INTERNATIONAL TECHNOLOGY CORP, 10-K, 1997-06-24

INTERNATIONAL TECHNOLOGY CORP
10-K, 1997-06-24
HAZARDOUS WASTE MANAGEMENT

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

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

For the fiscal year ended March 28, 1997

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

For the transition period from ___________ to ____________

Commission file number 1-9037

International Technology Corporation
(Exact name of registrant as specified in its charter)
Delaware 33-0001212
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

2790 Mosside Boulevard, Monroeville, Pennsylvania 15146-2792
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (412) 372-7701

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

Name of each exchange on which
Title of each class registered
------------------- ------------------------------
Common Stock, $.01 Par Value New York Stock Exchange; Pacific
Stock Exchange
Preferred Stock Depositary Shares New York Stock Exchange; Pacific
Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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

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

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

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

Documents Incorporated by Reference

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

<PAGE>

INTERNATIONAL TECHNOLOGY CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED MARCH 28, 1997

TABLE OF CONTENTS

Item Page
- ---- ----
PART I

1 Business . . . . . . . . . . . . . . . . . . . . . 2
General. . . . . . . . . . . . . . . . . . . . . 2
Background . . . . . . . . . . . . . . . . . . . 3
Operations . . . . . . . . . . . . . . . . . . . 3
General. . . . . . . . . . . . . . . . . . . . . 3
Engineering and Construction . . . . . . . . . 4
Consulting and Ventures. . . . . . . . . . . . 4
International. . . . . . . . . . . . . . . . . 5
Customers. . . . . . . . . . . . . . . . . . . 5
Competition. . . . . . . . . . . . . . . . . . 6
Technology Development . . . . . . . . . . . . 7
Regulations. . . . . . . . . . . . . . . . . . 7
Environmental Contractor Risks . . . . . . . . 10
Insurance and Risk Management. . . . . . . . . 11
Discontinued Operations. . . . . . . . . . . . . 11
Employees. . . . . . . . . . . . . . . . . . . . 11
2 Properties . . . . . . . . . . . . . . . . . . . . 12
3 Legal Proceedings. . . . . . . . . . . . . . . . . 12
4 Submission of Matters to a Vote of Shareholders. . 12
-----------
4A Executive Officers of the Company. . . . . . . . . 13

PART II

5 Market for the Registrant's Common Stock and
Related Shareholder Matters. . . . . . . . . . . 14
6 Selected Financial Data. . . . . . . . . . . . . . 15
7 Management's Discussion and Analysis of
Results of Operations and Financial Condition. . 15
8 Financial Statements and Supplementary Data. . . . 23
9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . 48

PART III

10 Directors and Executive Officers of the Registrant. 48
11 Executive Compensation . . . . . . . . . . . . . . 48
12 Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . 48
13 Certain Relationships and Related Transactions . . 48

PART IV

14 Exhibits, Financial Statement Schedule and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . 49

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PART I

ITEM 1. BUSINESS.

GENERAL

International Technology Corporation, a Delaware corporation (the
Company or IT), provides a wide range of environmental management
services and technologies including the assessment, engineering, and
remediation of situations involving hazardous materials and pollution
prevention and minimization. The Company was incorporated in 1983; the
earliest antecedent of the Company commenced operations in California in
1926.

The Company's services are provided to a broad array of
governmental and commercial entities predominantly in the U.S. market.
Additionally, the Company pursues selected international business
opportunities. The Company's business strategy is to provide its
environmental services on a full-service basis, particularly by focusing
on its capabilities to manage complex environmental issues from the
initial assessment of the level and extent of contamination through the
design, engineering and execution of a solution which minimizes the
client's total cost. In recent years, the Company has worked on several
hundred Superfund sites for various governmental and commercial clients.

Demand for the Company's services is heavily influenced by the
level of enforcement of environmental laws and regulations, funding
levels for government projects and spending patterns of commercial
clients. During the 1990's, spending by commercial clients has slowed
primarily due to reduced implementation and enforcement activities by
governmental regulatory agencies and an uncertain regulatory climate.
The operations of the Company are performed subject to a comprehensive
federal, state, and local environmental regulatory structure. (See
Business - Operations - Regulations.) This regulatory structure is a
primary driver of business opportunities for the Company. The lapse of
the Superfund (see Business - Operations - Regulations - Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (CERCLA))
and uncertainty concerning the form of the future reauthorization of the
Superfund and potential changes in other regulations have dampened
demand for the Company's services.

In recent years, the Company's revenues have been derived primarily
from its business with federal, state and local governmental clients.
Revenues attributable to contracts with governmental agencies accounted
for 67%, 69% and 71% of total revenues in fiscal years 1997, 1996 and
1995, respectively. (See Business - Operations - Customers - Federal,
State and Local Governmental Clients.) The Company expects that
revenues attributable to federal, state and local governmental agency
contracts, particularly those with the U.S. Department of Defense (DOD)
and the U.S. Department of Energy (DOE), will continue to represent a
substantial but declining percentage of total revenues in the near term.
Efforts to constrain the federal budget deficit have reduced the level
of spending on environmental restoration by the DOD, the DOE and other
federal governmental agencies. Additionally, the delay in the
authorization of the 1996 federal budget reduced the Company's revenues
in late-fiscal year 1996 and early-fiscal year 1997 due to the failure
of the DOD to fund the Company's delivery order contracts as previously
expected. (See Management's Discussion and Analysis of Results of
Operations and Financial Condition - Results of Operations - Continuing
Operations - Revenues.)

At the November 20, 1996 Annual Meeting of Stockholders, IT's
shareholders voted to approve an investment by The Carlyle Group, a
major Washington, D.C.-based investment bank (the Carlyle Investment).
The Company issued to Carlyle 45,000 shares of Convertible Preferred
Stock having a liquidation preference of $1,000 per share, and
warrants to purchase 1,250,000 shares of IT common stock at $11.39 per
share. The $40,609,000 net proceeds to the Company (after related
offering costs of $4,391,000) will be used by IT to finance business
acquisitions, as well as for working capital and general corporate
purposes (see Notes to Consolidated Financial Statements - Preferred
stock - Carlyle Investment).

Using the proceeds of the Carlyle Investment, the Company expects
to further grow and diversify its business through acquisitions. In
November 1996, the Company acquired a 50.1% interest in a Taiwanese
wastewater treatment design/build firm (see Business - Operations -
International) and, in May 1997, the Company acquired a consulting firm

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

BACKGROUND

Hazardous materials management and remediation, as well as air and
water pollution control, are widely acknowledged as significant national
priorities. As of March 1997, the U.S. Environmental Protection Agency
(USEPA) had designated approximately 1,372 sites as Superfund
locations with significant concentrations of hazardous materials,
although only approximately 25% of these sites have been remediated. In
addition, there are a large number of small commercial and governmental
sites that will require cleanup. The assessment, decontamination and
remediation of hazardous sites are governed by complex environmental and
occupational safety and health regulations administered by numerous
federal, state and local agencies.

Many of the Company's clients, both governmental and commercial,
continue to require a full-service solution, in which a single supplier
manages the entire process from identification and assessment through
remediation. Successful remediation of hazardous sites requires a
multidisciplinary approach, since such sites typically involve a variety
of waste which affects air, soil and/or water. Depending on the
circumstances, the required skills may include analytical chemistry,
risk assessment, computer modeling, ambient air monitoring, process and
design engineering, and construction/remediation. The application of
these disciplines to solve client problems requires substantial
operational knowledge, and the Company believes that it is
well-positioned to solve client problems in a practical, cost-effective
manner because of the combination of its technical capabilities and
experience. Additionally, the Company's technical expertise and
operational experience are sought by other firms for project-specific
teaming and joint venture relationships, thereby allowing the Company
access to an increased number of large scale governmental and commercial
programs.

Over the past several years, the environmental management and
hazardous waste remediation industry has been characterized by an
increasing number of well-capitalized competitors, reduced government
enforcement of environmental regulations and regulatory uncertainty.
This has resulted in reduced commercial spending on environmental
cleanup and intense pricing competition for hazardous waste cleanup
projects. Lower demand in the private sector during the 1990's has been
offset to some extent by new major project opportunities in the public
sector, primarily major cleanup projects at DOD and DOE installations,
which require a broad range of project management and field execution
skills, limiting the number of potential bidders. As a result of the
changes impacting the industry, consolidation has occurred through
downsizing and mergers. The Company's strategy is to be a strong
competitor for the major project opportunities offered by the DOD and
DOE, to continue to actively serve the commercial market, to expand and
diversify into economically-driven, value-added services and to achieve
economies of scale by participating in the ongoing consolidation in the
industry using the proceeds of the Carlyle Investment. (See
Management's Discussion and Analysis of Results of Operations and
Financial Condition - Liquidity and Capital Resources.)

OPERATIONS

General

The Company's operations are managed through two divisions, an
Engineering and Construction division and a Consulting and Ventures
division. The Engineering and Construction division manages projects of
all sizes, while the Consulting and Ventures division provides
specialized consulting services and focuses on new value-added business
initiatives. The Company provides these capabilities anywhere in the
United States as well as internationally through appropriate resources
located in the Company's 43 offices and through certain international
affiliates (see International).

3
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Engineering and Construction

The major part of IT's business is the management of complex
hazardous waste remediation projects involving the assessment, planning
and execution of the decontamination and restoration of property, plant
and equipment that have been contaminated by hazardous substances.
These projects include the cleanup of land disposal sites where
hazardous or toxic substances have been disposed and pose a threat to
the surrounding environment; rivers, streams and groundwater
contaminated by chemical substances and buildings, production facilities
and storage sites contaminated with hazardous chemical and/or
radioactive materials. These projects require considerable strategic
environmental management, technical engineering and analytical effort to
determine the substances involved, the extent of the contamination, the
appropriate alternatives for containing or removing the contamination,
and the selection of the technologies for treatment, to perform the
cleanup of the site as well as strong project management and
construction and remediation skills to execute the ultimate remediation
projects in the field. The Company is involved in all areas of the
United States and in selected areas internationally in the assessment or
cleanup phases of site remedial action projects.

The Company provides full-service capabilities for these projects,
primarily in the areas of DOD and DOE delivery order program management,
engineering and design services, remedial construction, mobile
treatment, and decontamination/decommissioning capabilities. In the
area of remedial construction, IT offers diverse services, such
as excavation and isolation, installation of subsurface recovery
systems, thermal treatment solutions, bioremediation approaches,
chemical treatment, soil washing, fixation or stabilization, facility or
site closures, solidification, landfill cell construction, and slurry
wall and cap installation. The full-service strategy supports the
Company's marketing efforts toward developing partnering arrangements
with clients in which IT is the primary supplier of all client
environmental management services and assists clients to innovatively
reduce total environmental costs.

Consulting and Ventures

The Company provides a wide range of consulting services including
environmental permitting, facility siting and design, strategic
environmental management, environmental compliance/auditing, risk
assessment/management, pollution prevention, waste minimization,
environmental information systems, and data management.

The Company has expanded its air quality business in response to
its clients' needs. The Company provides services related to pollution
prevention engineering, control technology specification, permit
preparation, emergency release management, emission sampling and
monitoring, leak detection in industrial facilities and overall air
quality management.

Additionally, the Company performs a variety of consulting services
for clients to help them comply with environmental and/or health and
safety regulations. The Company also provides assistance to these
clients in developing corporate policies and procedures in areas such as
pollution prevention and waste minimization that integrate
environmental regulations into their business decisions.

The Company has been strategically broadening its capability
through business initiatives which address the trend toward
economically-driven, value-added environmental solutions. In March
1996, IT acquired Gradient Corporation, a prominent environmental risk
assessment firm. Additionally, during fiscal year 1997, the Company
made a 19% investment in LandBank, Inc., a firm pursuing the brownfields
remediation market, a market involving economically-driven cleanup of
impaired properties for future real estate development. As well as
being an investor in LandBank, IT will be LandBank's preferred
contractor, both for site assessment and remediation activities. In May
1997, the Company purchased PHR Environmental Consultants, Inc., a
California-based consulting firm which assists business entities to more
economically confront potential or existing environmental liabilities
through an interdisciplinary investigative approach of science, history
and information.

4
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International

In November 1996, the Company made a 50.1% majority investment in
Chi Mei Scientech/Entech, a Taiwan-based wastewater treatment
design/build firm, which will now do business as Chi Mei International
Technology. The Company intends to use this investment as a stepping
stone to project opportunities and other business expansion
possibilities in the Far East. The Company has entered into a joint
venture agreement with a major Mexican engineering and construction
firm. This joint venture has performed several projects and is
currently seeking permits to operate a treatment facility using the
Company's incineration capabilities near Mexico City. The Company has
also entered into a joint venture with a major Korean engineering and
construction firm to pursue, among other things, a major
incineration project. (See Management's Discussion and Analysis -
Results of Operations - Continuing Operations - Revenues.)

Customers

The Company's services are provided to a broad range of federal,
state and local governmental and commercial clients in the U.S. market.
During the 1990's, the Company experienced a significant shift in
revenues from the commercial sector to the governmental sector, although
that trend reversed slightly beginning in fiscal year 1996.

Federal, State and Local Governmental Clients

Due to its technical expertise, project management experience and
full-service capabilities, the Company has successfully bid on and
executed contracts with federal and other governmental agencies for the
performance of various CERCLA and RCRA activities. (See Business -
Operations - Regulations.) The Company's governmental contracts
are often multi-year, indefinite delivery order programs (IDOs). These
programs provide spending budget estimates for which the client expects
to define the scope by working closely with IT's program management and
technical staff. As projects are defined, the work is awarded to the
Company on a sole source basis. Government contracts are typically
subject to annual funding limitations and public sector budgeting
constraints. Some of these contracts provide a maximum contractual
amount of services that may be performed by the Company with the
specific services authorized from time to time by the government agency
through a series of task orders under the master contract. The Company
may be asked to perform services for the full amount of an IDO or for
amounts greater or less than the full amount. IDOs generated
approximately 27% of the Company's revenues in fiscal year 1997. The
programs with federal government agencies typically involve a
competitive bidding process pursuant to federal procurement policies
involving several bidders and result in a period of contract negotiation
after a successful bidder is selected. Although the Company generally
serves as the prime contractor on its contracts or as a part of a joint
venture which is the prime contractor, the Company serves as a
subcontractor to other prime contractors on some federal government
programs. As has become typical in the environmental industry, the
Company has entered into joint venture or teaming arrangements with
competitors when bidding on certain of the largest, most complex
contracts, to provide the breadth of technical expertise and, at times,
bonding capacity required for the project.

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

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

Federal government:
DOD. . . . . . . . . . . . 42% 51% 47%
DOE. . . . . . . . . . . . 14 11 12
Other federal agencies . . 3 3 4
--- --- ---
59 65 63

State and local governments. 8 4 8
--- --- ---
Total. . . . . . . . . . . . 67% 69% 71%
=== === ===

Commercial Clients

The Company serves numerous commercial clients including chemical,
petroleum and other manufacturing firms, utilities, real estate and
transportation service companies, and law firms. A substantial portion
of the Company's commercial work represents new contracts awarded by
existing clients. No single commercial client accounted for 10%
or more of the Company's consolidated revenues in fiscal years 1997,
1996 or 1995. There is a growing trend in the Company's work for
commercial clients toward strategic environmental management services
and economically-driven solutions to environmental issues (see Business
- - Operations - Consulting and Ventures).

Competition

The environmental management industry is very competitive and
requires professional personnel with technical and project management
skills. The Company believes that the principal competitive factors in
all areas of its business are operational experience, technical
proficiency, breadth of services offered, local presence and, often most
importantly, price.

The Company faces competition from a diverse array of small and
large organizations including national or regional environmental
management firms; national, regional and local architectural,
engineering and construction firms; environmental management divisions
or subsidiaries of international engineering, construction and systems
companies; and hazardous waste generators which have developed in-house
capabilities. Major competitors in consulting, engineering and design
include Bechtel, CH2M Hill, Dames and Moore, Earth Technology, ERM
Group, Fluor Daniel, Jacobs Engineering, and Roy F. Weston. Major
competitors in remediation include Bechtel, Fluor Daniel, Foster
Wheeler, Groundwater Technology, Jacobs Engineering, Morrison-Knudsen,
OHM and Sevenson.

Increased competition, combined with changes in client procurement
procedures, has resulted in market trends over the past several years
toward lower contract margins, a client preference for fixed-price or
unit-price contracts and unfavorable changes in contract terms and
conditions in areas such as indemnification of the client by the Company
of liabilities for damage or injury to third parties and property and
for environmental fines and penalties. Additionally, certain of the
Company's competitors benefit from certain economies of scale and have
better access to bonding and insurance markets at a lower cost. The
entry of large systems contractors and international engineering and
construction firms into the environmental management industry has
increased the level of competition for major federal governmental
contracts and programs, which have been the primary source of the
Company's revenue over the past several years. Over the past several
years, there has been consolidation in the industry as certain of the
larger corporations have acquired smaller firms which, although reducing
the number of industry competitors to some degree, has increased the
number of stronger competitors.

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Technology Development

IT's Technology Development program focuses on innovative
applications of new and existing technologies and methods, principally
through client projects. The IT technology development program is
directed in three primary areas: 1) continued improvements to
technologies developed in-house through applications on client
projects,2) the evaluation and implementation of technologies developed
outside the Company which present commercial opportunities for IT,
and 3) improvements to third party technologies for enhanced client
value. Additionally, the Company continues to defend and expand its
patent position in thermal treatment technology, bioremediation and
various soil cleaning processes.

Through the Company's technology development program, IT has
continued to advance the development and implementation of its
bioremediation programs. Clean closure of numerous sites have been
accomplished using naturally occurring organisms in the patented BIOFAST
system. Recent patents for vapor phase nutrient delivery have
successfully demonstrated the ability to expand the range of
applicability to nutrient deficient soils. Advances in the
understanding and monitoring of natural attenuation processes have
resulted in approval from federal and state agencies for selection of
natural attenuation as the clean-up option of choice for an increasing
number of sites including contaminants such as gasoline, fuel oil, and
chlorinated solvents. IT is participating in a client funded program
for the applications testing and commercialization of an innovative
bioremediation technology using naturally occurring organisms for the
remediation of metals contaminated soils. This innovative approach will
provide a new cost effective option to the current practice of
excavation and disposal of metals contaminated soils.

Under license from a third party, IT has completed the largest
installation to date of the "barrier wall and reactive gate technology."
Contaminated groundwater at the site collects against the down gradient
barrier wall and is funneled to the reactive gate where the contaminants
decompose by reaction with the reactive media in the gate.

The Company continues to enhance the applicability of a licensed
method to identify and treat a specific class of toxic substances
inherent in wastewater discharges from the oil industry. Pilot-scale
testing at a client refinery is providing a direct comparison of the new
technology capabilities to existing, carbon treatment cost and
effectiveness.

IT has entered into the first option year of the contract for
operation of the USEPA Test & Evaluation Facility in Cincinnati, Ohio.
This RCRA Part B permitted, USEPA facility is also available for private
party sponsored technology evaluations, provides treatability testing
and process development services on contaminated waste waters, sludges,
and soils. Unique accomplishments this year include the development,
construction, and field startup of systems for the production of "safe
drinking water" at three sites in the Peoples Republic of China and one
in the state of Vera Cruz, Mexico under the federally funded United
States Technology for International Environmental Solutions program.

This year the Company has also improved its position in the
development and commercialization of environmental information
management technology. IT has received extensive patent coverage for
the ManageIT system which is used for the management and tracking of
Hazardous Waste at client sites. Through the use of its proprietary IT
Environment Management System (ITEMS) and related systems, the Company
has become a leading user of advanced data base management technology to
serve its clients' needs. The Company uses various information
management capabilities developed by many vendors, in addition to its
proprietary systems, in implementing environmental information
management systems for its clients.

Regulations

The Company and its clients are subject to extensive and evolving
environmental laws and regulations which affect the demand for many of
the services offered by the Company (see Business - Operations -
Environmental Contractor Risks) and create certain significant risks and
potential opportunities for the Company in providing its services.
Regulatory changes may also affect the Company's inactive disposal sites
in Northern California. (See Notes to Consolidated Financial Statements
- - Discontinued operations.)

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Within the past three years, a number of significant changes to
existing environmental legislation have been proposed. Some of the
proposed changes originated in legislation commonly referred to as the
Republican Party's "Contract With America." Many of the proposed
changes have been stalled in the Congress. The proposals would
overhaul the government regulatory process, requiring regulatory risk
assessments and cost-benefit analyses, and reducing requirements for
reporting to the government. Although the impact of these proposed
changes upon the Company's business cannot yet be fully predicted, the
proposed changes in regulations and reduced enforcement of current
environmental laws appear to have decreased the demand for certain of
the Company's services, as customers anticipate and adjust to the
potential changes. The Company believes that it generally has
benefitted from increased environmental regulations affecting business,
and from more active enforcement of those regulations. However,
proposed changes could also result in increased demand for certain of
the Company's services if regulatory changes decrease the cost of
remediation projects or result in more funds being spent for actual
remediation. The ultimate impact of the proposed changes will depend
upon a number of factors, including the overall strength of the U.S.
economy and customers' views on the cost-effectiveness of remedies
available under the changed regulations.

The principal environmental legislation affecting the Company and
its clients is described below:

National Environmental Policy Act of 1969 (NEPA). Under NEPA, all
federal agencies must consider environmental factors in their decision
making. Among other things, NEPA established guidelines and
requirements for environmental assessments and mitigation measures for a
variety of projects involving government approval or financing,
including development and construction of power plants and transmission
lines, pipelines, highways, landfills, mines, reservoirs and residential
and commercial developments.

Resource Conservation and Recovery Act of 1976 (RCRA). RCRA
regulates the treatment, storage and disposal of hazardous and solid
wastes. The 1984 Hazardous and Solid Waste Amendments to RCRA (HSWA)
expanded RCRA's scope by providing for the regulation of additional
wastes as hazardous and imposing restrictions on land disposal of
certain wastes, prescribing more stringent management standards for
hazardous waste disposal sites, setting standards for underground
storage tank (UST) management and providing for corrective action
procedures. Under RCRA, liability and stringent management standards
are imposed on generators or transporters of hazardous waste or owners
or operators of waste treatment, storage or disposal facilities.

RCRA's standards for waste treatment, storage and disposal
facilities apply to hazardous waste incinerators. Changes in these
standards and related changes in CERCLA have impacted the market for the
Company's mobile, on-site incineration services using the Hybrid Thermal
Treatment System (HTTS ) technology. In 1994, the USEPA issued a new
policy under RCRA which, while affirming incineration as an allowable
remedy under CERCLA, called for additional procedures and studies to be
conducted before incineration may be selected as a remedy, or which may
result in the deselection of incineration as a remedy, at a Superfund
site. Additionally, in 1996, the USEPA finalized its policy of favoring
waste minimization over combustion/incineration and of increasing
regulatory burdens upon combustion and incineration facilities, whether
fixed-based or on-site. Furthermore, incineration as a remediation
remedy continues to be the subject of considerable public opposition and
controversy. The Company believes that the heightened scrutiny and
higher cost of, and public opposition to, incineration as a remedial
option has led to delays and added costs in permitting the Company's
HTTS units for use on projects, and has also caused the USEPA and/or
private parties to prefer other remedies in Superfund remediations.
Such actions may have an adverse impact on the Company's business. (See
Management's Discussion and Analysis of Results of Operations and
Financial Condition - Results of Operations - Continuing Operations -
Revenues.)

Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (CERCLA). CERCLA addresses cleanup of sites at which there
have been or may be releases or threatened releases of hazardous
substances into the environment. CERCLA assigns liability for costs of
cleanup and damage to natural resources to any person who, currently or
at the time of disposal of a hazardous substance, owned or operated any
facility at which hazardous substances were released; to any person who
arranged for disposal, treatment, or transportation of hazardous
substances by others; and to certain persons who accepted hazardous
substances for transport to facilities or sites from which there
is a release or threatened release of hazardous substances. CERCLA
authorizes the federal government either to clean up these sites itself
or to order persons responsible for the situation to do so. CERCLA
created the Superfund to be used by the federal government to pay for

8
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certain cleanup efforts. Where the federal government expends money for
remedial activities, it must seek reimbursement from the potentially
responsible parties (PRPs). CERCLA generally imposes strict, joint and
several retroactive liability upon such parties. CERCLA was amended in
1986 by the Superfund Amendments and Reauthorization Act (SARA), which
authorized increased federal expenditures and imposed more stringent
cleanup standards and accelerated timetables. SARA also contained
provisions which expanded the enforcement powers of the USEPA.

While CERCLA's Superfund taxing authority originally expired in
December 1995, and CERCLA's authority to expend funds originally expired
in September 1994, Congress has extended the USEPA's authority to tax
and use funds on an interim basis through September 30, 1997. Moreover,
the Congressional Budget Office projects that the USEPA has enough
appropriated but unobligated funds to allow USEPA to operate at current
levels for approximately two years after September 30, 1997, should
CERCLA's taxing authority not be reauthorized by then.

The Company believes that failure of Congress to reauthorize
CERCLA, and proposed substantial changes in and continuing uncertainty
concerning the details of the legislation, cleanup standards, and remedy
selection, have resulted in project delays and/or the failure of clients
to initiate or proceed with projects. A number of changes to CERCLA
have been previously proposed as a part of the reauthorizing
legislation. Amendments to repeal CERCLA's retroactive liability
provisions have been introduced. It has also been proposed that CERCLA's
preference for permanent treatment remedies such as incineration be
changed to favor confinement and containment remedies. (See the
discussion of the Resource Conservation and Recovery Act of 1976 (RCRA)
immediately above.) Standards for acceptable cleanups have also been
the subject of proposals for change. Although several bills to
reauthorize CERCLA have been introduced in this session of Congress,
including some which propose to maintain or increase previous funding
levels, controversy over the details of the legislation indicate that
there is no clarity when CERCLA may be reauthorized, what changes would
be included in any reauthorization, or what funding levels might be.

In response to Congressional and private sector pressure and, in
part, to avoid more sweeping legislative changes, the USEPA has
attempted to relax regulatory requirements and enforcement. For
example, the USEPA has attempted, through various regulatory
initiatives, to make it easier to redevelop "brownfields," i.e., lightly
to moderately contaminated urban sites. Brownfields sites nationally
have been estimated to number in the hundreds of thousands. Similar
legislation has also been introduced, and a number of states have
initiated similar programs. While the Company believes such programs
offer additional opportunities, the ultimate impact of such programs
cannot yet be predicted.

Clean Air Act and 1990 Amendments. The Clean Air Act requires
compliance with National Ambient Air Quality Standards for specific
pollutants and empowers the USEPA to establish and enforce limits on the
emission of various pollutants from specific types of facilities. The
Clean Air Act Amendments of 1990 modified the Clean Air Act in a number
of significant areas. Among other changes, they established emissions
allowances for sulfur and nitrogen oxides, established strict
requirements applicable to emissions of air toxics, established a
facility-wide operating permit program for all major sources of
pollutants, established requirements for management of accidental
releases of toxic air pollutants, and created significant new penalties,
both civil and criminal, for violations of the Clean Air Act.

Although the USEPA has recently proposed a significant tightening
of regulations regarding ozone standards and particulate emissions,
which might eventually increase demand for the Company's air quality
services, the proposals have met with substantial opposition and their
ultimate fate remains uncertain.

Other Federal and State Environmental Laws. The Company's services
are also utilized by its clients in complying with, and the Company's
operations are subject to regulation under, among others, the following
federal laws: the Toxic Substances Control Act, the Clean Water Act,
the Safe Drinking Water Act, the Occupational Safety and Health Act
and the Hazardous Materials Transportation Act. In addition, many
states have passed Superfund-type legislation and other regulations and
policies to cover more detailed aspects of hazardous materials
management. This legislation addresses such topics as air pollution
control, UST and aboveground storage tank (AST) management, water
quality, solid waste, hazardous waste, surface impoundments, site
cleanup and wastewater discharge. In addition, many states that passed

9
<PAGE>

Superfund-type legislation and other environmental regulations are now
reviewing and relaxing those laws and regulations because of their
alleged adverse impact upon business and competitiveness.

Environmental Contractor Risks

Although the Company believes that it generally benefits from
increased environmental regulations affecting business, and from
enforcement of those regulations, increased regulation, enforcement and
private litigation also create significant risks for the Company. These
risks include potentially large civil and criminal liabilities from
violations of environmental laws and regulations and liabilities to
customers and to third parties for damages arising from performing
services for clients. The Company's failure to observe such laws and/or
the terms and conditions of licenses and permits it holds could
adversely impact the Company's ability to carry on one or more of its
businesses as presently constituted.

Liabilities Arising out of Environmental Laws and Regulations

All facets of the Company's business are conducted in the context
of an extensive and rapidly changing statutory and regulatory framework.
The Company's operations and services are affected by and subject to
regulation by a number of federal and other agencies. There have also
been efforts by litigants to expand the reach of CERCLA and RCRA to make
contractor firms responsible for cleanup costs through claims that
environmental contractors are owners or operators of hazardous waste
facilities or that they arranged for treatment, transportation or
disposal of hazardous substances. While a few decided CERCLA cases have
shielded cleanup contractors from strict liability, no clear direction
has emerged from the cases decided to-date.

Potential Liabilities Involving Customers and Third Parties

In performing services for its customers, the Company could
potentially be liable for breach of contract, personal injury, property
damage, negligence and other causes of action. The damages available to
a customer, should it prevail in its claims, are potentially large and
could include consequential damages.

Many of those contracting for environmental management services,
particularly those involving large scale remediations, seek to shift to
contractors the risk of completing the project in the event the
contamination is either more extensive or difficult to resolve than
originally anticipated. In the competitive market in which
environmental management services are offered, customer pressure has
increased significantly for contractors to accept greater risk of
performance, liability for damage or injury to third parties or
property, and liability for fines and penalties. The Company has from
time to time been involved in claims and litigation involving disputes
over such issues. (See Notes to Consolidated Financial Statements -
Motco litigation settlement.)

Environmental management contractors, in connection with work
performed for customers, also potentially face liabilities to third
parties from various claims including claims for property damage or
personal injury stemming from a release of toxic substances or otherwise
which could arise long after completion of the project.

Over the past several years, the USEPA and other federal agencies
have constricted significantly the circumstances under which they will
indemnify their contractors against liabilities incurred in connection
with CERCLA projects and continue their attempts to renegotiate
previously agreed indemnities. While future Congressional action to
broaden the availability of indemnification is possible, there is no
assurance that Congress will change federal government indemnification
policies.

Government Contracting Risk

As a major provider of services to governmental agencies, the
Company also faces the risks associated with government contracting,
which include substantial civil and criminal fines and penalties.
Government contracting requirements are complex, highly technical and
subject to varying interpretations. As a result of its government
contracting business, the Company has been, is, and expects in the
future to be, the subject of audits and investigations by governmental
agencies. (See Notes to Consolidated Financial Statements - Commitments

10
<PAGE>

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

Insurance and Risk Management

The Company has adopted a range of insurance and risk management
programs designed to reduce potential liabilities, including insurance
policies, programs to seek indemnity where possible in its contracts,
other contract administration procedures, and employee health, safety,
training, and environmental monitoring programs. In addition, as a
result of the substantial increase over the past several years in the
percentage of the Company's revenues derived from work for governmental
agencies, the Company has developed a company-wide government contracts
compliance program. The Company cannot assure the adequacy of the
program and compliance failure could have a material adverse effect on
the Company's business.

The Company's insurance program includes $70,000,000 per fiscal
year of excess liability policies, insuring claims in excess of a
$5,000,000 retention level for each of commercial general liability,
product liability and automotive liability. With respect to the
$5,000,000 retention level for each of such coverages, the Company's
captive insurance company (the Captive) generally is obligated to
indemnify the Company's insurance carriers against liabilities and costs
of defense, subject to certain limitations. Letters of credit are
provided to support the indemnity commitment; at present, the aggregate
amount of such letters of credit is approximately $3,500,000. From a
risk management perspective, the policies reinsured by the Captive are,
in effect, a self-insurance layer.

The Company also has other insurance policies with various
retentions or deductibles for the management of its risk including but
not limited to all risk property coverage, workers' compensation,
employer's liability, employment practices liability, consultants'
environmental liability (including errors and omissions) and directors'
and officers' liability insurance coverage.

Although the Company believes its program to be appropriate for the
management of its risk, its insurance policies may not fully cover risks
arising from the Company's operations. The exclusion of certain
pollution and other liabilities, such as punitive damages, from some
insurance policies, or losses in excess of the coverage, may cause all
or a portion of one or more losses not to be covered by such insurance.

DISCONTINUED OPERATIONS

There are substantial financial implications related to the
discontinued operations. For further information regarding the
Company's discontinued operations, see Notes to Consolidated Financial
Statements - Discontinued operations and Management's Discussion and
Analysis of Results of Operations and Financial Condition - Liquidity
and Capital Resources.

EMPLOYEES

At March 28, 1997, the Company employed 2,083 regular employees.
Of these employees, 203 were in sales, corporate office and group
administration and the remainder were in operations. The Company's

11
<PAGE>

professional and technical employees engage in disciplines which include
chemical and civil engineering, geology, hydrology/hydrogeology and
computer/data processing. Over 445 of the Company's employees hold
advanced degrees.

At March 28, 1997, none of the Company's employees were represented
by labor unions under collective bargaining agreements. The Company
employs union labor from time to time on a project-specific basis. The
Company considers its relations with its employees to be good.

ITEM 2. PROPERTIES.

IT owns or leases property in 25 states, the District of Columbia
and the United Kingdom. Excluding its discontinued operations, the
Company owns approximately 50 acres and leases approximately 675,000
square feet of property for various uses, including regional and project
offices, technology and process development laboratories, equipment
yards and a corporate office. Management considers the facilities
adequate for the present and anticipated activities of the Company.

Additionally, the Company owns approximately 2,821 acres related to
its discontinued operations, principally in Northern California, of
which approximately 500 acres have been used for hazardous waste
disposal facilities and approximately 2,200 are adjacent to those
facilities, but were never used for waste disposal.

The Company has announced the relocation and consolidation of its
Torrance, California corporate headquarters into its largest operations
office in Monroeville (Pittsburgh), Pennsylvania. This process will be
completed by the end of June 1997. The Company expects to realize
certain cost savings from this consolidation. (See Management's
Discussion and Analysis - Results of Operations - Continuing Operations
- - Restructuring charge.)

ITEM 3. LEGAL PROCEEDINGS.

Continuing Operations Legal Proceedings

See Notes to Consolidated Financial Statements - Commitments and
contingencies - Contingencies for information regarding the legal
proceedings related to the continuing operations of the Company.

Discontinued Operations Legal Proceedings

See Notes to Consolidated Financial Statements - Discontinued
operations for information regarding the legal proceedings that relate
to the transportation, treatment and disposal discontinued operations of
the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS.

There were no matters submitted to a vote of the Company's common
shareholders during the fourth quarter of fiscal year 1997.

12
<PAGE>

ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY.

The following table provides information as of June 13, 1997
regarding the Company's executive officers and the positions they hold
with the Company. The officers are appointed annually by the Board of
Directors to serve at the discretion of the Board.

First
elected
as
director
or
Term as officer
director of the
Name Age Position expires Company
---- --- -------- -------- -------
Anthony J. DeLuca 50 President and Acting 1997 1990
Chief Executive Officer
Franklin E. Coffman 55 Senior Vice President, ---- 1984
DOE Programs, Corporate
Business Development
James R. Mahoney 58 Senior Vice President, ---- 1991
Consulting and Ventures
and Corporate Development
Raymond J. Pompe 63 Senior Vice President, ---- 1988
Engineering and
Construction
James G. Kirk 58 Vice President, General ---- 1996
Counsel and Secretary
________________

Mr. Coffman joined the Company in October 1984 as Vice President,
Government Programs, was named Senior Vice President, Government and
Commercial Program Development, in March 1995, and Senior Vice
President, DOE Programs, Corporate Business Development in July 1996.
Prior to joining the Company, Mr. Coffman served in various capacities
for the DOE including Deputy Assistant Secretary of Waste Management,
Director of the Office of Advanced Nuclear Systems and Projects, and
Director of the Division of Fusion Development and Technology.
Previously, he was employed in the Atomic Energy Commission as Chief,
Energy Research Development Agency, Fusion Systems and Applications -
Applications Studies Branch, Washington, D.C. and as a health physicist.

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

Mr. Kirk, who joined the Company as General Counsel, Eastern
Operations, in 1991, was named Vice President, General Counsel and
Secretary in September 1996. Prior to joining the Company, Mr. Kirk
served as Vice President and General Counsel for Limbach Constructors
from 1978 to 1991. From 1973 to 1978, Mr. Kirk was Assistant
General Counsel for Dravo Corporation.

Mr. Mahoney, who joined the Company in January 1991 as Senior Vice
President and Director of Technology was named Senior Vice President,
Corporate Development and Sales in April 1992; Senior Vice President,
Technical Operations and Corporate Development in March 1995; and Senior
Vice President, Consulting and Ventures in July 1996. Prior to joining
the Company, Mr. Mahoney was Director of the National Acid Precipitation
Assessment Program, a U.S. government research and assessment program,
from 1988 to 1991. From 1984 to 1987, Mr. Mahoney served in various
environmental managerial capacities with Bechtel Group, Incorporated, a
major construction firm.

Mr. Pompe joined the Company in 1988 as Vice President, Construction
and Remediation, was named Senior Vice President, Project Operations, in
March 1995, and Senior Vice President, Engineering and Construction in
July 1996. Prior to joining the Company, Mr. Pompe was employed by
Dravo Corporation, a major construction firm, from 1956 to 1988 in
various executive capacities, most recently as Senior Vice President
responsible for construction projects.

13
<PAGE>
PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SHAREHOLDER MATTERS.

The Company's common stock is listed on the New York Stock Exchange
(NYSE) and Pacific Stock Exchange under the symbol ITX. The following
table sets forth the high and low sale prices of the common stock, as
reported by the NYSE for the periods indicated, all after adjustment for
a one-for-four reverse stock split effective November 21, 1996.

Quarter ended High Low
------------- ---- ---
June 30, 1995 . . . . . . . . . . . . $ 13 1/2 $ 9 1/2
September 29, 1995. . . . . . . . . . 15 1/2 11
December 29, 1995 . . . . . . . . . . 13 1/2 9
March 29, 1996. . . . . . . . . . . . 11 8
June 28, 1996 . . . . . . . . . . . . 14 9
September 27, 1996. . . . . . . . . . 12 7 1/2
December 27, 1996 . . . . . . . . . . 11 1/2 8 3/8
March 28, 1997. . . . . . . . . . . 8 7/8 6 3/4

On June 13, 1997, the closing sale price of the common stock on the
NYSE as reported by The Wall Street Journal was $7 7/8 per share. On
that date there were 1,925 stockholders of record.

The Company has not paid a cash dividend on its common stock for the
three years ended March 28, 1997. The Company has no present intention
to pay cash dividends on its common stock for the foreseeable future in
order to retain all earnings for investment in the Company's business.
IT's credit agreements prohibit cash dividends on common stock.

14
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.

The following table sets forth income statement information for the
Company's continuing operations and other financial information for each
of the five years in the period ended March 28, 1997. Share and per
share data have been restated to reflect the one-for-four reverse stock
split effective November 21, 1996.

<TABLE>
<CAPTION>
Year ended
---------------------------------------------------------
March 28, March 29, March 31,
-------------------------------
1997 1996 1995 1994 1993
--------- --------- -------- ------- --------
(In thousands, except per share data)

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

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

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

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

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

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

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

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

No cash dividends were paid on common shares for any period.

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

RESULTS OF OPERATIONS

CONTINUING OPERATIONS

Overview

The Company's services are provided to a broad array of governmental
and commercial entities predominantly in the U.S. market. Additionally,
the Company pursues selected international business opportunities on a
project-specific basis and has made an investment in a Taiwan-based
company (see Revenues). The Company's business strategy is to provide
its environmental services on a full-service basis, particularly by
focusing on its capabilities to manage complex environmental issues from
the initial assessment of the level and extent of contamination through
the design, engineering and execution of a solution which minimizes the
client's total cost.

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

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

Revenues

Revenues for fiscal year 1997 declined by 9.4% compared to a decline
of 5.6% in fiscal year 1996. This decline in revenues generally
reflected weak demand in both the governmental and commercial markets
the Company serves as well as a change in the Company's approach to the
market in de-emphasizing smaller lower-value projects (see Restructuring
Charge). During the fourth quarter of fiscal year 1997, however, the
Company experienced an 8% increase in revenues to $95,712,000 from
$88,579,000 in the fourth quarter of fiscal year 1996, principally due
to consistent funding of DOD programs which had been subject to reduced
funding in late fiscal year 1996 and early fiscal year 1997 as a result
of delays in the authorization of the federal budget.

Although revenue growth in the Company's core business is expected to
be modest in the near future due to the difficult industry-wide
conditions, the Company is actively seeking revenue growth and
diversification through business acquisitions (see Liquidity and Capital
Resources). The Company took an initial step in this strategy by making
a 50.1% majority investment in a Taiwan-based wastewater treatment
design/build firm in November 1996. Additionally, in May 1997, the
Company acquired PHR Environmental Consulting, Inc., a small consulting
firm specializing in environmental and historical investigation.

Revenues for fiscal year 1996 of $400,042,000 were $23,930,000 lower
than the $423,972,000 of revenues for fiscal year 1995. Effective with
the inception of operations for Quanterra in the second quarter of
fiscal year 1995, the Company ceased recording any analytical services
revenue. However, since a portion of analytical services revenue
historically was derived from the Company's other operations, additional
revenue is now being recorded related to analytical services
subcontracts performed by Quanterra (see Quanterra) for IT, similar to
other third party subcontracts. After excluding fiscal year 1996 and
1995 analytical services revenues other than those provided to the
Company's other operations, revenues for the Company declined 3.8% for
fiscal year 1996, primarily due to the slowdown of awards of federal
governmental contract delivery orders caused by the delayed
authorization of the federal government budget.

A substantial percentage of the Company's revenues during the three
years ended March 28, 1997 was earned through executing governmental
contracts for various federal, state and local agencies. Revenues from
governmental contracts accounted for 67% of the Company's revenues in
fiscal year 1997, compared to 69% and 71% in fiscal years 1996 and 1995,
respectively. See the table in Business - Operations - Customers -
Federal, State and Local Governmental Clients for an analysis of the
Company's revenues attributable to federal, state and local governmental
contracts. Federal governmental revenues are derived principally from
work performed for the DOD and, to a lesser extent, the DOE. The
Company expects to increase its revenues from the DOE over time due to
an expected transition by the DOE over the next several years to
emphasize remediation over studies combined with the Company's favorable
experience in winning and executing similar work for the DOD and the
Company's experience with DOE related to its past performance of DOE
studies. In the near term, the Company expects that the percentage of
total revenues from the execution of federal, state and local
governmental contracts will continue to be substantial.

Although increasing slightly as a percentage of total revenues,
reflecting management efforts to reduce the Company's reliance on
government contracts, the Company's revenues from commercial clients
declined slightly in fiscal year 1997 compared to fiscal year 1996. The
Company believes this is partly due to increased emphasis by
commercial clients on cost-effective solutions and partly due to
commercial clients delaying certain work until final Congressional
action is taken on the reauthorization of CERCLA. The Company is
focusing more on providing value-added consulting service and on
negotiating partnering arrangements with clients in an effort to provide
commercial clients with more cost-effective solutions. As for CERCLA,
it is uncertain when reauthorization will occur or what the details of
the legislation, including retroactive liability, cleanup standards, and
remedy selection, may include. Uncertainty regarding possible rollbacks
of environmental regulation and/or reduced enforcement have led
commercial clients to delay projects as well. Contemplated changes in
regulations could decrease the demand for certain of the Company's
services, as customers anticipate and adjust to the new regulations.
However, legislative or regulatory changes could also result in

16
<PAGE>

INTERNATIONAL TECHNOLOGY CORPORATION
RESULTS OF OPERATIONS (CONTINUED)

increased demand for certain of the Company's services if such changes
decrease the cost of remediation projects or result in more funds being
spent for actual remediation. The ultimate impact of any such changes
will depend upon a number of factors, including the overall strength of
the U.S. economy and customers' views on the cost effectiveness of the
remedies available.

Revenues derived from large, complex thermal remediation contracts
Utilizing the Company's HTTS thermal treatment technology were
approximately 10%, 11% and 11% of revenues in fiscal years 1997, 1996
and 1995, respectively. Incineration as a remedy under CERCLA continues
to come under legislative and regulatory pressures. Because of this
issue and the relatively higher cost of incineration, there are very few
potential project opportunities in the United States and the Company has
been forced to seek alternative uses for its HTTS equipment. The
Company is actively pursuing foreign opportunities which utilize the
HTTS equipment. If alternative uses, such as foreign installations,
cannot be found or are uneconomical, there could be a negative effect to
the Company due to impairment of HTTS assets as well as lost project
opportunities. At March 28, 1997, the net book value of IT's HTTS
equipment was approximately $11,200,000. The Company's backlog of
contracts which utilize HTTS equipment was approximately $10,000,000 at
March 28, 1997 with such backlog to be performed early in fiscal year
1998.

The Company's total funded and unfunded backlog at March 28, 1997 was
approximately $1,198,000,000 ($975,000,000 at March 29, 1996) including
approximately $280,000,000 of contracted backlog scheduled to be
completed during fiscal year 1998 and between $40,000,000 and
$60,000,000 of additional project work expected to be defined and
performed in fiscal year 1998 under existing governmental IDO contracts.
Backlog revenues are expected to be earned primarily over the next one
to five years, with a substantial portion of the backlog consisting of
governmental contracts, many of which are subject to annual funding and
definition of project scope. The backlog amounts at March 28, 1997 and
March 29, 1996 include $785,000,000 and $598,000,000, respectively, of
future work the Company estimates it will receive (based on historical
experience) under existing IDO programs. In accordance with industry
practices, substantially all of the Company's contracts are subject to
cancellation, delay or modification by the customer.

The Company's backlog at any given time is subject to changes in
scope of services required by the contracts leading to increases or
decreases in backlog amounts. These contracts subject to such scope
changes have led to a number of contract claims requiring negotiations
with clients in the ordinary course of business. (See Notes to
Consolidated Financial Statements - Summary of significant accounting
policies - Contract accounting and accounts receivable.)

Gross Margin

Gross margins were 10.5%, 14.5% and 14.6% of revenues in fiscal
years 1997, 1996 and 1995, respectively. In the current year, gross
margin was adversely impacted by lower pricing due to competitive
industry conditions and by the continued shift in revenue mix toward
larger projects and programs which involve more subcontracting and carry
a lower margin on revenues. Gross margin percentage of 11.3% of
revenues for the last six months of fiscal year 1997 improved from the
9.7% of revenues for the first half as overhead costs were reduced due
to organizational streamlining resulting from the recent corporate
restructuring (see Restructuring Charge). In the near term, the Company
expects to continue to experience the improved gross margins of the past
six months. The Company's ability to maintain or improve its gross
margins is heavily dependent on increasing utilization of professional
staff, properly executing projects, and successfully bidding new
contracts at adequate margin levels.

Excluding a $5,300,000 provision for major litigation in fiscal year
1995 (see Notes to Consolidated Financial Statements - Commitments and
contingencies - Central Garden), gross margin would have declined from
15.9% of revenues in fiscal year 1995 to 14.5% in fiscal year 1996,
primarily because of the combination of the declining level of revenues,
lower pricing due to competitive industry conditions and a shift in
revenue mix toward lower margin subcontracted work.

17
<PAGE>

INTERNATIONAL TECHNOLOGY CORPORATION
RESULTS OF OPERATIONS (CONTINUED)

Selling, General and Administrative Expenses

Selling, general and administrative expenses were 9.2%, 9.5% and
10.0% of revenues in fiscal years 1997, 1996 and 1995, respectively.
Selling, general and administrative expenses of $33,431,000 in
fiscal year 1997 were $4,694,000 or 12.3% lower than the fiscal year
1996 level primarily due to the impact of the corporate restructuring
(see Restructuring Charge) initiated in the second fiscal quarter of
1997. Selling, general and administrative expenses declined from 10.2%
in the first half of fiscal 1997 to 8.4% in the second half primarily
due to this corporate restructuring. Fiscal year 1996 selling, general
and administrative expenses of $38,125,000 represented a decrease of
$4,351,000 or 10.2% from the prior year level, due to cost containment
measures resulting from continued management attention to expenses.

Restructuring Charge

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

Additionally, during the first quarter of fiscal year 1998, the
Company will be relocating its corporate headquarters from Torrance,
California to Monroeville (Pittsburgh), Pennsylvania where the Company's
largest office is located. Beginning in the second quarter of fiscal
year 1998, this will result in reduced lease expenses as well as labor
cost savings due to the consolidation of certain functions, and travel
cost savings, since much of the Company's business, as well as its
lenders and largest shareholders, are located in the eastern United
States. The move is anticipated to result in a charge in the range of
$2,000,000 to $3,000,000. The Company also anticipates it may take a
smaller charge in connection with the sale in the first quarter of
fiscal year 1998 of its California remediation services business
pursuant to a change in the Company's approach to the market.

Quanterra

In June 1994, the Company and an affiliate of Corning Incorporated
combined the two companies' environmental analytical services businesses
into a 50%/50% jointly-owned company (Quanterra), which was
recapitalized effective December 29, 1995, with IT retaining a 19%
ownership interest. (See Liquidity and Capital Resources and Notes to
Consolidated Financial Statements - Quanterra.) IT's 50% investment in
Quanterra was accounted for under the equity method through December 29,
1995, and the remaining 19% investment is now accounted for under
the cost method. In the nine months ended March 31, 1995, the initial
period of Quanterra's operations, the Company reported equity in net
loss of Quanterra of $9,827,000 (including a $9,264,000 charge for
integration) and, in the six months ended September 29, 1995, the
Company reported equity in net loss of Quanterra of $1,821,000. In the
quarter ended December 29, 1995, the Company reported equity in net loss
of Quanterra of $24,595,000, principally related to the recapitalization
of Quanterra noted above.

Other Income (Expense)

In fiscal year 1996, the Company reported in other income a pre-tax
gain of $1,090,000, related to the settlement of certain litigation
concerning the Motco project. (See Notes to Consolidated Financial
Statements - Motco litigation settlement.) This gain represented the
settlement proceeds of $41,100,000 in cash, net of the previously

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

recorded $31,200,000 claim amount, $8,000,000 of costs related to
certain equipment specifically constructed for the Motco project which
has been idle since ceasing work on the project, and legal and other
expenses.

In fiscal year 1995, the Company recorded a charge of $3,800,000 to
provide for potential settlement and defense costs related to certain
class action shareholder litigation.

Interest, Net

Net interest expense was 1.5%, 1.6% and 1.7% of revenues in fiscal
years 1997, 1996 and 1995, respectively. The following table shows net
interest expense for the three fiscal years ended March 28, 1997.

Year ended
--------------------------------
March 28, March 29, March 31,
1997 1996 1995
-------- -------- --------
(In thousands)
Interest incurred . . . . . . $ 7,168 $ 7,014 $ 8,065
Capitalized interest. . . . . - - (484)
Interest income . . . . . . . (1,908) (569) (471)
------ ------ ------
Interest, net . . . . . . . $ 5,260 $ 6,445 $ 7,110
====== ====== ======

During fiscal year 1997, the level of debt outstanding was relatively
unchanged from the prior year end level as the Company's refinancing was
completed in October 1995 and the related initial principal payments are
not due until 2001 on the Company's outstanding $65,000,000 senior
secured notes. Accordingly, interest incurred in fiscal year 1997
was $154,000 or 2.2% higher than the corresponding amount for fiscal
year 1996. Interest income of $1,908,000 was $1,339,000 higher than the
$569,000 in fiscal year 1996 due to the full-year investment in cash
equivalents of the excess proceeds of the October 1995 refinancing (as
discussed immediately below) and an increased level of investment in
cash equivalents beginning in November 1996 from the proceeds of the
Carlyle Investment (see Notes to Consolidated Financial Statements -
Preferred stock - Carlyle Investment).

In fiscal year 1996, the decline in interest incurred is due
principally to lower levels of outstanding debt during the second half
of the fiscal year. This resulted from debt paid down out of the
$41,100,000 proceeds of the Motco settlement. (See Notes to
Consolidated Financial Statements - Motco litigation settlement.) This
decline in debt was partially offset by the refinancing of the
Company's senior notes in October 1995 through a $65,000,000 private
placement, which exceeded the $50,000,000 of debt being refinanced.
These excess proceeds were invested in cash equivalents which generated
interest income over the remainder of the year. There was no
capitalized interest in fiscal year 1996 due to the completion of the
Company's major company-wide management information systems project in
fiscal year 1995, on which interest had been capitalized.

Income Taxes

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

For fiscal year 1996, in which the Company reported a loss from
continuing operations before income taxes of $11,744,000, the Company
recorded an income tax benefit of $12,290,000 which included a

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

$7,781,000 tax benefit resulting from the adjustment of IT's deferred
tax asset valuation allowance based on the Company's reassessment of
its ability to generate a sufficient level of future earnings to realize
a substantial portion of IT's related deferred tax asset.

For fiscal year 1995, in which the Company reported a loss from
continuing operations before income taxes of $1,297,000, the Company
recorded a $2,383,000 income tax provision from continuing operations
due to the nondeductibility of certain expenses, including a
significant portion of the charge for integration related to the
formation of Quanterra. (See Notes to Consolidated Financial Statements
- - Quanterra.)

The Company's future tax rate is subject to the full realization of
its deferred tax asset of $32,116,000 (net of a valuation allowance of
$9,741,000). Realization of the tax asset is expected by management to
occur principally as closure expenditures related to the Company's
inactive disposal sites over the next several years are deductible in
the years the expenditures are made and upon the ultimate tax
disposition of the Company's interest in Quanterra, but is subject to
the Company having a sufficient level of taxable income and taxable
capital gains.

Dividends

Dividends for fiscal year 1997 include cash dividends of $4,050,000
($4,200,000 in fiscal years 1996 and 1995) on the Company's outstanding
depositary shares (each representing 1/100 of a share of the Company's
7% Convertible Exchangeable Preferred Stock) and a non-cash imputed
dividend of $866,000 on the newly issued Cumulative Convertible
Participating Preferred Stock (Convertible Preferred Stock) purchased by
Carlyle. (See Notes to Consolidated Financial Statements - Preferred
stock - Carlyle Investment.) During the first two years ended November
21, 1998 in which the Convertible Preferred Stock is outstanding and the
stated annual dividends are 0% and a stock dividend of 3%, respectively,
dividends will be calculated and presented in the statement of
operations at a rate of approximately 6% per annum. The additional
imputed dividend of approximately 6% in the first year and 3% in the
second year will never be paid in cash or stock.

Loss from Continuing Operations

The Company recorded losses from continuing operations of
$13,693,000, $3,654,000 and $7,880,000 for fiscal years 1997, 1996 and
1995, respectively. As discussed above, operating income for each of
the years was more than offset by the equity in net loss of Quanterra
and certain special charges. (See Gross Margin, Restructuring Charge,
Quanterra, and Other Income (Expense).)

DISCONTINUED OPERATIONS

In fiscal year 1995, the Company increased its provision for loss on
disposition of its discontinued transportation, treatment and disposal
business by $10,603,000 (net of income tax benefit of $6,397,000). This
increased provision primarily related to delays in the regulatory
approval process at the Company's inactive disposal facilities located
in Northern California, an additional accrual for estimated costs
related to certain waste disposal sites where IT has been named as a
PRP, increased closure construction costs due to plan revisions and to
additional costs experienced due to the unusually heavy rainfall
experienced in Northern California in January through March 1995.

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

20
<PAGE>

INTERNATIONAL TECHNOLOGY CORPORATION
LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY AND CAPITAL RESOURCES

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

Cash provided by operating activities for fiscal year 1997 totaled
$38,836,000, a $12,951,000 increase from the $25,885,000 of cash
provided by operating activities in the prior fiscal year principally
due to the improvement in receivables management. Capital expenditures
were $3,361,000, $4,696,000 and $10,533,000 for fiscal years 1997,
1996 and 1995, respectively. During fiscal year 1997, capital
expenditures decreased as the Company's decline in revenues reduced the
need for new equipment. Management believes capital expenditures in
fiscal year 1998 will remain stable or increase slightly from those of
fiscal year 1997, excluding any business acquisitions or strategic
investments which might be made by the Company. (See below and Business
- - Operations - General.) The Company does not expect to pay significant
cash income taxes over the next several years due to its net operating
loss carryforwards. (See Notes to Consolidated Financial Statements -
Income taxes and Results of Operations - Continuing Operations - Income
Taxes.)

Long-term debt of $65,874,000 at March 28, 1997 was essentially
unchanged from the $65,611,000 at March 29, 1996. (See Notes to
Consolidated Financial Statements - Long-term debt.) The Company's
ratio of debt (including current portion) to equity declined over the
past three years to 0.42:1 at March 28, 1997 from 0.47:1 and 0.56:1 at
March 29, 1996 and March 31, 1995, respectively.

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

The Company's shareholder agreements relating to Quanterra (an
environmental analytical services business 81% owned by an affiliate of
Corning Incorporated and 19% owned by IT) contain certain provisions
which have affected and, in the future, could affect liquidity. IT was
required by these agreements to contribute $2,500,000 to Quanterra
in October 1995 and an additional $2,500,000 to Quanterra in January
1996. In connection with a recapitalization of Quanterra in January
1996, the Company committed an additional $2,500,000 to Quanterra, of
which $475,000 was paid in each of March, April and July 1996 and
$1,075,000 was paid in December 1996, completing the commitment.
Additionally, in the current fiscal year, the Company made a one-time
$1,300,000 contribution to Quanterra in the form of work performed
related to the decommissioning/closure of a Quanterra laboratory
facility. IT is not committed to make, and does not presently intend to
make, additional contributions to Quanterra, but it has the option
to make future pro rata contributions to maintain its 19% interest.
Although Quanterra has experienced net losses in the past several
years, the level of net loss has decreased over the past several
quarters, and Quanterra has recently neared break-even operations.
The Company will continue to evaluate the ultimate recoverability of its
investment in Quanterra (which is carried at $16,300,000 on the
March 28, 1997 consolidated balance sheet) on an ongoing basis and will
recognize any impairment in value should it occur. (See Notes to
Consolidated Financial Statements - Quanterra.)

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

21
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

In aggregate, at March 28, 1997, letters of credit totaling
approximately $20,000,000 related to the Company's insurance program,
financial assurance and bonding requirements were outstanding against
the Company's $60,000,000 bank line of credit. The Company had no
outstanding cash advances under the line at March 28, 1997. As of that
date, the Company's borrowing base under its combined financing package
allowed for additional letters of credit or borrowings under the line of
credit of up to $580,000. At certain times (but not at March 28, 1997),
the Company has been required to maintain cash on deposit with its
credit providers, due to the Company's borrowing base being
insufficient to cover the collateral required for the $65,000,000 senior
notes and any outstanding letters of credit, primarily as a result of
reduced accounts receivable, which are the principal component of the
borrowing base. At March 28, 1997, the Company had invested cash of
approximately $73,000,000.

The Company has total bonding capacity of $135,000,000 at present, of
which approximately $94,000,000 is currently being utilized. The
Company's bonding lines generally require 5-10% collateral in the form
of letters of credit.

At the November 20, 1996 Annual Meeting of Stockholders, IT's
shareholders voted to approve the Carlyle Investment. The Company
issued to Carlyle 45,000 shares of Convertible Preferred Stock having a
liquidation preference of $1,000 per share, and warrants to purchase
1,250,000 shares of IT common stock at $11.39 per share. The
$40,609,000 net proceeds to the Company (after related offering costs of
$4,391,000) will be used by IT to finance business acquisitions, as well
as for working capital and general corporate purposes (see Notes to
Consolidated Financial Statements - Preferred stock - Carlyle
Investment).

The Company continues to have significant cash requirements,
including expenditures for the closure of its inactive disposal sites
and PRP matters (see Notes to Consolidated Financial Statements -
Discontinued operations), interest, preferred dividend obligations and
contingent liabilities. The Company's liquidity position is expected to
be sufficient to meet the foreseeable requirements, as well as to fund
expansion and diversification of the Company's business through both
internal growth and acquisitions.

FORWARD LOOKING STATEMENTS

When used in the preceding discussion, the words "expects,"
"anticipates," "believes" and similar expressions are intended to
identify, and nonhistorical statements are, forward looking statements.
Such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those expressed in
any of the forward looking statements. Such risks and uncertainties
include, but are not limited to, funding of federal government
contracts, ongoing regulatory uncertainties which affect both
governmental and commercial clients, industry wide market factors,
liabilities and regulatory developments related to the Company's
discontinued operations and financial and liquidity trends.

22
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULE FOR THE THREE YEARS IN THE PERIOD ENDED MARCH 28, 1997

Consolidated Financial Statements. Page
----
Report of Ernst & Young LLP, Independent Auditors. . . . . . 24
Consolidated Balance Sheets ----- March 28, 1997 and
March 29, 1996. . . . . . . . . . . . . . . . . . . . . . . 25
Consolidated Statements of Operations ----- Three Years Ended
March 28, 1997. . . . . . . . . . . . . . . . . . . . . . . 26
Consolidated Statements of Stockholders' Equity ----- Three
Years Ended March 28, 1997. . . . . . . . . . . . . . . . . 27
Consolidated Statements of Cash Flows ----- Three Years Ended
March 28, 1997. . . . . . . . . . . . . . . . . . . . . . . 28
Notes to Consolidated Financial Statements. . . . . . . . . . 29

Financial Statement Schedule.

II. Valuation and qualifying accounts. . . . . . . . . . . . 54

Schedules not filed herewith are omitted because of the absence of
conditions under which they are required or because the information
called for is shown in the consolidated financial statements or notes
thereto.

23
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors
International Technology Corporation

We have audited the accompanying consolidated balance sheets of
International Technology Corporation as of March 28, 1997 and March 29,
1996 and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the
period ended March 28, 1997. Our audits also included the financial
statement schedule listed in the index at Item 8. These consolidated
financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of International Technology Corporation at March 28,
1997 and March 29, 1996 and the consolidated results of operations and
cash flows for each of the three years in the period ended March 28,
1997 in conformity with generally accepted accounting principles. Also,
in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set
forth therein.

ERNST & YOUNG LLP
Los Angeles, California
May 13, 1997

24
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS

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

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

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

See accompanying notes to consolidated financial statements.

25
<PAGE>

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

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

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

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

See accompanying notes to consolidated financial statements.

26
<PAGE>

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

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

See accompanying notes to consolidated financial statements.

27
<PAGE>

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

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

Cash flows from operating activities:
Net income (loss). . . . . . . . $ (8,777) $ 546 $ (14,283)

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

See accompanying notes to consolidated financial statements.

28
<PAGE>

INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary of significant accounting policies:

Basis of presentation and principles of consolidation

The consolidated financial statements include International
Technology Corporation (IT or the Company) and its wholly-owned and
majority-owned subsidiaries. The Company also includes its
proportionate interest in joint ventures which were entered into for the
purpose of executing large remediation projects and in which the Company
does not have in excess of 50% of voting control. Intercompany
transactions are eliminated. Certain reclassifications have been made
to prior years' consolidated financial statements in order to conform to
the current year presentation.

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

Estimates used in the preparation of the consolidated financial
statements

The preparation of consolidated financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and the accompanying notes. Actual results
inevitably will differ from those estimates and such differences may be
material to the consolidated financial statements.

Cash equivalents

Cash equivalents include highly liquid investments with an original
maturity of three months or less.

Contract accounting and accounts receivable

The Company primarily derives its revenues from providing
environmental management services in the United States, principally to
federal, state and local governmental entities, large industrial
companies, utilities and waste generators. Services are performed under
time-and-material, cost-reimbursement, fixed-price and unit-bid
contracts.

Revenues from time-and-material and cost-reimbursement contracts are
recognized as costs are incurred. Estimated fees on such contracts and
revenues on fixed-price and certain unit-bid contracts are recognized
under the percentage-of-completion method determined based on the ratio
of costs incurred to estimated total costs. Anticipated losses on
contracts are recorded as identified. Certain contracts include
provisions for revenue adjustments to reflect scope changes and other
matters, including claims, which require negotiations with clients in
the ordinary course of business, leading to some estimates of claim
amounts being included in revenues. When such amounts are finalized,
any changes from the estimates are reflected in earnings.

Unbilled receivables typically represent amounts earned under the
company's contracts but not yet billable according to the contract
terms, which usually consider the passage of time, achievement of
certain milestones or completion of the project. Unbilled receivables,
included in accounts receivable, were $20,287,000 and $20,945,000 at
March 28, 1997 and March 29, 1996, respectively. Generally, unbilled
receivables are expected to be billed and collected in the subsequent
fiscal year. Included in unbilled receivables at March 28, 1997 is
approximately $9,200,000 of claims related to the Helen Kramer project
which is subject to a governmental investigation. (See Commitments and
contingencies - Helen Kramer contract.)

Billings in excess of revenues represent amounts billed in accordance
with contract terms, which are in excess of the amounts includable in
revenue.

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

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

Property, plant and equipment

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

Interest

Interest incurred on qualified capital expenditures is capitalized
and included in the cost of such constructed assets. Interest incurred
was $7,168,000, $7,014,000 and $8,065,000 for fiscal years 1997, 1996
and 1995, respectively. No interest was capitalized in fiscal years
1997 or 1996. Total interest capitalized was $484,000 for fiscal year
1995.

Interest income is principally earned on the Company's investments in
cash equivalents and was $1,908,000, $569,000 and $471,000 in fiscal
years 1997, 1996 and 1995, respectively. In fiscal year 1995, the
Company received a combined $278,000 of interest income resulting from a
settlement of a lawsuit and an income tax refund.

Intangible assets

Cost in excess of net assets of acquired businesses is amortized over
20 years on a straight-line basis. At March 28, 1997 and March 29,
1996, accumulated amortization is $8,143,000 and $7,305,000,
respectively. Other intangibles, arising principally from acquisitions,
are amortized on a straight-line basis over periods not exceeding 20
years. The Company regularly reviews the individual components of its
intangible assets and recognizes, on a current basis, any diminution in
value.

Per share information

The consolidated financial statements as well as all footnote
references to the Company's common shares and stock options have been
restated to reflect the one-for-four reverse split of IT common shares
and the reduction in par value of the Company's common stock which were
approved by the shareholders at the Annual Meeting of Stockholders on
November 20, 1996.

Per share information is based on the weighted average number of
outstanding common shares and common share equivalents during each
period which aggregated 9,226,596 in 1997, 8,981,827 in 1996 and
8,889,327 in 1995. Common share equivalents include dilutive stock
options. For each fiscal year presented, the computation of net income
per share, assuming the conversion into common shares of the Company's
7% Cumulative Convertible Exchangeable Preferred Stock, is antidilutive.
For fiscal year 1997, the computation of net income per share, assuming
the conversion into common shares of the Company's 6% Cumulative
Participating Preferred Stock, is antidilutive. (See Preferred stock.)

In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted
on December 31, 1997. At that time, the Company will be required to
change the method currently used to compute earnings per share and to
restate all prior periods. Under the new requirements for calculating
primary earnings per share, the dilutive effect of stock options will be
excluded. The impact of Statement 128 on the calculation of basic

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

earnings per share and fully diluted earnings per share for fiscal 1997,
1996 and 1995 is not expected to be materially different.

Fair value of financial instruments

The following methods and assumptions were used by the Company in
estimating the fair value of its financial instruments:

Cash and cash equivalents: The carrying amount reported in the
balance sheet approximates its fair value.

Investment in Quanterra: The Company has a 19% ownership interest in
Quanterra (see Quanterra), in which the remaining 81% interest is held
by Corning Incorporated. The determination of fair value of the
Company's investment in this untraded, closely held entity is not
practicable.

Long and short-term debt: A reasonable estimate of the fair value for
the 9.42% senior secured notes was based upon a discounted cash flow
analysis. The carrying amount of other debt approximates its fair
value.

The carrying amounts and estimated fair values of the Company's
financial instruments are:
<TABLE>
<CAPTION>

March 28, 1997 March 29, 1996
-------------------- -------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
------ ---------- ------ ----------
(In thousands)
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 78,897 $ 78,897 $ 24,493 $ 24,493

Investment in Quanterra 16,300 Not 12,975 Not
practicable practicable
to determine to determine

Long and short-term debt:
9.42% senior secured notes 65,000 63,329 65,000 64,759
Other 6,217 6,217 708 708
</TABLE>

Long-lived assets

In March 1995, the FASB issued Statement of Accounting Standards
No. 121 (SFAS No. 121), "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to Be Disposed Of," which requires
impairment losses to be recorded on long-lived assets used in operations
when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the
assets' carrying value. SFAS No. 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. The Company has
adopted SFAS No. 121 in fiscal year 1997 which did not result in any
material impact on the results of operations or financial position
of the Company. Long-term assets of discontinued operations (see
Discontinued operations) are accounted for under APB Opinion No. 30,
"Reporting the Results of Operations" and are not subject to SFAS No.
121.

31
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Consolidated statements of cash flows supplemental disclosures:

Supplemental cash flow information is:

Year ended
---------------------------------
March 28, March 29, March 31,
1997 1996 1995
--------- --------- --------
(In thousands)
Interest paid, net of amounts
capitalized $ 6,713 $ 7,184 $ 7,230
Interest received 1,730 293 317
Income taxes paid 287 1,860 782
Income tax refunds received 1,178 2 989
Acquisition liabilities assumed 6,346 1,155 -

Quanterra:

In June 1994, the Company and an affiliate of Corning Incorporated
(Corning) combined the two companies' environmental analytical services
businesses into a newly formed 50%/50% jointly-owned company
(Quanterra). In connection with the formation, the Company contributed
the $38,766,000 net assets of its analytical business into Quanterra.
Additionally, IT incurred cash costs of $1,208,000, issued to Corning
83,250 shares of IT common stock and a five-year warrant to purchase
500,000 shares of IT common stock at $20.00 per share which were valued
in the aggregate at $3,300,000, and agreed to indemnify Quanterra and
Corning from certain liabilities arising prior to the closing of the
transaction. Upon the closing of the formation of Quanterra, an
integration plan was implemented to eliminate redundant laboratory
facilities and duplicative overhead and systems. IT's portion of the
charge for integration was $9,264,000, including $2,869,000 incurred
directly by IT.

In January 1996, the Company and Corning completed an agreement to
recapitalize Quanterra which resulted in a change in Quanterra's
ownership to 19% by IT and 81% by Corning. The recapitalization
included a $25,000,000 infusion of new equity in Quanterra, of which
$2,500,000 was contributed by IT. In addition, IT sold a common stock
interest in Quanterra to Corning in consideration of the exchange of
83,250 shares of IT stock and warrants to purchase 500,000 shares of IT
common stock, previously issued to Corning in connection with the
formation of Quanterra. These shares and warrants were subsequently
retired by IT. IT also received a put option allowing it to sell its
shares to Quanterra at market value in the year 2003. The Company
reported a pre-tax charge of $24,595,000 related to the
recapitalization transaction. As a result of the recapitalization,
IT's investment in Quanterra, which was previously accounted for under
the equity method, is currently accounted for on the cost basis.

Although Quanterra has experienced net losses in the past several
years, the level of net loss has decreased over the past several
quarters, and Quanterra has recently neared break-even operation. The
Company will continue to evaluate the ultimate recoverability of its
investment in Quanterra (which is carried at $16,300,000 on the March
28, 1997 consolidated balance sheet) on an ongoing basis and will
recognize any impairment in value should it occur.

Summarized income statement data for Quanterra for fiscal years 1997,
1996 and 1995 (nine months) is the following: revenues - $72,900,000 in
1997, $94,100,000 in 1996 and $92,400,000 in 1995; operating loss -
$16,700,000 in 1997, $14,400,000 in 1996 and $18,900,000 in 1995; and
net loss - $10,600,000 in 1997, $11,300,000 in 1996 and $12,900,000 in
1995. Quanterra's revenues from IT were $8,100,000, $15,700,000 and
$12,000,000 in fiscal years 1997, 1996 and 1995 (nine months),
respectively.

32
<PAGE>

INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Discontinued operations:

Overview

In December 1987, the Company's Board of Directors adopted a
strategic restructuring program which included a formal plan to divest
the transportation, treatment and disposal operations through sale of
some facilities and closure of certain other facilities. In connection
with the divestiture, from December 1987 through March 31, 1994, the
Company cumulatively recorded a provision for loss on disposition of
transportation, treatment and disposal discontinued operations
(including the initial provision and two subsequent adjustments) in the
amount of $149,589,000, net of income tax benefit of $26,482,000. The
adjustments principally related to a writeoff of the contingent purchase
price from the earlier sale of certain assets, increased closure costs
principally due to delays in the regulatory approval process, and costs
related to certain waste disposal sites where IT has been named a
potentially responsible party (PRP). At March 31, 1995, the Company
recorded a further increase in the provision for loss on disposition of
$10,603,000, net of income tax benefit of $6,397,000, primarily for
increased closure costs resulting from additional delays in the
regulatory approval process and costs related to certain waste disposal
sites where IT has been named as a PRP. The Company has incurred costs
of $15,698,000 in 1997, $11,704,000 in 1996 and $11,324,000 in 1995
relating to the closure plans and construction and PRP matters. The
Company expects to incur significant costs over the next several years.
At March 28, 1997, the Company's consolidated balance sheet included
accrued liabilities of approximately $26,300,000 to complete the closure
and post-closure of its disposal facilities and the PRP matters, net of
certain trust fund and annuity investments restricted to closure and
post-closure use.

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

Northern California Facilities

With regard to the Company's transportation, treatment and disposal
discontinued operations, the Company has previously completed closure of
its Montezuma Hills and Benson Ridge facilities and is pursuing closure
of its inactive Panoche and Vine Hill Complex facilities. On November
17, 1995, the California EPA, Department of Toxic Substances Control
(DTSC) approved the final closure plan and post-closure plan for the
Vine Hill Complex facility. The approved final closure plan provides
for solidification and capping of waste sludges and installation of
underground barriers and groundwater control systems. Substantial
remediation has already been completed over both the past year since
approval of the plan and over the prior several years based upon
interim approvals by DTSC, and the final closure is scheduled to be
substantially completed in fiscal year 1998 with final completion in
fiscal year 1999.

On June 28, 1996, DTSC released a Draft Environmental Impact Report
(DEIR) and Draft Closure Plan for public comment for the Panoche
facility. The DEIR evaluates the Company's preferred closure plan as
well as several alternative plans and states that the Company's
preferred closure plan is environmentally superior. The alternative
plans involve excavation and on-site relocation of substantial
quantities of waste materials in addition to landfill capping and
groundwater controls which are common to all alternatives. If
implemented, the alternative plans would extend the closure construction
schedule and increase the cost of closure. The DEIR and Draft Closure
Plan were subject to a 90-day comment period which ended September 30,
1996, during which interested parties presented comments including
some supporting alternative plans. DTSC, after considering all comments
received, will approve a final closure plan and certify the final EIR.
The DTSC continues to consider comments by the Company, and by other
interested parties supporting alternative plans, and it is uncertain
what plan DTSC may ultimately approve. The Company expects a plan
and all necessary permits to be approved in mid-fiscal year 1998.
Closure construction for the Company's preferred plan is scheduled to be
completed within three years of approval of the plan. If DTSC were to

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

approve an alternative plan or fail to timely approve any plan or if
implementation of any plan is delayed by litigation or appeals, the
Company's cost to close the site would increase, which could have a
material adverse impact on the consolidated financial condition of the
Company. Pending approval of a closure plan, the Company has requested
permission, and the DTSC has agreed through the amendment of a
previously issued consent order, to allow the Company to promptly
excavate drums buried in a portion of the facility. The drums are the
alleged source of low levels of contaminants which have migrated through
groundwater underneath a portion of municipally-owned land adjacent to
the facility.

Closure construction was completed for the Montezuma Hills and Benson
Ridge facilities in December 1991 and December 1992, respectively. Upon
completion of closure construction, the Company is required to perform
post-closure monitoring and maintenance of its disposal facilities for
at least 30 years. Operation of the facilities in the closure and
post-closure periods is subject to numerous federal, state and local
regulations. The Company may be required to perform unexpected
remediation work at the facilities in the future or to pay penalties for
alleged noncompliance with regulatory permit conditions.

Regulations of the DTSC and the United States Environmental
Protection Agency (USEPA) require that owners and operators of hazardous
waste treatment, storage and disposal facilities provide financial
assurance for closure and post-closure costs of those facilities. The
Company has provided such financial assurance equal to its estimate for
closure costs at March 1, 1997, which could be subject to increase at a
later time as a result of regulatory requirements, in the form of a
corporate guarantee of approximately $14,900,000, letters of credit
totaling approximately $6,700,000 and a trust fund containing
approximately $12,200,000, and has purchased annuities which will
ultimately mature over the next 30 years to pay for its estimates of
post-closure costs.

Closure and post-closure costs are incurred over a significant number
of years and are subject to a number of variables including, among
others, completion of negotiations regarding specific site closure
and post-closure plans with DTSC, USEPA, the California State Water
Resources Control Board, the California Air Resources Board, Regional
Water Quality Control Boards (RWQCBs), Air Quality Management Districts,
various other state authorities and certain applicable local regulatory
agencies. Such closure costs are comprised principally of engineering,
design and construction costs and of caretaker and monitoring costs
during closure. The Company has estimated the impact of closure and
post-closure costs in the provision for loss on disposition of
transportation, treatment and disposal discontinued operations; however,
closure and post-closure costs could be higher than estimated if
regulatory agencies were to require closure and/or post-closure
procedures significantly different than those in the plans developed by
the Company or if there are additional delays in the closure plan
approval process. Certain revisions to the closure procedures could
also result in impairment of the residual land values attributed to
certain of the sites.

The carrying value of the long-term assets of transportation,
treatment and disposal discontinued operations of $40,048,000 at March
28, 1997 is principally comprised of residual land at the inactive
disposal facilities (a substantial component of which is adjacent to
those facilities and was never used for waste disposal) and assumes that
sales will occur at market prices estimated by the Company based on
certain assumptions (entitlements, development agreements, etc.), taking
into account market value information provided by independent real
estate appraisers. The Company has an agreement with a real estate
developer to develop some of this property as part of a larger
development in the local area involving a group of developers. The
entitlement process has been delayed pending approval of the Company's
closure plan for its adjacent disposal facility and local community
review of growth strategy. This review is proceeding and initially
recommends, on a non-binding basis, strategies for limiting growth in
the area. Ultimately, if the developers' plans change or the developers
are unable to obtain entitlements, the carrying value of this property
could be significantly impaired. With regard to this property or any of
the other residual land, there is no assurance as to the timing of sales
or the Company's ability to ultimately liquidate the land for the sale
prices assumed. If the assumptions used to determine such prices are
not realized, the value of the land could be materially different from
the current carrying value.

34
<PAGE>

INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Operating Industries, Inc. Superfund Site

In June 1986, USEPA notified a number of entities, including the
Company, that they were PRPs under the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA) with respect to the
Operating Industries, Inc. (OII) Superfund site in Monterey Park,
California, and as such, faced joint and several liability for the
cost to investigate and clean up this site. Subsequently, USEPA alleged
that the Company had generated approximately 2% by volume of the
hazardous wastes disposed of at the site, and the Company was also
served with lawsuits brought by members of a group of PRPs (the Steering
Committee). The Company has not been named as a defendant in any of the
several personal injury and property damage lawsuits brought by area
residents.

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

In April 1996, the Company reached a settlement of the lawsuits with
the Steering Committee, pursuant to which the Company paid $250,000 in
settlement of the Steering Committee's claims. The Company and the
Steering Committee also agreed, as a part of the settlement, to
cooperate and share on a pro-rata basis certain response and other
defense costs with respect to certain groundwater cleanup actions which
may be a part of the final remedy for the site. The Company and the
Steering Committee have not agreed to share all costs related to the
final remedy at the site, inasmuch as the Steering Committee claims that
pursuant to earlier consent decrees it is excused from paying for or
performing certain actions which may be required as a part of any final
remedy. The Company does not agree with these claims. The Company's
agreement with the Steering Committee to cooperate and share costs may
be terminated voluntarily by either party, including in the event of a
dispute as to the parties' respective obligations to pay for or perform
the final remedy for the site.

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

GBF Pittsburg Site

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

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

35
<PAGE>

INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

reports which were accepted by the DTSC. The studies indicate that
groundwater quality impact is not affecting drinking water supplies and
is not attributable solely to the portion of the site previously
operated by IT's predecessor.

In July 1993, the Company, along with the other PRPs at the site, was
issued a revised RAO and Imminent and Substantial Endangerment Order
that restates previous RAOs and directs all previously named PRPs
to undertake specific additional tasks including the closure of the
municipal landfill.

In November 1995, the DTSC, by letter, required the PRP group to
submit for public comment and DTSC approval a draft Remedial Action Plan
(RAP) describing a remedial alternative preferred by DTSC but not
supported by the PRP group. The PRP group disputed the timing and
content of the draft RAP as required by DTSC as not justified by the
RI/FS process, but in January 1996 submitted a draft RAP discussing a
number of remedial alternatives. After a period of public review and
comment, in June 1997, the DTSC completed and released a final RAP
selecting DTSC's original preferred alternative of actively pumping and
treating groundwater from both the alleged source points of
contamination and the edge of the allegedly contaminated groundwater
plume emanating from the site, which DTSC estimated to cost between
$18,000,000 and $33,000,000, depending upon whether certain options for
discharge of produced waters are available. The PRP group continues to
believe that its preferred alternative of continued limited site
monitoring, which was estimated to cost approximately $4,000,000, is
appropriate. As part of the RAP, the DTSC also advised the PRP
group of its position that both the group and the current owner/
operators are responsible for paying the future closure and postclosure
costs of the overlying municipal landfill, which have been estimated at
approximately $4,000,000.

As a part of the draft RAP that the PRP group submitted in January
1996, the group asserted that other PRPs at the site (principally, the
current and past owner/operators of the site) were responsible for
approximately 85% of the site's remediation costs, and that the PRP
group was responsible for no more than approximately 15% of such costs.
The Company has paid approximately 50% of the PRP group's costs to-date
on an interim basis. The current owner/operators claimed in response
that the Company and other members of the PRP group were responsible for
at least 89% of the site's remediation costs and that they were
responsible for only a small percentage of such costs. They also
demanded indemnity from the Company pursuant to the lease agreement
under which IT Corporation's predecessor operated the site, which demand
the Company has rejected. In the draft RAP released in October 1996 the
DTSC released a draft non-binding allocation suggesting that the Company
is responsible for 15% of the site's response costs, that the generators
and others who are part of the PRP group are responsible for 35% of such
costs and that the current owner/operators and others are responsible
for 50% of such costs. In the final RAP the DTSC assigned the Company
and the other members of the PRP group collective responsibility for 50%
of the site's response costs. Although the DTSC's allocation of
responsibility is not binding except in very limited circumstances, the
PRP group continues to believe that the current owner/operators should
pay a larger portion of the site's response costs and the Company is
attempting to continue to cooperate with the generators and other
members of the PRP group to effect an appropriate allocation of
responsibility for site costs.

The Company and the PRP group are evaluating their potential
remedies, including judicial review, with respect to the final RAP, and
the ultimate outcome of any available remedies cannot be predicted at
this time.

The PRP group has also filed an application with the appropriate
RWQCB for designation of the site as a containment zone which, if
approved, would facilitate the PRP group's preferred remedial
alternative. The DTSC has advised the PRP group that if, at some point,
the RWQCB designates all or part of the site as a containment zone, DTSC
will work with the PRPs to either amend or modify the final RAP as
appropriate. In the interim, however, DTSC will require that the PRPs
comply with the existing RAO, including implementation of the final RAP.

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

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

cooperation which was offered shortly after the September 1987 RAO and,
currently, with respect to DTSC's attempts to cause the selection of its
preferred remedial alternative. The current owner/operators are
vigorously defending the PRP group's litigation, and the outcome of the
litigation cannot be determined at this time.

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

Environmental Protection Corporation Sites

In March 1995, IT was notified by the DTSC that it was among 13
companies identified as potentially responsible for costs associated
with investigation and cleanup of the Environmental Protection
Corporation (EPC) site known as the Eastside Facility near Bakersfield,
California. The DTSC notice letter states that IT is believed to have
arranged for disposal of hazardous substances at the Eastside Facility
during the period between 1972 and 1985 when it was permitted and
operated as a land treatment facility. In March 1997, the Company was
notified by a potentially responsible party which performed work at
another site near Bakersfield, California, formerly operated by EPC
known as the Westside Facility, that IT was considered a potentially
responsible party to share in the costs of that cleanup, which has been
completed.

IT transported various waste streams both generated by IT and on
behalf of its customers to the Eastside Facility and the Westside
Facility at various times during those facilities' operations and it was
a minority shareholder in EPC for a period of its operations. In
January 1996, the PRP group for the Eastside Facility (of which the
Company is a member) and the DTSC entered into an agreement for the
performance of a RI/FS for the site, as well as for cost sharing
for the RI/FS among the group and the DTSC. IT is cooperating with
other group members to perform the work outlined in the agreement.
Because of the early stage of the matter, the potential costs associated
with the remediation of the Eastside Facility will not be reasonably
estimable until completion of the RI/FS.

Other Site Cleanup Actions

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

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

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

Long-term debt:

Long-term debt consists of the following:
March 28, March 29,
1997 1996
-------- --------
(In thousands)

Senior secured notes, due 2001 - 2003. . . $ 65,000 $ 65,000
Other. . . . . . . . . . . . . . . . . . . 6,217 708
------- -------
71,217 65,708
Less current portion. . . . . . . . . . . 5,343 97
------- -------
$ 65,874 $ 65,611
======= =======

Aggregate amounts of long-term debt maturing in the five years
following March 28, 1997 are $5,343,000, $749,000, $75,000, $50,000 and
$21,667,000, respectively.

On October 25, 1995, the Company executed a combined $125,000,000
financing which included $65,000,000 of 8.67% senior secured notes with
a group of major insurance companies and a $60,000,000 syndicated bank
revolving credit facility. The financing package, which is subject to a
borrowing base, is secured by the accounts receivable and certain fixed
assets of the Company. The senior secured notes have an eight-year
final maturity with no principal payments until the sixth year, and the
bank line has a term of five years. In addition, the facilities contain
certain other restrictive covenants, including prohibitions on the
payment of cash dividends on common stock (and, if the Company is in
default under the facilities, on preferred stock), and on the
repurchase of stock other than to fund IT's compensation plans,
limitations on capital expenditures, the incurrence of other debt and
the purchase or sale of assets and a negative pledge on substantially
all of the Company's assets not pledged to the facilities. The
Company is in compliance with its covenants as of March 28, 1997.

During the quarter ended December 27, 1996, the Company negotiated
amendments to its lending arrangements to provide enhanced flexibility
in the Company's operations in conjunction with the Carlyle Investment
(see below). Among other things, the changes modify certain financial
covenants, permit the Carlyle Investment and the payment of dividends on
such investment, increase the Company's allowable debt and permit
proceeds from borrowings to be used to finance acquisitions in certain
circumstances, and increase the cost of the senior secured notes and
credit line based upon certain leverage thresholds. At March 28, 1997,
this provision increased the cost of the facilities by 0.75% with the
senior notes currently bearing interest at 9.42%.

In aggregate, at March 28, 1997, letters of credit totaling
approximately $20,000,000 related to the Company's insurance program,
financial assurance requirements and bonding requirements were
outstanding against the Company's $60,000,000 bank line of credit. The
Company had no outstanding cash advances under the line at March 28,
1997. As of that date, the Company's borrowing base under its combined
financing arrangement allowed for additional letters of credit or
borrowings under the line of credit of up to $580,000. At March 28,
1997, interest on borrowings under the Company's revolving line of
credit is at the bank's prime rate plus 1.25%, or in the case of
Eurodollar borrowings, at the interbank offered rate plus 2.25%. The
Company is subject to a 0.5% per annum charge on the unused portion
of the commitment.

38
<PAGE>

INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Income taxes:

The benefit for income taxes, net of changes in the deferred tax
valuation allowance, consists of the following:

Year ended
---------------------------------
March 28, March 29, March 31,
1997 1996 1995
-------- -------- --------
(In thousands)
Current:
Federal $ (764) $ 1,098 $ -
State 215 346 371
------- ------- -------
(549) 1,444 371
------- ------- -------

Deferred:
Federal 336 (11,942) (1,828)
State 57 (1,792) (2,557)
Foreign (23) - -
------- ------- -------
370 (13,734) (4,385)
------- ------- -------
Total benefit $ (179) $(12,290) $ (4,014)
======= ======= =======

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

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

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

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

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

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

39
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

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

Deferred tax liabilities:
Tax depreciation in excess of book depreciation (9,235) (6,047)
Asset basis difference - discontinued operations (13,012) (11,997)
Other, net (5,347) (4,938)
------- -------
Total deferred tax liabilities (27,594) (22,982)
------- -------

Net deferred tax asset $ 32,116 $ 32,476
======= =======
Net current asset $ 11,324 $ 12,149
Net noncurrent asset 20,792 20,327
------- -------
Net deferred tax asset $ 32,116 $ 32,476
======= =======

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

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

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

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

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

Commitments and contingencies:

Lease commitments

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

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

Contingencies

Helen Kramer contract

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

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

Central Garden

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

41
<PAGE>

INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

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

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

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

Other

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

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

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

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

Restructuring charge:

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

Motco litigation settlement:

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

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

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

Governmental regulation:

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

Preferred stock:

Carlyle Investment

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

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

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

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

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

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

7% Preferred stock

In a September 1993 public offering, the Company issued 2,400,000
depositary shares, each representing a 1/100th interest in a share of
the Company's 7% Cumulative Convertible Exchangeable Preferred Stock (7%
Preferred Stock). The depositary shares entitle the holder to all
proportional rights and preferences of the 7% Preferred Stock, including
dividend, liquidation, conversion, redemption and voting rights and
preferences.

The 7% Preferred Stock ranks, as to dividends and liquidation,
pari passu to the Convertible Preferred Stock (see Carlyle Investment)
and prior to the Company's common stock. The dividend per annum and
liquidation preference for each share of 7% Preferred Stock are $175 and
$2,500, respectively, and for each depositary share are $1.75 and $25,
respectively. Dividends on the 7% Preferred Stock and depositary shares
are cumulative and payable quarterly.

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

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

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

44
<PAGE>

INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock incentive plans:

Summary

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

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

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

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

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

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

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

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

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

45
<PAGE>

INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Compensation cost

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

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

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

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

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

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

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

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

Major customers:

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

<PAGE>

INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Employee benefit plans:

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

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

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

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

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

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

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

47
<PAGE>

INTERNATIONAL TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

There were none.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

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

ITEM 11. EXECUTIVE COMPENSATION.

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

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

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

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

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

48
<PAGE>

PART IV

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

Exhibits

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

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

2 Omitted - Inapplicable.

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

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

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

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

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

9 Omitted - Inapplicable.

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

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

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

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

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

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

49
<PAGE>

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

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

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

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

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

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

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

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

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

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

10(iii) 1. Non-Employee Directors' Retirement Plan, as amended and
restated June 2, 1994 (9)(10), as amended by the
Amended and Restated Non-Employee Directors Retirement
Plan, Amendment No. 5, dated November 20, 1996.(9)

2. Description of the Special Turn-a-Round Plan (Fiscal
Year 1995 Management Incentive Plan) of the
registrant.(6)(9)

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

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

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

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

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

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

50
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

12 Omitted - Inapplicable.

13 Omitted - Inapplicable.

51
<PAGE>

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

16 Omitted - Inapplicable.

18 Omitted - Inapplicable.

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

21 List of the registrant's subsidiaries.

22 Omitted - Inapplicable.

23 Consent of Ernst & Young LLP, Independent Auditors.

24 Omitted - Inapplicable.

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

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

28 Omitted - Inapplicable.

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

52
<PAGE>

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

Reports on Form 8-K

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

53
<PAGE>

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

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

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

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

- ---------

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

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

(3) Represents benefit for income taxes.

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

54
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto
duly authorized, in Torrance, California on the 24th day of June
1997.

INTERNATIONAL TECHNOLOGY
CORPORATION

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

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

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

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

/S/ PHILIP B. DOLAN
- -------------------------
Philip B. Dolan Director June 24, 1997

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

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

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

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

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

<PAGE>
Exhibit 11.1

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

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

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

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

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

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

<PAGE>
Exhibit 21.1

INTERNATIONAL TECHNOLOGY CORPORATION

LIST OF SUBSIDIARY COMPANIES

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

<PAGE>

EXHIBIT 23

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

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

ERNST & YOUNG LLP
Los Angeles, California
June 20, 1997

<PAGE>

EXHIBIT 3(ii)
------------

As of June 20, 1997

AMENDED AND RESTATED
BYLAWS OF
INTERNATIONAL TECHNOLOGY CORPORATION
(a Delaware corporation)

ARTICLE I

Offices

Section 1.01 Registered Office. The registered office of
INTERNATIONAL TECHNOLOGY CORPORATION (hereinafter called the
"Corporation") in the State of Delaware shall be at 1013 Centre Road, City
of Wilmington, County of New Castle, 19805, and the name of the registered
agent in charge thereof shall be The Prentice-Hall Corporation System,
Inc.

Section 1.02 Principal Office. The principal office for the
transaction of the business of the Corporation shall be at 2790 Mosside
Boulevard, Monroeville, Pennsylvania 15146-2792. The Board of Directors
(hereinafter called the "Board") is hereby granted full power and
authority to change said principal office from one location to another.

Section 1.03 Other Offices. The Corporation may also have an
office or offices at such other place or places, either within or without
the State of Delaware, as the Board may from time to time determine or as
the business of the Corporation may require.

ARTICLE II

Meetings of Stockholders

Section 2.01 Annual Meetings. Annual meetings of the
stockholders of the Corporation for the purpose of electing directors and
for the transaction of such other proper business as may come before such
meetings may be held at such time, date and place as the Board shall
determine by resolution.

Section 2.02 Special Meetings. Special meetings of the
stockholders may be called at any time by the Board, the Chairman of the
Board or the President. Special meetings of stockholders may not be
called by any other person or persons. Written notice of a special
meeting shall be given as provided in Section 2.04 of these Bylaws.

Section 2.03 Place of Meetings. All meetings of the
stockholders shall be held at such places, within or without the State of
Delaware, as may from time to time be designated by the person or persons

1
<PAGE>

calling the respective meeting and specified in the respective notices or
waivers of notice thereof.

Section 2.04 Notice of Meetings. Except as otherwise required
by law, notice of each meeting of the stockholders, whether annual or
special, shall be given not less than ten (10) nor more than sixty (60)
days before the date of the meeting to each stockholder of record
entitled to vote at such meeting by delivering a typewritten or printed
notice thereof to him personally, or by depositing such notice in the
United States mail, in a postage prepaid envelope, directed to him at his
post office address furnished by him to the Secretary of the Corporation
for such purpose or, if he shall not have furnished to the Secretary his
address for such purpose, then at his post office address last known to
the Secretary, or by transmitting a notice thereof to him at such address
by telegraph, cable, or wireless. Except as otherwise expressly required
by law, no publication of any notice of a meeting of the stockholders
shall be required. Every notice of a meeting of the stockholders shall
state the place, date and hour of the meeting, and, in the case of
a special meeting, shall also state the purpose or purposes for which the
meeting is called. Notice of any meeting of stockholders shall not be
required to be given to any stockholder who shall have waived such notice
and such notice shall be deemed waived by any stockholder who shall attend
such meeting in person or by proxy, except as a stockholder who shall
attend such meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is
not lawfully called or convened. Except as otherwise expressly required
by law, notice of any adjourned meeting of the stockholders need not be
given if the time and place thereof are announced at the meeting at which
the adjournment is taken.

Section 2.05 Quorum. Except in the case of any meeting of or
the election of directors summarily ordered as provided by law, the
holders of record of a majority in voting interest of the shares of stock
of the Corporation entitled to be voted thereat, present in person or
by proxy, shall constitute a quorum for the transaction of business at any
meeting of the stockholders of the Corporation or any adjournment thereof.
In the absence of a quorum at any meeting or any adjournment thereof, a
majority in voting interest of the stockholders present in person or by
proxy and entitled to vote thereat or, in the absence therefrom of all the
stockholders, any officer entitled to preside at or to act as a secretary
of, such meeting may adjourn such meeting from time to time. At any such
adjourned meeting at which a quorum is present any business may be
transacted which might have been transacted at the meeting as originally
called.

Section 2.06 Voting.

(A) Each stockholder shall, at each meeting of the stockholders,
be entitled to vote in person or by proxy each share or fractional share
of the stock of the Corporation having voting rights on the matter in
question and which shall have been held by him and registered in his
name on the books of the Corporation:

(i) on the date fixed pursuant to Section 6.06 of these
Bylaws as the record date for the determination of stockholders entitled
to notice of and to vote at such meeting, or,

<PAGE>

(ii) if no such record date shall have been so fixed, then
(a) at the close of business on the day next preceding the day on which
notice of the meeting shall be given or (b) if notice of the meeting shall
be waived, at the close of business on the day next preceding the day
on which the meeting shall be held.

(B) Shares of its own stock belonging to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors in such other corporation is held, directly or
indirectly, by the Corporation shall neither be entitled to vote nor
be counted for quorum purposes. Persons holding stock of the Corporation
in a fiduciary capacity shall be entitled to vote such stock. Persons
whose stock is pledged shall be entitled to vote, unless in the transfer
by the pledgor on the books of the Corporation he shall have expressly
empowered the pledges to vote thereon, in which case only the pledgee, or
his proxy, may represent such stock and vote thereon. Stock having voting
power standing of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants in common, tenants by
entirety or otherwise, or with respect to which two or more persons have
the same fiduciary relationship, shall be voted in accordance with the
provisions of the General Corporation Law of the State of Delaware.

(C) Any such voting rights may be exercised by the stockholder
entitled thereto in person or by his proxy appointed by an instrument in
writing, subscribed by such stockholder or by his attorney thereunto
authorized and delivered to the secretary of the meeting; provided,
however, that no proxy shall be voted or acted upon after three years from
its date unless said proxy shall provide for a longer period. The
attendance at any meeting of a stockholder who may theretofore have given
a proxy shall not have the effect of revoking the same unless he shall in
writing so notify the secretary of the meeting prior to the voting of the
proxy. At any meeting of the stockholders all matters, except as
otherwise provided in the Certificate of Incorporation, in these Bylaws or
by law, shall be decided by the vote of a majority in voting interest of
the stockholders present in person or by proxy and entitled to vote
thereat and thereon, a quorum being present. The vote at any meeting to
the stockholders on any question need not be by ballot, except as
otherwise provided in the Certificate of Incorporation or unless so
directed by the chairman of the meeting. On a vote by ballot each ballot
shall be signed by the stockholder voting, or by his proxy, if there be
such proxy, and it shall state the number of shares voted.

Section 2.07 List of Stockholders. The Secretary of the
Corporation shall prepare and make, at least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the
name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held. The list

<PAGE>

shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who
is present.

Section 2.08 Inspectors. The Chairman of the Board shall, in
advance of any meeting of stockholders, appoint one or more inspectors to
act at the meeting and make a written report thereof. Each inspector,
before entering upon the discharge of his duties, shall take and
sign an oath faithfully to execute the duties of the inspector with strict
impartiality and according to the best of his ability. The inspectors
shall (i) ascertain the number of shares outstanding in the voting power
of each, (ii) determine the shares represented at a meeting and the
validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period of a record of the
disposition of any challenges made to any determination by the inspectors,
and (v) certify their determination of the number of shares represented at
the meeting, and account of all votes and ballots. The inspectors may
appoint or retain other persons or entities to assist the inspectors in
the performance of the duty of the inspectors. The inspectors need not be
stockholders of the Corporation, and any officer of the Corporation may be
an inspector with respect to any vote other than a vote for or against a
proposal in which such officer shall have a material interest.

SECTION 2.09 Advance Notice of Stockholder Proposals. At any
meeting of the stockholders, only such business shall be conducted as
shall have been brought before the meeting (i) by or at the direction of
the Board or (ii) by any stockholder of the Corporation who complies with
the notice procedures set forth in this Section 2.09. For business to be
properly brought before any meeting of the stockholders by a stockholder,
the stockholder must have given notice thereof in writing to the Secretary
of the Corporation at the principal executive offices of the Corporation,
which written notice must be received by the Secretary of the Corporation
not less than 60 days in advance of such meeting or, if later, the
fifteenth day following the first public disclosure of the date of such
meeting (by mailing of notice of the meeting or otherwise). A
stockholder's notice to the Secretary shall set forth as to each matter
the stockholder proposes to bring before the meeting (1) a brief
description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting, (2) the name and
address, as they appear on the Corporation's books, of the stockholder
proposing such business, (3) the class, series and number of shares of the
Corporation that are beneficially owned by the stockholder, and (4) any
material interest of the stockholder in such business. In addition,
the stockholder making such proposal shall promptly provide any other
information reasonably requested by the Corporation. Notwithstanding
anything in these Bylaws to the contrary, no business shall be
conducted at any meeting of the stockholders except in accordance with the
procedures set forth in this Section 2.09. The Chairman of any such
meeting shall direct that any business not properly brought before the
meeting shall not be considered.

SECTION 2.10 Stockholder Action by Written Consent.

(A) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the
Board may fix a record date, which record date shall not precede the date

<PAGE>

upon which the resolution fixing the record date is adopted by the Board,
and which date shall not be more than 10 days after the date upon which
the resolution fixing the record date is adopted by the Board. Any
stockholder of record seeking to have the stockholders authorize or take
corporate action by written consent shall, by written notice to the
Secretary, request the Board to fix a record date. The Board shall
promptly, but in all events within 10 days after the date upon which such
request is received, adopt a resolution fixing the record date. If no
record date has been fixed by the Board within 10 days of the date
upon which such request is received, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board is required by applicable law,
shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the Corporation
by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of
stockholders are recorded, addressed to the attention of the Secretary.
Delivery shall be by hand or by certified or registered mail, return
receipt requested. If no record date has been fixed by the Board and
prior action by the Board is required by applicable law, the record date
for determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the day on
which the Board adopts the resolution taking such prior action.

(B) In the event of the delivery to the Corporation of a written
consent or consents purporting to authorize or take corporate action
and/or revocations related to any such consents (each such written consent
and any revocation thereof is referred to in this Section 2.10(B) as a
"Consent"), the Secretary of the Corporation shall provide for the
safekeeping of such Consents and shall, as soon as practicable after
receipt thereof, conduct such reasonable investigation as he deems
necessary or appropriate for the purpose of ascertaining the
validity of such Consents and all matters incident thereto, including,
without limitation, whether the holders of shares having the requisite
voting power to authorize or take the action specified in the Consents
have given consent; provided, however, that the Chairman of the Board, in
his discretion, may designate an inspector to act with respect to such
Consents and such inspector shall discharge the functions of the Secretary
of the Corporation under this Section 2.10(B). If after such
investigation the Secretary or the inspector (as the case may be) shall
determine that any action purportedly taken by such Consents has been
validly taken, that fact shall be certified on the records of the
Corporation kept for the purpose of recording the proceedings of meetings
of the stockholders and the Consents shall be filed with such records. In
conducting the investigation required by this Section 2.10(B), the
Secretary or the inspector (as the case may be) may, at the expense of the
Corporation, retain to assist them special legal counsel and any other
necessary or appropriate professional advisors, and such other personnel
as they may deem necessary or appropriate.

<PAGE>

ARTICLE III

Board of Directors

Section 3.01 General Powers. The property, business and
affairs of the Corporation shall be managed by the Board.

Section 3.02 Number. In accordance with paragraph SIXTH of the
Certificate of Incorporation of this Corporation, the number of Directors
of the Corporation is fixed at three, provided however, that upon the
filing of the Certificate of Designations of the Cumulative Convertible
Preferred Stock (the "Certificate of Designations") and pursuant to the
terms thereof and the terms of the Certificate of Incorporation, the
number of directors will thereupon increase to seven.

Section 3.03 Election of Directors. The directors shall be
elected annually by the stockholders of the Corporation and the persons
receiving the greatest number of votes, up to the number of directors to
be elected, shall be the persons then elected.The election of directors
that may be elected only by holders of preferred stock is provided for in
the Certificate of Designations. The election of directors other than
those elected solely by the holders of preferred stock is subject to any
provisions contained in the Certificate of Incorporation, including,
without limitation, any certificates of designations, relating thereto,
including any provisions for a classified board, for cumulative voting,
and for voting by holders of preferred stock. Nominations for the
election of directors who may be elected by the holders of common stock
may be made by the Board or a Committee thereof or by any stockholder
entitled to vote in the election of directors; provided, however, that a
stockholder may nominate a person for election as a director at a meeting
only if written notice of such stockholder's intent to make such
nomination has been given by such stockholder to, and received by, the
Secretary of the Corporation at the principal executive offices of the
Corporation not later than 60 days in advance of such meeting or, if
later, the fifteenth day following the first public disclosure of the date
of such meeting (by mailing of notice or otherwise). Each such notice
shall set forth: (i) the name and address of the stockholder who intends
to make the nomination and of the person or persons to be nominated;
(ii) a representation that the stockholder is a holder of record of stock
of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting and nominate the person or persons
specified in the notice; (iii) a description of all arrangements or
understandings between the stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (iv) such
other information regarding each nominee proposed by such stockholder as
would be required to be included in a proxy statement filed pursuant to
the rules and regulations of the Securities and Exchange Commission had
the nominee been nominated, or intended to be nominated, by the Board; and
(v) the consent of each nominee to serve as a director of the Corporation
if so elected. In addition, the stockholder making such nomination
shall promptly provide any other information reasonably requested by the
Corporation. No person shall be eligible for election as a director of
the Corporation unless nominated in accordance with the procedures set

<PAGE>

forth in this Section 3.03. The Chairman of any meeting of stockholders
shall direct that any nomination not made in accordance with these
procedures be disregarded.

Section 3.04 Resignations. Any director of the Corporation may
resign at any time by giving written notice to the Board or to the
Secretary of the Corporation. Any such resignation shall take effect at
the time specified therein, or, if the time be not specified, it shall
take effect immediately upon its receipt; and unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make
it effective.

Section 3.05 Vacancies. Except as otherwise provided in the
Certificate of Incorporation, including without limitation, the
certificate of designations, any vacancy in the Board, whether because of
death, resignation, disqualification, an increase in the number of
directors, or any other cause, may be filled by vote of the majority of
the remaining directors, although less than a quorum. Each director so
chosen to fill a vacancy shall hold office until his successor shall have
been elected and shall qualify or until he shall resign or shall have been
removed.

Section 3.06 Place of Meeting, Etc. The Board may hold any of
it meetings at such place or places within or without the State of
Delaware as the Board may from time to time by resolution designate or as
shall be designated by the person or persons calling the meeting or in the
notice or a waiver of notice of any such meeting. Directors may
participate in any regular or special meeting of the Board by means of
conference telephone or similar communications equipment pursuant to which
all persons participating in the meeting of the Board can hear each other,
and such participation shall constitute presence in person at such
meeting.

Section 3.07 First Meeting. The Board shall meet as soon as
practicable after each annual election of directors and notice of such
first meeting shall not be required.

Section 3.08 Regular Meetings. Regular meetings of the Board
may be held at such times as the Board shall from time to time by
resolution determine. If any day fixed for a regular meeting shall be a
legal holiday at the place where the meeting is to be held, then the
meeting shall be held at the same hour and place on the next succeeding
business day not a legal holiday. Except as provided by law, notice of
regular meetings need not be given.

Section 3.09 Special Meetings. Special meetings of the Board
may be called at any time by the Board, the Chairman of the Board or the
President, to be held at the principal office of the Corporation, or at
such other place or places, within or without the State of Delaware, as
the person or persons calling the meeting may designate. Notice of all
special meetings of the Board shall be mailed to each director, addressed
to him at his residence or usual place of business, at least four (4) days
before the day on which the meeting is to be held, or shall be sent to him
at such place by telegram or given personally, on the second day, or
sooner, before the day on which the meeting is to be held. Such notice
may be waived by any director and any meeting shall be a legal meeting
without notice having been given if all the directors shall be present

<PAGE>

thereat or if those not present shall, either before or after the meeting,
sign a written waiver of notice of, or a consent to, such meeting or shall
after the meeting sign the approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate
records or be made a part of the minutes of the meeting.

Section 3.10 Quorum and Manner of Acting. Except as otherwise
provided in these Bylaws or bylaw, the presence of a majority of the total
number of directors then in office as directors shall be required to
constitute a quorum for the transaction of business at any meeting of
the Board, and all matters shall be decided at any such meeting, a quorum
being present, by the affirmative votes of a majority of the directors
present. In the absence of a quorum, a majority of directors present at
any meeting may adjourn the same from time to time until a quorum shall be
present. Notice of any adjourned meeting need not be given. The
directors shall act only as a Board, and the individual directors shall
have no power as such.

Section 3.11 Action by Consent. Any action required or
permitted to be taken at any meeting of the Board of any committee thereof
may be taken without a meeting if a written consent thereto is signed by
all members of the Board or of such committee, as the case may be, and
such written consent is filed the minutes of proceedings of the Board or
committee.

Section 3.12 Compensation. No stated salary need be paid
directors, as such, for their services, but, by resolution of the Board,
a fixed sum and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board or an annual
directors' fee may be paid; provided that nothing herein contained shall
be construed to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending
committee meetings.

Section 3.13 Committees. The Board may, by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation.
Any such committee, to the extent provided in the resolution of
the Board, shall have and may exercise all the powers and authority of the
Board in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers
which may require it; but no such committee shall have any power or
authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of
the Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of the dissolution or
amending the Bylaws of the Corporation; and unless the resolution of the
Board expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.
Any such committee shall keep written minutes of its meetings and report
the same to the Board at the next regular meeting of the Board.

<PAGE>

Section 3.14 Officers of the Board. The Board shall have a
Chairman of the Board and may, at the discretion of the Board, have a Vice
Chairman. Subject to the provisions of the Securities Purchase Agreement
dated August 28, 1996 (as at any time amended) by and between the
Corporation and Purchasers identified therein, the Chairman of the Board
and the Vice Chairman shall be appointed from time to time by the Board
and shall have such powers and duties as shall be designated by the Board.

Section 3.15 Chairman of the Board. The Chairman of the Board
shall preside at all meetings of stockholders, the Board and the Executive
Committee of the Board at which he is present.

He shall have the power to call special meetings of the Board, to
determine the order of business and the procedure for meetings of the
stockholders and meetings of the Board, and to appoint, subject to
approval of the Board, the members and chairpersons of the various
committees designated by the Board. The Chairman of the Board shall be a
member ex officio of all committees designated by the Board, other than
those on which he serves as a voting member, except that, so long as the
Chairman of the Board is designated by the Board the Chief Executive
Officer of the Corporation, he shall not be a member of either the Audit
Committee or of the Compensation Committee of the Board; provided,
however, that a Chairman of the Board who is also the Chief Executive
Officer may attend meetings of the Compensation Committee to provide
information and respond to inquiries, but without any vote on any matter
considered by the Committee. In the event the Chairman of the Board is
designated by the Board as the Chief Executive Officer of the Corporation,
he shall have, subject to the direction of the Board, general and active
supervision and management over the business, operations and affairs of
the Corporation and over its several officers, agents and employees. The
Chairman of the Board shall exercise and perform such other powers and
duties as may from time to time be assigned by the Board.

Subject to the provisions of the Securities Purchase Agreement
dated August 28, 1996 (as at any time amended) by and between the
Corporation and Purchasers identified therein, although the Chairman of
the Board shall not be an employee or officer of the Corporation, the
position of Chairman shall be subject to the provisions of Article IV
hereof, including Sections 4.02 (Election), 4.04 (Removal and
Resignation), 4.05 (Vacancies) and 4.11 (Compensation) as though the
Chairman of the Board were an officer of the Corporation.

ARTICLE IV

Officers

Section 4.01 Number. The officers of the Corporation shall be
a President, one or more Vice Presidents, a Secretary and a Treasurer.
The Corporation may also have, at the discretion of the Board, one or more
Assistant Vice Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers and such other officers as may be appointed in

<PAGE>

accordance with the provisions of Section 4.03 of this Article IV. One
person may hold two or more offices, except that the Secretary may not
also hold the office of President.

Section 4.02 Election. The officers of the Corporation, except
such officers as may be appointed in accordance with Section 4.03 or 4.05,
shall be chosen annually by the Board, and each shall hold office until
his successor shall have been duly chosen and shall qualify or until
his resignation, removal or other disqualification for service.

Section 4.03 Subordinate Officers, Etc. The Board may appoint
such other officers as the business of the Corporation may require, each
of whom shall have such authority and perform such duties as are provided
in these Bylaws or as the Board may from time to time specify, and shall
hold office until he shall resign or shall be removed or otherwise
disqualified to serve.

Section 4.04 Removal and Resignation. Any officer may be
removed, either with or without cause, by a majority of the directors at
the time in office, at any regular or special meeting of the Board, or
except in the case of an office chosen by the Board, by any officer upon
whom such power of removal may be conferred by the Board.

Any officer may resign at any time by giving written notice to the
Board, the Chairman of the Board, the President or the Secretary of the
Corporation. Any such resignation shall take effect at the date of the
receipt of such notice or at any later time specified therein; and
unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.

Section 4.05 Vacancies. A vacancy in any office because of
death, resignation, removal, disqualification, or other cause, may be
filled in the manner prescribed in these Bylaws for regular appointments
to such office.

Section 4.06 Chairman of the Board. The Chairman of the Board
shall not be an employee or officer of the Corporation, unless he is
designated by the Board as the Chief Executive Officer of the Corporation.
The duties of the Chairman are set forth in Section 3.15 above.

Section 4.07 President.

(A) In the event the Chairman of the Board is designated by the
Board as the Chief Executive Officer of the Corporation, the President
shall be the Chief Operating Officer of the Corporation, and subject to
the direction of the Board and the Chairman of the Board and Chief
Executive Officer, shall have general responsibility for the operation,
administration and direction of the business of the Corporation and its
several offices, agents and employees, and shall see that all resolutions
and orders of the Board and of the Chairman of the Board and Chief
Executive Officer are carried into effect.

<PAGE>

(B) In the event the Chairman of the Board is not designated by
the Board as the Chief Executive Officer of the Corporation, the President
shall have, subject to the direction of the Board, general and active
supervision and management over the business, operations and affairs of
the Corporation and over its several officers, agents and employees. The
President shall exercise and perform such other powers and duties as may
from time to time be assigned by the Board.

Section 4.08 Vice Presidents. In the absence or disability of
the President, the Vice Presidents in order of their rank as fixed by the
Board or, if not ranked, the Vice President designated by the Board, shall
perform all the duties of the President, and when so acting shall have all
the powers of, and be subject to all the restrictions upon, the President.

Section 4.09 Secretary. The Secretary shall, if present,
record the proceedings of all meetings of the Board, of the stockholders,
and of all committees of which a secretary shall not have been appointed,
in one or more books provided for that purpose. The Secretary shall
see that all notices are duly given in accordance with these Bylaws and as
required by law. The Secretary shall be custodian of the seal of the
Corporation and shall affix and attest the seal to all documents to be
executed on behalf of the Corporation under its seal. In general, the
Secretary shall perform all the duties incident to the office of Secretary
and such other duties as may from time to time be assigned by the Board.

Section 4.10 Treasurer. The Treasurer is the chief financial
officer of the Corporation and shall keep and maintain, or cause to be
kept and maintained adequate and correct accounts of the properties and
business transactions of the Corporation.

Section 4.11 Compensation. The compensation of the officers,
agents or employees of the Corporation shall be fixed from time to time by
the Board. The Board may delegate to any officer of the Corporation or
any committee of the Board the power to fix the compensation of any
officer, agent or employee of the Corporation. No officer shall be
prevented from receiving such compensation by reason of the fact that such
officer is also a director of the Corporation.

ARTICLE V

Contracts, Checks, Drafts, Bank Accounts, Etc.

Section 5.01 Execution of Contracts. The Board, except as in
these Bylaws otherwise provided, may authorize any officer or officers,
agent or agents, to enter into any contract or execute any instrument in
the name of and on behalf of the Corporation, and such authority may be
general or confined to specific instances.

Section 5.02 Checks, Drafts, Etc. All checks, drafts or other
orders for payment of money, notes or other evidence of indebtedness,
issued in the name of or payable to the Corporation, shall be signed or

<PAGE>

endorsed by such person or persons and in such manner as, from time to
time, shall be determined by resolution of the Board. Each such officer,
assistant, agent or attorney shall give such bond, if any, as the Board
may require.

Section 5.03 Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the credit of
the Corporation in such banks, trust companies or other depositories as
the Board may select, or as may be selected by any officer or officers,
assistant or assistants, agent or agents, or attorney or attorneys of the
Corporation to whom such power shall have been delegated by the Board.
For the purpose of deposit and for the purpose of collection for the
account of the Corporation, the President, any Vice President or the
Treasurer (or any other officer or officers, assistant or assistants,
agent or agents, or attorney or attorneys of the Corporation who shall
from time to time be determined by the Board) may endorse, assign and
deliver checks, drafts and other orders for the payment of money which are
payable to the order of the Corporation.

Section 5.04 General and Special Bank Accounts. The Board may
from time to time authorize the opening and keeping of general and special
bank accounts with such banks, trust companies or other depositories as
the Board may select or as may be selected by any officer or officers,
assistant or assistants, agent or agents, or attorney or attorneys of the
Corporation to whom such power shall have been delegated by the Board.
The Board may make such special rules and regulations with respect to such
bank accounts, not inconsistent with the provisions of these Bylaws, as it
may deem expedient.

ARTICLE VI

Shares and Their Transfer

Section 6.01 Certificates for Stock. Every owner of stock of
the Corporation shall be entitled to have a certificate or certificates,
to be in such form as the Board shall prescribe, certifying the number and
class of shares of the stock of the Corporation owned by him. The
certificates representing shares of such stock shall be numbered in the
order in which they shall be issued and shall be signed in the name of the
Corporation by the President or a Vice President, and by the Secretary or
an Assistant Secretary or by the Treasurer or an Assistant Treasurer. Any
of or all of the signatures on the certificates may be a facsimile. In
case any officer, transfer agent or registrar who has signed, or whose
facsimile signature has been placed upon, any such certificate, shall have
ceased to be such officer, transfer agent or registrar before such
certificate is issued, such certificate may nevertheless be issued by
the Corporation with the same effect as though the person who signed such
certificate, or whose facsimile signature shall have been placed
thereupon, were such officer, transfer agent or registrar at the date of
issue. A record shall be kept of the respective names of the persons,
firms or corporations owing the stock represented by such certificates,
the number and class of shares represented by such certificates,
respectively, and the respective dates thereof, and in case of
cancellation, the respective dates of cancellation. Every certificate
surrendered to the Corporation for exchange or transfer shall be
cancelled, and no new certificate or certificates shall be issued in
exchange for any existing certificate until such existing certificate

<PAGE>

shall have been so cancelled, except in cases provided for in Section
6.05.

Section 6.02 Stock Purchase Plans. The Corporation may adopt
and carry out a stock purchase plan or agreement or stock option plan or
agreement providing for the issue and sale for such consideration as may
be fixed of its unissued shares, or of issued shares acquired or
to be acquired, to one or more of the employees or directors of the
Corporation or of a subsidiary or to a trustee on their behalf and for the
payment of such shares in installments or at one time, and may provide for
aiding any such persons in paying for such shares by compensation for
services rendered, promissory notes or otherwise.

Any such stock purchase plan or agreement or stock option plan or
agreement may include, among other features, the fixing of eligibility for
participation therein, the class and price of shares to be issued or sold
under the plan or agreement, the number of shares which may be subscribed
for, the method of payment therefor, the reservation of title until full
payment therefor, the effect of the termination of employment and option
or obligation on the part of the Corporation to repurchase the shares upon
termination of employment, restrictions upon transfer of the shares, the
time limits of and termination of the plan and any other matters, not in
violation of applicable law, as may be included in the plan as approved or
authorized by the Board or any committee of the Board.

Section 6.03 Transfers of Stock. Transfers of shares of stock
of the Corporation shall be made only on the books of the Corporation by
the registered holder thereof, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary, or with a
transfer clerk or a transfer agent appointed as provided in Section 6.04,
and upon surrender of the certificate or certificates for such shares
properly endorsed and the payment of all taxes thereon. The person in
whose name shares of stock stand on the books of the Corporation shall
be deemed the owner thereof for all purposes as regards the Corporation.
Whenever any transfer of shares shall be made for collateral security, and
not absolutely, such fact shall be so expressed in the entry or transfer
if, when the certificate or certificates shall be presented to the\
Corporation for transfer, both the transferor and the transferee request
the Corporation to do so.

Section 6.04 Regulations. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with these Bylaws,
concerning the issue, transfer and registration of certificates for shares
of the stock of the Corporation. It may appoint, or authorize any officer
or officers to appoint, one or more transfer clerks or one or more
transfer agents and one or more registrars, and may require all
certificates for stock to bear the signature or signatures of any of them.

Section 6.05 Lost, Stolen, Destroyed, and Mutilated
Certificates. In any case of loss, theft, destruction, or mutilation of
any certificate of stock, another may be issued in its place upon proof of
such loss, theft, destruction, or mutilation and upon the giving of a bond

13
<PAGE>

of indemnity to the Corporation in such form and in such sum as the Board
may direct; provided, however, that a new certificate may be issued
without requiring any bond when, in the judgment of the Board, it is
proper so to do.

Section 6.06 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any other change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board may fix, in advance,
a record date, which shall not be more than 60 nor less than 10 days
before the date of such meeting, nor more than 60 days prior to any other
action. If in any case involving the determination of stockholders for
any purpose other than notice of or voting at a meeting of stockholders,
the Board shall not fix such a record date, the record date for
determining stockholders for such purpose shall be the close of business
on the day on which the Board shall adopt the resolution relating thereto.
A determination of stockholders entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of such meeting;
provided, however, that the Board may fix a new record date for
the adjourned meeting.

ARTICLE VII

Indemnification

Section 7.01 Indemnification of Directors, Officers, Employees,
and Agents. The Corporation shall indemnify to the full extent authorized
by law any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(including without limitation an action by or in the right of the
Corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation or any predecessor
of the Corporation, or is or was serving at the request of the Corporation
or any predecessor of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) judgments,
fines and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, that he had reasonable cause
to believe that his conduct was unlawful. The right of indemnity provided
herein shall not be exclusive, and the Corporation may provide
indemnification to any person, by agreement or otherwise, on such terms;
and conditions as the Board of Directors may approve. Any agreement for

<PAGE>

indemnification of any director, officer, employee or other person may
provide indemnification rights which are broader or otherwise different
from those set forth herein.

Section 7.02 Other Rights and Remedies. The indemnification
provided by this Article shall not be deemed exclusive of any other rights
to which one seeking indemnification may be entitled under any Bylaws,
agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in an official capacity and as to action in
another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of
such a person.

Section 7.03 Insurance. Upon resolution passed by the Board,
the Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted
against him and incurred by him in any such capacity or arising out of his
status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article.

Section 7.04 Certain Definitions. For purposes of this
Article, (1) references to "the Corporation" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger
which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers and employees or agents, so
that any person who is or was a director, officer, employee or agent of
such constituent corporation or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the
same position under the provisions of this Article with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued; (2)
references to "other enterprises" shall include employee benefit plans;
(3) references to "fines" shall include any excise taxes assessed on a
person with respect to an employee benefit plan; (4) references to
"serving at the request of the Corporation" shall include any service as
a director, officer, employee or agent of the Corporation which imposes
duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and (5) a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in
a manner "not opposed to the best interests of the Corporation" as
referred to in this Article.

ARTICLE VIII

Miscellaneous

Section 8.01 Seal. The Board shall provide a corporate seal,
which shall be in the form of a circle and shall bear the name of the

<PAGE>

Corporation and words and figures showing that the Corporation was
incorporated in the State of Delaware and the year of incorporation.

Section 8.02 Waiver of Notices. Whenever notice is required to
be given by these Bylaws or the Certificate of Incorporation or bylaw, the
person entitled to said notice may waive such notice in writing, either
before or after the time stated therein, and such waiver shall be deemed
equivalent to notice.

Section 8.03 Fiscal Year. The fiscal year of the Corporation
shall end on the last Friday in March in each year.

Section 8.04 Amendments. These Bylaws, or any of them, may be
altered, amended or repealed, and new Bylaws may be made by the Board, by
vote of a majority of the number of directors then in office as directors,
acting at any meeting of the Board. These Bylaws or any of them, except
Sections 3.02, 3.03 and this Section 8.04, may be altered, amended or
repealed and new Bylaws may be made by the vote of the holders of not less
than a majority of the outstanding shares of voting stock of the
Corporation at an annual meeting of stockholders, without previous notice,
or at any special meeting of stockholders, provided that such proposed
amendment, modification, repeal or adoption is given in the notice of
special meeting. Sections 3.02, 3.03 and this Section 8.04 may be
altered, amended or repealed by the vote of the holders of not less than
two-thirds of the total voting power of all outstanding shares of voting
stock of the Corporation, at an annual meeting of stockholders, without
previous notice, or at any special meeting of stockholders, provided that
notice of such proposed amendment, modification, repeal or adoption is
given in the notice of special meeting.

<PAGE>

EXHIBIT 10(ii)6
---------------

CONFORMED COPY

SECOND AMENDMENT TO
CREDIT AGREEMENT,
MASTER COLLATERAL AND INTERCREDITOR AGREEMENT AND
NOTE PURCHASE AGREEMENTS

AMENDMENT AND CONSENT, dated as of October 30, 1996 (the
"Amendment"), to (i) the Credit Agreement, dated as of October 24, 1995,
as amended by Amendment No. 1 to Credit Agreement, dated as of January 5,
1996 (as amended, supplemented or otherwise modified from time to time,
the "Agreement") among IT CORPORATION, a California corporation (the
"Borrower"), the several banks and other financial institutions from time
to time parties thereto (the "Lenders") and The Chase Manhattan Bank
(formerly known as Chemical Bank), as administrative agent for the Lenders
(in such capacity, the "Agent"), (ii) the Master Collateral and
Intercreditor Agreement, dated as of October 24, 1995 (as amended,
supplemented or otherwise modified from time to time, the "Intercreditor
Agreement"), among the Lenders and the holders of the outstanding Senior
Notes (collectively, the "Participating Creditors") and The Chase
Manhattan Bank (formerly known as Chemical Bank), as collateral agent for
the Participating Creditors and (iii) the several Note Purchase
Agreements, each dated as of October 24, 1995, as amended by Amendment No.
1 to Note Purchase Agreements, dated as of January 5, 1996 (as amended,
supplemented or otherwise modified from time to time, collectively, the
"Note Agreements") between the Borrower and the respective Purchasers
party thereto (the Agreement, the Intercreditor Agreement and the Note
Agreements, collectively, the "Agreements").

W I T N E S S E T H :

WHEREAS, the parties hereto wish to amend or waive certain
provisions of the Agreements on the terms set forth herein;

NOW, THEREFORE, in consideration of the premise contained
herein, the parties hereto agree as follows:

1. Defined Terms. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to them in
the Agreements as amended hereby.

2. Consent. Notwithstanding anything to the contrary
contained in the Loan Documents (as defined in the Credit Agreement), the
Note Agreements, the Senior Notes or the Intercreditor Agreement, the
parties hereto hereby agree that the Carlyle Transaction shall not
constitute a Change of Control under the Agreements, provided that the
aggregate net cash proceeds received by the Borrower upon consummation of
the Carlyle Transaction is at least $40,000,000.00.

<PAGE>

3. Amendment to Section 1.1 of the Credit Agreement
(Definitions). The definition of "Applicable Margin" is hereby amended by
(i) deleting the word "and" before the word "(b)" and substituting
therefor "," and (ii) deleting the clause beginning "; and provided,
further," and substituting therefor the following to read in its entirety:

"(c) in addition, for each day from the Second Amendment
Effective Date to and including June 30, 1997, an additional 0.75%
shall be added to the applicable rate per annum for any outstanding
Alternate Base Rate Loans or Eurodollar Loans in clauses (a) or (b)
above; and

(d) in addition, for each day of each calendar quarter
following the calendar quarter ending June 30, 1997, the applicable
rate set forth below opposite the Leverage Ratio (in each case
calculated as of the last day of the Borrower's fiscal quarter ending
on or about the beginning of such calendar quarter and based upon the
Borrower's financial statement for such fiscal quarter delivered to
the Lenders pursuant to Section 21 of Schedule III) shall be added to
the applicable rate per annum for any outstanding Alternate Base Rate
Loans or Eurodollar Loans in clauses (a) or (b) above:

Leverage Ratio
--------------

< 2.99 None
-

3.00 < 3.49 + 0.25%
-

3.50 < 3.99 + 0.50%
-

4.00 < 4.49 + 0.75%
-

4.50 < 4.99 + 1.00%
-

> 5.00 + 1.25%".
-

4. Amendment to Subsection 4.3 of the Credit Agreement
(Purpose of Loans). Subsection 4.3 is hereby amended by:

(i) deleting the word "and" appearing at the end of clause
(iii);

(ii) deleting the period at the end of clause (iv) thereof and
substituting the word "; and" in lieu thereof; and

(iii) inserting a new clause at the end thereof to read in its
entirety "(v) Investments, subject to the limitations contained in
Section 13 of Schedule II.".

5. Amendment to Schedule I (Uniform Definitions). (a)
Schedule I is hereby amended by adding in the appropriate alphabetical
order the following new definitions:

<PAGE>

"'Carlyle 6% Preferred Stock' shall mean the 6% convertible
participating preferred stock issued by the Parent, $100.00 par value
per share, which are convertible into shares of the Parent's common
stock."

"'Carlyle Transaction' shall mean the acquisition of (i) up to
45,000 shares of Carlyle 6% Preferred Stock (and the distribution of
additional shares of Carlyle 6% Preferred Stock as a dividend on the
Carlyle 6% Preferred Stock, to be distributed at a rate of 3% for a
period not exceeding one year during the second year after the date
of issue) and (ii) warrants to purchase 5,000,000 shares of common
stock, $1.00 par value per share, of the Parent and the exercise of
such warrants, in each case, by certain limited partnerships of which
TC Group, L.L.C. is the general partner, pursuant to the Securities
Purchase Agreement (without any material amendments or waivers to the
terms thereof, including, without limitation, the Certificate of
Designation, attached as Exhibit A thereto)."

"'Leverage Ratio' shall mean, on the last day of any fiscal
quarter, the ratio of (i) an amount equal to the average month-end
Total Debt for each month ended in such fiscal quarter to (ii) EBITDA
for the period of four consecutive fiscal quarters ending on such
day."

"'Second Amendment' shall mean the Second Amendment to the
Credit Agreement, the Master Collateral and Intercreditor Agreement
and the Note Purchase Agreements, dated as of October 30, 1996, by
and among the Borrower, the Agent, the Lenders and the Noteholders."

"'Second Amendment Effective Date' shall mean the date upon
which (i) the Second Amendment is (a) executed by the Borrower, the
Majority Creditors, the Agent and each Noteholder and (b)
acknowledged by the Borrower, the Parent, IT-Tulsa Holdings, Inc., IT
Hanford, Inc., Universal Professional Insurance Company, Gradient
Corporation, Zentox Corporation, (ii) the Agent receives
a non-refundable amendment fee in the amount equal to $300,000.00
(the "Amendment Fees") for the ratable benefit of each Lender, in
immediately available funds and (iii) each Noteholder receives its
ratable share (based on such Lender's percentage of the outstanding
principal amount of the Senior Notes) of a non-refundable fee in the
aggregate amount of $325,000.00 (each, a "Noteholder's Fee") in
immediately available funds."

"'Securities Purchase Agreement' shall mean the Securities
Purchase Agreement, dated as of August 28, 1996, by and among the
Parent and certain limited partnerships of which TC Group, L.L.C. is
the general partner."

(b) The definition of "Capital Expenditures" is hereby amended
by (i) deleting the word "," following the words "and equipment" and
substituting therefor the words ", other than in connection with
acquisitions of assets comprising a business unit or Capital Stock of
any Person, and" and (ii) deleting the clause (c) in its entirety.

<PAGE>

(c) The definition of "Consolidated Net Worth" is hereby
amended by deleting it in its entirety and substituting therefor the
following new definition in its entirety:

"shall mean, without duplication, (a) the capital stock (but
excluding treasury stock and capital stock subscribed but unissued
and preferred stock of the Parent or any of its Subsidiaries
redeemable prior to October 31, 2003) and surplus accounts of the
Parent and its Restricted Subsidiaries appearing on a consolidated
balance sheet of the Parent and its Restricted Subsidiaries prepared
in accordance with GAAP, provided that the investment in Quanterra
represented in such accounts and surplus shall be included only
to the extent of such investment existing at the Second Amendment
Effective Date at all times valued at its book value (such amount on
the Second Amendment Effective Date being $13,925,000.00) plus the
book value of up to $3,575,000.00 of additional investment in
Quanterra, plus (b) non-cash charges arising from the writing off of
the asset values for deferred taxes and the investment in Quanterra
in an amount no greater than $30,000,000.00, provided to the extent
that the non-cash charges referred to in this clause (b) are less
than $30,000,000.00, any other non-cash charges in an amount
no greater than $5,000,000.00, in any case taken during the period
from the Second Amendment Effective Date to and including the fiscal
year ending on or before March 31, 1998 minus (c) Restricted
Investments, and minus:

(d)(i) (A) the net book amount of all assets, after
deducting any reserves applicable thereto, which would be
treated as intangibles under GAAP, including, without
limitation, such items as good will, trademarks, trade names,
service marks, brand names, copyrights, patents and licenses,
and rights with respect to the foregoing, unamortized debt
discount and expense (other than the capitalized expenses
related to the Credit Agreement and the Note Agreements
and amendments and waivers thereto up to and including the
Second Amendment, but not any subsequent amendments,
refinancings or waivers relating thereto), organizational
expenses and the excess of cost of purchased Subsidiaries over
equity in the net assets thereof at the date of acquisition
(collectively, "Intangible Assets") reflected on the Parent's
consolidated balance sheet up to and including September 27,
1996, and, (B) either (1) only 50% of any Intangible Assets
acquired after September 27, 1996, subject to the consummation
of the Carlyle Transaction or (2) 100% of any Intangible Assets
acquired after September 27, 1996 if the Carlyle Transaction is
not consummated;

(ii) any write-up in the book value of any asset on the
books of the Parent or any Restricted Subsidiary resulting from
a revaluation thereof subsequent to the Closing Date;

(iii) the amounts, if any, at which any shares of stock of
the Parent or any Restricted Subsidiary appear on the asset
side of such balance sheet; and

<PAGE>

(iv) all deferred charges (other than deferred taxes and
prepaid expenses).".

(d) The definition of "Guaranty" is hereby amended by inserting
at the end thereof the following sentence in its entirety:

"For clarification purposes, all Debt of a Permitted Joint Venture
guaranteed by the Parent or any of its Restricted Subsidiaries or
which is recourse to the Parent or any of its Restricted
Subsidiaries, as the case may be, shall be a Guaranty.".

(e) The definition of "Make-Whole Amount" is hereby amended by
deleting the definition of "Remaining Scheduled Payments" thereto in its
entirety and substituting in lieu thereof the following new definition in
its entirety:

"'Remaining Scheduled Payments' means, with respect to the
Called Principal of any Senior Note, all payments of such Called
Principal and interest thereon (assuming for such purposes that
interest (computed on the basis on a 360-day year of twelve 30-day
months) shall be deemed to accrue at a rate of 8.67% per annum,
payable semi-annually on each April 30 and October 30) that would be
due after the Settlement Date with respect to such Called Principal
if no payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is not a
date on which interest payments are due to be made under the terms of
the Senior Notes, then the amount of the next succeeding scheduled
interest payment will be reduced by the amount of interest accrued to
such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 7 or 10 of the Note Agreements.".

(f) The definition of "Permitted Joint Ventures" is hereby
amended by (i) deleting clause (ii) in its entirety and renumbering the
subsequent clauses accordingly and (ii) deleting the word "$15,000,000" in
clause (iii) thereto and substituting therefor the word "$20,000,000".

(g) The definition of "Senior Notes" is hereby amended by
deleting it in its entirety and substituting in lieu therefor the
following new definition in its entirety:

"'Senior Notes' shall mean $65,000,000 aggregate principal
amount of the Company's Guaranteed Senior Secured Notes due October
30, 2003 (including any such notes issued in substitution therefor
pursuant to Section 11 of the Note Agreements or pursuant to the
Second Amendment) originally issued pursuant to the Note Agreements,
to be substantially in the form of the Senior Note set out in Exhibit
A to the Note Agreements, with such changes therefrom, if any, as may
be approved by the Noteholders and the Company.".

6. Amendment to Schedule II (Uniform Representations and
Warranties).

<PAGE>

(a) Section 5 is hereby amended by (i) deleting the words
"March 31, 1995" and substituting therefor the words "June 28, 1996" and
(ii) inserting immediately after the words "Exchangeable Preferred Stock"
in clause (c) thereto the words "and the Carlyle 6% Preferred Stock.".

(b) Section 13 is hereby amended by (i) deleting the word "and"
following the words "other existing Debt" and substituting therefor ","
and (ii) deleting the period at the end thereof and substituting therefor
the following new clause in its entirety:

"and, subject to the consummation of the Carlyle Transaction, to make
Investments, provided that with respect to any Investment made with
the proceeds of any Loan (i) such Investment shall not be made on or
before September 30, 1997, (ii) the aggregate amount of Loans used by
the Company for such Investments shall not exceed $20,000,000.00 for
any consecutive four-quarter period, (iii) such Investments shall
not be an acquisition that has not been approved by the Board of
Directors of the Person being acquired, (iv) such Investments shall
not be of an entity organized under the laws of any jurisdiction
other than the United States of America or any state thereof
or Canada, (v) such Investments (whether pursuant to a single
transaction or a series of related transactions) shall not be made
for consideration greater than $10,000,000.00 unless EBITDA minus
capital expenditures (each as defined under GAAP) for the Person
being acquired shall be positive in the aggregate for no less than
two fiscal years immediately preceding such purchase, (vi) after
giving effect to such Loans, the Available Commitment of all Lenders
is at least $5,000,000 and (vii) Borrowing Base excess on a pro forma
basis after taking into account the inclusion of such assets being
acquired shall be at least $20,000,000.00 until September 30, 1998,
and at least $15,000,000.00 thereafter.".

7. Amendment to Schedule III (Uniform Covenants). (a)
Subsection 1(a)(v) is hereby amended by inserting at the end thereof the
following in its entirety:

", and, subject to the consummation of the Carlyle Transaction, an
additional amount of Debt comprised of unsecured debt incurred or
assumed in connection with any acquisition not prohibited hereunder
in an aggregate principal amount outstanding not to exceed (A)
$10,000,000.00 or (B) from and after the first date on which the
ratio of Total Debt to EBITDA, as calculated pursuant to clause
(viii) hereof, as at the last day of the most recent fiscal quarter
for which financial statements have been delivered hereunder is less
than 3.50:1.00, $20,000,000.00.".

(b) Section 3 is hereby amended by deleting it in its entirety
and substituting therefor the following in its entirety:

"The Parent will not, as at the end of each fiscal quarter,
permit the Leverage Ratio to be greater than the ratios specified
below for the fiscal quarters ending in the periods specified below:

<PAGE>

Period Ratio
------ -----

Beginning September 28, 1996
through and including March 28, 1997 7.00:1.00
Beginning March 29, 1997
through and including December 26, 1997 6.00:1.00
Beginning December 27, 1997
through and including June 26, 1998 5.00:1.00
Beginning June 27, 1998
through and including December 25, 1998 4.50:1.00
Beginning December 26, 1998
through and including December 31, 1999 4.00:1.00
Thereafter 3.50:1.00".

(c) Section 4 is hereby amended by deleting it in its entirety
and substituting therefor the following new paragraph in its entirety:

"The Parent will not, as at the end of any fiscal quarter
beginning with the fiscal quarter commencing on September 28, 1996,
permit Consolidated Net Worth to be less than the sum of (a)
$112,400,000, plus (b) 50% of the cumulative Net Income (without
reduction for loss during any fiscal quarter) for all fiscal quarters
ending after September 27, 1996, plus (c) 50% of (i) the net cash
proceeds from the sale or issuance of any of the Parent's common
stock directly or through the conversion of convertible debt and (ii)
any cash proceeds received from the exercise of any warrants and
rights to purchase the Parent's common stock, plus (d) 60% of the net
cash proceeds from the issuance and sale of any Carlyle 6% Preferred
Stock.".

(d) Section 5 is hereby amended by deleting it in its entirety
and substituting therefor the following in its entirety:

"The Parent will not, as at the end of each fiscal quarter
specified below, permit the ratio of (i) EBIT for the period
specified below, to (ii) an amount equal to (A) Interest Expense for
such period minus any fees paid pursuant Section 13 of to the
Second Amendment amortized or required to be amortized in the
determination of Net Income for such period, plus (B) all cash
dividends on Preferred Stock paid during such period, including,
without limitation, all cash dividends paid on Carlyle 6% Preferred
Stock during such period, plus (C) on and after March 26, 1999, the
current maturities of long term debt, to be less than the ratios
specified below:

Fiscal Quarter Ending Ratio
--------------------- -----
Quarter Ended March 28, 1997 0.75:1.00
Two Quarter Period
Ended June 27, 1997 1.00:1.00
<PAGE>

Three Quarter Period
Ended September 26, 1997 1.00:1.00
Four Quarter Period
Ended December 26, 1997 1.25:1.00
Four Quarter Periods
Ended March 27, 1998
and June 26, 1998 1.50:1.00
Four Quarter Period
Ended September 25, 1998 1.75:1.00
Rolling Four Quarter Periods
Ended December 25, 1998
and thereafter 2.00:1.00".

(e) Section 6(b) is hereby amended by inserting immediately
after the word "35%" the clause "(or, in the case of the Carlyle
Transaction, 20%)".

(f) Section 7(g) is hereby amended by (i) deleting the word
"$15,000,000" and substituting therefor the word "$20,000,000" and (ii)
inserting at the end of Section 7(g) the following in its entirety:

", provided that no such Permitted Joint Venture may owe or incur any
Debt with recourse against the Parent or its Restricted Subsidiaries,
as the case may be, nor shall the Parent or any of its Restricted
Subsidiaries guarantee such Debt of a Permitted Joint Venture, unless
such Debt or guarantee is permitted to be made by Section 1
hereunder.".

(g) Section 7 is hereby amended by (i) deleting the period at
the end of clause (k) thereto and substituting therefor the word "," and
(ii) inserting the following new clause in its entirety at the margin:

", provided that with respect to any Investment pursuant to this
Section 7, (A) the Agent shall have the option to perform an audit of
assets directly or indirectly being acquired thereby, at the
Borrower's expense, prior to the inclusion in the Borrowing
Base of such assets if the value of such assets is less than 10% of
the Borrowing Base for the immediately preceding month and (B) the
Agent shall perform an audit of assets directly or indirectly being
acquired thereby, at the Borrower's expense, prior to such
assets inclusion in the Borrowing Base if the value of such assets is
(i) equal to or greater than 10% of the Borrowing Base for any single
acquisition or (ii) equal to or greater than 25% of the Borrowing
Base in the aggregate for the immediately preceding four quarters (it
being understood that the foregoing proviso is not intended to limit
or restrict any other inspection or evaluation rights of the Agent
set forth in the Loan Documents).".

(h) Section 8(c) is hereby amended by (i) deleting the word
"or" appearing before the word "(ii)" and substituting therefor the word
"," and (ii) inserting at the end of Section 8(c) the following new clause

<PAGE>

(iii) "or (iii) to enable the Parent to pay dividends on the Carlyle 6%
Preferred Stock, provided that at no time shall the dividend rate per
annum on the Carlyle 6% Preferred Stock exceed 6%".

(i) Section 8 is hereby further amended by:

(i) deleting the word "or" at the end of clause (d)(ii)(D)
thereto;

(ii) deleting the word "." at the end of clause (f) thereto and
substituting therefor the words "; or"; and

(iii) inserting the following new paragraph (g) in its entirety:

"(g) so long as no Default or Event of Default shall have
occurred and is continuing, the Company may redeem its capital
stock out of the net cash proceeds of the issuance of any other
new capital stock, provided that the new capital stock being
issued is (i) either pari passu or junior in right to receive
dividends and (ii) has no additional or improved economic terms
than the capital stock being redeemed and that such redemption
and issuance occur within a reasonable period of time.".

(j) Schedule III is hereby further amended by adding the
following new Section 27 in its entirety:

"Section 27. Use of Proceeds of Senior Notes.

Neither the Parent or any of its Affiliates will, directly or
indirectly, use any of the proceeds of the sale of the Senior Notes
for the purpose, whether immediate, incidently or ultimate, of buying
a "margin stock" or of maintaining, reducing or retiring any
indebtedness originally incurred to purchase a stock that is
currently a "margin stock", or for any other purpose which might
constitute this transaction a "purpose credit", in each case within
the meaning of Regulation G of the Board of Governors of the Federal
Reserve System (12 C.F.R. 207, as amended) or Regulation U of such
Board (12 C.F.R. 221, as amended), or otherwise take or permit to be
taken any action which would involve a violation of such Regulation
G or Regulation U or of Regulation T (12 C.F.R. 220, as amended) or
Regulation X (12 C.F.R. 224, as amended) or any other regulation of
such Board. No indebtedness being reduced or retired out of the
proceeds of the sale off the Senior Notes was incurred for the
purpose of purchasing or carrying any such "margin stock", and
neither the Company or any of its Affiliates owns or has any
intention of acquiring such "margin stock".".

8. Limited Waiver. Compliance with Sections 2, 4 and 5 of
Schedule III is hereby waived for the quarters ended June 28, 1996 and
September 27, 1996.

<PAGE>

9. Amendment to Section 1 of the Note Agreements. Section 1
of each Note Agreement is hereby amended by deleting it in its entirety
and substituting therefor the following paragraph in its entirety:

"SECTION 1. AUTHORIZATION OF SENIOR NOTES.

The Company will authorize the issue and sale of $65,000,000
aggregate principal amount of its 8.67% Guaranteed Senior Secured
Notes due October 30, 2003(including any such notes issued in
substitution therefor pursuant to Section 11 or pursuant to the
Second Amendment), to be substantially in the form of the Senior Note
set out in Exhibit A, with such changes therefrom, if any, as may be
approved by you and the Company. Certain capitalized terms used in
this Agreement are defined in Schedule I; references to a "Schedule"
or an "Exhibit" are, unless otherwise specified, to a Schedule or an
Exhibit attached to this Agreement.

The Senior Notes will be guaranteed by the Parent and the
Subsidiary Guarantors pursuant to the Guarantees and will be secured
as provided in the Security Documents.".

10. Amendment to Section 8 of the Note Agreements. Section 8
of each Note Agreement is hereby amended by deleting it in its entirety
and substituting therefor the following paragraph in its entirety:

"SECTION 8. COVENANTS OF THE COMPANY

The Company covenants that from the date of this Agreement
through the Closing and thereafter so long as any of the Senior Notes
are outstanding, (a) it will observe and comply with the "Uniform
Covenants" set forth in Schedule III, which Schedule III is
incorporated herein as if set forth herein in full, and (b)
commencing on the Second Amendment Effective Date, the Company will
pay interest on the unpaid balance of the principal amount of the
Senior Notes outstanding until the unpaid balance shall become due
and payable (whether at stated maturity or at a date fixed for
prepayment or by declaration or otherwise) at the rate calculated
below (the "Rate"), in cash, on each April 30 and October 30 after
the Second Amendment Effective Date, and with interest on any overdue
principal (including any overdue prepayment of principal) and
premium, if any, and (to the extent permitted by law) on any overdue
interest, at the Rate plus 2.00%, payable semi-annually as aforesaid
or, at the option of the holder of its respective Senior Note, on
demand.

The interest shall be calculated by the Company on a daily basis
(each such day, a "Determination Date") based on the principal amount
of the Senior Notes outstanding on such Determination Date. Daily
interest shall be calculated, based on actual days elapsed in a
365-day year, at a rate per annum equal to 9.42% for the period
commencing on the Second Amendment Effective Date to and including
<PAGE>

June 30, 1997, and for each day of each calendar quarter following
the calendar quarter ending June 30, 1997, at a rate per annum equal
to the sum of (i) 8.67% plus (ii) the applicable rate set forth below
opposite the Leverage Ratio (in each case calculated as of the last
day of the Company's fiscal quarter ending on or about the beginning
of such calendar quarter and based upon the Company's financial
statement for such fiscal quarter delivered to the Noteholders
pursuant to Section 21 of Schedule III):

Leverage Ratio Rate
-------------- ----
< 2.99 None
-
3.00 < 3.49 0.25%
-
3.50 < 3.99 0.50%
-
4.00 < 4.49 0.75
-
4.50 < 4.99 1.00%
-
> 5.00 1.25%
-
The Senior Notes are hereby amended to the extent of the foregoing
provisions, and, within 10 Business Days of the Second Amendment
Effective Date, the Company shall issue and deliver to the
Noteholders revised Senior Notes, in form and substance
satisfactory to the holders of the Senior Notes reflecting the
payment of interest specified above and shall obtain for such notes
a Private Placement Number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissions). Each such revised
Senior Note, shall be a "Senior Note".".

11. Amendment to the Intercreditor Agreement. The
Intercreditor Agreement is hereby amended by deleting the words "(the
"Senior Notes")" in clause (B) thereto.

12. Representations and Warranties. On and as of the date
hereof, the Borrower hereby represents and warrants that after giving
effect to the waivers and amendments contained herein, no Default or Event
of Default has occurred or is continuing.

13. Fees. The Borrower shall pay (i) to the Agent, a
non-refundable amendment fee in the amount equal to $300,000.00 (the
"Amendment Fee") for the ratable benefit of each Lender, in immediately
available funds and (ii) to each Noteholder, its ratable share (based on
such Noteholder's percentage of the outstanding principal amount of the
Senior Notes) of a non-refundable fee in the aggregate amount of
$325,000.00 (each, a "Noteholder's Fee") in immediately available funds.

<PAGE>

14. Effective Date. This Amendment will become effective on
the Second Amendment Effective Date.

15. Continued Effect. Except as expressly amended as provided
for herein, the Agreements shall continue to be, and shall remain, in full
force and effect in accordance with its terms. This Amendment shall be
limited solely for the purposes and to the extent expressly set forth
herein and nothing herein express or implied shall constitute an
amendment, supplement, modification or waiver to or of any other term,
provision or condition of the Agreements.

16. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

17. Counterparts. This Amendment may be executed by the
parties hereto in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their properly and duly
authorized officers as of the day and year first above written.

IT CORPORATION

By: /s/ Philip Ockelmann
-------------------------------------
Title: VP, Finance & Treasurer

THE CHASE MANHATTAN BANK (formerly
known as Chemical Bank), as
Administrative Agent and as a Lender

By: /s/ John T. Zeller
-------------------------------------
Title: Vice President

SOCIETE GENERALE

By: /s/ David Brunson
-------------------------------------
Title: First Vice President

THE FIRST NATIONAL BANK OF BOSTON

By: /s/ J. Lee Harper
-------------------------------------
Title: Vice President

JOHN HANCOCK MUTUAL LIFE
INSURANCE
COMPANY

By: /s/ Stephen J. Blewitt
-------------------------------------
Title: Investment Officer

<PAGE>

JOHN HANCOCK LIFE INSURANCE
COMPANY OF AMERICA

By: /s/ Willma Davis
-------------------------------------
Title: Vice President

ALLSTATE LIFE INSURANCE COMPANY

By: /s/ Patricia W. Wilson
-------------------------------------
Title: Vice President

By: /s/ Steven M. Laude
-------------------------------------
Title: Senior Investment Manager

THE MUTUAL LIFE INSURANCE COMPANY
OF NEW YORK

By: /s/ Suzanne E. Walton
-------------------------------------
Title: Managing Director

MONY LIFE INSURANCE COMPANY OF
AMERICA

By: /s/ Suzanne E. Walton
-------------------------------------
Title: Authorized Agent

<PAGE>

The undersigned hereby acknowledge and affirm their respective obligations
pursuant to the Security Agreements and the Guarantees as of the day and
year first above written.

INTERNATIONAL TECHNOLOGY
CORPORATION

By: /s/ Philip Ockelmann
-------------------------------------
Title: VP, Finance & Treasurer

IT CORPORATION

By: /s/ Philip Ockelmann
-------------------------------------
Title: VP, Finance & Treasurer

IT-TULSA HOLDINGS, INC.

By: /s/ Philip Ockelmann
-------------------------------------
Title: Treasurer

IT HANFORD, INC.

By: /s/ Philip Ockelmann
-------------------------------------
Title: Assistant Treasurer

UNIVERSAL PROFESSIONAL INSURANCE
COMPANY

By: /s/ Philip Ockelmann
-------------------------------------
Title: Treasurer

GRADIENT CORPORATION

By: /s/ Philip Ockelmann
-------------------------------------
Title: Assistant Treasurer

EXHIBIT 10(ii) 12
-----------------
(PORTION)

RESOLUTION OF THE BOARD OF DIRECTORS OF
INTERNATIONAL TECHNOLOGY CORPORATION
ADOPTED NOVEMBER 29, 1996

WHEREAS, in connection with the implementation of the Corporation's
strategic plan, the Corporation desires to retain The Carlyle Group
("Carlyle") to render to the Corporation certain financial advisory and
investment banking services;

WHEREAS, the Corporation's Proxy Statement for the 1996 Annual Meeting
discloses that the Corporation and Carlyle anticipate that the Corporation
will pay Carlyle (i) an annual financial advisory fee of $100,000, payable
quarterly, and (ii) investment banking fees and reimbursement of reasonable
out-of-pocket expenses for investment banking services rendered to
the Corporation;

WHEREAS, the Board of Directors has determined that it is in the best
interests of the Corporation to secure the services of Carlyle as described
above and to pay the proposed fees;

NOW, THEREFORE, BE IT RESOLVED, that the Corporation pay Carlyle, in
consideration of services rendered by Carlyle, 1) a $100,000 per year
financial advisory fee, payable quarterly in advance (with a pro-rata
payment for the third quarter of fiscal year 1997 due promptly after the
date of these resolutions), and 2) an investment banking fee equal to 1%
of transaction value and reimburse any reasonable out-of-pocket expenses,
for investment banking services relating to the execution of the
Corporation's strategic plan, all as disclosed in such Proxy Statement;

RESOLVED FURTHER, that the officers of this Corporation be, and each
of them hereby is, authorized and directed to execute all documents and to
take such additional actions as he or they may deem necessary or advisable
in order to carry out the purposes of the foregoing resolutions, such
determination to be conclusively evidenced by the taking of any such action
or the execution and delivery of any such agreements and instruments.

EXHIBIT 10(iii) 1
-----------------
(PORTION)

International Technology Corporation

Amended and Restated Non-Employee Directors Retirement Plan
Amendment No. 5

This Amendment No. 5 (this "Amendment") to the Amended and Restated
Non-Employee Directors Retirement Plan, originally adopted May 18, 1989
and as amended on May 16, 1991, July 1, 1993, August 5, 1993 and June 2,
1994 (the "Plan"), of International Technology Corporation, a Delaware
corporation (the "Company"), is implemented by the Company, effective as
of November 20, 1996, and is agreed to and acknowledged by each of the
non-employee directors of the Company serving as such as of the effective
date of the Amendment, each acting in his capacity as a beneficiary under
the Plan.
RECITALS

WHEREAS, the Plan provides for certain payments to be made to
non-employee directors subsequent to their retirement in accordance with
the provisions of the Plan;

WHEREAS, the Plan contains certain provisions relating to the
acceleration of the payment of benefits upon a change of control (as
described in the Plan), such that such benefits would be payable in a lump
sum to all eligible directors who do not elect to remain on the Board of
Directors subsequent to a change of control;

WHEREAS, the Company has entered into a transaction (the "Carlyle
Transaction") with The Carlyle Group ("Carlyle") pursuant to which Carlyle
would, among other things, purchase preferred stock of the Company
representing more than 35% of the voting stock of the Company, which
transaction, when closed, would be a change of control under the Plan
resulting in a waiver of the retirement age and service requirements under
the Plan and the entitlement (the "Change of Control Entitlement") of all
non-employee directors of the Company in office at the date of the change
of control (the "Non-Employee Directors") who do not elect to remain on
the Board of Directors to a lump sum payment of benefits;

WHEREAS, the Company and the Non-Employee Directors who will resign
from the Board concurrent with the consummation of the Carlyle Transaction
desire to enter into a modification of the Plan whereby such Non-Employee
Directors would waive their rights to the Change of Control Entitlement
and, in lieu thereof, would become entitled to receive the aggregate
amounts set forth opposite each such Non-Employee Director's name on
Exhibit A hereto, such amounts to be paid in equal monthly installments
over five years following the consummation of the Carlyle Transaction; and

WHEREAS, it has been proposed that Messrs. McGill and Gibson be paid
retirement benefits under the Plan as set forth on Exhibit A hereto
notwithstanding the fact that it is proposed that they remain active with
the Company as members of the Board of Governors of the Company following
the Carlyle Transaction in lieu of any benefits that may become payable to
them under the Plan in the future.

<PAGE>

WHEREAS, all former directors of the Company who are receiving
payments under the Plan prior to the consummation of the Carlyle
Transaction shall continue to receive the benefits to which they are
entitled prior to consummation of the Carlyle Transaction.

AMENDMENT
1. Concurrent with the consummation of the Carlyle Transaction and
the ratification of this Amendment by the Board of Directors of the
Company, as constituted immediately after the consummation of the Carlyle
Transaction, the Plan shall be amended with respect to all Non-Employee
Directors as follows: In full and complete settlement of all rights and
obligations owing under the Plan to the Non-Employee Directors and
notwithstanding the provisions and terms of the Plan (including without
limitation of the change of control provisions thereof), the Non-Employee
Directors shall be paid retirement benefits under the Plan in accordance
with the schedule attached as Exhibit A hereto.

2. The benefits owed and amounts payable by the Company to
non-employee directors of the Company who have retired prior to the
consummation of the Carlyle Transaction shall remain unchanged and the
Company shall continue to perform its obligations to such directors in
accordance with the Plan.

This Amendment has been executed on November 20, 1996 and shall be
effective as provided herein.

INTERNATIONAL TECHNOLOGY CORPORATION

/s/
_________________________________
Anthony J. DeLuca
President and Acting Chief Executive
Officer

The undersigned non-employee directors of International Technology
Corporation acknowledge and agree to the waiver and modification of
benefits to be paid under the Amended and Restated Non-Employee Directors
Retirement Plan to non-employee directors of International Technology, as
reflected in this Amendment, as of the respective dates indicated in their
capacity as beneficiaries under the Plan.

/s/ November 20, 1996
______________________________
Donald S. Burns

/s/ November 20, 1996
______________________________
Kirby L. Cramer

<PAGE>

/s/ November 20, 1996
______________________________
Ralph S. Cunningham

/s/ November 20, 1996
______________________________
E. Martin Gibson

/s/ November 20, 1996
______________________________
W. Scott Martin

/s/ November 20, 1996
______________________________
James C. McGill

/s/ November 20, 1996
______________________________
Henry E. Riggs

/s/ November 20, 1996
______________________________
Jack O. Vance

<PAGE>

Exhibit A

Director Age Years of Service(1) Vested Benefit Annual Payment(2)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jack O. Vance. . . . . . 71 9 $ 200,000 $ 40,000

Donald S. Burns. . . . . 71 7 200,000 40,000

Ralph S. Cunningham. . . 56 13 200,000 40,000

James C. McGill. . . . . 52 6 200,000 40,000

W. Scott Martin. . . . . 46 2 80,000 16,000

E. Martin Gibson . . . . 58 2 80,000 16,000

Kirby L. Cramer. . . . . 60 1 40,000 8,000

Henry E. Riggs . . . . . 61 1 40,000 8,000
--------- -------
TOTAL. . . . . . . . . $1,040,000 $208,000
========= =======

</TABLE>
<PAGE>

EXHIBIT 10(iii) 4
-----------------
(PORTION)

INTERNATIONAL TECHNOLOGY CORPORATION

Waiver

This Waiver is entered into and agreed to between International
Technology Corporation, a Delaware corporation (the "Company"), and each
of the non-employee directors (the "Non-Employee Directors") of the
Company set forth on the signature page hereto, with each such
Non-Employee Director acting in his capacity as a holder of certain
options to purchase Common Stock of the Company awarded under the Plan (as
defined below).

RECITALS

WHEREAS, each of the undersigned Non-Employee Directors has received
the number of non-employee director options set forth opposite such
Non-Employee Director's name on the signature page pursuant to the terms
of the Company's 1991 Stock Incentive Plan (the "Plan") and the agreements
evidencing the Options thereunder (the "Option Agreement");
WHEREAS, the Plan and each respective Option Agreement contains
certain provisions relating to the acceleration of the vesting of such
stock options upon a terminating event (as described in the Plan and the
Option Agreement), such that such stock options would become exercisable
in full upon the acquisition of more than 35% of the voting power of the
Company;
WHEREAS, the Company has entered into a Securities Purchase Agreement
(the "Carlyle Agreement") with The Carlyle Group ("Carlyle") pursuant to
which certain affiliates of Carlyle would, among other things, purchase
preferred stock of the Company representing more than 35% of the voting
power of the Company, which transaction, when consummated, would be a
terminating event under the Plan resulting in the acceleration of stock
options of all non-employee directors of the Company who own stock
options; and
WHEREAS, as a condition to the consummation of the transactions (the
"Carlyle Transactions") contemplated by the Carlyle Agreement, Carlyle is
requiring that the Non-Employee Directors waive, and the undersigned
Non-Employee Directors are willing to waive, their respective rights to
any such acceleration resulting from the consummation of the Carlyle
Transactions.

AGREEMENT

1. Each of the undersigned Non-Employee Directors hereby waives the
acceleration of the exerciseability of such Non-Employee Directors' stock
options set forth on the signature page hereto that would otherwise occur
pursuant to the terms of the Plan and the Option Agreement as a result of
the consummation of the Carlyle Transaction.
2. Except as provided herein, the terms of options will otherwise
remain unchanged.

<PAGE>
This Waiver may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

This Waiver has been executed effective as of November 20, 1996 by
the Company and each of the Non-Employee Directors set forth below.

Shares of Common Stock Subject to
Non-Employee Director Non-Employee Director Options
--------------------- ---------------------------------
/s/DONALD S. BURNS
______________________
Donald S. Burns 12,500 shares

/s/KIRBY L. CRAMER
______________________
Kirby L. Cramer 15,000 shares

/s/RALPH S. CUNNINGHAM
______________________
Ralph S. Cunningham 7,500 shares

/s/E. MARTIN GIBSON
______________________
E. Martin Gibson 17,500 shares

/s/W. SCOTT MARTIN
______________________
W. Scott Martin 17,500 shares

/s/JAMES C. MCGILL
______________________
James C. McGill 10,000 shares

/s/HENRY E. RIGGS
______________________
Henry E. Riggs 15,000 shares

/s/JACK O. VANCE
______________________
Jack O. Vance 10,000 shares

INTERNATIONAL TECHNOLOGY CORPORATION
By: /s/ ANTHONY J. DELUCA
___________________________
Anthony J. DeLuca
President and Acting Chief Executive Officer

EXHIBIT 10 (iii) 6
-----------------

IT CORPORATION

1997 MANAGEMENT INCENTIVE PLAN

Purpose

To recognize and reward key management, technical, and professional
associates for their ability to assist the Company to achieve, or
exceed identified Company goals, as well as personally achieve or
exceed established pre-agreed individual performance goals.

To offer a comprehensive incentive compensation program that will
enable the Company to:

Cost effectively attract and retain key management and
professional personnel to enhance the Company's leadership
position, and

Motivate responsible management to achieve Company goals and
foster teamwork within the Company by relating the incentive
portion of total compensation directly to measurable performance
criteria linked to the creation of enhanced shareholder value.

Eligibility

Regular full-time active associates, generally in salary grade E12 or
above, nominated by senior management and approved by the President.

Participation in the Plan is not expected to exceed 5% of the total
associate population.

Associates must be approved for incentive plan eligibility each year.
Eligibility in any given year does not assure eligibility in
subsequent years.

Incentive awards will only be paid to participants who are regular
full-time status at the time the award is paid.

Incentive awards will be calculated on actual base salary at the time
the award is paid.

Performance Period

The Performance Period will be the combined 3rd and 4th quarters of
FY1997.

1
<PAGE>

Plan Funding

Incentive awards, up to an aggregate incentive pool of $1,000,000 are
authorized under this Plan. It is contemplated that a minimum of 50%
of the incentive awards will be paid in cash and 50% of the incentive
awards will be made in the form of stock option grants.

The number of stock option shares to be granted shall be calculated
by dividing the dollar value of the incentive award to be paid in
stock options by the current value of a Company stock option as
determined by the Black-Scholes option valuation method.

The Compensation Committee shall ultimately determine the final ratio
between cash and stock options for payment of incentive awards or
delegate such authority to the Chief Executive Officer.

Performance Criteria

The Company's pretax income (excluding special items) target of
$2,509,000 (after payment of cash awards) must be met before any
awards will be paid.

Divisional days of sales outstanding (DSO) targets must be met for any
participant in the Division to receive an award. The Engineering and
Construction (E&C) Division's DSO target is 95 days (excluding Helen
Kramer) and the Consulting and Ventures (C&V) Division DSO target is
105 days (excluding Chi Mei).

Non-divisional participant awards are based 90% on the E&C Division
achieving it's DSO target and 10% on the C&V Division achieving it's
DSO target.

Each participant will be assigned an annualized target incentive award
ranging from 10% to 50% of salary. Target incentive awards will be
prorated 50% to match the 6 month performance period. Target
incentive awards may also be prorated if necessary so that the sum of
the individual awards does not exceed Plan funding.

Individual awards calculated from the individual target incentive, the
Company's pretax income target and Divisional DSO targets are subject
to an adjustment of up to 25% of the total award based on individual
performance as determined by senior management.

Factors to be considered when evaluating individual performance, to
determine incentive awards, may include, but not be limited to, some
or all of the following:
- Accounts receivable improvement
- Intracompany cooperation
- Achievement of business unit milestones

2
<PAGE>

- Furtherance of the Company's mission with respect to client
relationships, new business development, people development,
quality and safety.

Administration

The Plan shall be administered by the Compensation Committee of the
Board of Directors.

The authority of the Committee includes, but is not limited to the
following:

- Determining eligibility for participation in the Plan
- Determining:
Incentive Award Opportunities and earned awards
Performance measures and performance targets
- Authorizing payments and determining the form of incentive
(cash awards and stock awards)
- Interpreting the Plan and exercising its power to prescribe,
amend, or rescind rules and regulations relating to the
Plan.
- Adjusting the Company's performance goals and/or funded
incentive pool due to a material change in the
organizational structure of the Company and/or occurrence
of extraordinary events.

Changes in Capital Structure and Other Events

Upon dissolution or liquidation of the Corporation or upon
reorganization, merger, or consolidation of the Corporation with one
or more corporations as a result of which the Corporation is not the
surviving corporation, or upon sale of all or substantially all
of the assets of the Corporation, or change in control, the Committee
may in its sole discretion:

(a) Accelerate the payment of earned awards under the Plan.

(b) Make any other adjustments or amendments to the Plan and
outstanding incentive awards as it may deem equitable.

Amendment and Termination of the Plan

The Board may at any time and from time to time may suspend,
terminate, modify, or amend the Plan.

3
<PAGE>

General Provisions

(a) The Company shall deduct from incentive awards the gross amount
of any overtime paid to the participant as well the gross amount
of any other incentive compensation awards paid including Spot
Bonus awards. Special recognition awards will not be deducted.

(b) The Company may deduct federal, state, and any other local taxes
of any kind required by law to be withheld upon payment of any
incentive award under this Plan.

(c) Nothing in this Plan or in any award granted pursuant hereto
shall confer on an individual any right to continue in the employ
of the Company or any of its subsidiaries or deter in any way the
right of the Company or any subsidiary to terminate any
employment.

(d) The Plan shall take effect upon its adoption by the Board of
Directors.

(e) Awards granted under the Plan shall not be transferrable
otherwise than by will or by laws of descent and distribution,
and awards may be realized during the employment of the
participant or by his/her guardian or legal representative.

4
<PAGE>

EXHIBIT 10(iii) 7
-----------------
EXHIBIT D

IT CORPORATION

1998 MANAGEMENT INCENTIVE PLAN

Purpose

To offer a comprehensive incentive compensation program that will
enable the Company to:

Cost effectively attract and retain key management and
professional personnel to enhance the Company's leadership
position, and

Motivate responsible management to achieve Company goals and
foster teamwork within the Company by relating the incentive
portion of total compensation directly to measurable
performance criteria linked to the creation of enhanced
shareholder value.

Eligibility

Regular full-time active associates, generally in salary grade E12
or above, nominated by senior management and approved by the
President.

Associates must be approved for incentive plan eligibility each
year. Eligibility in any given year does not assure eligibility in
subsequent years.

Incentive awards will only be paid to participants who are regular
full-time status at the time the award is paid.

Incentive awards will be calculated on actual base salary at the
time the award is paid.

1
<PAGE>

Performance Period

The primary Performance Period will be FY 1998. The Company's
performance against the stock price appreciation target will be
measured after the end of the fiscal year. Upon recommendation of
the President, and at the discretion of the Compensation Committee,
quarterly and semi-annual performance may be reviewed to determine
if interim incentive payments are warranted and desired.

Performance Criteria

EBIT - The Company's Earnings Before Interest and Taxes (EBIT)
target of $18,528,000 (after payment of cash awards and excluding
special items) must be met before any awards will be paid.

DSO - The Days of Sales Outstanding (DSO) target (excluding special
items) is 78 days average overall for the second six months of the
fiscal year.

Each Division must meet its Divisional DSO targets (excluding
special items) for any participant in the Division to receive an
award. Non-divisional participant awards are weighted 85% on the
E&C Division achieving its DSO target and 15% on the C&V Division
achieving its DSO target.

The average DSO target for the second six months of the fiscal year
is 77 days for the E&C Division and 89 days for the C&V Division.

STOCK PRICE APPRECIATION - The stock price appreciation target will
be met if the average trading price of the Company's common stock
equals or exceeds $10.00 per share for forty-five (45) calendar
days beginning on May 1, 1998 and ending June 14, 1998, the
Company achieves 125% or more of its EBIT target and 100% of its
DSO target.

INDIVIDUAL PERFORMANCE - Individual awards are subject to an
increase or decrease adjustment of up to 25% of the total award
based on individual performance as determined by senior management.

Factors to be considered when evaluating individual performance, to
determine incentive awards, may include, but not be limited to,
some or all of the following:
- New business development
- Accounts receivable improvement
- Intracompany cooperation
- Achievement of business unit milestones
- Furtherance of the Company's mission with respect to
client relationships, new business development, people
development, quality and safety.

2
<PAGE>

Individual Awards

Each participant will be assigned an annualized target incentive
award ranging from 5% to 50% of salary. Target incentive awards
will be prorated as necessary so that the sum of the individual
awards does not exceed authorized Plan funding.

Incentive Pool Funding

BASIC INCENTIVE POOL - The Basic Incentive Pool is $1,250,000
provided that the Company's targets for EBIT and DSO are met. The
Basic Incentive Pool will be increased to a maximum of $1,875,000
if the Company exceeds its EBIT target by 25%. If the actual EBIT
achieved for the year is between 100% and 125% of the target, the
amount of the Basic Incentive Pool will be calculated by
extrapolating between the minimum and maximum incentive pools.

STOCK PRICE INCENTIVE POOL - The Stock Price Incentive Pool is
fixed at $500,000 and is payable only if the Company achieves 125%
of its EBIT target, 100% of its DSO target and if the average
trading price of the Company's common stock equals or exceeds
$10.00 per share for forty-five (45) calendar days beginning on
May 1, 1998 and ending on June 14, 1998.

Incentive Award Payments

INTERIM INCENTIVE AWARDS - Up to $500,000 of the Basic Incentive
Pool may be paid after six months of the fiscal year have elapsed
if recommended by the President and approved by the Compensation
Committee.

FINAL INCENTIVE AWARDS - The Basic Incentive Pool, less any Interim
Incentive Awards, will be paid at the end of the fiscal year once
the Company's EBIT and DSO performance is determined provided that
the minimum performance targets are achieved. The Stock Price
Incentive Pool is only payable after it can be determined that the
average stock trading price target for forty-five (45) days was
achieved.

Adjustments and Form of Payment

The Compensation Committee of the Board of Directors reserves the
right to make good faith adjustments to any of the Performance
Criteria and/or the amount of Incentive Awards due to a material
change in the Company's structure due to, but not limited to;
acquisitions, divestitures or mergers. Further, although it is
contemplated that Incentive Awards will be paid in cash, the
Committee may at its discretion determine that Incentive Awards be
made in the form of cash, stock, stock options, or in any other
form or combination of forms as the Committee should determine.

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<PAGE>

Administration

The Plan shall be administered by the Compensation Committee of the
Board of Directors.
The authority of the Committee includes, but is not limited to the
following:

- Determining eligibility for participation in the Plan
- Determining:
Incentive Award Opportunities and earned awards
Performance measures and performance targets
- Authorizing payments and determining the form of
incentive (cash awards and stock awards)
- Interpreting the Plan and exercising its power to
prescribe, amend, or rescind rules and regulations
relating to the Plan.
- Adjusting the Company's performance goals and/or funded
incentive pool due to a material change in the
organizational structure of the Company and/or occurrence
of extraordinary events.

Changes in Capital Structure and Other Events

Upon dissolution or liquidation of the Corporation or upon
reorganization, merger, or consolidation of the Corporation with
one or more corporations as a result of which the Corporation is
not the surviving corporation, or upon sale of all or substantially
all of the assets of the Corporation, or change in control, the
Committee may in its sole discretion:

(a) Accelerate the payment of earned awards under the Plan.

(b) Make any other adjustments or amendments to the Plan
and outstanding incentive awards as it may deem
equitable.

Amendment and Termination of the Plan

The Board may at any time and from time to time may suspend,
terminate, modify, or amend the Plan.

General Provisions

(a) The Company may deduct from incentive awards the gross amount
of any overtime paid to the participant as well the gross
amount of any other incentive compensation awards paid
including Spot Incentive awards. Special recognition awards
will not be deducted.

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<PAGE>

(b) The Company may deduct federal, state, and any other local
taxes of any kind required by law to be withheld upon payment
of any incentive award under this Plan.

(c) Nothing in this Plan or in any award granted pursuant hereto
shall confer on an individual any right to continue in the
employ of the Company or any of its subsidiaries or deter in
any way the right of the Company or any subsidiary to
terminate any employment.

(d) The Plan shall take effect upon its adoption by the
Compensation Committee of the Board of Directors.

5
<PAGE>

EXHIBIT 10(iii) 16
------------------

AMENDMENT NUMBER FOUR
IT CORPORATION RETIREMENT PLAN
1993 RESTATEMENT

The IT Corporation Retirement Plan (1993 Restatement) shall
be amended to read as follows, effective as indicated below:

A. Section 2.35 shall be amended, effective February 1,
1997, by the addition of the following at the end thereof.

Notwithstanding the foregoing, for purposes of
contributions under Section 5.1 hereof, an Eligible
Employee's Participation Commencement Date shall
be the date he or she is first eligible to participate
under Section 3.1 hereof.

B. Section 3.1(c) shall be amended, effective February 1,
1997, in its entirety to read as follows:

Each Eligible Employee who is not eligible to participate
in the Plan as specified in Section 3.1(a) or (b), above,
shall become eligible to participate in the Plan (i) on the
date he completes one (1) Year of Service, or (ii) after
January 31, 1997, his date of hire, and shall commence
participation pursuant to Section 3.2 hereof.

C. The first sentence of Section 5.2(a) shall be amended,
effective January 1, 1997, in its entirety to read as follows.

The amount of an individual's compensation that may be
deferred subject to the election provided in Section 5.1
shall be a whole percentage of the individual's
Compensation (while a Participant) not to exceed 10% in the
case of Highly Compensated Employees and not to exceed 15%
in the case of Non-Highly Compensated Employees.

D. Section 6.1(c) shall be amended, effective February 1,
1997, in its entirety to read as follows:

Prior to July 1, 1995, four percent (4%), and after June
30, 1995, three percent (3%) of that Compensation (earned
in each case after the Participant's Participation
Commencement Date) of all eligible Participants eligible
for an allocation pursuant to the provisions of Section
7.1(a) of the Plan for the Plan Year with respect to which
such allocation is to be made, reduced by any forfeitures
applied to reduce Company Contributions in accordance with
Section 9.5(f), which amount is to be allocated to Eligible
Participants' Company Fixed Contribution Accounts; and

1
<PAGE>
E. Section 6.1(e) shall be amended, effective February 1,
1997, in its entirety to read as follows:

A monthly matching contribution for each Participant equal
to fifty percent (50%) of the contributions made by the
Participant under Section 5.1 hereof for such month that
does not exceed four percent (4%) of such Participant's
Compensation for such month (provided the beginning of such
month coincides with or follows the Participant's
Participation Commencement Date), all Participant matching
contributions to be allocated to Participants; respective
Company Matching Contribution Accounts.

IN WITNESS WHEREOF, this instrument of amendment is
executed as of February 1, 1997.

IT CORPORATION

By: /s/
---------------------------
Anthony J. DeLuca,
President & Acting
Chief Executive Officer

2
<PAGE>

EXHIBIT 10(iii) 17
------------------

Amendment NUMBER FIVE to IT Corporation
Retirement Plan (1993 Restatement)

The IT Corporation Retirement Plan (1993 Restatement) shall be
amended as set forth herein:

A. The first sentence of Section 8.2 shall be amended, effective
July 1, 1995, to read as follows:

The Vested Interest of each Participant in his Company Fixed
Contribution Account, Discretionary Company Contribution Account, and
Matching Contribution Account shall be determined on the basis of the
Participant's Years of Service, in accordance with the following
schedule.

B. Section 7.10(e) shall be amended, effective January 1, 1997,
by the addition of the following at the end thereof:

Notwithstanding the foregoing, Employees compensated on an hourly
basis may, but only while still actually employed by the Company,
choose to make a required loan repayment for a month by sending a
check to the Company's Human Resources Department, if their income
during such month is insufficient to cover required deductible loan
repayments. Failure to make such payments will result in a default
on the loan as described above.

C. A new Article XX shall be added, effective January 1, 1997, to
read as follows:

ARTICLE XX

SPECIAL PROVISIONS REGARDING ACCOUNTS TRANSFERRED FROM THE GRADIENT
401(K) PROFIT-SHARING PLAN.

Section 20.1. In General. The following special provisions in this
Article XX shall be effective as of January 1, 1997, and shall apply
under the Plan to any Eligible Employee with an account under the
Gradient 401(k) Profit-Sharing Plan ("Gradient Plan").

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<PAGE>

Section 20.2. Application of Vesting Provisions. The vesting rules
under Article VIII hereof shall be applied as follows. Any Eligible
Employee with at least three (3) Years of Service recognized under
the Gradient Plan as of December 31, 1996, shall have a Vested
Interest under this Plan that is at least as favorable as the
vesting percentage they would have achieved were the vesting schedule
under the Gradient Plan to remain in effect; provided that the
foregoing shall be applied taking into account Section 20.03 hereof.
Other Eligible Employees shall be fully subject to Article VIII
hereof for all amounts contributed to this Plan on their behalf;
provided that in respect of amounts contributed prior to January 1,
1997, under the Gradient Plan, they shall retain at least the same
vested percentage as they achieved under the Gradient Plan through
December 31, 1996, taking into account Section 20.3 hereof.

Section 20.3. Computation of Service. Eligible Employees under this
Section 20.3 shall have Years of Service computed pursuant to Section
2.54 hereof. However, each Eligible Employee shall automatically
receive credit for one Year of Service for the period from his or her
anniversary date in 1996 through December 31, 1996, without regard to
actual Hours of Service performed.

IN WITNESS WHEREOF, this instrument of Amendment is executed this
13th day of May, 1997.

IT CORPORATION

By: /S/
__________________________
Anthony J. DeLuca
President and Acting Chief
Executive Office

2
<PAGE>

EXHIBIT 10(iii) 20
------------------
(PORTION)

AMENDMENT TO IT CORPORATION RESTORATION PLAN

The IT Corporation Restoration Plan shall be amended, as set forth
herein:

Section 1.2 shall be amended, effective July 1, 1995, by the addition
of the following at the end thereof.

Notwithstanding the foregoing, Annual Bonus shall not include any
stock option awards or stock received upon the exercise of an option.

B. A new Section 11.18 shall be added, effective May 13, 1997,
to read as follows:

11.18. Small Payments. Notwithstanding any other provision
hereof, in the event that any Participant's or Beneficiary's Account
hereunder is less than $5,000, the Committee may, in its discretion,
automatically pay such amount in one lump sum, rather than in
installments, but in all other respects in accordance with the terms of
the Plan or an applicable Election Form.

IN WITNESS WHEREOF, this instrument of Amendment is executed this
13th day of May, 1997.

IT CORPORATION

By: /S/
________________________________
Anthony J. DeLuca
President and Acting Chief
Executive Officer

EXHIBIT 10(iii) 22
------------------

EMPLOYMENT AGREEMENT

THIS AGREEMENT, dated as of November 20, 1996, is made by and
between International Technology Corporation, a Delaware corporation
(together with any successor thereto and with its wholly-owned subsidiary,
IT Corporation, a California corporation, the "Company"), and Anthony J.
DeLuca (the "Executive").

RECITALS:

A. It is the desire of the Company to assure itself of the
services of the Executive by engaging the Executive to perform such
services under the terms hereof.

B. The Executive desires to commit himself to serve the Company
on the terms herein provided.

NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements set forth below the parties hereto
agree as follows:

1. Certain Definitions.

(a) "Base Management Forecasts" shall mean the forecasts
of both EBITDA and Net Income as described in Schedule I, for each of
the four fiscal years in the period ended March 31, 2000, as
initially identified in Schedule I attached hereto, subject to
automatic adjustment from time to time to take account of the effect
of changes in accounting principles, income tax rates or other
similar factors beyond the control of management or the Board that
shall have positive or negative impact on the Company's reported Net
Income for the year in question relative to the manner in which Net
Income was computed for the year ended March 31, 1996. "Base
Management Forecasts" for fiscal years beginning on and after
April 1, 2000, shall be such forecasts as determined by the
Compensation Committee. In addition, the Company and the Executive
shall negotiate in good faith to make reasonable adjustments to the
Base Management Forecasts to give effect to changes in business
strategy, changes in research and development budgets, acquisitions
(to the extent not taken into account in specifying the Base
Management Forecasts attached hereto), and the like that have been
approved by the Board and which have the effect of increasing or
reducing the short-term Net Income but which are intended to enhance
long-term shareholder value.

(b) "Base Salary" shall have the meaning set forth in
Section 4(a).

(d) "Cause" the Executive shall have "Cause" to resign his
employment hereunder upon

(i) the Company's assignment to the Executive of
duties materially inconsistent with his position as President,
or

(ii) the Company's failure to make any payment or
provide any benefit hereunder or the Company's material breach
of this Agreement, which failure or breach is not cured within
30 days after written notice from the Executive thereof.

(e) "Change of Control" shall mean the consummation of the
first to occur of (i) the sale, lease or other transfer of all or
substantially all of the assets of the Company to any person or group
(as such term is used in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended); (ii) the adoption by the stockholders of
the Company of a plan relating to the liquidation or dissolution of
the Company; (iii) the merger or consolidation of the Company with or
into another entity or the merger of another entity into the Company
or any subsidiary thereof with the effect that immediately after such
transaction the stockholders of the Company immediately prior to such
transaction (or their Related Parties) hold less than 50% of the
total voting power of all securities generally entitled to vote in
the election of directors, managers or trustees of the entity
surviving such merger of consolidation; or (iv) the acquisition by
any person or group of more than 50% of the voting power of all
securities of the Company generally entitled to vote in the election
of directors of the Company.

(f) "Common Stock" shall mean the $0.01 par value common
stock of the Company.

(g) "Company" shall have the meaning set forth in the
preamble hereto.

(h) "Compensation Committee" shall mean the compensation
committee of the Board.

(i) "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his
death, (ii) if the Executive's employment is terminated pursuant to
Section 5(a)(ii) - (vii) the date specified in the Notice of
Termination.

(j) "Disability" shall mean the absence of the Executive
from the Executive's duties to the Company on a full-time basis for
a period of 90 consecutive days or a total of six months during any
24 month period as a result of incapacity due to mental or physical
illness.

(k) "Executive" shall have the meaning set forth in the
preamble hereto.
2
<PAGE>

(l) "Loan Documents" shall mean the Promissory Note
pursuant to which the Executive shall borrow from the Company the
Purchase Price for the shares of Common Stock purchased by the
Executive pursuant to Section 4(f). The Company agrees to consider
in good faith providing forgiveness of a certain portion of the loan
principal and interest if previously agreed to targets are met or
exceeded.

(m) "Long-Term Incentive Plan" or "LTIP" shall mean any
long-term incentive plan, including options to purchase Common Stock,
instituted to promote the Company's long-term goals.

(n) "Notice of Termination" shall have the meaning set
forth in Section 5(b).

(o) "Options" shall have the meaning set forth in Section
4(b).

(p) "Prorated Short-Term Bonus" for any given fiscal year
shall mean the product of

(i) the Short-Term Bonus amount, if any, that would
have been payable to the Executive for the fiscal year in which
occurs his Date of Termination, based upon the Company's
performance for the entire fiscal year projected in good faith
by the Compensation Committee on the basis of the Company's
performance for such fiscal year through the Date of
Termination,

and

(ii) the ratio of (A) the number of days elapsed in
such fiscal year through the Date of Termination, to (B) 365.

(q) "Severance Period" shall mean,

(i) with respect to

(A) Termination without Reason (pursuant to
Section 5(a)(v)) at any time;

(B) Termination for Reason of Company
Performance(pursuant to Section 5(a)(iv)) within 24 months
after a Change of Control; or

the period beginning on the Date of Termination and ending 24
months thereafter;

3
<PAGE>

and,

(ii) with respect to Termination for Reason of Company
Performance not within 24 months after a Change of Control, the
period beginning on the Date of Termination and ending 12
months thereafter.

(r) "Short-Term Bonus" shall mean the bonus, if any,
payable to the Executive pursuant to the Company's short-term
incentive compensation plan. The target amount of the Short-Term
Bonus shall be 50% of the Executive's Base Salary and the maximum
amount shall be 75% of the Executive's Base Salary.

(s) "Term" shall have the meaning set forth in Section
2(b).

(t) "Termination for Reason of Cause" shall mean the
termination of the Executive's employment hereunder at the initiative
of the Company upon the Executive's

(i) habitual neglect of, or failure substantially to
perform, his duties hereunder, other than any such failure
resulting from the Executive's Disability, after written notice
and reasonable opportunity for cure, all as determined by the
Board;

(ii) final conviction of a felony or of any crime
involving moral turpitude, fraud or misrepresentation;

(iii) fraud or personal dishonesty involving the
Company's assets;

(iv) willful failure to follow any lawful directive of
the Company consistent with the Executive's position and duties,
after written notice and reasonable opportunity for cure, all as
determined by the Board;

(v) use of alcohol or illegal drugs interfering with
the performance of the Executive's responsibilities relating to
his or her employment with the Company; or

(vi) commission of any willful or intentional act
which could reasonably be expected to injure materially the
reputation, business or business relationships of the Company or
its clients.

(u) "Termination for Reason of Company Performance" shall
mean termination of the Executive's employment hereunder at the
initiative of the Company, at the discretion of the Board of
Directors upon the Company's satisfaction of less than all Base
Management Forecasts during two or more consecutive fiscal years.

4
<PAGE>

(v) "Termination without Reason" shall mean any
termination (other than upon the Executive's Disability) of the
Executive's employment hereunder at the initiative of the Company
other than a Termination for Reason of Company Performance or a
Termination for Reason of Cause.

2. Employment.

(a) The Company shall employ the Executive and the
Executive shall enter the employ of the Company, for the period set
forth in this Section 2, in the positions set forth in Section 3 and
upon the other terms and conditions herein provided. The initial
term of employment under this Agreement (the "Initial Term") shall be
for the period beginning on the effective date of this Agreement and
ending on November 19, 1999, unless earlier terminated as provided in
Section 5.

(b) After the Initial Term, the employment term hereunder
shall automatically be extended day by day (collectively with the
Initial Term, the "Term") unless either party gives written notice of
non-extension to the other, in which case the employment term shall
expire no earlier than the date that is six months after the date
such notice is received.

3. Position and Duties.

(a) During the Term, the Executive shall serve as President of
the Company with such customary responsibilities, duties and
authority as may from time to time be assigned to the Executive by
the Board. If appointed thereto, the Executive agrees to serve as
Chief Executive Officer of the Company and from the date hereof until
otherwise notified by the Board, the Executive shall serve as Acting
Chief Executive Officer of the Company with such customary
responsibilities, duties and authority as may be assigned to a chief
executive officer. The Executive shall assume such additional or
different duties and/or title as may from time-to-time be assigned to
the Executive by the Board, provided, however, that such duties
and/or title shall not be lower in responsibility and level within
the Company than that of President. The Executive shall devote
substantially all his working time and efforts to the business and
affairs of the Company and shall not receive compensation in excess
of one percent (1%) of his Base Salary for services rendered to any
other persons.

(b) The Executive will be nominated as a Director of the
Company no later than the first meeting of the Board coincident with
or following the Effective Date. The Executive shall resign from the
Board as of the Date of Termination, regardless of the reason for
such termination.

4. Compensation and Related Matters.

(a) Base Salary. During the Term the Executive shall
receive a base salary at a rate of $320,000.00 per annum,
subject to increase as determined by the Compensation

5
<PAGE>

Committee and subject to reduction only in connection with an
across the board reduction applicable to senior management of
the Company generally.

(b) LTIPS. From time to time during the Term the
Executive may be eligible to participate in one or more LTIPs,
including the grant of Options pursuant to the Company's 1996
Stock Incentive Plan (if approved by the Company's stockholders)
and/or pursuant to similar plans adopted in the future, with
option exercise price, vesting criteria and expiration terms
under any such stock plan generally consistent with the
Company's practice under its 1991 Stock Incentive Plan (unless
different terms are mandated under the 1996 Stock Incentive
Plan); provided, however, if insufficient numbers of Options are
available to provide adequate incentive to other levels of
management, alternative arrangements may be made. Awards (if
made) under such LTIPs shall be at the discretion of the
Compensation Committee and based on appropriate Executive and
Company performance criteria and will generally approximate
(assuming performance criteria are achieved) 75% to 100% of the
Executive's Base Salary.

(c) Short-Term Bonuses. For each fiscal year of the
Company ending within the Term, the Executive shall be eligible
to receive a Short-Term Bonus.

(d) Benefits. The Executive shall be entitled to
participate in the other employee benefit plans, programs and
arrangements of the Company (including vacation) now (or, to the
extent determined by the Board, hereafter) in effect which are
applicable to the senior officers of the Company, subject to and
on a basis consistent with the terms, conditions and overall
administration thereof.

(e) Expenses. The Company shall reimburse the Executive
for all reasonable travel and other business expenses incurred
by him in the performance of his duties to the Company, in
accordance with the Company's documentation and other policies
with respect thereto.

(f) Stock Purchase. The Executive hereby agrees that on
or before February 20, 1997, he will purchase, in the open
market or through a Company arranged open market share
repurchase program, Common Stock at an aggregate purchase price
of not less than $100,000. The Company hereby agrees to lend to
the Executive the aggregate purchase price of such stock (but
not more than $125,000) in accordance with the Loan Documents.
The Company agrees to consider providing forgiveness of a
certain portion of the loan principal and interest if previously
agreed upon performance targets (Executive and/or Company) are
met or exceeded.

5. Termination. The Executive's employment hereunder may be
terminated by the Company or the Executive, as applicable, without
any breach of this Agreement only under the following circumstances:

(a) (i) Death. The Executive's employment hereunder

6
<PAGE>

shall terminate upon his death.

(ii) Disability. The Executive's employment hereunder
shall terminate in the event of his Disability.

(iii) Termination for Reason of Cause.

(iv) Termination for Reason of Company Performance.

(v) Termination Without Reason.

(vi) Resignation for Cause. The Executive may resign
his employment hereunder for Cause at any time.

(vii) Resignation without Cause. The Executive may
resign his employment without Cause upon 6 months advance
written notice to the Company; provided that the Company may
waive the notice period.

(b) Notice of Termination. Any termination of the
Executive's employment by the Company or by the Executive under this
Section 5 (other than termination pursuant to paragraph (a)(i)) shall
be communicated by a written notice to the other party hereto
indicating the specific termination provision in this Agreement
relied upon, setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and
specifying a Date of Termination (a "Notice of Termination").

6. Severance Payments and Benefits.

(a) Upon termination of the Executive's employment with
the Company for any reason, the Company shall provide the Executive
(or, in the event of his death, his estate or other legal
representative) benefits due him under the Company's benefits plans
and policies for services rendered to the Company prior to such
termination (pursuant to the terms of such plans and policies) and,
in accordance with applicable law and in any event not later than 90
days after the Date of Termination, the Company shall pay the
Executive all unpaid Base Salary earned through such date. The
Executive shall be entitled to the payments described below only as
each is applicable to such termination of employment.

(b) The following payments and benefits described in this
subsection (b) shall be in addition to the payments and benefits
described in subsection (a) above.

7
<PAGE>

increase as determined by the Compensation after the Date of
Termination, the Prorated Short-Term Bonus for the fiscal year
in which such termination occurs.

(ii) Termination without Reason or Resignation for
Cause. Except as provided by subsection (b)(iv), in the event of
the Executive's Termination without Reason (pursuant to Section
5(a)(v)) or his resignation for Cause (pursuant to Section
5(a)(vi)),

(A) the Company shall pay to the Executive, in
accordance with its regular payroll practice, his Base
Salary for the Severance Period;

(B) the Company shall continue for the Severance
Period Executive's coverage under all Company welfare
benefit plans and programs in which the Executive was
entitled to participate immediately prior to the Date of
Termination, to the extent permitted thereunder. In
the event that the Executive's participation in any such
plan or program is not permitted, the Company shall
arrange to provide the Executive with benefits
substantially similar to those which the Executive would
otherwise have been entitled to receive under such plans
and programs;

(C) the Company shall pay to the Executive, in
a lump sum within 90 days after his Date of Termination,
the Prorated Short-Term Bonus for the fiscal year in which
such Date of Termination occurs; and

(D) the Executive's Options, if any, shall
continue to vest during the Severance Period and shall
remain exercisable until the earlier of (1) the date such
Option would otherwise expire without regard to this
Agreement or (2) the expiration of the Severance Period.

(iii) Termination for Reason of Company
Performance. Except as provided by subsection (b)(iv), in the
event of the Executive's Termination for Reason of Company
Performance (pursuant to Section 5(a)(iv)),

(A) the Company shall pay to the Executive, in
accordance with its regular payroll practice, his Base
Salary for the Severance Period; and

8
<PAGE>

substantially similar to those which the Executive would
otherwise have been entitled to receive under such plans
and programs.

(iv) Termination following a Change in Control. If,
within the 24 month period following a Change of Control, the
Executive's employment is terminated pursuant to a Termination
without Reason (pursuant to Section 5(a)(v)), Termination for
Reason of Company Performance (pursuant to Section 5(a)(iv)), or
his resignation for Cause (pursuant to Section 5(a)(vi)),

(A) the Company shall pay to the Executive, in
accordance with its regular payroll practice, his Base
Salary for the Severance Period;

(B) the Company shall continue for the Severance
Period Executive's coverage under all Company welfare
benefit plans and programs in which the Executive was
entitled to participate immediately prior to the Date of
Termination, to the extent permitted thereunder. In
the event that the Executive's participation in any such
plan or program is not permitted, the Company shall arrange
to provide the Executive with benefits substantially
similar to those which the Executive would otherwise
have been entitled to receive under such plans and
programs;

(C) the Company shall pay to the Executive, in
a lump sum within 90 days after his Date of Termination, an
amount equal to the greater of (x) the Executive's targeted
Short-Term Bonus for the fiscal year in which occurs the
Date of Termination or (y) the greatest Short-Term
Bonus paid to the Executive in respect of the two fiscal
years ending prior to the fiscal year in which occurs the
Date of Termination; and

(D) the Executive's Options, if any, shall
become 100% vested as of the Date of Termination and shall
remain exercisable until the earlier of (1) the date such
Option would otherwise expire without regard to this
Agreement or (2) the expiration of the Severance Period.

(c) Survival. The expiration or termination of the Term
shall not impair the rights or obligations of any party hereto which
shall have accrued hereunder prior to such expiration.

(d) Mitigation Not Required. The Executive shall not be
required to seek other employment to mitigate damages, and the
Executive's payments and benefits hereunder during the Severance
Period shall not be subject to offset by the amount of income earned
by the Executive from other employment or self-employment during the
Severance Period.

9
<PAGE>

(e) Reduction in Payments. Notwithstanding anything
contained in this Agreement to the contrary, in the event that the
payments to the Executive under Section 6 of this Agreement, either
alone or together with other payments the Executive has a right to
receive from the Company, would not be deductible (in whole or in
part) by the Company as a result of such payments constituting a
"parachute payment" (as defined in Section 280G of the Internal
Revenue Code, as amended (the "Code")), such payments shall be
reduced to the largest amount as will result in no portion of the
payments under Section 6 not being fully deductible by the Company as
the result of Section 280G of the Code. The determination of any
reduction in the payments under Section 6 pursuant to the foregoing
sentence shall be made exclusively by Ernst & Young, or such other
firm of independent public accountants as may be serving as the
Company's principal auditors immediately prior to the Date of
Termination (whose fees and expenses shall be borne by the Company),
and such determination shall be conclusive and binding on the Company
and the Executive.

7. Non-Interference; Non-Competition.

(i) in any way solicit or induce or attempt to
solicit or induce any employee, officer, representative,
consultant, or other agent of the Company (whether such person
is presently employed by the Company or may hereinafter be
so employed), to leave the Company's employ or otherwise
interfere with the employment relationship between any such
person and the Company; or

(ii) take any action to purchase or obtain goods or
services, from any of the Company's proprietary suppliers or
other supplier with whom the Company has developed a unique or
exclusive relationship; or

(iii) in any way solicit, or attempt to divert,
take away or call on, any customers or potential customers of
the Company.

10
<PAGE>

or otherwise) that engages in any business which competes with any
business of the Company or any subsidiary anywhere in the world;
provided, however, that Executive shall be permitted to acquire a
stock interest in such a corporation provided such stock is
publicly traded and the stock so acquired is not more than one
percent of the outstanding shares of such corporation.

(c) In the event the agreement in this Section 7 shall be
determined by any court of competent jurisdiction to be unenforceable
by reason of its extending for too great a period of time or over too
great a geographical area or by reason of its being too extensive in
any other respect, it will be interpreted to extend only over the
maximum period of time for which it may be enforceable, and/or over
the maximum geographical area as to which it may be enforceable
and/or to the maximum extent in all other respects as to which it may
be enforceable, all as determined by such court in such action.

8. Nondisclosure of Proprietary Information.

(a) Except as required in the faithful performance of the
Executive's duties hereunder or pursuant to subsection (c), Executive
shall, in perpetuity, maintain in confidence and shall not directly,
indirectly or otherwise, use, disseminate, disclose or publish, or
use for his benefit or the benefit of any person, firm, corporation
or other entity any confidential or proprietary information or trade
secrets of or relating to the Company, including, without limitation,
information with respect to the Company's operations, processes,
products, inventions, business practices, finances, principals,
vendors, suppliers, customers, potential customers, marketing
methods, costs, prices, contractual relationships, regulatory status,
compensation paid to employees or other terms of employment, or
deliver to any person, firm, corporation or other entity any
document, record, notebook, computer program or similar repository
of or containing any such confidential or proprietary information or
trade secrets; provided, however, that no information otherwise in
the public domain (other than by an act of Executive in violation
hereof) shall be considered confidential. The parties hereby
stipulate and agree that as between them the foregoing matters are
important, material and confidential proprietary information and
trade secrets and affect the successful conduct of the businesses of
the Company (and any successor or assignee of the Company).

(b) Upon termination of Executive's employment with
Company for any reason, the Executive will promptly deliver to the
Company all correspondence, drawings, manuals, letters, notes,
notebooks, reports, programs, plans, proposals, financial documents,
or any other documents concerning the Company's customers, business
plans, marketing strategies, products or processes which are Company
property, or which are non-public or which contain proprietary
information or trade secrets.

11
<PAGE>

documents and other information sought and shall assist such counsel
in resisting or otherwise responding to such process.

9. Injunctive Relief. It is recognized and acknowledged by
Executive that a breach of the covenants contained in Sections 7 and 8
will cause irreparable damage to Company and its goodwill, the exact
amount of which will be difficult or impossible to ascertain, and that
the remedies at law for any such breach will be inadequate. Accordingly,
Executive agrees that in the event of a breach of any of the covenants
contained in Sections 7 and 8, in addition to any other remedy which may
be available at law or in equity, the Company will be entitled to specific
performance and injunctive relief.

10. Indemnification and Insurance; Legal Expenses.
Notwithstanding any other indemnification agreement between the Company
and the Executive that may be in effect from time to time, the Company
shall indemnify the Executive to the fullest extent permitted by
the laws of the State of Delaware, as in effect at the time of the subject
act or omission, and shall advance to the Executive reasonable attorney's
fees and expenses as such fees and expenses are incurred (subject to an
undertaking from the Executive to repay such advances if it shall be
finally determined by a judicial decision which is not subject to further
appeal that the Executive was not entitled to the reimbursement of such
fees and expenses) and he will be entitled to the protection of any
insurance policies the Company may elect to maintain generally for the
benefit of its directors and officers against all costs, charges and
expenses incurred or sustained by him in connection with any action, suit
or proceeding to which he may be made a party by reason of his being or
having been a director, officer or employee of the Company or any of its
subsidiaries or his serving or having served any other enterprise as a
director, officer or employee at the request of the Company (other than
any dispute, claim or controversy arising under or relating to this
Agreement). The Company covenants to maintain for the benefit of the
Executive (in his capacity as an officer and director of the Company)
directors and officers insurance with respect to acts or omissions during
the Term; provided that the Board may elect to terminate directors and
officers insurance for all officers and directors, including the
Executive, if a majority of the Board determines in good faith that such
insurance is not available or is available only at unreasonable expense.

11. Binding on Successors. This Agreement shall be binding
upon and inure to the benefit of the Company, the Executive and their
respective successors, assigns, personnel and legal representatives,
executors, administrators, heirs, distributees, devisees, and legatees, as
applicable.

12. Governing Law. This Agreement shall be governed,
construed, interpreted and enforced in accordance with the substantive
laws of the State of Delaware.

13. Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.

12
<PAGE>

14. Notices. Any notice, request, claim, demand, document and
other communication hereunder to any party shall be effective upon receipt
(or refusal of receipt) and shall be in writing and delivered personally
or sent by telex, telecopy, or certified or registered mail, postage
prepaid, as follows:

(a) If to the Company,

International Technology Corporation
23456 Hawthorne Boulevard
Torrance, CA 90505

Attention: General Counsel

(b) If to the Executive, to him at the address set forth
below under his signature;

or at any other address as any party shall have specified by notice in
writing to the other parties.

15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.

16. Entire Agreement. The terms of this Agreement are intended
by the parties to be the final expression of their agreement with respect
to the employment of the Executive by the Company and may not be
contradicted by evidence of any prior or contemporaneous agreement. The
parties further intend that this Agreement shall constitute the complete
and exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any judicial, administrative, or other
legal proceeding to vary the terms of this Agreement.

17. Amendments; Waivers. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by the
Executive and the Chairman of the Board. By an instrument in writing
similarly executed, the Executive or the Company may waive compliance by
the other party or parties with any provision of this Agreement that such
other party was or is obligated to comply with or perform, provided,
however, that such waiver shall not operate as a waiver of, or estoppel
with respect to, any other or subsequent failure. No failure to exercise
and no delay in exercising any right, remedy, or power hereunder preclude
any other or further exercise of any other right, remedy, or power
provided herein or by law or in equity.

18. No Inconsistent Actions. The parties hereto shall not
voluntarily undertake or fail to undertake any action or course of action
inconsistent with the provisions or essential intent of this Agreement.
Furthermore, it is the intent of the parties hereto to act in a fair and
reasonable manner with respect to the interpretation and application of
the provisions of this Agreement.

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<PAGE>

19. Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three arbitrators in the city in
which the Executive is then based (or was last based during the Term if
the Executive has then terminated employment with the Company) in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction over the parties; provided however, that the Company
shall be entitled to seek a restraining order or injunction in any court
of competent jurisdiction to prevent any continuation of any violation of
the provisions of Sections 7 or 8 of the Employment Agreement and provided
further that the Executive shall be entitled to seek specific performance
of his right to be paid during the pendency of any dispute or controversy
arising under or in connection with this Agreement. The fees and expense
of the arbitrator shall be borne by the Company.

20. Attorney's Fees. In the event of any arbitration or
litigation arising under this Agreement, the prevailing party shall be
entitled to recover his or its reasonable attorney's fees from the other
party.

[signature page follows]

14
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.

INTERNATIONAL TECHNOLOGY CORPORATION
IT CORPORATION

By: /s/
-------------------------------------
Name: James M. Redwine
Title: Senior Corporate Counsel and
Assistant Secretary

/s/
-------------------------------------
Signature Anthony J. DeLuca

23456 Hawthorne Blvd.
-------------------------------------

Torrance, CA 90505
-------------------------------------
Address

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<PAGE>

SCHEDULE I
Management Base Case

(adjusted for Special Charges)

Fiscal Year Ended
----------------------------------------------------
03/31/97 03/31/98 03/31/99 03/31/2000 03/31/2001
-------- -------- -------- ---------- ----------
Revs 392,416 586,000 760,000 835,000 na
EBITDA 24,529 49,483 68,858 79,594 na
Net Income 2,532 15,892 26,086 31,979 na
(B/f Pref Divs)

16
<PAGE>

EXHIBIT 10(iii) 23
------------------

EMPLOYMENT AGREEMENT

RECITALS:

A. It is the desire of the Company to assure itself of the
services of the Executive by engaging the Executive to perform such
services under the terms hereof.

B. The Executive desires to commit himself to serve the Company
on the terms herein provided.

NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements set forth below the parties hereto
agree as follows:

1. Certain Definitions.

(b) "Base Salary" shall have the meaning set forth in
Section 4(a).

(d) "Cause" the Executive shall have "Cause" to resign his
employment hereunder upon

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<PAGE>
(i) the Company's assignment to the
Executive of duties materially inconsistent with his position as
Senior Vice President, or

(ii) the Company's failure to make any
payment or provide any benefit hereunder or the Company's
material breach of this Agreement, which failure or breach is
not cured within 30 days after written notice from the
Executive thereof.

(e) "CEO" shall mean the Chief Executive Officer of
the Company.

(f) "Change of Control" shall mean the consummation
of the first to occur of (i) the sale, lease or other transfer of all
or substantially all of the assets of the Company to any person or
group (as such term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended); (ii) the adoption by the
stockholders of the Company of a plan relating to the liquidation or
dissolution of the Company; (iii) the merger or consolidation of the
Company with or into another entity or the merger of another entity
into the Company or any subsidiary thereof with the effect that
immediately after such transaction the stockholders of the Company
immediately prior to such transaction (or their Related Parties) hold
less than 50% of the total voting power of all securities generally
entitled to vote in the election of directors, managers or trustees
of the entity surviving such merger of consolidation; or (iv) the
acquisition by any person or group of more than 50% of the voting
power of all securities of the Company generally entitled to vote in
the election of directors of the Company.

(g) "Common Stock" shall mean the $0.01 par value
common stock of the Company.

(h) "Company" shall have the meaning set forth in the
preamble hereto.

(i) "Compensation Committee" shall mean the
compensation committee of the Board.

(j) "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his
death, (ii) if the Executive's employment is terminated pursuant to
Section 5(a)(ii) - (vii) the date specified in the Notice of
Termination.

(k) "Disability" shall mean the absence of the
Executive from the Executive's duties to the Company on a full-time
basis for a period of 90 consecutive days or a total of six months
during any 24 month period as a result of incapacity due to mental
or physical illness.

(l) "Executive" shall have the meaning set forth in
the preamble hereto.

(m) "Loan Documents" shall mean the Promissory Note
pursuant to which the Executive shall borrow from the Company the
Purchase Price for the shares of Common Stock purchased by the
Executive pursuant to Section 4(f). The Company agrees to consider

2
<PAGE>

in good faith providing forgiveness of a certain portion of the loan
principal and interest if previously agreed to targets are met or
exceeded.

(n) "Long-Term Incentive Plan" or "LTIP" shall mean
any long-term incentive plan, including options to purchase Common
Stock, instituted to promote the Company's long-term goals.

(o) "Notice of Termination" shall have the meaning
set forth in Section 5(b).

(p) "Options" shall have the meaning set forth in
Section 4(b).

(q) "Prorated Short-Term Bonus" for any given fiscal
year shall mean the product of

(i) the Short-Term Bonus amount, if any,
that would have been payable to the Executive for the fiscal
year in which occurs his Date of Termination, based upon the
Company's performance for the entire fiscal year projected in
good faith by the Compensation Committee on the basis of the
Company's performance for such fiscal year through the Date of
Termination,

and

(ii) the ratio of (A) the number of days
elapsed in such fiscal year through the Date of Termination, to
(B) 365.

(r) "Severance Period" shall mean,

(i) with respect to

(A) Termination without Reason (pursuant to
Section 5(a)(v)) at any time;

(B) Termination for Reason of Company
Performance (pursuant to Section 5(a)(iv)) within 24
months after a Change of Control; or

the period beginning on the Date of Termination and ending
12 months thereafter;
and,

(ii) with respect to Termination for Reason
of Company Performance not within 24 months after a Change of
Control, the period beginning on the Date of Termination and
ending 6 months thereafter.

3
<PAGE>

(s) "Short-Term Bonus" shall mean the bonus, if any,
payable to the Executive pursuant to the Company's short-term
incentive compensation plan. The target amount of the Short-Term
Bonus shall be 40% of the Executive's Base Salary and the maximum
amount shall be 60% of the Executive's Base Salary.

(t) "Term" shall have the meaning set forth in
Section 2(b).

(u) "Termination for Reason of Cause" shall mean the
termination of the Executive's employment hereunder at the initiative
of the Company upon the Executive's

(i) habitual neglect of, or failure
substantially to perform, his duties hereunder, other than any
such failure resulting from the Executive's Disability, after
written notice and reasonable opportunity for cure, all
as determined by the Board;

(ii) final conviction of a felony or of any
crime involving moral turpitude, fraud or misrepresentation;

(iii) fraud or personal dishonesty
involving the Company's assets;

(iv) willful failure to follow any lawful
directive of the Company consistent with the Executive's
position and duties, after written notice and reasonable
opportunity for cure, all as determined by the Board;

(v) use of alcohol or illegal drugs
interfering with the performance of the Executive's
responsibilities relating to his or her employment
with the Company; or

(vi) commission of any willful or
intentional act which could reasonably be expected to injure
materially the reputation, business or business relationships of
the Company or its clients.

(v) "Termination for Reason of Company Performance"
shall mean termination of the Executive's employment hereunder at the
initiative of the Company, at the discretion of the Board of
Directors upon the Company's satisfaction of less than all Base
Management Forecasts during two or more consecutive fiscal years.

4
<PAGE>

(w) "Termination without Reason" shall mean any
termination (other than upon the Executive's Disability) of the
Executive's employment hereunder at the initiative of the Company
other than a Termination for Reason of Company Performance or a
Termination for Reason of Cause.

2. Employment.

(b) After the Initial Term, the employment term
hereunder shall automatically be extended day by day (collectively
with the Initial Term, the "Term") unless either party gives written
notice of non-extension to the other, in which case the employment
term shall expire no earlier than the date that is six months after
the date such notice is received.

3. Position and Duties. During the Term, the Executive
shall serve as Senior Vice President of the Company with such
customary responsibilities, duties and authority as may from time to
time be assigned to the Executive by the Board or the CEO. The
Executive shall assume such additional or different duties and/or
title as may from time-to-time be assigned to the Executive by the
Board or the CEO, provided, however, that such duties and/or title
shall not be lower in responsibility and level within the Company
than that of Senior Vice President. The Executive shall devote
substantially all his working time and efforts to the business and
affairs of the Company and shall not receive compensation in excess
of one percent (1%) of his Base Salary for services rendered to any
other persons.

4. Compensation and Related Matters.

(a) Base Salary. During the Term the Executive shall
receive a base salary at a rate of $194,000.00 per annum,
subject to increase as determined by the Compensation Committee
and subject to reduction only in connection with an across the
board reduction applicable to senior management of the Company
generally.

(b) LTIPS. From time to time during the Term the
Executive may be eligible to participate in one or more LTIPs,
including the grant of Options pursuant to the Company's 1996

5
<PAGE>

Stock Incentive Plan (if approved by the Company's stockholders)
and/or pursuant to similar plans adopted in the future, with
option exercise price, vesting criteria and expiration terms
under any such stock plan generally consistent with the
Company's practice under its 1991 Stock Incentive Plan (unless
different terms are mandated under the 1996 Stock Incentive
Plan); provided, however, if insufficient numbers of Options are
available to provide adequate incentive to other levels of
management, alternative arrangements may be made. Awards (if
made) under such LTIPs shall be at the discretion of the
Compensation Committee and based on appropriate Executive and
Company performance criteria and will generally approximate
(assuming performance criteria are achieved) 40% to 60% of the
Executive's Base Salary.

(c) Short-Term Bonuses. For each fiscal year of the
Company ending within the Term, the Executive shall be eligible
to receive a Short-Term Bonus.

(e) Expenses. The Company shall reimburse the
Executive for all reasonable travel and other business expenses
incurred by him in the performance of his duties to the Company,
in accordance with the Company's documentation and other
policies with respect thereto.

(f) Stock Purchase. The Executive hereby agrees that
on or before February 20, 1997, he will purchase, in the open
market or through a Company arranged open market share
repurchase program, Common Stock at an aggregate purchase price
of not less than $75,000. The Company hereby agrees to lend to
the Executive the aggregate purchase price of such stock (but
not more than $100,000) in accordance with the Loan Documents.
The Company agrees to consider providing forgiveness of a
certain portion of the loan principal and interest if previously
agreed upon performance targets (Executive and/or Company) are
met or exceeded.

5. Termination. The Executive's employment hereunder may
be terminated by the Company or the Executive, as applicable, without
any breach of this Agreement only under the following circumstances:

(a) (i) Death. The Executive's employment hereunder
shall terminate upon his death.

(ii) Disability. The Executive's employment
hereunder shall terminate in the event of his Disability.

(iii) Termination for Reason of Cause.

6
<PAGE>

(iv) Termination for Reason of Company
Performance.

(v) Termination Without Reason.

(vi) Resignation for Cause. The Executive
may resign his employment hereunder for Cause at any time.

(vii) Resignation without Cause.
The Executive may resign his employment without Cause upon 6
months advance written notice to the Company; provided that the
Company may waive the notice period.

(b) Notice of Termination. Any termination of the
Executive's employment by the Company or by the Executive under this
Section 5 (other than termination pursuant to paragraph (a)(i))
shall be communicated by a written notice to the other party hereto
indicating the specific termination provision in this Agreement
relied upon, setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and
specifying a Date of Termination (a "Notice of Termination").

6. Severance Payments and Benefits.

(a) Upon termination of the Executive's employment
with the Company for any reason, the Company shall provide the
Executive (or, in the event of his death, his estate or other legal
representative) benefits due him under the Company's benefits plans
and policies for services rendered to the Company prior to such
termination (pursuant to the terms of such plans and policies) and,
in accordance with applicable law and in any event not later than 90
days after the Date of Termination, the Company shall pay the
Executive all unpaid Base Salary earned through such date. The
Executive shall be entitled to the payments described below only as
each is applicable to such termination of employment.

(b) The following payments and benefits described in
this subsection (b) shall be in addition to the payments and
benefits described in subsection (a) above.

(i) Termination upon Death or Disability.
If the Executive's employment shall terminate by reason of his
death or Disability, the Company shall pay to the Executive (or
his estate or representative), in a lump sum within 90 days
after the Date of Termination, the Prorated Short-Term Bonus for
the fiscal year in which such termination occurs.

(ii) Termination without Reason or
Resignation for Cause. Except as provided by subsection
(b)(iv), in the event of the Executive's Termination without
Reason (pursuant to Section 5(a)(v)) or his resignation for
Cause (pursuant to Section 5(a)(vi)),

7
<PAGE>
(A) the Company shall pay to the Executive,
in accordance with its regular payroll practice, his
Base Salary for the Severance Period;

(B) the Company shall continue for the
Severance Period Executive's coverage under all
Company welfare benefit plans and programs in which
the Executive was entitled to participate immediately
prior to the Date of Termination, to the extent
permitted thereunder. In the event that the
Executive's participation in any such plan or program
is not permitted, the Company shall arrange to provide
the Executive with benefits substantially similar to
those which the Executive would otherwise have been
entitled to receive under such plans and programs;

(C) the Company shall pay to the Executive, in
a lump sum within 90 days after his Date of
Termination, the Prorated Short-Term Bonus for the
fiscal year in which such Date of Termination occurs;
and

(D) the Executive's Options, if any, shall
continue to vest during the Severance Period and shall
remain exercisable until the earlier of (1) the
date such Option would otherwise expire without regard
to this Agreement or (2) the expiration of the
Severance Period.

(A) the Company shall pay to the Executive,
in accordance with its regular payroll practice, his
Base Salary for the Severance Period; and

(B) the Company shall continue for the
Severance Period Executive's coverage under all
Company welfare benefit plans and programs in which
the Executive was entitled to participate immediately
prior to the Date of Termination, to the extent\
permitted thereunder. In the event that the
Executive's participation in any such plan or program
is not permitted, the Company shall arrange to provide
the Executive with benefits substantially similar to
those which the Executive would otherwise have been
entitled to receive under such plans and programs.

(iv) Termination following a Change in
Control. If, within the 24 month period following a Change of
Control, the Executive's employment is terminated pursuant to a
Termination without Reason (pursuant to Section 5(a)(v)),
Termination for Reason of Company Performance (pursuant to
Section 5(a)(iv)), or his resignation for Cause (pursuant to
Section 5(a)(vi)),

8
<PAGE>
(A) the Company shall pay to the Executive,
in accordance with its regular payroll practice, his
Base Salary for the Severance Period;

(B) the Company shall continue for the
Severance Period Executive's coverage under all
Company welfare benefit plans and programs in which
the Executive was entitled to participate immediately
prior to the Date of Termination, to the extent
permitted thereunder. In the event that the
Executive's participation in any such plan or program
is not permitted, the Company shall arrange to provide
the Executive with benefits substantially similar to
those which the Executive would otherwise have been
entitled to receive under such plans and programs;

(C) the Company shall pay to the Executive,
in a lump sum within 90 days after his Date of
Termination, an amount equal to the greater of (x) the
Executive's targeted Short-Term Bonus for the fiscal
year in which occurs the Date of Termination or (y)
the greatest Short-Term Bonus paid to the Executive in
respect of the two fiscal years ending prior to the
fiscal year in which occurs the Date of Termination;
and

(D) the Executive's Options, if any, shall
become 100% vested as of the Date of Termination and
shall remain exercisable until the earlier of (1) the
date such Option would otherwise expire without regard
to this Agreement or (2) the expiration of the
Severance Period.

(c) Survival. The expiration or termination of the
Term shall not impair the rights or obligations of any party hereto
which shall have accrued hereunder prior to such expiration.

(d) Mitigation Not Required. The Executive shall not
be required to seek other employment to mitigate damages, and the
Executive's payments and benefits hereunder during the Severance
Period shall not be subject to offset by the amount of
income earned by the Executive from other employment or
self-employment during the Severance Period.

(e) Reduction in Payments. Notwithstanding anything
contained in this Agreement to the contrary, in the event that the
payments
to the Executive under Section 6 of this Agreement, either alone or
together with other payments the Executive has a right to receive from
the Company, would not be deductible (in whole or in part) by the Company
as a result of such payments constituting a "parachute payment" (as
defined in Section 280G of the Internal Revenue Code, as amended (the
"Code")), such payments shall be reduced to the largest amount as will
result in no portion of the payments under Section 6 not being fully
deductible by the Company as the result of Section 280G of the Code. The
determination of any reduction in the payments under Section 6 pursuant to
the foregoing sentence shall be made exclusively by Ernst & Young,
or such other firm of independent public accountants as may be serving as

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<PAGE>

the Company's principal auditors immediately prior to the Date of
Termination (whose fees and expenses shall be borne by the Company), and
such determination shall be conclusive and binding on the Company
and the Executive.

7. Non-Interference; Non-Competition.

(i) in any way solicit or induce or attempt
to solicit or induce any employee, officer, representative,
consultant, or other agent of the Company (whether such person
is presently employed by the Company or may hereinafter be so
employed), to leave the Company's employ or otherwise interfere
with the employment relationship between any such person and the
Company; or

(ii) take any action to purchase or obtain
goods or services, from any of the Company's proprietary
suppliers or other supplier with whom the Company has developed
a unique or exclusive relationship; or

(iii) in any way solicit, or attempt to
divert, take away or call on, any customers or potential
customers of the Company.

(b) The Executive hereby agrees, in consideration of
his employment hereunder and in view of the confidential position to
be held by the Executive hereunder, that during the Term and, in the
event of his resignation without Cause, during the 12 month period
beginning on the Date of Termination, the Executive will not, without
the prior written consent of the Board, directly or indirectly engage
in, or have any interest in, or manage or operate any person, firm,
corporation, partnership or business (whether as director, officer,
employee, agent, representative, partner, security holder, consultant
or otherwise) that engages in any business which competes with any
business of the Company or any subsidiary anywhere in the world;
provided, however, that Executive shall be permitted to acquire a
stock interest in such a corporation provided such stock is
publicly traded and the stock so acquired is not more than one
percent of the outstanding shares of such corporation.

(c) In the event the agreement in this Section 7
shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too great a period
of time or over too great a geographical area or by reason of its
being too extensive in any other respect, it will be interpreted to
extend only over the maximum period of time for which it may be
enforceable, and/or over the maximum geographical area as to which it

10
<PAGE>

may be enforceable and/or to the maximum extent in all other respects
as to which it may be enforceable, all as determined by such court in
such action.

8. Nondisclosure of Proprietary Information.

(a) Except as required in the faithful performance of
the Executive's duties hereunder or pursuant to subsection (c),
Executive shall, in perpetuity, maintain in confidence and shall not
directly, indirectly or otherwise, use, disseminate, disclose or
publish, or use for his benefit or the benefit of any person, firm,
corporation or other entity any confidential or proprietary
information or trade secrets of or relating to the Company,
including, without limitation, information with respect to the
Company's operations, processes, products, inventions, business
practices, finances, principals, vendors, suppliers,
customers, potential customers, marketing methods, costs, prices,
contractual relationships, regulatory status, compensation paid to
employees or other terms of employment, or deliver to any person,
firm, corporation or other entity any document, record, notebook,
computer program or similar repository of or containing any such
confidential or proprietary information or trade secrets; provided,
however, that no information otherwise in the public domain (other
than by an act of Executive in violation hereof) shall be considered
confidential. The parties hereby stipulate and agree that as
between them the foregoing matters are important, material and
confidential proprietary information and trade secrets and affect the
successful conduct of the businesses of the Company (and any
successor or assignee of the Company).

(b) Upon termination of Executive's employment with
Company for any reason, the Executive will promptly deliver to the
Company all correspondence, drawings, manuals, letters, notes,
notebooks, reports, programs, plans, proposals, financial
documents, or any other documents concerning the Company's customers,
business plans, marketing strategies, products or processes which
are Company property, or which are non-public or which contain
proprietary information or trade secrets.

(c) Executive may respond to a lawful and valid
subpoena or other legal process but shall give the Company the
earliest possible notice thereof, shall, as much in advance of the
return date as possible, make available to the Company and its
counsel the documents and other information sought and shall assist
such counsel in resisting or otherwise responding to such process.

9. Injunctive Relief. It is recognized and acknowledged
by Executive that a breach of the covenants contained in Sections 7 and 8
will cause irreparable damage to Company and its goodwill, the exact
amount of which will be difficult or impossible to ascertain, and that
the remedies at law for any such breach will be inadequate. Accordingly,
Executive agrees that in the event of a breach of any of the covenants
contained in Sections 7 and 8, in addition to any other remedy which may
be available at law or in equity, the Company will be entitled to specific
performance and injunctive relief.

10. Indemnification and Insurance; Legal Expenses.
Notwithstanding any other indemnification agreement between the Company
and the Executive that may be in effect from time to time, the Company

11
<PAGE>

shall indemnify the Executive to the fullest extent permitted by
the laws of the State of Delaware, as in effect at the time of the subject
act or omission, and shall advance to the Executive reasonable attorney's
fees and expenses as such fees and expenses are incurred (subject to an
undertaking from the Executive to repay such advances if it shall be
finally determined by a judicial decision which is not subject to further
appeal that the Executive was not entitled to the reimbursement of such
fees and expenses) and he will be entitled to the protection of any
insurance policies the Company may elect to maintain generally for the
benefit of its directors and officers against all costs, charges and
expenses incurred or sustained by him in connection with any action, suit
or proceeding to which he may be made a party by reason of his being or
having been a director, officer or employee of the Company or any of its
subsidiaries or his serving or having served any other enterprise as a
director, officer or employee at the request of the Company (other than
any dispute, claim or controversy arising under or relating to this
Agreement). The Company covenants to maintain for the benefit of the
Executive (in his capacity as an officer and director of the Company)
directors and officers insurance with respect to acts or omissions during
the Term; provided that the Board may elect to terminate directors and
officers insurance for all officers and directors, including the
Executive, if a majority of the Board determines in good faith that such
insurance is not available or is available only at unreasonable
expense.

11. Binding on Successors. This Agreement shall be
binding upon and inure to the benefit of the Company, the Executive and
their respective successors, assigns, personnel and legal representatives,
executors, administrators, heirs, distributees, devisees, and legatees, as
applicable.

12. Governing Law. This Agreement shall be governed,
construed, interpreted and enforced in accordance with the substantive
laws of the State of Delaware.

14. Notices. Any notice, request, claim, demand, document
and other communication hereunder to any party shall be effective upon
receipt (or refusal of receipt) and shall be in writing and delivered
personally or sent by telex, telecopy, or certified or registered
mail, postage prepaid, as follows:

12
<PAGE>
(a) If to the Company,

International Technology Corporation
23456 Hawthorne Boulevard
Torrance, CA 90505

Attention: General Counsel
(b) If to the Executive, to him at the address set
forth below under his signature;

or at any other address as any party shall have specified by notice in
writing to the other parties.

15. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an original, but
all of which together will constitute one and the same Agreement.

16. Entire Agreement. The terms of this Agreement are
intended by the parties to be the final expression of their agreement with
respect to the employment of the Executive by the Company and may not be
contradicted by evidence of any prior or contemporaneous agreement. The
parties further intend that this Agreement shall constitute the complete
and exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any judicial, administrative, or other
legal proceeding to vary the terms of this Agreement.

17. Amendments; Waivers. This Agreement may not be
modified, amended, or terminated except by an instrument in writing,
signed by the Executive and the Chairman of the Board. By an instrument
in writing similarly executed, the Executive or the Company may waive
compliance by the other party or parties with any provision of this
Agreement that such other party was or is obligated to comply with or
perform, provided, however, that such waiver shall not operate as a waiver
of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise and no delay in exercising any right, remedy, or power
hereunder preclude any other or further exercise of any other right,
remedy, or power provided herein or by law or in equity.

13
<PAGE>

having jurisdiction over the parties; provided however, that the Company
shall be entitled to seek a restraining order or injunction in any court
of competent jurisdiction to prevent any continuation of any violation of
the provisions of Sections 7 or 8 of the Employment Agreement and provided
further that the Executive shall be entitled to seek specific performance
of his right to be paid during the pendency of any dispute or controversy
arising under or in connection with this Agreement. The fees and expense
of the arbitrator shall be borne by the Company.

[signature page follows]

14
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.

INTERNATIONAL TECHNOLOGY CORPORATION
IT CORPORATION

By: /s/
-------------------------------------
Name: Anthony J. DeLuca
Title: President and Acting
Chief Executive Officer

EXECUTIVE

/s/
-------------------------------------
Signature Franklin E. Coffman

312 Directors Drive
-------------------------------------

Knoxville, TN 37923
-------------------------------------

Address

15
<PAGE>

SCHEDULE I
Management Base Case

(adjusted for Special Charges)

16
<PAGE>

EXHIBIT 10(iii) 24
------------------

EMPLOYMENT AGREEMENT

RECITALS:

A. It is the desire of the Company to assure itself of the
services of the Executive by engaging the Executive to perform such
services under the terms hereof.

B. The Executive desires to commit himself to serve the Company
on the terms herein provided.

NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements set forth below the parties hereto
agree as follows:

1. Certain Definitions.

(a) "Base Management Forecasts" shall mean the forecasts
of both EBITDA and Net Income as described in Schedule I, for each of
the four fiscal years in the period ended March 31, 2000, as
initially identified in Schedule I attached hereto, subject to
automatic adjustment from time to time to take account of the effect
of changes in accounting principles, income tax rates or other
similar factors beyond the control of management or the Board that
shall have positive or negative impact on the Company's reported Net
Income for the year in question relative to the manner in which Net
Income was computed for the year ended March 31, 1996. "Base
Management Forecasts" for fiscal years beginning on and after
April 1, 2000, shall be such forecasts as determined by
the Compensation Committee. In addition, the Company and the
Executive shall negotiate in good faith to make reasonable
adjustments to the Base Management Forecasts to give effect to
changes in business strategy, changes in research and
development budgets, acquisitions (to the extent not taken into
account in specifying the Base Management Forecasts attached hereto),
and the like that have been approved by the Board and which have the
effect of increasing or reducing the short-term Net Income but
which are intended to enhance long-term shareholder value.

(b) "Base Salary" shall have the meaning set forth in
Section 4(a).

(d) "Cause" the Executive shall have "Cause" to resign his
employment hereunder upon

1
<PAGE>
(i) the Company's assignment to the Executive of
duties materially inconsistent with his position as Senior Vice
President, or

(e) "CEO" shall mean the Chief Executive Officer of the
Company.

(f) "Change of Control" shall mean the consummation of the
first to occur of (i) the sale, lease or other transfer of all
or substantially all of the assets of the Company to any person
or group (as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended); (ii) the adoption
by the stockholders of the Company of a plan relating to the
liquidation or dissolution of the Company; (iii) the merger or
consolidation of the Company with or into another entity or the
merger of another entity into the Company or any subsidiary
thereof with the effect that immediately after such transaction
the stockholders of the Company immediately prior to such
transaction (or their Related Parties) hold less than 50% of the
total voting power of all securities generally entitled to vote
in the election of directors, managers or trustees of the
entity surviving such merger of consolidation; or (iv) the
acquisition by any person or group of more than 50% of the
voting power of all securities of the Company generally
entitled to vote in the election of directors of the Company.

(g) "Common Stock" shall mean the $0.01 par value common
stock of the Company.

(h) "Company" shall have the meaning set forth in the
preamble hereto.

(i) "Compensation Committee" shall mean the compensation
committee of the Board.

(j) "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of
his death, (ii) if the Executive's employment is terminated
pursuant to Section 5(a)(ii) - (vii) the date specified in the
Notice of Termination.

(k) "Disability" shall mean the absence of the Executive
from the Executive's duties to the Company on a full-time basis
for a period of 90 consecutive days or a total of six months
during any 24 month period as a result of incapacity due to
mental or physical illness.

(l) "Executive" shall have the meaning set forth in the
preamble hereto.

(m) "Loan Documents" shall mean the Promissory Note
pursuant to which the Executive shall borrow from the Company
the Purchase Price for the shares of Common Stock purchased by
the Executive pursuant to Section 4(f). The Company agrees to
consider in good faith providing forgiveness of a certain

2
<PAGE>
portion of the loan principal and interest if previously agreed
to targets are met or exceeded.

(n) "Long-Term Incentive Plan" or "LTIP" shall mean any
long-term incentive plan, including options to purchase Common
Stock, instituted to promote the Company's long-term goals.

(o) "Notice of Termination" shall have the meaning set
forth in Section 5(b).

(p) "Options" shall have the meaning set forth in Section
4(b).

(q) "Prorated Short-Term Bonus" for any given fiscal year
shall mean the product of

(i) the Short-Term Bonus amount, if any, that
would have been payable to the Executive for the fiscal year
in which occurs his Date of Termination, based upon the
Company's performance for the entire fiscal year projected
in good faith by the Compensation Committee on the basis of
the Company's performance for such fiscal year through
the Date of Termination,

and

(ii) the ratio of (A) the number of days elapsed
in such fiscal year through the Date of Termination, to (B)
365.

(r) "Severance Period" shall mean,

(i) with respect to

(A) Termination without Reason (pursuant to
Section 5(a)(v)) at any time;

(B) Termination for Reason of Company
Performance (pursuant to Section 5(a)(iv)) within 24 months
after a Change of Control;
or

the period beginning on the Date of Termination and ending 12
months thereafter; and,

(ii) with respect to Termination for Reason of
Company Performance not within 24 months after a Change of
Control, the period beginning on the Date of Termination and
ending 6 months thereafter.

3
<PAGE>

(s) "Short-Term Bonus" shall mean the bonus, if any,
payable to the Executive pursuant to the Company's short-term
incentive compensation plan. The target amount of the
Short-Term Bonus shall be 40% of the Executive's Base Salary and
the maximum amount shall be 60% of the Executive's Base Salary.

(t) "Term" shall have the meaning set forth in Section
2(b).

(u) "Termination for Reason of Cause" shall mean the
termination of the Executive's employment hereunder at the
initiative of the Company upon the Executive's

(i) habitual neglect of, or failure
substantially to perform, his duties hereunder, other than
any such failure resulting from the Executive's Disability,
after written notice and reasonable opportunity for cure,
all as determined by the Board;

(ii) final conviction of a felony or of any crime
involving moral turpitude, fraud or misrepresentation;

(iii) fraud or personal dishonesty involving
the Company's assets;

(iv) willful failure to follow any lawful
directive of the Company consistent with the Executive's
position and duties, after written notice and reasonable
opportunity for cure, all as determined by the Board;

(v) use of alcohol or illegal drugs interfering
with the performance of the Executive's responsibilities
relating to his or her employment with the Company; or

(vi) commission of any willful or intentional act
which could reasonably be expected to injure materially the
reputation, business or business relationships of the
Company or its clients.

(v) "Termination for Reason of Company Performance" shall
mean termination of the Executive's employment hereunder at the
initiative of the Company, at the discretion of the Board of
Directors upon the Company's satisfaction of less than all
Base Management Forecasts during two or more consecutive fiscal
years.

4
<PAGE>

(w) "Termination without Reason" shall mean any
termination (other than upon the Executive's Disability) of the
Executive's employment hereunder at the initiative of the
Company other than a Termination for Reason of Company
Performance or a Termination for Reason of Cause.

2. Employment.

(a) The Company shall employ the Executive and the
Executive shall enter the employ of the Company, for the period
set forth in this Section 2, in the positions set forth in
Section 3 and upon the other terms and conditions herein
provided. The initial term of employment under this Agreement
(the "Initial Term") shall be for the period beginning on the
effective date of this Agreement and ending on November 19,
1999, unless earlier terminated as provided in Section 5.

(b) After the Initial Term, the employment term hereunder
shall automatically be extended day by day (collectively with
the Initial Term, the "Term") unless either party gives written
notice of non-extension to the other, in which case the
employment term shall expire no earlier than the date that is
six months after the date such notice is received.

3. Position and Duties. During the Term, the Executive shall
serve as Senior Vice President of the Company with such customary
responsibilities, duties and authority as may from time to time be
assigned to the Executive by the Board or the CEO. The Executive
shall assume such additional or different duties and/or title as may
from time-to-time be assigned to the Executive by the Board or the
CEO, provided, however, that such duties and/or title shall not be
lower in responsibility and level within the Company than that of
Senior Vice President. The Executive shall devote substantially all
his working time and efforts to the business and affairs of the
Company and shall not receive compensation in excess of one percent
(1%) of his Base Salary for services rendered to any other persons.

4. Compensation and Related Matters.

(a) Base Salary. During the Term the Executive shall
receive a base salary at a rate of $260,000.00 per annum,
subject to increase as determined by the Compensation Committee
and subject to reduction only in connection with an across the
board reduction applicable to senior management of the Company
generally.

(b) LTIPS. From time to time during the Term the
Executive may be eligible to participate in one or more LTIPs,
including the grant of Options pursuant to the Company's 1996

5
<PAGE>

(c) Short-Term Bonuses. For each fiscal year of the
Company ending within the Term, the Executive shall be eligible
to receive a Short-Term Bonus.

(f) Stock Purchase. The Executive hereby agrees that on
or before February 20, 1997, he will purchase, in the open
market or through a Company arranged open market share
repurchase program, Common Stock at an aggregate purchase price
of not less than $75,000. The Company hereby agrees to lend to
the Executive the aggregate purchase price of such stock (but
not more than $100,000) in accordance with the Loan Documents.
The Company agrees to consider providing forgiveness of a
certain portion of the loan principal and interest if previously
agreed upon performance targets (Executive and/or Company) are
met or exceeded.

5. Termination. The Executive's employment hereunder may be
terminated by the Company or the Executive, as applicable, without
any breach of this Agreement only under the following circumstances:

(a) (i) Death. The Executive's employment hereunder
shall terminate upon his death.

(ii) Disability. The Executive's employment hereunder
shall terminate in the event of his Disability.

(iii) Termination for Reason of Cause.

6
<PAGE>

(iv) Termination for Reason of Company Performance.

(v) Termination Without Reason.

(vi) Resignation for Cause. The Executive may resign
his employment hereunder for Cause at any time.

(vii) Resignation without Cause. The Executive
may resign his employment without Cause upon 6 months advance
written notice to the Company; provided that the Company may
waive the notice period.

6. Severance Payments and Benefits.

(i) Termination upon Death or Disability. If
the Executive's employment shall terminate by reason of his
death or Disability, the Company shall pay to the Executive (or
his estate or representative), in a lump sum within 90 days
after the Date of Termination, the Prorated Short-Term Bonus for
the fiscal year in which such termination occurs.

(ii) Termination without Reason or Resignation
for Cause. Except as provided by subsection (b)(iv), in the
event of the Executive's Termination without Reason (pursuant to
Section 5(a)(v)) or his resignation for Cause (pursuant to
Section 5(a)(vi)),

7
<PAGE>

(A) the Company shall pay to the Executive, in
accordance with its regular payroll practice, his Base
Salary for the Severance Period;

(B) the Company shall continue for the Severance
Period Executive's coverage under all Company welfare
benefit plans and programs in which the Executive was
entitled to participate immediately prior to the Date of
Termination, to the extent permitted thereunder. In
the event that the Executive's participation in any such
plan or program is not permitted, the Company shall arrange
to provide the Executive with benefits substantially
similar to those which the Executive would otherwise
have been entitled to receive under such plans and
programs;

(C) the Company shall pay to the Executive, in a lump
sum within 90 days after his Date of Termination, the
Prorated Short-Term Bonus for the fiscal year in which such
Date of Termination occurs; and

(D) the Executive's Options, if any, shall continue
to vest during the Severance Period and shall remain
exercisable until the earlier of (1) the date such Option
would otherwise expire without regard to this Agreement
or (2) the expiration of the Severance Period.

(A) the Company shall pay to the Executive, in
accordance with its regular payroll practice, his Base
Salary for the Severance Period; and

(B) the Company shall continue for the Severance
Period Executive's coverage under all Company welfare
benefit plans and programs in which the Executive was
entitled to participate immediately prior to the Date of
Termination, to the extent permitted thereunder. In
the event that the Executive's participation in any such\
plan or program is not permitted, the Company shall arrange
to provide the Executive with benefits substantially
similar to those which the Executive would otherwise
have been entitled to receive under such plans and
programs.

(iv) Termination following a Change in Control.
If, within the 24 month period following a Change of Control,
the Executive's employment is terminated pursuant to a
Termination without Reason (pursuant to Section 5(a)(v)),
Termination for Reason of Company Performance (pursuant to
Section 5(a)(iv)), or his resignation for Cause (pursuant to
Section 5(a)(vi)),

8
<PAGE>

(A) the Company shall pay to the Executive, in
accordance with its regular payroll practice, his Base
Salary for the Severance Period;

(B) the Company shall continue for the Severance
Period Executive's coverage under all Company welfare
benefit plans and programs in which the Executive was
entitled to participate immediately prior to the Date of
Termination, to the extent permitted thereunder. In
the event that the Executive's participation in any such
plan or program is not permitted, the Company shall arrange
to provide the Executive with benefits substantially
similar to those which the Executive would otherwise
have been entitled to receive under such plans and
programs;

(c) Survival. The expiration or termination of the Term
shall not impair the rights or obligations of any party hereto
which shall have accrued hereunder prior to such expiration.

(d) Mitigation Not Required. The Executive shall not be
required to seek other employment to mitigate damages, and the
Executive's payments and benefits hereunder during the Severance
Period shall not be subject to offset by the amount of income
earned by the Executive from other employment or self-employment
during the Severance Period.

(e) Reduction in Payments. Notwithstanding anything
contained in this Agreement to the contrary, in the event that
the payments to the Executive under Section 6 of this
Agreement, either alone or together with other payments the
Executive has a right to receive from the Company, would not be
deductible (in whole or in part) by the Company as a result of
such payments constituting a "parachute payment" (as defined in
Section 280G of the Internal Revenue Code, as amended (the
"Code")), such payments shall be reduced to the largest amount
as will result in no portion of the payments under Section 6 not
being fully deductible by the Company as the result of Section\
280G of the Code. The determination of any reduction in the
payments under Section 6 pursuant to the foregoing sentence
shall be made exclusively by Ernst & Young, or such other firm
of independent public accountants as may be serving as the

9
<PAGE>

Company's principal auditors immediately prior to the Date of
Termination (whose fees and expenses shall be borne by the
Company), and such determination shall be conclusive and binding
on the Company and the Executive.

7. Non-Interference; Non-Competition.

(a) The Executive hereby agrees, in consideration of his
employment hereunder and in view of the confidential position to
be held by the Executive hereunder, that during the Term and
during any Severance Period, and in the event of the Executive's
resignation without Cause, during the 12 month period beginning
on the Date of Termination, the Executive will not directly or
indirectly, by or for himself, or as the agent of another, or
through others as an agent,
(i) in any way solicit or induce or attempt to
solicit or induce any employee, officer, representative,
consultant, or other agent of the Company (whether such
person is presently employed by the Company or may
hereinafter be so employed), to leave the Company's employ
or otherwise interfere with the employment relationship
between any such person and the Company; or
(ii) take any action to purchase or obtain goods
or services, from any of the Company's proprietary
suppliers or other supplier with whom the Company has
developed a unique or exclusive relationship; or

(iii) in any way solicit, or attempt to
divert, take away or call on, any customers or potential
customers of the Company.

(b) The Executive hereby agrees, in consideration of his
employment hereunder and in view of the confidential position to
be held by the Executive hereunder, that during the Term and, in
the event of his resignation without Cause, during the 12
month period beginning on the Date of Termination, the Executive
will not, without the prior written consent of the Board,
directly or indirectly engage in, or have any interest in,
or manage or operate any person, firm, corporation, partnership
or business (whether as director, officer, employee, agent,
representative, partner, security holder, consultant or
otherwise) that engages in any business which competes with any
business of the Company or any subsidiary anywhere in the world;
provided, however, that Executive shall be permitted to acquire
a stock interest in such a corporation provided such stock is
publicly traded and the stock so acquired is not more than one
percent of the outstanding shares of such corporation.

(c) In the event the agreement in this Section 7 shall be
determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too great a period
of time or over too great a geographical area or by reason of
its being too extensive in any other respect, it will be
interpreted to extend only over the maximum period of time for
which it may be enforceable, and/or over the maximum
geographical area as to which it may be enforceable and/or to
the maximum extent in all other respects as to which it may be

10
<PAGE>

enforceable, all as determined by such court in such action.

8. Nondisclosure of Proprietary Information.

(a) Except as required in the faithful performance of the
Executive's duties hereunder or pursuant to subsection (c),
Executive shall, in perpetuity, maintain in confidence and shall
not directly, indirectly or otherwise, use, disseminate,
disclose or publish, or use for his benefit or the benefit of
any person, firm, corporation or other entity any confidential
or proprietary information or trade secrets of or relating to
the Company, including, without limitation, information with
respect to the Company's operations, processes, products,
inventions, business practices, finances, principals, vendors,
suppliers, customers, potential customers, marketing methods,
costs, prices, contractual relationships, regulatory status,
compensation paid to employees or other terms of employment, or
deliver to any person, firm, corporation or other entity any
document, record, notebook, computer program or similar
repository of or containing any such confidential or proprietary
information or trade secrets; provided, however, that no
information otherwise in the public domain (other than by an act
of Executive in violation hereof) shall be considered
confidential. The parties hereby stipulate and agree that as
between them the foregoing matters are important, material and
confidential proprietary information and trade secrets and
affect the successful conduct of the businesses of the
Company (and any successor or assignee of the Company).

(b) Upon termination of Executive's employment with
Company for any reason, the Executive will promptly deliver to
the Company all correspondence, drawings, manuals, letters,
notes, notebooks, reports, programs, plans, proposals, financial
documents, or any other documents concerning the Company's
customers, business plans, marketing strategies, products or
processes which are Company property, or which are
non-public or which contain proprietary information or trade
secrets.

(c) Executive may respond to a lawful and valid subpoena
or other legal process but shall give the Company the earliest
possible notice thereof, shall, as much in advance of the return
date as possible, make available to the Company and its counsel
the documents and other information sought and shall assist such
counsel in resisting or otherwise responding to such process.

10. Indemnification and Insurance; Legal Expenses.
Notwithstanding any other indemnification agreement between the Company
and the Executive that may be in effect from time to time, the Company

11
<PAGE>

shall indemnify the Executive to the fullest extent permitted by
the laws of the State of Delaware, as in effect at the time of the subject
act or omission, and shall advance to the Executive reasonable attorney's
fees and expenses as such fees and expenses are incurred (subject to an
undertaking from the Executive to repay such advances if it shall be
finally determined by a judicial decision which is not subject to further
appeal that the Executive was not entitled to the reimbursement of such
fees and expenses) and he will be entitled to the protection of any
insurance policies the Company may elect to maintain generally for the
benefit of its directors and officers against all costs, charges and
expenses incurred or sustained by him in connection with any action, suit
or proceeding to which he may be made a party by reason of his
being or having been a director, officer or employee of the Company or any
of its subsidiaries or his serving or having served any other enterprise
as a director, officer or employee at the request of the Company (other
than any dispute, claim or controversy arising under or relating to this
Agreement). The Company covenants to maintain for the benefit of the
Executive (in his capacity as an officer and director of the Company)
directors and officers insurance with respect to acts or omissions during
the Term; provided that the Board may elect to terminate directors and
officers insurance for all officers and directors, including the
Executive, if a majority of the Board determines in good faith that such
insurance is not available or is available only at unreasonable
expense.

12. Governing Law. This Agreement shall be governed,
construed, interpreted and enforced in accordance with the substantive
laws of the State of Delaware.

12
<PAGE>

(a) If to the Company,

International Technology Corporation
23456 Hawthorne Boulevard
Torrance, CA 90505

Attention: General Counsel

(b) If to the Executive, to him at the address set forth
below under his signature;
or at any other address as any party shall have specified by notice in
writing to the other parties.

15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.

13
<PAGE>

[signature page follows]

14
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.

INTERNATIONAL TECHNOLOGY CORPORATION
IT CORPORATION

By: /s/
-------------------------------------
Name: Anthony J. DeLuca
Title: President and Acting
Chief Executive Officer

EXECUTIVE

/s/
-------------------------------------
Signature James R. Mahoney

23456 Hawthorne Blvd.
-------------------------------------

Torrance, CA 90505
-------------------------------------
Address

15
<PAGE>

SCHEDULE I
Management Base Case

(adjusted for Special Charges)

Fiscal Year Ended
----------------------------------------------------
03/31/97 03/31/98 03/31/99 03/31/2000 03/31/2001
-------- -------- -------- ---------- ----------

Revs 392,416 586,000 760,000 835,000 na
EBITDA 24,529 49,483 68,858 79,594 na
Net Income 2,532 15,892 26,086 31,979 na
(B/f Pref Divs)

16
<PAGE>

EXHIBIT 10(iii) 25
------------------

EMPLOYMENT AGREEMENT

RECITALS:

A. It is the desire of the Company to assure itself of the
services of the Executive by engaging the Executive to perform such
services under the terms hereof.

B. The Executive desires to commit himself to serve the Company
on the terms herein provided.

NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements set forth below the parties hereto
agree as follows:

1. Certain Definitions.

(b) "Base Salary" shall have the meaning set forth in
Section 4(a).

(d) "Cause" the Executive shall have "Cause" to resign his
employment hereunder upon

1
<PAGE>

(i) the Company's assignment to the Executive of
duties materially inconsistent with his position as Senior Vice
President, or

(e) "CEO" shall mean the Chief Executive Officer of the
Company.

(f) "Change of Control" shall mean the consummation of the
first to occur of (i) the sale, lease or other transfer of all or
substantially all of the assets of the Company to any person or
group (as such term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended); (ii) the adoption by the
stockholders of the Company of a plan relating to the liquidation or
dissolution of the Company; (iii) the merger or consolidation of the
Company with or into another entity or the merger of another entity
into the Company or any subsidiary thereof with the effect that
immediately after such transaction the stockholders of the Company
immediately prior to such transaction (or their Related Parties)
hold less than 50% of the total voting power of all securities
generally entitled to vote in the election of directors, managers or
trustees of the entity surviving such merger of consolidation; or
(iv) the acquisition by any person or group of more than 50% of the
voting power of all securities of the Company generally entitled to
vote in the election of directors of the Company.

(g) "Common Stock" shall mean the $0.01 par value common
stock of the Company.

(h) "Company" shall have the meaning set forth in the
preamble hereto.

(i) "Compensation Committee" shall mean the compensation
committee of the Board.

(k) "Disability" shall mean the absence of the Executive
from the Executive's duties to the Company on a full-time basis for
a period of 90 consecutive days or a total of six months during any
24 month period as a result of incapacity due to mental or physical
illness.

(l) "Executive" shall have the meaning set forth in the
preamble hereto.

2
<PAGE>

in good faith providing forgiveness of a certain portion of the loan
principal and interest if previously agreed to targets are met or
exceeded.

(n) "Long-Term Incentive Plan" or "LTIP" shall mean any
long-term incentive plan, including options to purchase Common Stock,
instituted to promote the Company's long-term goals.

(o) "Notice of Termination" shall have the meaning set
forth in Section 5(b).

(p) "Options" shall have the meaning set forth in Section
4(b).

(q) "Prorated Short-Term Bonus" for any given fiscal year
shall mean the product of

(i) the Short-Term Bonus amount, if any, that
would have been payable to the Executive for the fiscal year in
which occurs his Date of Termination, based upon the Company's
performance for the entire fiscal year projected in good faith
by the Compensation Committee on the basis of the Company's
performance for such fiscal year through the Date of
Termination, and

(ii) the ratio of (A) the number of days elapsed
in such fiscal year through the Date of Termination, to (B) 365.

(r) "Severance Period" shall mean,

(i) with respect to

(A) Termination without Reason (pursuant to
Section 5(a)(v)) at any time;

(B) Termination for Reason of Company
Performance (pursuant to Section 5(a)(iv)) within 24 months
after a Change of Control; or

the period beginning on the Date of Termination and ending 12
months thereafter; and,

(ii) with respect to Termination for Reason of
Company Performance not within 24 months after a Change of
Control, the period beginning on the Date of Termination and
ending 6 months thereafter.

3
<PAGE>

(t) "Term" shall have the meaning set forth in Section
2(b).

(u) "Termination for Reason of Cause" shall mean the
termination of the Executive's employment hereunder at the initiative
of the Company upon the Executive's

(i) habitual neglect of, or failure
substantially to perform, his duties hereunder, other than any
such failure resulting from the Executive's Disability, after
written notice and reasonable opportunity for cure, all
as determined by the Board;

(ii) final conviction of a felony or of any crime
involving moral turpitude, fraud or misrepresentation;

(iii) fraud or personal dishonesty involving
the Company's assets;

(iv) willful failure to follow any lawful
directive of the Company consistent with the Executive's
position and duties, after written notice and reasonable
opportunity for cure, all as determined by the Board;

(v) use of alcohol or illegal drugs interfering
with the performance of the Executive's responsibilities
relating to his or her employment with the Company; or

(vi) commission of any willful or intentional act
which could reasonably be expected to injure materially the
reputation, business or business relationships of the Company or
its clients.
(v) "Termination for Reason of Company Performance" shall
mean termination of the Executive's employment hereunder at the
initiative of the Company, at the discretion of the Board of
Directors upon the Company's satisfaction of less than all
Base Management Forecasts during two or more consecutive fiscal
years.
4
<PAGE>

2. Employment.

3. Position and Duties. During the Term, the Executive shall
serve as Senior Vice President of the Company with such customary
responsibilities, duties and authority as may from time to time be
assigned to the Executive by the Board or the CEO. The Executive shall
assume such additional or different duties and/or title as may from
time-to-time be assigned to the Executive by the Board or the CEO,
provided, however, that such duties and/or title shall not be
lower in responsibility and level within the Company than that of Senior
Vice President. The Executive shall devote substantially all his working
time and efforts to the business and affairs of the Company and shall not
receive compensation in excess of one percent (1%) of his Base Salary
for services rendered to any other persons.

4. Compensation and Related Matters.

(a) Base Salary. During the Term the Executive shall
receive a base salary at a rate of $265,000.00 per annum, subject to
increase as determined by the Compensation Committee and subject to
reduction only in connection with an across the board reduction
applicable to senior management of the Company generally.

(b) LTIPS. From time to time during the Term the
Executive may be eligible to participate in one or more LTIPs,
including the grant of Options pursuant to the Company's 1996 Stock

5
<PAGE>

Incentive Plan (if approved by the Company's stockholders) and/or
pursuant to similar plans adopted in the future, with option exercise
price, vesting criteria and expiration terms under any such stock
plan generally consistent with the Company's practice under its 1991
Stock Incentive Plan (unless different terms are mandated under the
1996 Stock Incentive Plan); provided, however, if insufficient
numbers of Options are available to provide adequate incentive to
other levels of management, alternative arrangements may be made.
Awards (if made) under such LTIPs shall be at the discretion of the
Compensation Committee and based on appropriate Executive and Company
performance criteria and will generally approximate (assuming
performance criteria are achieved) 40% to 60% of the Executive's Base
Salary.

(c) Short-Term Bonuses. For each fiscal year of the
Company ending within the Term, the Executive shall be eligible to
receive a Short-Term Bonus.

(d) Benefits. The Executive shall be entitled to
participate in the other employee benefit plans, programs and
arrangements of the Company (including vacation) now (or, to the
extent determined by the Board, hereafter) in effect which are
applicable to the senior officers of the Company, subject to and on
a basis consistent with the terms, conditions and overall
administration thereof.

(e) Expenses. The Company shall reimburse the Executive
for all reasonable travel and other business expenses incurred by him
in the performance of his duties to the Company, in accordance with
the Company's documentation and other policies with respect thereto.

(f) Stock Purchase. The Executive hereby agrees that on
or before February 20, 1997, he will purchase, in the open market or
through a Company arranged open market share repurchase program,
Common Stock at an aggregate purchase price of not less than $75,000.
The Company hereby agrees to lend to the Executive the aggregate
purchase price of such stock (but not more than $100,000) in
accordance with the Loan Documents. The Company agrees to consider
providing forgiveness of a certain portion of the loan principal
and interest if previously agreed upon performance targets (Executive
and/or Company) are met or exceeded.

5. Termination. The Executive's employment hereunder may be
terminated by the Company or the Executive, as applicable, without any
breach of this Agreement only under the following circumstances:

(a) (i) Death. The Executive's employment hereunder
shall terminate upon his death.

(ii) Disability. The Executive's employment hereunder
shall terminate in the event of his Disability.

(iii) Termination for Reason of Cause.

6
<PAGE>

(iv) Termination for Reason of Company Performance.

(v) Termination Without Reason.

(vi) Resignation for Cause. The Executive may resign
his employment hereunder for Cause at any time.

(vii) Resignation without Cause. The Executive may
resign his employment without Cause upon 6 months advance
written notice to the Company; provided that the Company may
waive the notice period.

6. Severance Payments and Benefits.

(b) The following payments and benefits described in this
subsection (b) shall be in addition to the payments and benefits
described in subsection (a) above.

(i) Termination upon Death or Disability. If
the Executive's employment shall terminate by reason of his
death or Disability, the Company shall pay to the Executive (or
his estate or representative), in a lump sum within 90 days
after the Date of Termination, the Prorated Short-Term Bonus for
the fiscal year in which such termination occurs.

(ii) Termination without Reason or Resignation
for Cause. Except as provided by subsection (b)(iv), in the
event of the Executive's Termination without Reason (pursuant to
Section 5(a)(v)) or his resignation for Cause (pursuant to
Section 5(a)(vi)),

7
<PAGE>

(A) the Company shall pay to the Executive, in
accordance with its regular payroll practice, his Base
Salary for the Severance Period;

(B) the Company shall continue for the Severance
Period Executive's coverage under all Company welfare
benefit plans and programs in which the Executive was
entitled to participate immediately prior to the Date of
Termination, to the extent permitted thereunder. In
the event that the Executive's participation in any such\
plan or program is not permitted, the Company shall arrange
to provide the Executive with benefits substantially
similar to those which the Executive would otherwise
have been entitled to receive under such plans and
programs;

(C) the Company shall pay to the Executive, in a lump
sum within 90 days after his Date of Termination, the
Prorated Short-Term Bonus for the fiscal year in which such
Date of Termination occurs; and

(D) the Executive's Options, if any, shall continue
to vest during the Severance Period and shall remain
exercisable until the earlier of (1) the date such Option
would otherwise expire without regard to this Agreement
or (2) the expiration of the Severance Period.

(A) the Company shall pay to the Executive, in
accordance with its regular payroll practice, his Base
Salary for the Severance Period; and

(B) the Company shall continue for the Severance
Period Executive's coverage under all Company welfare
benefit plans and programs in which the Executive was
entitled to participate immediately prior to the Date of
Termination, to the extent permitted thereunder. In
the event that the Executive's participation in any such
plan or program is not permitted, the Company shall arrange
to provide the Executive with benefits substantially
similar to those which the Executive would otherwise
have been entitled to receive under such plans and
programs.

8
<PAGE>

Termination for Reason of Company Performance (pursuant to
Section 5(a)(iv)), or his resignation for Cause (pursuant to
Section 5(a)(vi)),

(A) the Company shall pay to the Executive, in
accordance with its regular payroll practice, his Base
Salary for the Severance Period;

(B) the Company shall continue for the Severance
Period Executive's coverage under all Company welfare
benefit plans and programs in which the Executive was
entitled to participate immediately prior to the Date of
Termination, to the extent permitted thereunder. In
the event that the Executive's participation in any such
plan or program is not permitted, the Company shall arrange
to provide the Executive with benefits substantially
similar to those which the Executive would otherwise
have been entitled to receive under such plans and
programs;

(c) Survival. The expiration or termination of the Term
shall not impair the rights or obligations of any party hereto which
shall have accrued hereunder prior to such expiration.

(e) Reduction in Payments. Notwithstanding anything
contained in this Agreement to the contrary, in the event that the
payments to the Executive under Section 6 of this Agreement, either alone
or together with other payments the Executive has a right to receive from
the Company, would not be deductible (in whole or in part) by the Company
as a result of such payments constituting a "parachute payment" (as
defined in Section 280G of the Internal Revenue Code, as amended (the
"Code")), such payments shall be reduced to the largest amount as will
result in no portion of the payments under Section 6 not being fully
deductible by the Company as the result of Section 280G of the Code. The
determination of any reduction in the payments under Section 6 pursuant to
the foregoing sentence shall be made exclusively by Ernst & Young,
or such other firm of independent public accountants as may be serving as

9
<PAGE>

7. Non-Interference; Non-Competition.

(i) in any way solicit or induce or attempt to
solicit or induce any employee, officer, representative,
consultant, or other agent of the Company (whether such person
is presently employed by the Company or may hereinafter be so
employed), to leave the Company's employ or otherwise interfere
with the employment relationship between any such person and the
Company; or

(ii) take any action to purchase or obtain goods
or services, from any of the Company's proprietary suppliers or
other supplier with whom the Company has developed a unique or
exclusive relationship; or

(iii) in any way solicit, or attempt to
divert, take away or call on, any customers or potential
customers of the Company.

(b) The Executive hereby agrees, in consideration of his
employment hereunder and in view of the confidential position to be
held by the Executive hereunder, that during the Term and, in the
event of his resignation without Cause, during the 12 month period
beginning on the Date of Termination, the Executive will not, without
the prior written consent of the Board, directly or indirectly engage
in, or have any interest in, or manage or operate any person, firm,
corporation, partnership or business (whether as director, officer,
employee, agent, representative, partner, security holder, consultant
or otherwise) that engages in any business which competes with any
business of the Company or any subsidiary anywhere in the world;
provided, however, that Executive shall be permitted to acquire a
stock interest in such a corporation provided such stock is
publicly traded and the stock so acquired is not more than one
percent of the outstanding shares of such corporation.

10
<PAGE>

be enforceable, all as determined by such court in such action.

8. Nondisclosure of Proprietary Information.

(a) Except as required in the faithful performance of the
Executive's duties hereunder or pursuant to subsection (c), Executive
shall, in perpetuity, maintain in confidence and shall not directly,
indirectly or otherwise, use, disseminate, disclose or publish, or
use for his benefit or the benefit of any person, firm, corporation
or other entity any confidential or proprietary information or trade
secrets of or relating to the Company, including, without limitation,
information with respect to the Company's operations, processes,
products, inventions, business practices, finances, principals,
vendors, suppliers, customers, potential customers, marketing
methods, costs, prices, contractual relationships, regulatory status,
compensation paid to employees or other terms of employment, or
deliver to any person, firm, corporation or other entity any
document, record, notebook, computer program or similar repository of
or containing any such confidential or proprietary information or
trade secrets; provided, however, that no information otherwise in
the public domain (other than by an act of Executive in violation
hereof) shall be considered confidential. The parties hereby
stipulate and agree that as between them the foregoing matters are
important, material and confidential proprietary information and
trade secrets and affect the successful conduct of the businesses of
the Company (and any successor or assignee of the Company).

(b) Upon termination of Executive's employment with
Company for any reason, the Executive will promptly deliver to the
Company all correspondence, drawings, manuals, letters, notes,
notebooks, reports, programs, plans, proposals, financial
documents, or any other documents concerning the Company's customers,
business plans, marketing strategies, products or processes which are
Company property, or which are non-public or which contain
proprietary information or trade secrets.

(c) Executive may respond to a lawful and valid subpoena
or other legal process but shall give the Company the earliest
possible notice thereof, shall, as much in advance of the return date
as possible, make available to the Company and its counsel
the documents and other information sought and shall assist such
counsel in resisting or otherwise responding to such process.

9. Injunctive Relief. It is recognized and acknowledged by
Executive that a breach of the covenants contained in Sections 7 and
8 will cause irreparable damage to Company and its goodwill, the
exact amount of which will be difficult or impossible to ascertain,
and that the remedies at law for any such breach will be inadequate.
Accordingly, Executive agrees that in the event of a breach of any of
the covenants contained in Sections 7 and 8, in addition to any
other remedy which may be available at law or in equity, the Company
will be entitled to specific performance and injunctive relief.

10. Indemnification and Insurance; Legal Expenses.
Notwithstanding any other indemnification agreement between the
Company and the Executive that may be in effect from time to time,

11
<PAGE>

the Company shall indemnify the Executive to the fullest extent
permitted by the laws of the State of Delaware, as in effect at the
time of the subject act or omission, and shall advance to the
Executive reasonable attorney's fees and expenses as such fees and
expenses are incurred (subject to an undertaking from the Executive
to repay such advances if it shall be finally determined by a
judicial decision which is not subject to further appeal that the
Executive was not entitled to the reimbursement of such fees and
expenses) and he will be entitled to the protection of any insurance
policies the Company may elect to maintain generally for the benefit
of its directors and officers against all costs, charges and expenses
incurred or sustained by him in connection with any action, suit or
proceeding to which he may be made a party by reason of his
being or having been a director, officer or employee of the Company
or any of its subsidiaries or his serving or having served any other
enterprise as a director, officer or employee at the request
of the Company (other than any dispute, claim or controversy arising
under or relating to this Agreement). The Company covenants to
maintain for the benefit of the Executive (in his capacity as an
officer and director of the Company) directors and officers insurance
with respect to acts or omissions during the Term; provided that the
Board may elect to terminate directors and officers insurance for all
officers and directors, including the Executive, if a majority of the
Board determines in good faith that such insurance is not available
or is available only at unreasonable expense.

12. Governing Law. This Agreement shall be governed,
construed, interpreted and enforced in accordance with the substantive
laws of the State of Delaware.

12
<PAGE>
(a) If to the Company,

International Technology Corporation
23456 Hawthorne Boulevard
Torrance, CA 90505

Attention: General Counsel

(b) If to the Executive, to him at the address set forth
below under his signature;

or at any other address as any party shall have specified by notice in
writing to the other parties.

15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.

13
<PAGE>

[signature page follows]

14
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.

INTERNATIONAL TECHNOLOGY CORPORATION
IT CORPORATION

By: /s/
-------------------------------------
Name: Anthony J. DeLuca
Title: President and Acting
Chief Executive Officer

EXECUTIVE

/s/
-------------------------------------
Signature Raymond J. Pompe

2790 Mosside Blvd.
-------------------------------------

Monroeville, PA 15146
-------------------------------------
Address

15
<PAGE>

<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM the Company's
Condensed Consolidated Balance Sheet as of March 28, 1997, and
Consolidated Statement of Operations for the Fiscal Year
Ended March 28, 1997, which were filed with the SEC on June 24, 1997 on
Form 10-K for the fiscal year ended March 28, 1997 (commission file number
1-9037) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-28-1997
<PERIOD-END> MAR-28-1997
<CASH> 78897
<SECURITIES> 0
<RECEIVABLES> 110262
<ALLOWANCES> (2055)
<INVENTORY> 0
<CURRENT-ASSETS> 202505
<PP&E> 151192
<DEPRECIATION> 106891
<TOTAL-ASSETS> 342531
<CURRENT-LIABILITIES> 91800
<BONDS> 65874
<COMMON> 97
0
6260
<OTHER-SE> 162496
<TOTAL-LIABILITY-AND-EQUITY> 342531
<SALES> 0
<TOTAL-REVENUES> 362131
<CGS> 0
<TOTAL-COSTS> 365827
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5260
<INCOME-PRETAX> (8956)
<INCOME-TAX> (179)
<INCOME-CONTINUING> (8777)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8777)
<EPS-PRIMARY> (1.48)
<EPS-DILUTED> 0

</TABLE>

<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM the Company's
Condensed Consolidated Balance Sheet as of March 28, 1997, and
Consolidated Statement of Operations for the fourth quarter of Fiscal Year
Ended March 28, 1997, which were filed with the SEC on June 24, 1997 on
Form 10-K for the fiscal year ended March 28, 1997 (commission file number
1-9037) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-28-1997
<PERIOD-END> MAR-28-1997
<CASH> 78897
<SECURITIES> 0
<RECEIVABLES> 110262
<ALLOWANCES> (2055)
<INVENTORY> 0
<CURRENT-ASSETS> 202505
<PP&E> 151192
<DEPRECIATION> 106891
<TOTAL-ASSETS> 342531
<CURRENT-LIABILITIES> 91800
<BONDS> 65874
<COMMON> 97
0
6260
<OTHER-SE> 162496
<TOTAL-LIABILITY-AND-EQUITY> 342531
<SALES> 0
<TOTAL-REVENUES> 95712
<CGS> 0
<TOTAL-COSTS> 92307
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1155
<INCOME-PRETAX> 2250
<INCOME-TAX> 967
<INCOME-CONTINUING> 1283
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1283
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0

</TABLE>