                       -------        ------    --------
                                                  
                                       $ 6,303        $1,239    $(12,877)
                                       =======        ======    ========
Provision (benefit) for income       
 taxes:                              
  Federal:                                        
    Current                            $   171        $  120    $      -
    Deferred                             2,020         2,328        (652)
                                       -------        ------    --------
                                                  
                                         2,191         2,448        (652)
                                       -------        ------    --------
  State:                                          
    Current                                258           100           -
    Deferred                               293           172         (62)
                                       -------        ------    --------
                                                  
                                           551           272         (62)
                                       -------        ------    --------
  Foreign:                                        
    Current                                409           180         365
    Deferred                            (1,060)            -           -
                                       -------        ------    --------
                                                  
                                          (651)          180         365
                                       -------        ------    --------
                                                  
                                       $ 2,091        $2,900    $   (349)
                                       =======        ======    ========

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



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

                                      F-13
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

    The tax effects of the principal temporary differences and carryforwards
that give rise to the Company's deferred tax asset are as follows (in
thousands):

--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                  December 31,   February 28,
                                                     1995            1995
                                                  ------------   ------------
<S>                                               <C>            <C> 
Reserves for adjustments and allowances             $ 8,984        $ 8,507
Vacation and incentive compensation accruals          6,655          5,443
Litigation settlement                                (2,676)             -
Joint ventures                                       (1,969)        (1,610)
Net operating loss carryforwards                        711          2,247
Tax credit carryforwards                              2,077          1,063
Other                                                 1,482          1,233
                                                    -------        -------
                                                    
Deferred income tax asset                            15,264         16,883
Valuation allowance                                  (3,330)        (3,330)
                                                    -------        -------
                                                    
  Deferred income tax asset, net                    $11,934        $13,553
                                                    =======        =======

</TABLE> 
--------------------------------------------------------------------------------

    Because of the reported losses for the year ended February 28, 1994, a $3.3
million valuation allowance was established in that year for deferred tax
assets.  Although the level of pretax income has increased  substantially since
that period (with a corresponding increase in taxable income), the Company has
maintained the valuation allowance.  At December 31, 1995, the Company had
deferred tax assets of $0.7 million related to net operating loss carryforwards,
of which $0.5 million expire within the next five years and $0.2 million expire
in 2008.  Additionally, the Company has deferred tax assets of $2.1 million
related to tax credit carryforwards, the majority of which expire in 1998 to
2009.  Management believes that the Company's expected levels of pretax
earnings, when adjusted for nondeductible expenses such as goodwill
amortization, will generate sufficient future taxable income to realize the
$11.9 million deferred tax asset (net) within the next five years.

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

                                      F-14
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

    The effective income tax (benefit) rate varied from the federal statutory
income tax rate because of the following differences:

--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                          Ten Months
                                            Ended       Year Ended February 28,
                                         December 31,   -----------------------
                                             1995          1995        1994
                                         -----------    ----------  -----------
<S>                                      <C>            <C>         <C>    
Statutory tax rate (benefit)                 34.0%         34.0%      (34.0)%
                                            -----         -----      ------
Changes in tax rate (benefit) from:                  
  Goodwill amortization                      11.7          69.9         9.9
  Minority interest earnings of a                     
    consolidated subsidiary                 (11.0)            -           -
  Differences between book and tax basis              
    of businesses sold                          -           7.4         7.3
  State income taxes                          5.8          14.5        (0.3)
  Foreign taxes (benefit)                    (9.2)         67.8         4.8
  Valuation allowance                           -             -         9.2
  Business meals, entertainment, and dues     5.1          30.9         1.4
  R&D credits                                (5.5)            -           -
  Subsidiary preferred dividends                -           1.9         0.1
  Adjustment of prior years' accruals         2.1           3.8        (2.4)
  Other                                       0.2           3.8         1.3
                                            -----         -----      ------
                                                                    
                                             (0.8)        200.0        31.3
                                            -----         -----      ------
                                                                    
                                             33.2%        234.0%      (2.7)%
                                            =====         =====      ======

</TABLE> 
--------------------------------------------------------------------------------

    One of the Company's consolidated subsidiaries, Kaiser-Hill, is a flow-
through entity for tax purposes and is partially owned by an outside party.
Accordingly, the provision for income taxes in the accompanying financial
statements was computed based on the Company's taxable share of Kaiser-Hill's
income. The tax rate effect of the outside party's share of income is reflected
above as minority interest earnings of a consolidated subsidiary. Kaiser-Hill
began operations during the ten months ended December 31, 1995.

    The tax provision for the year ended February 28, 1995 reflects the deemed
dividend from the repatriation of overseas funds to the United States that
currently could not be offset by foreign tax credits. For the past several
years, the Company has had ongoing negotiations, filings, and litigation with
the Internal Revenue Service (IRS) related to settlement of its tax liabilities
and the liabilities associated with affiliates of acquired companies. During the
year ended February 28, 1995, ICF Kaiser's 1989-1992 tax returns were accepted
as filed, resulting in the receipt of refunds from the IRS with interest. An
agreement also was reached with the IRS as to the amount of interest owed in
connection with previously settled years (1977-1986). The overall impact on
pretax earnings for the year ended February 28, 1995 was a reduction of net
interest expense of $1.3 million related to interest refunds.

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

                                      F-15
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

NOTE I--PREFERRED STOCK

     Preferred Stock of the Company is as follows (in thousands):

--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                   December 31,   February 28,
                                                       1995           1995
                                                   ------------   ------------
<S>                                                <C>            <C> 
Series 2D Senior Preferred Stock, par value
 $0.01 per share; liquidation value 
 $20,000,000; 200 shares designated, issued, 
 and outstanding                                      $20,000        $20,000
Less unamortized discount, warrant value, and        
 issue costs                                             (213)          (383)
                                                      -------        -------  
 Redeemable Preferred Stock                           $19,787        $19,617
                                                      =======        =======

</TABLE> 
--------------------------------------------------------------------------------

     Series 2D Senior Preferred Stock:  The Series 2D Senior Preferred Stock
(Series 2D Preferred Stock) together with five-year detachable warrants (Series
2D Warrants) were issued in fiscal 1992 for a price of $20,000,000 (less a
discount of $100,000).  Of the net price of $19,900,000, $400,000 was allocated
to the value of the warrants and $19,500,000 was allocated to the value of the
stock.  The value of the Series 2D Preferred Stock was reduced further by issue
costs.

     Dividends on the Series 2D Preferred Stock are $9,750 per share per annum,
cumulative.  Each of the shares has a liquidation preference of $100,000 ($20
million in the aggregate).  The issue carries voting rights equal to 2,380,952
shares of ICF Kaiser Common Stock.  The Series 2D Preferred Stock may be
redeemed at ICF Kaiser's option at 106.25% of the original price and is subject
to mandatory redemption at liquidation value on January 13, 1997.  Because of
technical limitations on the payment of dividends contained in the Indenture
governing the Company's 12% Notes (see Note F), the Company did not pay the
November 30, 1995 and February 29, 1996 accrued dividends in the aggregate
amount of $975,000.  Dividends in arrears at December 31, 1995 were $487,500.
If dividends are in arrears in excess of 100 days or redemption does not occur
in January 1997, the holder of the Series 2D Preferred Stock will have the
exclusive right to elect two additional directors and to prohibit or limit the
Company from taking certain specified extraordinary actions without the holder's
consent.  In March 1996, the Company and the holders of the 12% Notes amended
the Indenture to permit payment of all accrued but unpaid dividends (which were
then paid) and all future dividends.  As consideration for this amendment, the
interest rate on the 12% Notes was increased by one percent from March 1996
until the Company achieves and maintains a specified level of earnings.

     The Series 2D Warrants expire in November 1997 and may be exercised for
2,680,952 shares of ICF Kaiser Common Stock at an exercise price of $6.90 per
share.  In lieu of exercising the warrants, the holder may, at the holder's
option, require the Company to pay it cash or issue shares of ICF Kaiser's
Common Stock equal to the difference between the current market price of the
Company's common stock and 90% of the warrants' current exercise price.  In the
event that the Company cannot make a cash payment to the holder of the warrants
without violating certain covenants contained in the Company's agreements
relating to certain indebtedness, the Company will make such payment in common
stock.  Additional warrants may be issued under certain anti-dilution
provisions.

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

                                      F-16
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

     Junior Preferred Stock:  The Company has authorized 200 shares of Series 1
Junior Convertible Preferred Stock, par value $0.01 per share, with a
liquidation value of $20,000,000 and 500,000 shares of Series 4 Junior Preferred
Stock, par value $0.01 per share, with a liquidation value of $500,000.  There
were no shares issued or outstanding on either series as of December 31, 1995
and February 28, 1995.

NOTE J--COMMON STOCK

     Notes Receivable Related to Common Stock:  Notes receivable related to ICF
Kaiser Common Stock pertain to promissory notes from certain current and former
members of senior management in accordance with their compensation agreements
collateralized by shares of ICF Kaiser Common Stock.

     Shareholder Rights Plan:  The Shareholder Rights Plan (Rights Plan) is
designed to provide the Board of Directors (the Board) with the ability to
negotiate with a person or group that might, in the future, make an unsolicited
attempt to acquire control of ICF Kaiser, whether through the accumulation of
shares in the open market or through a tender offer that does not offer an
adequate price.  The Rights Plan provides for one Right (Right) for each
outstanding share of ICF Kaiser Common Stock.  Each Right entitles the holder to
purchase 1/100 of a share of Series 4 Junior Preferred Stock at a purchase price
of $50.  The Rights generally may cause substantial dilution to a person or
group that attempts to acquire the Company on terms not approved by the Board.
The Rights should not interfere with any merger or other business combination
approved by the Board because the Board may, at its option, following the
acquisition by any person or group of 20% of the outstanding shares of ICF
Kaiser Common Stock, redeem the Rights upon payment of the redemption price of
$0.01 per Right.  The Rights are not triggered by the acquisition of beneficial
ownership of more than 20% of ICF Kaiser Common Stock by the initial holder of
the Series 2D Preferred Stock.  Unless redeemed earlier by the Board,
unexercised Rights expire on January 13, 2002.

     Other:  At December 31, 1995, ICF Kaiser was obligated to issue 396,167
shares of the Company's common stock pursuant to an agreement with a former
employee.  Accordingly, this liability has been recognized in the accompanying
financial statements.  The shares were issued in March 1996.  275,000 of these
shares are being held by the Company pursuant to a pledge agreement as security
for an amount receivable from the former employee.

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

                                      F-17
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

NOTE K--LEASES

     Future minimum payments on noncancelable operating leases for office space
and on other noncancelable operating leases with initial or remaining terms in
excess of one year are as follows on December 31, 1995 (in thousands):
 
--------------------------------------------------------------------------------
<TABLE> 
<CAPTION>
<S>                    <C>                <C>  
                          1996            $  24,066
                          1997               19,949
                          1998               17,366
                          1999               15,701
                          2000               12,586
                       Thereafter            20,312
                                          ---------
                                          $ 109,980
                                          ========= 
</TABLE> 
--------------------------------------------------------------------------------

     The total rental expense for all operating leases was $24,950,000,
$31,176,000, and $30,833,000 for the ten months ended December 31, 1995 and the
years ended February 28, 1995 and 1994, respectively.  Sublease rental income
was $3,189,000,  $3,944,000, and $2,225,000, for the ten months ended December
31, 1995 and the years ended February 28, 1995 and 1994, respectively.  Minimum
future sublease rentals to be received under noncancelable subleases during 1996
are approximately $1,967,000.

NOTE L--STOCK OPTIONS

     The ICF Kaiser Stock Incentive Plan provides for the issuance of options,
stock appreciation rights, restricted shares, and restricted stock units of up
to an aggregate of 6,000,000 shares of ICF Kaiser Common Stock.  Awards are made
to  employees of ICF Kaiser at the discretion of the Compensation Committee of
the Board.  The plan provides that the option price is not to be less than the
fair market value on the date of grant.

       Stock option activity under this plan and other options granted for the
periods indicated is as follows:

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

                                      F-18
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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


--------------------------------------------------------------------------------
 
                                            Shares         Option Price
                                          ---------      ---------------
 
Balance, March 1, 1993                    1,946,000      $5.99 to $17.00
                                                                  
Granted                                     390,000      $4.17 to $ 6.79
Canceled                                    (10,000)     $8.25 to $12.83
Expired                                     (30,000)     $5.04 to $12.83
                                          ---------               
                                                                  
Balance, February 28, 1994                2,296,000      $4.17 to $17.00
                                                                  
Granted                                     824,000      $2.34 to $ 4.41
Canceled                                   (453,000)     $2.64 to $16.23
Expired                                    (250,000)     $4.41 to $16.23
                                          ---------               
                                                                  
Balance, February 28, 1995                2,417,000      $2.34 to $17.00
                                                                  
Granted                                     678,000      $3.50 to $ 4.42
Canceled                                   (257,000)     $8.25    
Expired                                    (382,000)     $2.64 to $16.23
Exercised                                    (4,000)     $2.64 to $ 2.68
                                          ---------               
                                                                  
Balance, December 31, 1995                2,452,000      $2.34 to $17.00
                                          =========               
                                                                  
Exercisable at December 31, 1995          1,090,000      $2.34 to $17.00
                                          =========

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

     At December 31, 1995, 1,985,835 shares were available for the granting of
options.  There were 242,000 exercisable options outstanding at an option price
below the fair market value of ICF Kaiser Common Stock at December 31, 1995.  In
March 1995, the Company canceled 257,000 options granted to employees at an
exercise price of $8.25 and granted 86,000 options to them at an exercise price
of $4.09.

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

                                      F-19
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

NOTE M--EMPLOYEE BENEFIT PLANS

     ICF Kaiser and certain of its subsidiaries sponsor a number of benefit
plans covering substantially all employees who meet minimum length of service
requirements.  These plans include the ICF Kaiser International, Inc. Retirement
Plan (Retirement Plan), a defined-contribution profit sharing plan that provides
for contributions by the Company based on a percentage of covered compensation;
the ICF Kaiser International, Inc. Section 401(k) Plan (401(k) Plan), a cash or
deferred-compensation arrangement that allows employees to defer portions of
their salary, subject to certain limitations; and the ICF Kaiser International,
Inc. Employee Stock Ownership Plan (ESOP) under which the Company made
contributions based on a percentage of covered compensation.  Effective March 1,
1993, the Company made contributions equal to 20% of the first 4% of employee
contributions to the 401(k) Plan and 2% of covered compensation to the ESOP.
Effective March 1, 1994, the Company increased its matching contribution to the
401(k) Plan to 50% of the first 4% of employee contributions and discontinued
contributions to the ESOP.  Total expense for these plans for the ten months
ended December 31, 1995 and the years ended February 28, 1995 and 1994 was
$5,711,000, $6,466,000, and $8,041,000, respectively.  As of December 31, 1995,
the Retirement Plan, 401(k) Plan, and ESOP owned 1,036,437, 175,937, and
2,104,240 shares, respectively, of ICF Kaiser Common Stock.

     Certain of the Company's employees are covered by union-sponsored,
collectively bargained, multi-employer pension plans.  Contributions and costs
are determined in accordance with the provisions of negotiated labor contracts
or terms of the plans.  Pension expense for these plans was $3,676,000,
$2,525,000, and $2,150,000 for the ten months ended December 31, 1995 and the
years ended February 28, 1995 and 1994, respectively.

NOTE N--OTHER POSTRETIREMENT BENEFITS

     The Company provides certain postretirement benefits to a limited group of
retirees.  The cost of these benefits is funded when paid and limited to a fixed
amount per participant.  The Company adopted Statement of Financial Accounting
Standards No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, as of March 1, 1993, and recorded the transition obligation on the
delayed recognition basis.

     The funded status of the plan is as follows (in thousands):

--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                   December 31,   February 28,
                                                       1995           1995
                                                   ------------   ------------
<S>                                                <C>            <C> 
Accumulated postretirement benefit obligation        
 (APBO)                                              $  7,843       $  9,537
Unamortized  transition obligation                    (11,427)       (12,257)
Unrecognized net gain                                   5,554          4,121
                                                     --------       --------
 
Accrued postretirement benefit cost                  $  1,970       $  1,401
                                                     ========       ========
</TABLE> 
--------------------------------------------------------------------------------

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

                                      F-20
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

     The net periodic postretirement benefit cost consists of the following (in
thousands):

--------------------------------------------------------------------------------
 
                                         Ten Months 
                                           Ended       Year Ended February 28,
                                        December 31,   -----------------------
                                            1995        1995            1994
                                        ------------   ------          ------
                                                                  
Interest cost                              $  541      $  920          $  938
Amortization of transition obligation         830         980             981
Amortization of unrecognized net gain        (214)          -               -
                                           ------      ------          ------
                                                                       
  Net periodic postretirement benefit   
   cost                                    $1,157      $1,900          $1,919
                                           ======      ======          ======

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

     All service cost related to the participants' benefits was included in the
transition obligation.

     The discount rate at both December 31, 1995 and February 28, 1995 was 7%.
The 1995 health care cost trend rate is 5%, effective until 2008 when the cost
will be in excess of the Company's maximum obligation.  If the trend rate was
increased by 1% for each year, the APBO as of December 31, 1995 would increase
by approximately 3%.  Due to changes in assumptions made, including reductions
in premiums paid by the Company, the APBO was reduced by approximately $1.6
million during the ten months ended December 31, 1995.  These reductions in the
APBO will be amortized over the average remaining life expectancy of the plan's
participants.

NOTE O--BUSINESS SEGMENT, MAJOR CUSTOMERS, AND FOREIGN OPERATIONS

     Business Segment:  ICF Kaiser operates predominantly in one industry
segment in which it provides engineering, construction, program management, and
consulting services.

     Major Customers:  Gross revenue from major customers is as follows (in
thousands):

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

                                         Ten Months 
                                           Ended      Year Ended February 28,
                                        December 31,  -----------------------
                                            1995         1995         1994
                                        ------------  ----------     --------
                                                                     
U.S. Department of Energy                 $623,149     $517,478      $312,889
U.S. Environmental Protection Agency        55,527       62,783        63,109
Other U.S. government agencies              41,182       44,969        49,105
                                          --------     --------      --------
                                                                   
  Total U.S. government                   $719,858     $625,230      $425,103
                                          ========     ========      ========

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

                                      F-21
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

     Foreign Operations:  Gross revenue and operating income from foreign
operations and foreign assets of all consolidated subsidiaries and branches were
as follows (in thousands):

--------------------------------------------------------------------------------
                                                
                                     Ten Months 
                                       Ended          Year Ended February 28,
                                    December 31,     ------------------------
                                        1995           1995            1994
                                      --------       --------        --------
Foreign gross revenue:
  Europe                              $ 14,237       $ 16,758        $ 11,600
  Pacific                               28,002         35,189          21,997
  Other                                  1,189          2,122           2,793
                                      --------       --------        --------
                                        43,428         54,069          36,390
Domestic gross revenue                 873,316        807,449         615,267
                                      --------       --------        --------
                                      
  Total gross revenue                 $916,744       $861,518        $651,657
                                      ========       ========        ========
                                      
Foreign operating income (loss):      
  Europe                              $  1,426       $  2,600        $  1,742
  Pacific                                2,511           (350)         (1,899)
  Other                                     20            (44)           (255)
                                      --------       --------        --------
                                         3,957          2,206            (412)
Domestic operating income (loss)        13,548         11,482          (4,818)
                                      --------       --------        --------
 
  Total operating income (loss)       $ 17,505       $ 13,688        $ (5,230)
                                      ========       ========        ========
Foreign assets:
  Europe                              $ 12,905       $  9,950        $  6,410
  Pacific                               11,024         14,813          14,626
  Other                                    137            182              14
                                      --------       --------        --------
                                        24,066         24,945          21,050
Domestic assets                        345,451        256,477         260,148
                                      --------       --------        --------
 
  Total assets                        $369,517       $281,422        $281,198
                                      ========       ========        ========

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


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

                                     F-22
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

NOTE P--UNUSUAL ITEMS

     During the ten months ended December 31, 1995, the Company recorded $0.5
million in additional income (net), consisting of the following unusual items:
income in settlement of litigation against the IRS, associated with an affiliate
of an acquired company, net of an accrual for related expenses  ($6.8 million);
a charge to accrue the net settlement cost and legal expenses of other
litigation ($4.6 million); a charge to accrue for severance for the termination
of 110 employees in the engineering and international groups ($1.0 million); and
a charge to accrue for consolidation of office space ($0.7 million).  As a part
of management's continuing efforts to identify areas in which costs can be
reduced, the Company has chosen to terminate a group of underutilized employees
and consolidate office space.  Management expects that all actions associated
with the termination of employees and office space consolidation will be
completed by December 31, 1996.

     During the year ended February 28, 1994, the Company completed a corporate
reorganization, performed a comprehensive review of its key business lines and
its cost structure, and designed and implemented action plans intended to return
the Company to long-term profitability.  As a result, the Company recorded an
$8.7 million pretax charge to cover the cost of downsizing the work force ($2.5
million), consolidating office space and renegotiating significant leases ($5.1
million), and restructuring certain international operations ($1.1 million).
All actions have been completed, and there is no further liability outstanding
as of December 31, 1995 associated with this plan.

NOTE Q--SUPPLEMENTAL CASH FLOW INFORMATION

     Supplemental cash flow information is as follows (in thousands):

--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                     Ten Months 
                                       Ended          Year Ended February 28,
                                    December 31,     ------------------------
                                        1995           1995            1994
                                      --------       --------        --------
<S>                                 <C>              <C>             <C> 
Cash payments for interest            $  7,898       $ 14,961        $ 10,565
Cash payments (refunds) for                           
 income taxes                            1,306         (1,026)           (106)
                                                      
Non-cash transactions:                                
  Issuance of common stock in                         
   connection with an acquisition          765              -               -
  Decrease of ESOP guaranteed                        
   bank loan                                 -              -          (5,000)
  Sale of investment                         -            735           2,600

</TABLE> 
--------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------

                                      F-23
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

NOTE R--SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

     Quarterly financial information for full fiscal quarters for the ten months
ended December 31, 1995 and the year ended February 28, 1995 is presented in the
following tables (in thousands, except per share amounts):

--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
  Ten Months Ended December 31, 1995:
                                                 Third      Second     First
                                                 Quarter    Quarter    Quarter
                                                 --------   --------   -------
<S>                                              <C>        <C>        <C>                             
Gross revenue                                    $319,870   $268,274   $192,983
Service revenue                                  $147,391   $117,645   $105,498
Operating income                                 $  5,815   $  5,497   $  3,762
Net income                                       $    896   $    575   $    163
Primary and fully diluted                                              
  net income (loss) per common share             $   0.02   $   0.00   $  (0.02)
Market price per share:                                                
  High                                           $   4.75   $   4.63   $   5.00
  Low                                            $   3.25   $   3.75   $   3.75
</TABLE> 
<TABLE> 
<CAPTION> 
  Year Ended February 28, 1995:      
                                     
                                      Fourth     Third      Second     First
                                      Quarter    Quarter    Quarter    Quarter
                                      --------   --------   --------   --------
<S>                                   <C>        <C>        <C>        <C>                   
Gross revenue                         $206,154   $235,912   $208,961   $210,491
Service revenue                       $111,372   $125,345   $109,919   $113,150
Operating income                      $  3,234   $  2,962   $  3,273   $  4,219
Net income (loss)                     $   (943)  $   (323)  $   (613)  $    218
Primary and fully diluted                                              
  net income (loss) per common share  $  (0.07)  $  (0.04)  $  (0.05)  $  (0.02)
Market price per share:                                                
  High                                $   4.38   $   4.13   $   2.63   $   3.88
  Low                                 $   2.63   $   2.38   $   2.00   $   2.25
</TABLE> 
--------------------------------------------------------------------------------

     At February 29, 1996 there were  21,398,053 shares of common stock
outstanding held by 1,356 holders of record.

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

                                      F-24
<PAGE>

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

NOTE S--COMPARATIVE STATEMENT OF OPERATIONS INFORMATION (UNAUDITED)

     Unaudited operating results for the ten months ended December 31, 1994 are
as follows (in thousands):

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

GROSS REVENUE                                                         $ 732,370
  Subcontract and direct material costs                                (343,369)
  Equity in income of joint ventures and 
    affiliated companies                                                  2,995
                                                                      ---------
 
SERVICE REVENUE                                                         391,996
 
OPERATING EXPENSES
  Direct cost of services and overhead                                  337,120
  Administrative and general                                             34,292
  Depreciation and amortization                                           7,688
                                                                      ---------
 
OPERATING INCOME                                                         12,896
 
OTHER INCOME (EXPENSE)
  Gain on sale of investment                                                551
  Interest income                                                         1,492
  Interest expense                                                      (12,138)
                                                                      ---------
 
INCOME BEFORE INCOME TAXES                                                2,801
  Income tax provision                                                    2,962
                                                                      ---------
 
NET LOSS                                                              $    (161)
                                                                      =========

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



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

                                      F-25
<PAGE>
                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
                                (in thousands)

<TABLE> 
<CAPTION> 
             COLUMN A                        COLUMN B             COLUMN C                COLUMN D        COLUMN E
----------------------------------------------------------------------------------------------------------------------
                                                                  Additions
                                                           ------------------------
                                            Balance at     Charged to                                    Balance at
                                            beginning      costs and                                       end of
            Description                     of period       expenses       Other         Deductions        period
----------------------------------------------------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>            <C>             <C>
Ten months ended December 31, 1995:
  Deducted from asset account
  Allowance for doubtful accounts            $9,864          $601          $62 (4)       $1,092 (1)      $9,435
                                                                                      
  Deducted from asset account and                                                     
    included in other liabilities                                                      
  Provision for future losses                                                         
    on contracts                                843         1,119          545 (5)          233 (3)       2,274
                                            --------------------------------------------------------------------------
                                            $10,707        $1,720         $607           $1,325         $11,709
                                            ==========================================================================
                                                                                      
                                                                                      
Year ended February 28, 1995:                                                         
  Deducted from asset account                                                         
  Allowance for doubtful accounts           $10,197        $1,406           --           $1,739 (1)      $9,864
                                                                                      
  Deducted from asset account and                                                     
    included in other liabilities                                                      
  Provision for future losses                                                         
    on contracts                                179           664           --               --             843
                                            --------------------------------------------------------------------------
                                            $10,376        $2,070           --           $1,739         $10,707
                                            ==========================================================================
                                                                                      
                                                                                      
Year ended February 28, 1994:                                                         
  Deducted from asset account                                                         
  Allowance for doubtful accounts            $8,977        $2,509           --           $1,289 (2)     $10,197
                                                                                      
  Included in other liabilities                                                       
  Provision for future losses                                                         
    on contracts                                464            --           --              285 (3)         179
                                            --------------------------------------------------------------------------
                                             $9,441        $2,509           --           $1,574         $10,376
                                            ==========================================================================
</TABLE> 
(1)  Reflects amounts written of against the allowance and related accounts 
     receivable accounts and settlement of doubtful accounts.
(2)  Reflects amounts written off against the allowance and related accounts 
     receivable accounts.
(3)  Reflects losses charged against the provision for contract losses.
(4)  Reflects net allowance for doubtful accounts from the purchase of a 
     subsidiary.
(5)  Reflects provision for future contract losses provided for in connection 
     with the purchase of a subsidiary.

                                      S-1