ICF KAISER INTERNATIONAL INC, 424B3, 1994-01-14

ICF KAISER INTERNATIONAL INC
424B3, 1994-01-14
HAZARDOUS WASTE MANAGEMENT

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<PAGE>

Rule 424(b)(3)
Registration No. 33-51677

600,000 SHARES OF COMMON STOCK

ICF KAISER INTERNATIONAL, INC.

The 600,000 shares of common stock, par value $0.01 per share (the "Common
Stock"), of ICF Kaiser International, Inc. ("ICF Kaiser" or the "Company")
being offered hereby (the "Shares") are issuable upon exercise of 600,000
warrants (the "Warrants"), which were sold on January 11, 1994, in connection
with the sale of the Company's 12% Senior Subordinated Notes due 2003 (the "12%
Notes").

Each Warrant entitles the holder thereof to acquire one share of Common Stock
at a price equal to $5.00 per share, subject to adjustment under certain
circumstances. The Warrants are exercisable at any time prior to their
expiration on December 31, 1998. Upon exercise, the holders of Warrants see be
entitled to purchase, in the aggregate, 600,000 shares of Common Stock. On
January 13, 1994, the last reported sales price on the New York Stock Exchange
Composite Tape for the Common Stock was $4.75. See "Market Prices and Dividend
Policy."

SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NORHAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
PRICE TO PROCEEDS TO
PUBLIC COMPANY(1)
<S> <C> <C>
Per Share (on exercise of Warrants)..................... $5.00 $5.00
Total................................................... $3,000,000 $3,000,000
</TABLE>

(1)Before deducting expenses, payable by the Company, estimated at $100,000.

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The date of this Prospectus is January 14, 1994.
<PAGE>

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (herein, together with all
amendments and exhibits, referred to as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), with respect to the Common
Stock offered hereby. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all the information set forth in
the Registration Statement and in the exhibits and schedules thereto. For
further information about the Company and the Common Stock, reference is made
to the Registration Statement. The Registration Statement may be inspected and
copied at the Commission's Public Reference Room, Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following Regional Offices of the
Commission: New York Regional Office, 7 World Trade Center, New York, New York
10048; and Chicago Regional Office, 500 West Madison Street, Chicago, Illinois
60661. The statements contained in this Prospectus about the contents of any
contract or other document filed as an exhibit to the Registration Statement
are not complete, each such statement being qualified in all respects by such
reference. Copies of each such document may be obtained from the Commission at
its principal office in Washington, D.C. upon payment of the charges prescribed
by the Commission.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Reports,
proxy and information statements, and other information filed by the Company
can be inspected and copied at the Commission's Public Reference Room and
Regional Offices set forth above, and copies of such material can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.

The Company's Common Stock has been traded on the New York Stock Exchange
since September 14, 1993, and reports, proxy material, and other information
concerning the Company may be inspected at the office of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005. Prior to September
14, 1993, the Company's Common Stock was traded on the Nasdaq National Market.

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

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus. On June 26, 1993, ICF Kaiser International, Inc.
changed its name from ICF International, Inc. The entire group of ICF Kaiser
International, Inc. companies will be referred to in this Prospectus as "ICF
Kaiser" or the "Company."

THE COMPANY

ICF Kaiser International, Inc., through ICF Kaiser Engineers, Inc. and its
other operating subsidiaries, is one of the nation's largest engineering,
construction and consulting services firms, offering its clients over 20 years
of experience in all aspects of environmental regulation and compliance and
providing access to leading process technologies. The Company provides fully
integrated consulting, engineering and construction services to public and
private sector clients in the related markets of environment, infrastructure
and industry. The Company estimates that of its $385 million of fiscal year
1993 service revenue, approximately 63% was attributable to environmental
services, 17% to infrastructure-related work, 13% to industrial work, and 7% to
other consulting services. As of January 1, 1994, the Company employed
approximately 5,700 people located in more than 80 offices worldwide.

In the environmental market, ICF Kaiser applies its skills and expertise with
sophisticated technologies to help its clients solve complex environmental
problems. The Company is involved in all phases of environmental analysis,
design and construction, and has expertise in hazardous and radioactive waste
cleanup, waste minimization and disposal, risk assessment, permitting,
environmental compliance, global climate change and clean air, alternative
fuels, analysis of ground-water contamination and the clean up of harbors and
waterways. The Company believes that this breadth and depth of knowledge
contributes to its ability to compete successfully when bidding for major
environmental restoration projects.

ICF Kaiser also provides management, engineering and construction services in
the infrastructure and industrial markets. Projects include rapid transit
systems, light and heavy rail systems, bridges, highways, manufacturing
facilities, and hydroelectric, fossil fuel, nuclear and renewable energy
plants. Increasingly, these projects require a substantial level of
environmental problem-solving in both design and construction. The Company
believes that its ability to integrate its environmental disciplines with its
engineering expertise and large-project management skills is a marketing
advantage.

The Company is currently working on several large, highly visible projects
including: (i) a two-and-one-half year, $800 million contract at the U.S.
Department of Energy's Hanford nuclear site in Richland, Washington, the
nation's largest waste clean-up site under the "Superfund" program; (ii) a
five-year, $140 million contract for the construction management of a new, $5.4
billion wastewater treatment facility project in Boston Harbor, the single
largest environmental effort in the United States; and (iii) a two-year
extension of a $33 million contract for the planning, design and construction
services for an $18 billion, 88-kilometer mass transit system in Taipei,
Taiwan, the largest such program underway in the world.

THE OFFERING

Securities offered hereby......... 600,000 shares of Common Stock issuable
upon exercise of the Warrants.

Use of Proceeds................... The net proceeds will be used for general
corporate purposes.

RISK FACTORS

Prospective purchasers should consider carefully certain factors relating to
an investment in the Common Stock. See "Risk Factors."

3
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SUMMARY CONSOLIDATED FINANCIAL DATA

The following statement of operations data and balance sheet data, excluding
the data for the nine months ended November 30, 1993 and 1992, have been
derived from financial statements audited by Coopers & Lybrand, independent
accountants. This information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in this Prospectus and with the Company's consolidated
financial statements and notes thereto.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
NOVEMBER 30, YEAR ENDED FEBRUARY 28,
------------------ ---------------------------
1993 1992 1993 1992 1991
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenue(a)................ $454,069 $527,961 $678,882 $710,873 $624,976
Service revenue(a)(b)........... 276,482 293,572 384,985 379,826 363,318
Cost of restructuring and
disposal of
businesses, net................ -- 1,336 1,336 73,354 --
Operating income (loss)......... 8,220 17,506 22,744 (43,963) 33,287
Income (loss) before income
taxes.......................... 4,247 12,278 14,894 (54,310) 24,018
Net income (loss)............... 2,039 7,121 8,639 (40,516) 14,291
Net income (loss) available for
common shareholders............ (1,731) 3,351 3,613 (42,719) 13,434
Net income (loss) per common share
Primary........................ (0.09) 0.15 0.16 (2.25) 0.71
Fully diluted.................. (0.09) 0.15 0.16 (2.25) 0.68
BALANCE SHEET DATA (END OF PERIOD):
Working capital................. $ 92,715 $ 88,971 $ 87,845 $ 66,065 $ 74,754
Total assets.................... 278,457 317,962 295,578 318,947 357,457
Total debt(c)................... 79,324 102,951 74,391 86,332 105,362
Redeemable preferred stock...... 44,445 44,709 44,824 45,161 26,498
Shareholders' equity............ 57,976 57,517 58,521 51,151 88,839
</TABLE>

(a) Gross revenue and service revenue for the fiscal years ended February 28,
1993 and February 29, 1992, exclude businesses discontinued by the Company
in fiscal year 1992; the financial data for fiscal year 1991 includes
results for the entire Company.
(b) Service revenue is calculated by deducting the costs of subcontracted
services and other direct costs from the gross revenue and adding the
Company's share of the income (loss) of joint ventures and affiliated
companies.
(c) Total debt includes both the current and long-term portions of long-term
debt and subordinated debt.

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THE COMPANY

In its most recent fiscal year ended February 28, 1993, ICF Kaiser reported
gross and service revenue of $679 million and $385 million, respectively.
Service revenue is derived by deducting subcontract and direct material costs
from gross revenue and adding the Company's share of income (loss) of joint
ventures and affiliated companies. ICF Kaiser believes it is appropriate to
analyze its business in relation to service revenue rather than gross revenue
because service revenue reflects the work directly performed by the Company.
The percentage breakdowns of ICF Kaiser's service revenue (excluding
discontinued businesses) by market for the fiscal years shown below were as
follows (dollars in millions):

<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
--------------------------------------
1993 1992 1991
------------ ------------ ------------
AMOUNT % AMOUNT % AMOUNT %
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Environment.............................. $240.2 62.4 $230.2 60.6 $160.6 50.7
Infrastructure........................... 66.6 17.3 57.7 15.2 47.5 15.0
Industry................................. 51.2 13.3 63.0 16.6 88.3 27.9
Other consulting......................... 27.0 7.0 28.9 7.6 20.4 6.4
------ ----- ------ ----- ------ -----
Total.................................. $385.0 100.0 $379.8 100.0 $316.8 100.0
====== ===== ====== ===== ====== =====
</TABLE>

ICF Kaiser's services in the environmental market include consulting,
engineering and construction involved with the remediation of hazardous and
radioactive waste, waste minimization and disposal, risk assessment, global
warming and acid rain, alternative fuels and clean up of harbors and waterways.
The Company minimizes its participation in the collection, treatment, storage
and disposal of hazardous waste because of the risks and potential liability
involved with such activities.

Demand for environmental services is driven by a number of factors,
including: the need to improve the quality of the environment; federal, state
and municipal regulation and enforcement; and increased liability associated
with pollution-related injury and damage. The Company's strategic plan is to
position itself as a fully integrated environmental services firm that can
provide expertise across all phases of an environmental remediation project. By
leveraging its technological expertise at the front-end analysis and assessment
phases, ICF Kaiser improves its position in participating in the subsequent
phases of engineering and construction, which the Company believes will be a
major area for market growth.

ICF Kaiser also provides consulting, engineering, and construction services
to the infrastructure market. This market historically has been driven by the
need to maintain and expand roads, highways, mass transit systems, and
airports. Increasingly, environmental concerns, such as reducing automotive air
pollutant emissions, are a driving force behind new infrastructure and
transportation initiatives. The Company has capitalized on its specialized
environmental skills to win projects to provide planning, design and
construction services.

5
<PAGE>

ICF Kaiser assists clients in private industry by providing the engineering
and construction skills needed to maintain and retrofit existing plants and
replace aging production capacity with newer, more environmentally responsible
facilities. Through its acquisition of ICF Kaiser Engineers, Inc. in 1988, the
Company acquired the engineering and construction skills, as well as access to
process technologies, needed to establish a leadership position in serving the
basic metals and mining industries, including aluminum, steel, copper, and
coal.

All of ICF Kaiser's markets are global in nature. To capitalize on
international opportunities while minimizing its business development risks,
the Company has established international business relationships through joint
ventures, marketing agreements and direct equity investments. The Company has
projects underway in over 25 countries,

ICF Kaiser International, Inc. was incorporated in Delaware in 1987 as the
parent holding company of ICF Incorporated, a nationwide consulting and
engineering firm that has provided services since 1969. The Company's
headquarters is located at 9300 Lee Highway, Fairfax, Virginia 22031-1207, and
its telephone number is (703) 934-3600.

6
<PAGE>

RISK FACTORS

Prospective purchasers of the Common Stock should carefully consider the
following, as well as other information contained in this Prospectus.

SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE AND INCUR DEBT; PREFERRED STOCK TERMS

On a pro forma basis at November 30, 1993, taking into account the January
11, 1994, sale of the Warrants and 12% Notes, the Company had total
indebtedness of $123.2 million, representing 64% of total capitalization. This
high degree of leverage may have important consequences to the holders of the
Common Stock. In particular, at least in the near term: (i) a substantial
portion of the Company's cash flow from operations will be required for the
payment of interest expense; (ii) the level of the Company's indebtedness may
make it difficult to obtain additional financing in the future for working
capital, acquisitions, capital expenditures, repayment of debt, or other
purposes; and (iii) the level of the Company's leverage may make it more
difficult for the Company's subsidiaries to obtain performance and similar
bonds related to certain activities. The Company will be more leveraged after
completion of the Unit Offering than many of its competitors, which may leave
the Company less able to take advantage of market opportunities or withstand
weakness in its markets. The ability of the Company to meet its debt service
and other obligations will depend largely on the future performance of the
Company, which will be subject in part to prevailing economic and competitive
conditions, government spending patterns, and to other factors beyond its
control. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

The Company repaid outstanding indebtedness under its current revolving
credit facility with a syndicate of banks with the proceeds of the January 11,
1994, sale of the Warrants and 12% Notes. On January 11, 1994, the Company
entered into a new bank credit facility (the "New Credit Facility") that
requires the Company to comply with certain financial and non-financial
covenants. The New Credit Facility is secured by substantially all of the
current assets of the Company and most of its subsidiaries. See "Use of
Proceeds" and "Description of Credit Facility."

The indenture (the "Indenture") for the Company's 12% Notes limits the
Company's ability to incur additional indebtedness. See "Description of Credit
Facility." The Company anticipates that such limitations will prohibit the
Company from incurring a substantial amount of additional indebtedness other
than under the New Credit Facility. As a result, new funding, to the extent
needed, will have to take the form of raising additional equity capital,
refinancing existing debt, or obtaining significant proceeds from the sale of
assets.

In addition to the restrictive covenants under the Indenture and the New
Credit Facility, the agreements governing the Company's Series 2D Senior
Preferred Stock ("Series 2D Preferred Stock") provide that certain restrictive
covenants become operative while the Company is in arrears with respect to any
dividend on such preferred stock for a period in excess of 100 days or has
failed to make a mandatory redemption. Such covenants would prohibit the
Company from, among other things: disposing of assets for consideration of
more than $1 million in a single transaction; entering into mergers; making
acquisitions; guaranteeing any obligation in excess of $1 million; or
incurring indebtedness other than as permitted pursuant to the terms of the
Indenture governing the Notes without the consent of the holder of the Series
2D Preferred Stock. See "Description of Capital Stock--Series 2D Preferred
Stock."

Because of the restrictions described above, during the next several years
it will be necessary for the Company to issue additional equity securities to
fund any significant acquisitions and invest in joint ventures beyond the
level permitted by the Indenture.

DEPENDENCE ON KEY CUSTOMERS AND FEDERAL GOVERNMENT CONTRACTS

A substantial portion of ICF Kaiser's revenues are derived from services
performed directly or indirectly under contracts with various agencies and
departments of the Federal government. During fiscal year 1993, approximately
47% of the Company's consolidated gross revenue was derived from contracts
with the U.S.

7
<PAGE>

Government. The U.S. Department of Energy ("DOE") accounted for approximately
29% of consolidated gross revenue, and the U.S. Department of Defense ("DOD"),
the U.S. Environmental Protection Agency ("EPA") and other Federal agencies
collectively accounted for approximately 18% of the Company's consolidated
gross revenue, during fiscal year 1993. These agencies and departments
accounted for approximately the same percentages of service revenue of the
Company during fiscal year 1993.

Contracts made with the U.S. Government generally are subject to annual
approval of funding. Limitations imposed on spending by Federal government
agencies, which might result from efforts to reduce the Federal deficit or for
other reasons, may limit the continued funding of the Company's existing
contracts with the Federal government and may limit the ability of the Company
to obtain additional contracts. These limitations, if significant, could have
a material adverse effect on the Company.

All contracts made with the U.S. Government may be terminated by the U.S.
Government at any time, with or without cause. There can be no assurance that
existing or future contracts with the U.S. Government would not be terminated
or that the government will continue to use the Company's services at levels
comparable to current use. See "Business--Competition and Contract Award
Process."

REGULATION OF FEDERAL GOVERNMENT CONTRACTING ACTIVITIES

The Company is subject to general Federal regulation with respect to its
contracting activities with the Federal government. For example, the Company
is subject to audit with respect to costs incurred and charged to the Federal
government. In one such audit, the government has asserted that certain costs
claimed as reimbursable under government contracts were not allocated in
accordance with government cost accounting standards. Management believes that
the potential effect of disallowed costs, if any, for the periods currently
under audit and for periods not yet audited has been adequately provided for
and will not have a material adverse effect on the Company's financial
condition.

Because certain of the Company's subsidiaries provide the Federal government
with nuclear energy and defense-related services, these subsidiaries and a
substantial number of their employees are required to have and maintain
security clearances from the Federal government. There can be no assurance
that the required security clearances will be obtained and maintained in the
future.

Because of its nuclear energy and defense-related services, the Company is
subject to foreign ownership, control and influence ("FOCI") regulations
imposed by the Federal government and designed to prevent the release of
classified information to contractors subject to FOCI. Under these
regulations, FOCI concerns may arise as a result of a variety of factors,
including foreign ownership of substantial percentages of the Company's equity
securities or debt, the percentage of gross revenue the Company receives from
foreign sources, and whether any directors or officers are not U.S. citizens.
Subsidiaries of the Company with facility security clearances or sensitive DOE
contracts file reports with DOD and DOE which disclose each of the above
factors as well as disclosing all other events and changes that affect the
potential for FOCI. As required by DOD and DOE, the Company has implemented
procedures designed to insulate such subsidiaries from impermissible FOCI.
There can be no assurance that such measures will prevent FOCI concerns from
affecting the ability of the Company's subsidiaries to secure and maintain
certain types of DOD and DOE contracts.

DEPENDENCE ON ENVIRONMENTAL REGULATION

Much of the Company's business is generated either directly or indirectly as
a result of federal and state laws, regulations and programs related to
environmental issues. Accordingly, a reduction in the number or scope of these
laws and regulations, or changes in government policies regarding the funding,
implementation or enforcement of such laws, regulations and programs, could
have a material adverse effect on the Company's business. See "Business--
Overview of Markets."

In July 1993, the Department of Energy commenced an initiative to achieve
substantial cost reductions and productivity improvements within the Office of
Environmental Restoration and Waste Management

8
<PAGE>

("OERWM"). A study commissioned by OERWM reported on November 30, 1993 that
the DOE is paying private contractors more than a third more than the private
sector pays for comparable projects and that DOE projects experience cost
overruns of approximately 48% (compared to approximately 6% on private sector
projects). The study also cited extensive delays on DOE projects. The study
concluded that a major reason for the poor performance of the OERWM in
managing its projects was its reliance on private contractors. Any significant
effort by the DOE to reduce the role of private contractors in environmental
projects could have a material adverse effect on the Company.

ENVIRONMENTAL CONTRACTOR RISKS

Although the Company believes that it generally benefits from increased
environmental regulations, and from enforcement of those regulations,
increased regulation and enforcement also create significant risks for the
Company. The assessment, analysis, remediation, handling and management of
hazardous substances necessarily involve significant risks, including the
possibility of damages or personal injuries caused by the escape of hazardous
materials into the environment, and the possibility of fines, penalties or
other regulatory action. These risks include potentially large civil and
criminal liabilities for violations of environmental laws and regulations, and
liabilities to customers and to third parties for damages arising from
performing services for clients. See "Business--Potential Environmental
Liability."

Potential Liabilities Arising Out of Environmental Laws and Regulations

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

The Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA") addresses cleanup of sites at which there has been a release
or threatened release of hazardous substances into the environment.
Increasingly, there are efforts to expand the reach of CERCLA to make
environmental contractors responsible for cleanup costs by claiming that
environmental contractors are owners or operators of hazardous waste
facilities or that they arranged for treatment, transportation or disposal of
hazardous substances. Several recent court decisions have accepted these
claims. Should the Company be held responsible under CERCLA for damages caused
while performing services or otherwise, it may be forced to bear such
liability by itself, notwithstanding the potential availability of
contribution or indemnity from other parties.

The Resource Conservation and Recovery Act of 1976, as amended in 1984
("RCRA"), is the principal federal statute governing hazardous waste
generation, treatment, transportation, storage and disposal. RCRA, or EPA-
approved state programs at least as stringent, govern waste handling
activities involving wastes classified as "hazardous." See "Business--Overview
of Markets." Substantial fees and penalties may be imposed under RCRA and
similar state statutes for any violation of such statutes and the regulations
thereunder.

Potential Liabilities Involving Clients and Third Parties

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

Environmental contractors, in connection with work performed for clients,
also potentially face liabilities to third parties from various claims
including claims for property damage or personal injury stemming from a
release of hazardous substances or otherwise. Claims for damage to third
parties could arise in a number of

9
<PAGE>

ways, including: through a sudden and accidental release or discharge of
contaminants or pollutants during the performance of services; through the
inability, despite reasonable care, of a remedial plan to contain or correct an
ongoing seepage or release of pollutants; through the inadvertent exacerbation
of an existing contamination problem; or through reliance on reports prepared
by the Company. Personal injury claims could arise contemporaneously with
performance of the work or long after completion of the project as a result of
alleged exposure to toxic or hazardous substances. In addition, increasing
numbers of claimants assert that companies performing environmental remediation
should be adjudged strictly liable, i.e. liable for damages even though its
services were performed using reasonable care, on the grounds that such
services involved "abnormally dangerous activities."

Clients frequently attempt to shift various of the liabilities arising out of
remediation of their own environmental problems to contractors through
contractual indemnities. Such provisions seek to require the Company to assume
liabilities for damage or personal injury to third parties and property and for
environmental fines and penalties. Moreover, during the past year, the EPA has
constricted significantly the circumstances under which it will indemnify its
contractors against liabilities incurred in connection with CERCLA projects.
There are other proposals both in Congress and at the regulatory agencies to
further restrict indemnification of contractors from third party claims.

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

COMPETITION

The market for the Company's services is highly competitive. The Company and
its subsidiaries compete with many other firms ranging from small firms to
large multinational firms having substantially greater financial, management,
and marketing resources than the Company. Other competitive factors include
quality of services, technical qualifications, reputation, geographic presence,
price and the availability of key professional personnel. See "Business--
Competition and Contract Award Process."

FEDERAL GOVERNMENT CONFLICT OF INTEREST POLICIES AND POSSIBLE RESTRUCTURING OF
CONSULTING SUBSIDIARIES

Federal agencies that are the Company's regular customers (including the DOD,
DOE, and EPA) have formal policies against awarding contracts that would
present actual or potential conflicts of interest with other activities of the
contractor. The Company follows practices designed to comply with these
policies. However, in light of the broad range of environmental and related
services provided by various of the Company's subsidiaries to Federal and state
governmental units and private sector customers, the Company is considering
restructuring its subsidiaries that are engaged primarily in providing
consulting services to governmental units ("Government Consulting
Subsidiaries"). The goal of such a restructuring would be to provide further
assurance to the Federal agencies for which the Government Consulting
Subsidiaries perform services that such subsidiaries are insulated from the
interests of the Company's private sector clients. If implemented, the
restructuring would likely involve arrangements pursuant to which the
Government Consulting Subsidiaries, or a single Government Consulting
Subsidiary, would have a Board of Directors independent of the Company. Other
steps would also be taken to segregate the management, operations and
compensation policies of the Government Consulting Subsidiaries from those of
the rest of the Company. Such a restructuring would not affect the flow of
earnings from the Government Consulting Subsidiaries to the Company. It would,
however, eliminate the Company's ability to exercise control over the
Government Consulting Subsidiaries during the term of the arrangements
described above.

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FLUCTUATIONS IN QUARTERLY FINANCIAL RESULTS

The Company's quarterly financial results may be affected by, among other
factors, the commencement and completion or termination of major projects.
Accordingly, results for any one quarter are not necessarily indicative of
results for any other quarter or for the year.

ATTRACTION AND RETENTION OF PROFESSIONAL PERSONNEL

The Company's ability to retain and expand its staff of qualified
professionals will be an important factor in determining the Company's future
success. The market for these professionals, especially environmental
professionals, is competitive. There can be no assurance that the Company will
continue to be successful in its efforts to attract and retain such
professionals.

CHANGE OF CONTROL PROVISIONS

In the event of a Change of Control (as defined in the Indenture), the
Company would be required, subject to certain conditions, to offer to purchase
all outstanding 12% Notes at a price equal to 101% of the principal amount
thereof, plus accrued interest thereon. As of November 30, 1993, after giving
effect to the sale of the Warrants and the 12% Notes, the Company would not
have sufficient funds available to purchase all the 12% Notes were they to be
tendered in response to an offer made as a result of such a Change of Control.
There can be no assurance that, at the time of a Change of Control, the Company
will have sufficient cash to repay all amounts due under the 12% Notes. If a
Change of Control should occur, the rights of the holders of the 12% Notes to
receive payment for their 12% Notes upon a Change of Control Offer would be
subject to the prior payment rights of holders of any Senior Indebtedness (as
defined in the Indenture). See "Description of Credit Agreement." The terms of
the New Credit Facility prohibit the optional payment or prepayment or any
redemption of the 12% Notes. If, following a Change of Control, the Company has
insufficient funds to purchase all the 12% Notes tendered pursuant to such an
offer, or is prohibited from purchasing the 12% Notes pursuant to the terms of
any Senior Indebtedness, an event of default in respect of the 12% Notes would
occur. The Change of Control provisions of the Indenture may have the effect of
discouraging attempts by a person or group to take control of the Company.

The Company's Amended and Restated Certificate of Incorporation, By-laws,
Shareholder Rights Plan and certain other agreements contain provisions that
could have the effect of delaying or preventing a change of control of the
Company or affect the Company's ability to engage in certain extraordinary
transactions. See "Description of Capital Stock."

ABILITY TO REALIZE VALUE ON WARRANTS

There can be no assurance that the Common Stock will trade at a price above
the exercise price of the Warrants prior to the expiration of the Warrants. As
of January 12, 1993, the Company had 2,956,040 shares of Common Stock that may
be issued pursuant to outstanding warrants (other than the Warrants) and, as of
November 30, 1993, 2,298,976 shares of Common Stock were issuable pursuant to
outstanding stock options. Future sales of such shares and sales of shares
purchased by holders of options or warrants could have an adverse effect on the
market price of the Common Stock.

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the 600,000
shares of Common Stock offered hereby upon exercise of all of the Warrants will
equal $2,900,000. The Company intends to use all of the net proceeds for
general corporate purposes.

11
<PAGE>

MARKET PRICES AND DIVIDEND POLICY

Since September 14, 1993, the Common Stock has been traded on the New York
Stock Exchange ("NYSE") under the symbol "ICF." Prior to that date, the Common
Stock was traded on the Nasdaq National Market. At December 17, 1993, there
were 1,233 shareholders of record; the Company believes that there are
approximately 6,150 beneficial owners of Common Stock. On January 13, 1994, the
closing price of the Company Stock as reported by the NYSE was $4.75. The
following table sets forth, for the periods indicated, the high and low sale
prices for the Common Stock as reported on the Nasdaq National Market (through
September 13, 1993) and the NYSE (from September 14, 1993, to the latest date
indicated):

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
Fiscal Year Ended February 29, 1992
First Quarter................................................. $18.50 $14.25
Second Quarter................................................ 16.75 8.00
Third Quarter................................................. 10.00 6.50
Fourth Quarter................................................ 11.00 6.25
Fiscal Year Ended February 28, 1993
First Quarter................................................. $10.875 $ 7.25
Second Quarter................................................ 7.75 5.00
Third Quarter................................................. 7.50 4.00
Fourth Quarter................................................ 8.50 6.00
Fiscal Year Ending February 28, 1994
First Quarter................................................. $ 6.875 $ 4.75
Second Quarter................................................ 5.50 3.75
Third Quarter (September 1--September 13)..................... 4.875 4.375
Third Quarter (September 14--November 30)..................... 5.375 4.00
Fourth Quarter (through January 3, 1994)...................... 4.875 4.00
</TABLE>

The Company has never paid cash dividends on its Common Stock. The Board of
Directors anticipates that for the foreseeable future no cash dividends will be
paid on its Common Stock and that the Company's earnings will be retained for
use in the business. The Board of Directors determines the Company's Common
Stock dividend policy based on the Company's results of operations, payment of
dividends on preferred stock (if any is outstanding), financial condition,
capital requirements, and other circumstances. The Company's credit agreements
allow dividends to be paid on its capital stock provided that the Company
complies with certain limitations imposed by the terms of such agreements. See
"Description of Credit Facility."

12
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
November 30, 1993 and as adjusted as of such date to give effect to the January
11, 1994, sale of the Warrants and the 12% Notes and the application of the
proceeds therefrom. This table should be read in conjunction with the
consolidated financial statements and notes thereto appearing elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
NOVEMBER 30, 1993
--------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Debt:
Revolving credit facility(a)............................. $ 45,000 $ --
ESOP guaranteed notes(a)................................. 1,667 --
Notes payable............................................ 2,657 2,657
12% Senior Subordinated Notes(b)......................... -- 120,588
13.5% Subordinated debt.................................. 30,000 --
-------- --------
Total debt............................................. 79,324 123,245
Redeemable Preferred Stock of Subsidiary................... 799 799
9.75% Series 2C Senior Preferred Stock..................... 24,284 --
9.75% Series 2D Senior Preferred Stock..................... 19,362 19,362
9.25% Series 1 Junior Convertible Preferred Stock.......... 6,900 --
Common shareholders' equity(c)(d).......................... 51,076 48,033
-------- --------
Total capitalization................................... $181,745 $191,439
======== ========
</TABLE>
- --------
(a) See "Description of Credit Facility."
(b) Excludes $3.5 million original issue discount and $0.9 million assigned to
the Warrants.
(c) Adjusted to take into account the retirement of the Company's 13.5% Senior
Subordinated Notes due 1999 (the "13.5% Notes"), the repurchase of warrants
issued in connection with the 13.5% Notes, the repurchase of the Series 1
Junior Convertible Preferred Stock, the repurchase of the Series 2C Senior
Preferred Stock together with the Series 2C Warrants, the repayment of
senior debt, the repayment of the ESOP loan and other costs related to the
foregoing items.
(d) Includes $0.9 million assigned to the Warrants.

13
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data of the Company for each year in the
five-year period ending February 28, 1993 have been derived from the Company's
consolidated financial statements, which have been audited by Coopers &
Lybrand, independent accountants. This information should be read in
conjunction with the Consolidated Financial Statements and the related notes
thereto appearing elsewhere in this Prospectus and "Management's Discussion
and Analysis of Financial Condition and Results of Operations." The selected
consolidated financial data of the Company as of November 30, 1992 and 1993
and for the nine-month periods then ended have been prepared on the same basis
as the Consolidated Financial Statements appearing elsewhere herein and, in
the opinion of the Company, include all normal and recurring adjustments
(consisting of only normal recurring adjustments) necessary to present fairly
the information set forth therein. Operating results for the nine months ended
November 30, 1993 are not necessarily indicative of the results that may be
expected for the fiscal year ending February 28, 1994.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
NOVEMBER 30, YEAR ENDED FEBRUARY 28,
------------------ ---------------------------------------------
1993 1992 1993 1992 1991 1990 1989(B)
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenue (a)....... $454,069 $527,961 $678,882 $710,873 $624,976 $503,904 $297,866
Service revenue (a) (c). 276,482 293,572 384,985 379,826 363,318 278,255 174,328
Cost of restructuring
and disposal of
businesses, net........ -- 1,336 1,336 73,354 -- -- --
Operating income (loss). 8,220 17,506 22,744 (43,963) 33,287 22,563 13,845
Income (loss) before
income taxes........... 4,247 12,278 14,894 (54,310) 24,018 14,906 11,584
Net income (loss)....... 2,039 7,121 8,639 (40,516) 14,291 8,794 6,524
Net income (loss) avail-
able for common
shareholders........... (1,731) 3,351 3,613 (42,719) 13,434 8,794 6,524
Net income (loss) per
common share
Primary................ (0.09) 0.15 0.16 (2.25) 0.71 0.57 0.46
Fully diluted.......... (0.09) 0.15 0.16 (2.25) 0.68 0.57 0.45
BALANCE SHEET DATA (END OF PERIOD):
Total assets............ $278,457 $317,962 $295,578 $318,947 $357,457 $237,057 $140,751
Working capital......... 92,715 88,971 87,845 66,065 74,754 43,430 27,253
Long-term liabilities... 79,999 98,081 75,602 85,675 109,820 53,019 40,440
Total debt(d)........... 79,324 102,951 74,391 86,332 105,362 75,619 32,418
Redeemable preferred
stock.................. 44,445 44,709 44,824 45,161 26,498 3,997 3,997
Shareholders' equity.... 57,976 57,517 58,521 51,151 88,839 58,503 19,595
</TABLE>
- --------
(a) Gross revenue and service revenue for the fiscal years ended February 28,
1993 and February 29, 1992, exclude businesses discontinued by the Company
in fiscal 1992; the financial data for fiscal 1989 through 1991 include
results for the entire Company.
(b) Includes the effect from June 1988 of the acquisition of ICF Kaiser
Engineers, Inc.
(c) Service revenue is calculated by deducting the costs of subcontracted
services and reimbursable direct costs from the gross revenue and adding
the Company's share of the income of joint ventures and affiliated
companies.
(d) Total debt includes both the current and long-term portions of long-term
debt and subordinated debt.

14
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Overview

For the nine months ended November 30, 1993, ICF Kaiser's net income was
$2,039,000 and net loss available for common shareholders was ($1,731,000), or
($0.09) per share, compared to net income of $7,121,000 and net income
available for common shareholders of $3,351,000, or $0.15 per share, for the
nine months ended November 30, 1992. The decrease in net income was caused by a
decline in volume due to weakened demand in the Company's markets, the
completion of several large industrial projects, the sale of two income-
producing businesses (Lewin-ICF, Inc. and an equity interest in Acer Group
Limited), a decline in the Company's energy engineering business, and the
delayed impact of the Company's cost reduction efforts which began in the
fourth quarter of the year ended February 28, 1993 (fiscal 1993).

For fiscal 1993, ICF Kaiser's net income was $8.6 million, or $0.16 per
share, compared to a net loss of $40.5 million, or ($2.25) per share, for the
year ended February 29, 1992 (fiscal 1992). Net income in fiscal 1993 was
adversely impacted by a net $1.3 million pretax addition to the provision for
restructuring and disposal of businesses discussed below, and a $0.9 million
pretax loss on the sale of ICF Kaiser's minority interest in Acer Group
Limited, offset by a $0.1 million net credit for the unusual items discussed in
Note Q to the consolidated financial statements.

In fiscal 1993, the Company successfully completed several large industrial
projects. In the second half of fiscal 1993 and in fiscal 1994, because of the
completion of these projects and the slowdown in government contracting which
the Company experienced following the change in Presidential Administrations,
recovery of the Company's overhead and administrative costs was lower than
anticipated. In the fourth quarter of fiscal 1993, ICF Kaiser reviewed its
indirect cost structure and reduced its administrative and overhead employment
base by 13%, resulting in a one-time $0.6 million charge for severance in the
fourth quarter of fiscal 1993. These cost-cutting efforts have continued
through fiscal 1994. Additionally, during fiscal 1993, the Company also
incurred a heavy periodic cost for preparing and defending its successful bid
for the engineer/constructor contract at the DOE Hanford site, as well as costs
associated with completing its restructuring program during fiscal 1993. ICF
Kaiser management believes that these overhead cost reductions, as well as
further cost cutting actions taken in fiscal 1994, will allow the Company to
match more closely its costs to its direct labor base while enabling the
Company to respond to further growth.

Outlook

Effective October 1, 1993, the Company entered into a material amendment to
its contract to provide architect-engineering and construction management
services to the Department of Energy (DOE) at its Hanford site. The Company
estimates that it will realize over $800 million in gross revenue under the two
and one-half years of the amended contract and that fees under this contract
will increase significantly. In addition, the Company will be eligible to earn
additional incentive fees related to contractor efficiency and technology
transfer. In connection with the contract amendment and in order to reduce
duplication of work and to improve management control and efficiency of
operation, the Company and DOE agreed to assign management of substantially all
aspects of the amended contract to Westinghouse Hanford Company, the current
management and operations contractor at the DOE's Hanford site.

Similar to many companies in its industry, during fiscal 1994 ICF Kaiser
continued to experience weak demand in its other markets when compared to
fiscal 1993. Federal spending under the Company's existing environmental
contracts, although increasing throughout the year, was lower than last year.
This slowdown over the prior year period was compounded by several factors,
including the change in Presidential Administrations, a sluggish market for
major industrial and environmental expenditures and the completion of several
large industrial projects. These factors resulted in reduced levels of gross
and service revenue. ICF

15
<PAGE>

Kaiser's management continues to focus on developing marketing opportunities,
improving the efficiency of operations, and areas for additional cost-cutting.

Bid and proposal activity remained active during fiscal 1994. ICF Kaiser has
won a number of new environmental, infrastructure, industrial, and energy
contracts.

Gross Revenue

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

Comparison of Nine months ended November 30, 1993 to Nine months ended
November 30, 1992--Gross revenue for the nine months ended November 30, 1993
was $454.1 million, a decrease of $73.9 million or 14.0% from $528.0 million in
the comparable period last year. The decrease is attributable to: the
successful completion of two large industrial projects in fiscal 1993 ($73.4
million); the sale of the Company's Lewin-ICF subsidiary at the end of the
third quarter of fiscal 1993 ($14.4 million); a decline in the Company's energy
engineering business ($9.5 million); the general impact of reduced government
spending; the completion of other large projects; and sluggish demand. This
decrease was partially offset by a significant increase in ICF Kaiser's
engineer/constructor services to the DOE at the Hanford site ($50.6 million).

Comparison of Fiscal 1993 to Fiscal 1992--Gross revenue was $678.9 million in
fiscal 1993, a $32.0 million or 4.5% reduction from $710.9 million in fiscal
1992. This decrease in the Company's gross revenue is primarily attributable to
the Company's Kaiser Engineers Australia Pty Ltd. ("KEA") subsidiary, which was
successfully winding down its natural gas liquefaction project in northwest
Australia ahead of schedule ($37.5 million); the completion of a large
industrial project in the first half of fiscal 1993 ($34.2 million); and the
impact of several other projects nearing completion. This decrease was
partially offset by an increase in ICF Kaiser's project to manage the
construction of a pulverized coal injection facility ($30.0 million) and an
increase in ICF Kaiser's engineer/constructor services to the DOE at its
Hanford site ($21.6 million).

Comparison of Fiscal 1992 to Fiscal 1991--Gross revenue increased to $710.9
million in fiscal 1992 from $625.0 million in fiscal 1991. Excluding the gross
revenues from those businesses discontinued in fiscal 1992 under the
restructuring plan, fiscal 1991 revenues would have been $541.5 million. The
$169.4 million or 31.3% increase in comparable gross revenues is partially
attributable ($35 million) to the Company owning 100% of KEA in all of fiscal
1992, whereas the Company did not acquire the remaining 50% interest in KEA it
did not already own until the third quarter of fiscal year 1991. Prior to this
acquisition, the Company's initial 50% interest in KEA was accounted for under
the equity method through the second quarter of fiscal year 1991. Additional
growth in gross revenue for this period is attributable to the start-up of
several large industrial projects ($116 million) and ICF Kaiser's
engineer/constructor services at the DOE's Hanford site ($29 million).

Service Revenue

Service revenue is derived by deducting the costs of subcontracted services
and other direct costs from gross revenue and adding the Company's share of the
income (loss) of joint ventures and affiliated companies. ICF Kaiser believes
it is appropriate to analyze operating margins and other ratios in relation to
service revenue because such revenue and ratios reflect the work directly
performed by the Company and because the percentage relationship between gross
revenue and operating expenses can vary from period to period.

16
<PAGE>

The following table sets forth the gross revenue and service revenue (both
excluding discontinued businesses) and the percentage relationship between them
for the periods presented (dollars in millions):

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED FEBRUARY
NOVEMBER 30, 28,
-------------- ----------------------
1993 1992 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Gross revenue........................... $454.1 $528.0 $678.9 $710.9 $541.5
Service revenue......................... $276.5 $293.6 $385.0 $379.8 $316.8
Percentage relationship................. 60.9% 55.6% 56.7% 53.4% 58.5%
</TABLE>

Comparison of Nine months ended November 30, 1993 to Nine months ended
November 30, 1992--Service revenue for the nine months ended November 30, 1993
was $276.5 million, a decrease of $17.1 million or 5.8% from $293.6 million for
the comparable period in fiscal 1993. Service revenue for the quarter ended
November 30, 1993 was $102.1 million, a $7.4 million or 7.8% increase from
$94.7 million in the comparable period last year. Service revenue was primarily
impacted by the same factors affecting gross revenue discussed above, as well
as by a decline at the Company's KEA subsidiary due to the successful early
completion of a natural gas liquefaction project on Australia's northwest shelf
($3.4 million for the nine months ended November 30, 1993).

Service revenue under the DOE contract at Hanford increased $21.0 million for
the nine month period ended November 30, 1993, in comparison to the same period
in the prior year. Operating income on this contract generally fluctuates based
on performance and not with the volume of gross or service revenue.
Consequently, fluctuations in revenue on this contract can impact the Company's
operating margins expressed as a percentage of service revenue.

Equity in income of joint ventures and affiliates decreased $1.1 million for
the nine months ended November 30, 1993 over the comparable period last year,
primarily as a result of the decrease at KEA and the sale of the Company's
equity interest in Acer Group Limited.

Service revenue as a percentage of gross revenue was 60.9% for the nine
months ended November 30, 1993 compared to 55.6% in the comparable period last
year. The increase in this percentage for the comparable nine month period is a
result of the changing nature of ICF Kaiser's contract base. As several large
industrial projects were completed, a greater portion of the Company's projects
during the current year were performed by ICF Kaiser and its personnel as
opposed to subcontractors.

Comparison of Fiscal Year 1993 to Fiscal Year 1992--Fiscal 1993 service
revenue increased to $385.0 million from $379.8 million in fiscal 1992, an
increase of 1.4%. Service revenue as a percentage of gross revenue increased to
56.7% in fiscal 1993 from 53.4% in fiscal 1992, indicating that a greater
portion ofICF Kaiser's gross revenue was being provided by the Company and its
personnel rather than subcontractors. The majority of the projects that were
completed or neared completion in fiscal 1992 had a significant percentage of
their gross revenues being generated from subcontracted work and material
costs. In fiscal 1993, the reduction in service revenue due to the completion
of the projects discussed above was partially offset by increased environment
and infrastructure-related service revenue of $9.8 million and $8.3 million,
respectively.

Comparison of Fiscal Year 1992 to Fiscal Year 1991--Fiscal 1992 service
revenue increased to$379.8 million from $316.8 million in fiscal 1991, an
increase of 19.8%. Services to the DOE at the Hanford nuclear site accounted
for $27.3 million of this increase, while the remaining growth is attributable
to internal work at other DOE facilities and private sector contracts. In
addition, equity in income of joint ventures and affiliated companies, which is
a component of service revenue, decreased to $6.0 million in fiscal year 1992
from $8.2 million in fiscal 1991, primarily due to a $3.3 million decrease in
income from a joint venture caused by a negotiated increase in the cost of
services provided to the joint venture. The decrease in earnings from this
joint venture was offset by income earned on services provided to the joint
venture by ICF Kaiser. Service

17
<PAGE>

revenue as a percentage of gross revenue is lower in fiscal 1992 (53.4%) as
compared to fiscal 1991 (58.5%) due to several large construction projects that
were ongoing in fiscal 1992 that carried a higher percentage of subcontracted
work.

Operating Expenses

The Company believes that it is appropriate to analyze operating margins and
other ratios in relation to service revenue because such revenue reflects the
work directly performed by the Company. The following table sets forth the
percentage relationship to service revenue of certain income statement items
for the periods presented (expenses are expressed as a percentage of service
revenue):

<TABLE>
<CAPTION>
NINE MONTHS ENDED
NOVEMBER 30, YEAR ENDED FEBRUARY 28,
------------------ -------------------------
1993 1992 1993 1992 1991
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Service revenues (in millions)--
excluding discontinued
businesses..................... $276.5 $293.6 $385.0 $ 379.8 $316.8
Direct cost of services and
overhead....................... 77.8% 75.6% 75.8% 76.7% 73.4%
Administrative and general...... 16.4 14.7 15.1 14.8 12.6
Depreciation and amortization... 2.7 2.8 2.8 2.4 2.2
Costs of restructuring and dis-
posal of businesses............ -- 0.5 0.3 19.3 --
Unusual items................... 0.2 0.5 0.0 (1.7) --
Operating income................ 3.0 6.0 5.9 (11.6) 11.8
</TABLE>

Direct cost of services and overhead includes the cost to the Company of
professional and administrative staff hours, including labor-related overhead
costs, that are directly chargeable to client projects. Direct cost of services
and overhead for the nine months ended November 30, 1993, were $215.2 million,
a $6.8 million or 3.1% decrease from the nine months ended November 30, 1992.
This decrease is attributable to the decline in volume as well as the Company's
cost-cutting efforts. Direct cost of services and overhead as a percentage of
service revenue for the first nine months of fiscal 1994 is relatively
consistent with fiscal 1993. Although volume is down and the Company has
implemented cost-cutting measures, certain indirect costs, such as a large
portion of the Company's rent expense, are relatively more fixed in nature. The
percentage in fiscal 1992 was higher than fiscal 1991 as a result of the
increase in revenue realized from the recognition of fees and contingency
reductions on two large projects in fiscal 1991.

Although the Company has acted to reduce administrative and general expenses,
these expenses have increased for the nine months ended November 30, 1993 from
the prior period last year. The increase is primarily the result of the
Company's increased marketing efforts and additional absorption of fixed
expenses after the completion of ICF Kaiser's restructuring program in fiscal
1993, partially offset by reductions realized by the Company's cost-cutting
program. The percentages in fiscal 1993 and 1992 were higher than in fiscal
1991 as a result of the increased expenses during and after the restructuring
program. Additionally, the Company recorded a $0.5 million charge in the nine
months ended November 30, 1993 for costs related to the resignation of the
Company's President and Chief Operating Officer and severance costs related to
actions taken to reduce indirect costs.

Depreciation and amortization for the nine months ended November 30, 1993
decreased over the nine months ended November 30, 1992 by $0.9 million or 10.8%
to $7.4 million, primarily as the result of the write-off of certain software
assets in the third quarter of fiscal 1993 and the sale of ICF Kaiser's
interest in Acer Group Limited at the end of fiscal 1993. The $1.6 million
increase in depreciation and amortization expense in fiscal 1993 compared to
fiscal 1992 was the result of a full year of amortization of certain goodwill
and intangible assets acquired in fiscal 1992. At November 30, 1993, the
Company had a net balance of $59.0 million of goodwill and intangible assets
that are amortized over periods ranging from five to 40 years, down from $61.1
million at the end of fiscal 1993.

18
<PAGE>

Interest Expense

ICF Kaiser's interest expense for the nine months ended November 30, 1993
decreased 22.3% from the comparable period last year. This was primarily
because of reduced average long-term debt outstanding and lower interest rates.
Interest expense will increase over future periods as a result of the
restructuring of the Company's balance sheet, discussed under "Liquidity and
Capital Resources". The increase in interest expense will be partially offset
by a reduction in preferred dividends.

Net interest expense decreased in fiscal 1993 compared to fiscal 1992 by $3.4
million primarily as the result of lower prevailing interest rates and using
proceeds from the sale of Lewin-ICF and other discontinued businesses to pay
down the Company's credit facility. The sale of Lewin-ICF occurred on November
30, 1992. The Company also sold its minority investment in Acer Group Limited
on February 21, 1993. As a result of the timing of these transactions, the
Company expects interest expense in fiscal 1994 to continue to be lower than
fiscal 1993 if prevailing interest rates remain stable.

Interest expense for core businesses was slightly lower in fiscal 1992 ($10.8
million) as compared to fiscal 1991 ($11.3 million) since the Company had
increased borrowings under the credit facility to make several acquisitions in
fiscal 1991.

Discontinued Businesses

At February 28, 1993, the Company had sold or otherwise disposed of all
businesses discontinued under its restructuring plan. In fiscal 1992, the Board
of Directors approved management's recommendation to discontinue certain non-
core businesses, resulting in a $73.4 million provision for restructuring and
disposal of businesses to provide for: operating losses of discontinued
businesses through disposal; losses on the disposal of those businesses
included in the plan at that time; and one-time restructuring charges for
closing and consolidating certain operations of core businesses. In fiscal
1993, ICF Kaiser increased the provision for restructuring and disposal of
businesses by an additional $1.3 million to provide for the combined impact of
the sale of the Company's Lewin-ICF health consulting subsidiary which had been
determined to be outside of the Company's core businesses and the revisions to
the estimates of remaining liabilities relating to discontinued businesses.

Income Tax Expense

The Company's effective tax rate is 52% for the nine months ended November
30, 1993, reflecting an increase in ICF Kaiser's effective tax rate from 42%
for fiscal 1993. The increase reflects the effect of the Company's lower than
anticipated pre-tax income, which increases the impact of the Company's
permanent book-tax differences, primarily goodwill, on the effective tax rate.
This increase was partially offset by the effect of recent changes in U.S. tax
law on ICF Kaiser's deferred tax asset.

The $6.3 million tax provision for fiscal 1993 differs from the statutory
rate primarily as a result of state income taxes and the amortization of
goodwill. In fiscal 1992, ICF Kaiser adopted Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes, effective March 1, 1991. The
impact of adoption was to increase the deferred tax benefit by $6.5 million.
The $13.8 million tax benefit recorded for fiscal 1992 relates to the operating
losses of discontinued businesses and the available benefits from the
disposition of these businesses, net of $8.6 million of taxes applicable to the
core businesses. The overall benefit rate of 25.4% in fiscal 1992 differs from
the statutory rate primarily due to differences between the tax and book basis
of various assets of discontinued businesses.

Impact of New Accounting Standards

The Company adopted Statement of Financial Accounting Standards No. 106,
Employers' Accounting for Postretirement Benefits ("SFAS No. 106"), effective
March 1, 1993. The Company's postemployment obligation extends to only a
limited group of retirees (and their spouses) who joined ICF Kaiser through an

19
<PAGE>

acquisition; and their benefits are limited to a fixed amount per employee or
spouse. SFAS No. 106 requires that companies accrue postemployment benefits
over the period benefits are earned. The Company has elected the prospective
transition method and is amortizing its $14.2 million transition obligation
over 14.5 years, the average remaining life expectancy of the retirees and
their spouses. The Company's ongoing expense under SFAS No. 106 includes the
interest component and the amortization of the transition obligation.

LIQUIDITY AND CAPITAL RESOURCES

In the nine months ended November 30, 1993, ICF Kaiser's cash position
increased $14.0 million. Working capital increased slightly since February 28,
1993, $4.9 million or a 5.5% increase, to $92.7 million as of November 30,
1993. Operations provided $17.3 million of cash, including the collection of
contract receivables partially offset by a decrease in outstanding accounts
payable. Cash was also provided from borrowings under the Company's credit
facility. ICF Kaiser uses bank financing to supplement its ongoing working
capital requirements.

The Company's operating activities used $16.6 million in cash in fiscal 1993
and provided $17.7 million of cash in fiscal 1992. The use of cash in fiscal
1993 and the cash provided in 1992 were primarily results of changes in
deferred revenue, which were attributable to two major contracts that had
significant contract advances in fiscal 1992 and were substantially complete in
fiscal 1993. At February 28, 1993, the Company's level of working capital had
increased $21.8 million from February 29, 1992. This increase is primarily the
result of the sale of businesses, offset by the reduction in the Company's
long-term debt, redeemable preferred stock, and payment of preferred stock
dividends. During fiscal 1993, ICF Kaiser also completed the sale of all of its
remaining discontinued operations and its interest in Acer Group Limited,
generating $35.7 million in cash proceeds. These proceeds were used primarily
to repay indebtedness and to increase the Company's working capital position.

On January 11, 1994, ICF Kaiser issued 125,000 Units, each unit consisting of
$1,000 principal amount of the Company's 12% Notes and 4.8 Warrants, each to
purchase one share of the Company's Common Stock at $5.00 per share. Of the
Units' net issue price of $121,487,500 ($125,000,000 less a $3,512,500
discount), $900,000 was allocated to the value of the 600,000 Warrants and
$120,587,500 to the 12% Notes. The net proceeds were used to retire the
Company's 13.5% Senior Subordinated Notes ("13.5% Notes") at 114.17% ($34.3
million), to repurchase warrants issued in connection with the 13.5% Notes
($1.6 million), to repurchase its Series 1 Junior Convertible Preferred Stock
and pay accrued dividends thereon ($5.1 million), to repurchase its Series 2C
Senior Preferred Stock at 106.25% together with the Series 2C Warrants ($26.6
million), to repay the Company's then-existing credit facility ($45.0 million),
and to repay, on behalf of the Company's ESOP, the outstanding balance on the
ESOP loan ($1.7 million). The balance will be used for general corporate
purposes.

The early extinguishment of debt will result in an approximately $3.8 million
after-tax extraordinary charge in the fourth quarter. Additionally, although
not directly reducing net income, the premium related to the Company's exercise
of its early repurchase rights on the Series 2C Senior Preferred Stock will
reduce net income available for common shareholders by approximately $2.0
million in the fourth quarter.

Upon issuance of the 125,000 Units discussed above, the Company's $60 million
New Credit Facility became effective; the Company's previous credit facility
had been due to expire on September 30, 1994. The New Credit Facility is
provided by a lead bank and a consortium of other banks with terms and
covenants similar to those under the previous credit facility. The New Credit
Facility expires on October 31, 1996 and contains Eurodollar and alternate base
rate options with margins dependent upon the Company's financial operating
results.

ICF Kaiser expects that current projected levels of cash flows and operating
revenues and the availability of borrowings under the Company's New Credit
Facility will be adequate to fund operations for the next twelve months.

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Effects of Inflation

The majority of the Company's contracts are cost reimbursable and, therefore,
the inflation rate in the United States, as well as in other countries in which
the Company operates, generally has little impact on operating margins;
however, as a professional services firm, the Company is more labor-intensive
than an industrial firm. To attract and maintain the high-caliber professional
staff it needs, the Company must structure its compensation programs
competitively. The wage-demand effects of inflation are felt almost immediately
in the Company's costs.

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BUSINESS

ICF Kaiser provides fully integrated consulting, engineering and construction
services to public and private sector clients in the related markets of
environment, infrastructure and industry.

OVERVIEW OF MARKETS

Environmental. Demand for ICF Kaiser's environmental consulting and
engineering services is driven by a number of factors, including: the need to
improve the quality of the environment; environmental regulation and
enforcement; and increased liability associated with pollution-related injury
and damage. Increasingly strict Federal, state, and local government regulation
has forced private industry and government agencies to clean up contaminated
sites, to bring production facilities into compliance with current
environmental regulations, and to minimize waste generation on an ongoing
basis.

Significant environmental laws have been enacted in response to public
concern over the environment. These laws and the implementing regulations
affect nearly every industrial activity. Efforts to comply with the
requirements of these laws creates demand for the Company's services, and the
Company believes that under the stated policies of the Clinton Administration
there will be a trend toward more stringent regulation and government
enforcement. The principal Federal legislation that has created a substantial
market for the Company, and therefore has the most significant effect on the
Company's business, includes the following: The Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA") of 1980, as amended by the
Superfund Amendments and Reauthorization Act ("SARA") of 1986, established the
Superfund program to clean up existing, often abandoned hazardous waste sites
and provides for penalties and punitive damages for noncompliance with EPA
orders. The Resource Conservation and Recovery Act ("RCRA") of 1976, as amended
by the Hazardous and Solid Waste Amendments of 1984 ("HSWA"), provides a
comprehensive scheme for the regulation of hazardous waste from the time of
generation to its ultimate disposal (and sometimes thereafter), as well as the
regulation of persons engaged in the treatment, storage and disposal of
hazardous waste. The Clean Air Act of 1970 empowered the EPA to establish and
enforce National Ambient Air Quality Standards and limits on the emission of
various pollutants. The 1990 amendments to the Clean Air Act substantially
increase the number of sources emitting a regulated air pollutant which will be
required to obtain an operating permit; the amendments also address the issues
of acid rain, ozone protection, and other areas in which the Company can
provide expanded services. The Clean Water Act of 1972, originally the Federal
Water Pollution Control Act of 1948, established a system of standards, permits
and enforcement procedures for the discharge of pollutants to surface water
from industrial, municipal, and other wastewater sources. The Toxic Substance
Control Act, enacted in 1976, established requirements for identifying and
controlling toxic chemical hazards to human health and the environment.

Infrastructure. The global infrastructure market has historically been driven
by the need to maintain and expand roads, highways, mass transit systems, and
airports. In addition, environmental concerns, such as reducing automotive air
pollutant emissions, have become increasingly important factors in new
infrastructure and transportation initiatives. This market is primarily funded
by government dollars, although the private sector is seeking an increased
role, particularly in international projects. ICF Kaiser's services in this
market include design, engineering and construction.

Industrial. ICF Kaiser's industrial work is funded almost exclusively by the
private sector and is driven by businesses' need to maintain and retrofit
existing plants and replace aging production capacity with newer, more
environmentally responsible facilities. Through the acquisition of ICF Kaiser
Engineers, Inc. in 1988, the Company acquired the engineering and construction
skills, as well as access to process technologies, needed to establish a
leadership position in serving the basic metals and mining industries,
including aluminum, steel, copper and coal. These industries have in the past
several years experienced a decline in the prices for the materials they
produce. This decline has resulted in a slower pace at which plants or
production

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capacity are retrofitted or replaced. As a consequence, the Company's revenue
from this market has declined over the past several years.

The percentage breakdowns of ICF Kaiser's service revenue (excluding
discontinued businesses) by market for the fiscal years shown below were as
follows (dollars in millions):

ICF Kaiser's markets are global in nature. To compete successfully and to
reduce its risks, the Company enters into marketing and project-specific joint
ventures with other companies. The Company has also been able to leverage its
existing international projects to gain a competitive advantage when bidding on
new work.

STRATEGIC CONSIDERATIONS

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

Full Front-End Capability. Through internal growth and acquisition, the
Company's skills have been expanded to include policy analysis and
consulting, scientific analysis and health/risk assessments, remedial
investigations and feasibility studies and engineering design. By
possessing these front-end skills, the Company can become involved at the
outset of the problem identification phase which, in turn, puts it in a
stronger position to participate in any follow-on engineering and
construction work.

High Value-Added Services. The Company's marketing strategy is to provide
exceptional value to its clients, which often means focusing on the quality
of service offered but not necessarily being the lowest cost provider.
Within those markets that relate to environmental services, the Company
adds high value through specialized environmental knowledge that: (i) helps
clients understand environmental threats and opportunities and alternative
ways in which each can be managed; (ii) allows creation of customized
solutions for the clients' environmental problems; and (iii) combines
problem identification, solution, and implementation in a seamless
approach.

Access to Technology. New technologies play a critical role in both the
cleanup of existing waste sites and in the reduction of waste generated by
ongoing production processes. The Company has access to key technologies
relating to reducing and monitoring stack emissions, bio-remediation, coal
scrubbing and industrial process technologies that can help minimize waste,
reduce costs and improve the quality of a finished product. To better
assist clients and to increase its overall participation in a project, the
Company continues to expand its access to leading environmental and process
technologies through various methods, including licensing and joint
ventures.

Strategic Relationships. To extend its presence and reduce business
development risks, the Company has established international business
relationships through joint ventures, marketing agreements and direct
equity investments. These relationships, which continue to be expanded,
facilitate management of the Company's existing international operations
and help to reduce the cost and risks associated with entering new
geographic regions.

Avoidance of Environmental Liability. To avoid the risks and potential
liability associated with taking possession of hazardous waste, the Company
has made the decision to minimize its participation in that part of the
business associated with collection, treatment, storage or disposal of
waste. When such services are required, the Company will subcontract the
work or assist the client in selecting appropriate contractors.

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SERVICES AND PROJECTS

Environmental Market

ICF Kaiser's environmental market includes work for clients in all major
industries, including many large domestic and multi-national corporations, and
public sector work, primarily for the DOE, DOD, and EPA. The Company offers its
clients over 20 years experience in all aspects of environmental regulation,
compliance and access to leading technologies, as well as skills in the
assessment, management and remediation of existing hazardous and solid wastes,
and process redesign to minimize future waste.

Analysis/Assessment. The Company's analytic and scientific abilities allow it
to become involved in environmental issues and problems at their outset. In the
initial phase, ICF Kaiser provides a broad outline of the types of
environmental problems, health risks, and liabilities associated with the
client's business. In subsequent stages, ICF Kaiser conducts field assessments
to evaluate a site's waste, ground water, air, sediment, and soil
characteristics and to determine the extent of contamination, if any.

Remediation. In general, environmental restoration work is progressing beyond
study and analysis to remediation. Having already established a market position
in the consulting and front-end analysis phase, ICF Kaiser has been able to
follow market demand into remediation. After an environmental problem is
characterized, the Company offers alternative remediation approaches which may
involve providing on-site waste containment or management of on-site/off-site
remediation and waste removal. The Company can also redesign the client's
ongoing production processes to minimize or eliminate the generation of
hazardous waste. The Company then develops engineering plans and technical
specifications. To minimize potential liabilities associated with taking title
to hazardous waste during the cleanup process, ICF Kaiser will often assist the
client in selecting cleanup contractors to handle the actual remediation work.

Water Pollution. The major ports of many of the world's cities have serious
water pollution problems, and ICF Kaiser is part of several cities' efforts to
improve the condition of their harbors and waterways. The Company is the
construction manager of the cleanup of Boston Harbor, the largest environmental
project in the country. Under this contract, the Company is managing more than
1,800 construction workers, engineers, architects, and support personnel
working to construct the largest wastewater treatment plant in the United
States on an island in Boston Harbor. Because of the Company's experience with
the Boston Harbor project, it was selected to be one of the companies currently
working on San Diego, California's clean water program.

Industrial Production. Increasingly, it is cost effective for ICF Kaiser
clients to modify ongoing production processes to minimize or eliminate waste
generation. The Company's integration of engineering and environmental skills,
plus its access to innovative technologies, provides a competitive advantage in
redesigning production processes. For example, the Company has designed control
systems to enable steel producers to reduce harmful emissions and rehabilitate
coke ovens while producing a better product.

DOE/DOD Facilities Restoration. Government estimates suggest that more than
$100 billion could be spent by DOD and DOE over the next 20 years cleaning up
closed weapons production facilities and military bases around the world. ICF
Kaiser is already working on 11 of 18 major DOE facilities and at DOD bases
around the world. At a U.S. Army installation in the eastern United States, the
Company is assisting in the clean up of an ordnance disposal site contaminated
with chemical warfare agents, unexploded munitions, radiological materials and
other hazardous waste.

The Company has been the engineer/constructor at the DOE's Hanford site in
Richland, Washington, since 1987. In early 1993, the Company won a renewal of
its contract, which was subsequently amended in October 1993. The Company
estimates that the architect-engineering and construction management services
to be provided under the amended contract will be worth more than $800 million
in gross revenue over the two-and-one-half year term of the amended contract
which began on October 1, 1993. See "Backlog." Assuming the Company's
historical performance ratings are maintained over this two-and-one-half year
period, the Company estimates that the fees it will be eligible to earn under
this contract would be increased

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significantly. In addition, the amended contract provides the Company with the
opportunity to earn incentive fees related to technology transfers and
efficiency savings. In connection with the contract amendment and in order to
reduce duplication of work and to improve management control and efficiency of
operation, the Company and DOE agreed to assign management of substantially all
aspects of the amended contract to Westinghouse Hanford Company, the current
management and operations contractor at the DOE's Hanford site.

Clean Air. ICF Kaiser's clients continue to face complicated and costly
regulatory compliance obligations associated with the Clean Air Act Amendments
of 1990. The Company has developed comprehensive computer models that simulate
changes in air quality, visibility and population exposure which are being used
to examine air quality problems. ICF Kaiser assists clients by quantifying
plant emissions, developing strategies for complying with permit requirements,
evaluating and installing advanced control technologies, and redesigning
production processes to reduce pollutant emissions. For clients required to
reduce fugitive emissions resulting from equipment leaks, ICF Kaiser has
developed FUGEMS (TM), a proprietary emissions monitoring system which
identifies and tracks the sources of air pollutant leaks. The Company has been
awarded a three-year contract to examine air quality problems that might result
from oil and gas exploration in the Gulf of Mexico. In the public sector, the
Company has been awarded a number of EPA contracts related to global climate
change, indoor air quality, and acid rain in the past 12 months.

Energy. ICF Kaiser's energy clients include major U.S. electric utilities;
leading oil, natural gas, and coal companies; transportation companies;
pipeline entities; firms practicing energy law; environmental groups; and
government and regulatory agencies involved in energy and related environmental
issues. ICF Kaiser's expertise includes strategic planning and analysis; energy
and environmental policy analysis; supply and demand forecasting; and
technology assessments. The Company also provides services for the design,
construction, modification, operation and maintenance of fossil fuel, nuclear,
and renewable energy power plants. ICF Kaiser uses its broad environmental
skills, access to leading-edge technology and well-established energy practice
in the search for cleaner burning sources of energy and the efforts to minimize
waste generation in power production. For example, a flue gas desulfurization
process that removes emissions that cause acid rain from power plant
smokestacks ("LIFAC") currently is undergoing testing at the LIFAC clean coal
demonstration project conducted by ICF Kaiser for DOE in Richmond, Indiana. ICF
Kaiser developed the project, arranged for the license of the technology,
participated in the project implementation, and is providing engineering
design, project management, and construction services for the installation of
the technology. ICF Kaiser also markets Microcel (TM), a microbubble column-
flotation method for cleaning fine coal, which currently is installed in coal
facilities in five states.

International. ICF Kaiser serves environmental clients in Taiwan, France, the
former Soviet republics, Mexico, the Czech republic and a number of other
countries. During the past year, ICF Kaiser has worked on global climate change
projects in more than 20 countries for clients such as the World Bank, the
United Nations, and foreign government agencies. ICF Kaiser has established an
initial international presence in Eastern Europe through analytical consulting
projects which may enable the Company to compete for larger environmental and
construction projects that may develop as the economies in that region
strengthen.

Infrastructure Market

The Company believes that there is a growing acceptance of the need to
restore and upgrade the public infrastructure of mass transit systems,
airports, highways, bridges and water resource facilities worldwide. ICF Kaiser
also believes that environmental concerns increasingly are a driving force
behind new infrastructure and transportation initiatives. The Company currently
provides planning, feasibility studies, design, and construction management
services to the infrastructure market. At the planning stage, ICF Kaiser
incorporates its specialized environmental skills to design environmentally
responsible projects. Thereafter, the Company's engineers and construction
specialists provide a full range of services such as master planning,
alternative analysis, site development studies, conceptual and preliminary
engineering, detail design, specifications development, quality assurance and
quality control, construction management, construction and inspection.

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<PAGE>

Transportation. ICF Kaiser has over three decades of experience in
transportation projects, and its current transportation projects show the
breadth of this experience: services related to the conversion the diesel bus
system to electric power as part of Los Angeles (California) County's program
to lower overall mobile source emissions and improve the area's air quality;
engineering services for new rail rapid transit system work in the Los Angeles
area; evaluation of bus and light rail transit alternatives in Sacramento,
California; construction engineering and inspection services for a "people
mover" in Jacksonville, Florida; construction management of several San
Francisco, California, Bay Area Rapid Transit projects; and engineering design
services for development of and seismic retrofitting of bridges in Seattle,
Washington.

More than $150 billion has been authorized through 1997 by the Federal
government for programs mandated by the Intermodal Surface Transportation
Efficiency Act ("ISTEA"), a substantial portion of which will be directed to
upgrade the national highway and interstate systems and to enhance state roads
and bridge safety. ICF Kaiser has recently been awarded two contracts which are
partially funded through ISTEA. The Company will serve as the management
consultant for the preliminary engineering phase of a light rail system planned
for downtown Chicago, Illinois, and also provide preliminary design services
for a Miami, Florida, intermodal center that will offer rapid and convenient
transportation alternatives.

Other Infrastructure Services. ICF Kaiser offers specialized infrastructure
services such as structural and earthquake engineering, seismic evaluation and
the rehabilitation of buildings. The Company currently is performing detail
design and inspection services for the refurbishing of the hydroelectric power
plant at the base of the Pardee Dam in Northern California.

International. ICF Kaiser is a member of a joint venture that provides
planning, design and construction services for the 88-kilometer Taipei, Taiwan,
rapid transit system. The Company also is providing construction engineering
and architectural services for a new Toronto, Canada, subway station and
system-wide electrical and mechanical design engineering and specification
services for a subway line extension in London, England.

Industrial Market

ICF Kaiser's engineering design, project management and construction services
to the industrial market involve work with the steel, aluminum, alumina,
copper, tin and other metals industries. In the coke, coal, and coal chemicals
area, ICF Kaiser's services include inspection of coke plants for environmental
compliance, facility design and construction, and equipment sales and services.
The Company also provides services related to coal cleaning, handling and
environmental controls. ICF Kaiser provides blast furnace design, repair and
construction to the steel industry and is currently assessing and recommending
the installation or upgrading of management information systems and process
control systems at three steel plants in India. Following on the successful
design and construction of a copper concentrator for a Portuguese copper mine,
the Company recently was awarded a contract to provide engineering and
procurement services for the development of a U.S. copper concentrating plant.

Pulverized Coal. Increasingly the Company's industrial clients rely on ICF
Kaiser to help them make more efficient use of traditional energy sources, find
alternative energy sources, and employ new technologies that offer both
environmental compliance and cost competitiveness. At a plant in Gary, Indiana,
ICF Kaiser successfully achieved these goals for U.S. Steel with the Company's
contract to construct, own, and operate a pulverized coal injection (PCI)
facility. Pulverized coal is a cost-effective and environmentally acceptable
substitute for a portion of the coke used in blast furnace operations. For the
PCI project, ICF Kaiser obtained the license for the critical technology,
structured and secured the needed $100 million-plus financing, designed the
facility, and managed its construction. Following the successful test period in
the spring of 1993, ICF Kaiser now operates the PCI facility, which it owns
with other partners.

International. ICF Kaiser currently has projects underway in over 25
countries and has business alliances with companies based around the world. To
strengthen its position in the industrial market and to

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<PAGE>

gain access to new technologies, ICF Kaiser has a marketing joint venture with
Spie Batignolles S.A. (France) and Davy Corporation PLC (United Kingdom) to
pursue engineering and construction work for alumina refineries and aluminum
smelters.

Other Markets

ICF Kaiser serves numerous clients who need state-of-the-art technology and
consulting services for the management of information and solving information-
related problems, including business process redesign, systems automation,
modernization and movement of systems from mainframes to client/server
platforms. The Company also assists clients in analyzing, designing, and
implementing modern financial systems often utilizing ICF Kaiser's GSA-approved
financial management system--FEDERAL SUCCESS(TM). The Company's contract
dispute management services help contractors, project owners and developers to
resolve disputes without resorting to costly and time-consuming litigation. ICF
Kaiser's housing and community development specialists provide consulting
services to housing professionals in Federal, state and local governments, non-
profit organizations, tenant groups, financial services groups, and private
development firms.

COMPETITION AND CONTRACT AWARD PROCESS

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

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

Most of the Company's contracts with public sector clients are awarded
through a competitive bidding process that places no limit on the number or
type of offerors. The process usually begins with a government Request for
Proposal ("RFP") that delineates the size and scope of the proposed contract.
Proposals submitted by ICF Kaiser and others are evaluated by the government on
the basis of technical merit (for example, response to mandatory solicitation
provisions, corporate and personnel qualifications and experience) and cost.
While each RFP sets out specific criteria for the choice of a successful
offeror, RFP selection criteria in the government services market in which ICF
Kaiser competes often tend to weigh the technical merit of the proposal more
heavily than the proposed cost. The Company believes that its experience and
ongoing work strengthen its technical qualifications and thereby enhance its
ability to compete successfully for future government work.

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

ICF Kaiser subsidiaries operate under a number of different types of contract
structures with its private sector and public clients, the most common of which
are Cost Plus and Fixed Price. Under Cost Plus contracts, the Company's costs
are reimbursed with an incentive or award fee offered to provide inducement for
effective project management. A variation of Cost Plus contracts are time and
materials contracts under which the Company is paid at a specified fixed hourly
rate for direct labor hours worked. This structure normally is used in
situations where it may not be possible to estimate the extent and duration of
work to be performed. Cost Plus contracts (including time and materials
contracts) accounted for approximately 71.3%

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<PAGE>

of the Company's total gross revenue for fiscal year 1993. Under Fixed Price
contracts, which accounted for approximately 19.0% of the Company's total gross
revenue for fiscal year 1993, the Company is paid a predetermined amount for
all services provided as detailed in the design and performance specifications
agreed to at the projects' inception.

CUSTOMERS

The Company's clients include: DOE, EPA and DOD; major industrial firms in
the aerospace, energy, transportation, chemical, steel, aluminum, mining,
manufacturing and computer industries; utilities; and a variety of state and
local government agencies throughout the United States. A substantial portion
of the Company's work is repeat business from existing clients. In many cases,
the Company has worked for the same client for many years, providing different
services at different times. DOE accounted for approximately 29%, and DOD, EPA,
and other Federal agencies collectively accounted for approximately 18%, of the
Company's consolidated gross revenue during fiscal year 1993. The Federal
government accounted for approximately 47% of the Company's consolidated gross
revenue in fiscal year 1993, 42% in fiscal year 1992, and 40% in fiscal year
1991.

In fiscal year 1993, revenue from USX Corporation and its affiliates
accounted for approximately 13% of the Company's consolidated gross revenue.
The Company's international clients include both private firms and foreign
government agencies in such countries as Australia, Portugal, and Taiwan. In
fiscal year 1993, foreign operations accounted for approximately 8% of the
Company's consolidated gross revenue. For information concerning gross revenue,
operating income, and identifiable assets of the Company's business by
geographic area, see Note P to the Consolidated Financial Statements.

BACKLOG

Backlog refers to the aggregate amount of gross contract revenues remaining
to be earned pursuant to signed contracts extending beyond one year. At
November 30, 1993, the Company's contract backlog was approximately $1.8
billion in gross revenue, compared to approximately $1.0 billion in gross
revenue at November 30, 1992. The Company expects that approximately 10% of
this backlog will be worked off during the last quarter of the current fiscal
year, and that approximately 77% will be worked off over the following three
complete fiscal years. Because of the nature of its contracts, the Company is
unable to calculate the amount or timing of service revenue that might be
earned pursuant to these contracts. The Company believes that backlog is not a
predictor of future gross or service revenues.

Differences in contracting practices between the public and private sectors
result in ICF Kaiser's backlog being heavily weighted toward contracts
associated with agencies of the Federal government. Although such contracts
historically have generated less than 50% of the Company's revenues, they
comprised approximately 88.5% of the contract backlog at November 30, 1993.
Backlog under contracts with agencies of the Federal government that extend
beyond the government's current fiscal year includes the full contract amount,
including in many cases amounts anticipated to be earned in option periods and
certain performance fees, although generally annual funding of the amounts
under such contracts must be appropriated by Congress before the agency may
expend funds during any year under such contracts. In addition, the agency must
allocate the appropriated funds to these specific contracts and thereafter
authorize work or task orders to be performed under these specific contracts.
Such authorizations are generally for periods considerably shorter than the
duration of the work the Company expects to perform under a particular contract
and generally cover only a percentage of the contract revenue. Because of these
factors, the amount of Federal government contract backlog for which funds have
been appropriated and allocated, and task orders issued, at any given date is a
substantially smaller amount than the total Federal government contract backlog
as of that date. In the event that option periods under any given contract are
not exercised or funds are not appropriated, allocated, or authorized to be
spent under any given contract, the amount of backlog attributable to that
contract would not result in revenues to the Company. All contracts and
subcontracts with agencies of the Federal government are subject to
termination, reduction or modification at any time in the discretion of the
government agency.

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POTENTIAL ENVIRONMENTAL LIABILITY

The assessment, remediation, analysis, handling and management of hazardous
substances necessarily involve significant risks, including the possibility of
damages or personal injuries caused by the escape of hazardous materials into
the environment, and the possibility of fines, penalties or other regulatory
action. These risks include potentially large civil and criminal liabilities
for violations of environmental laws and regulations, and liabilities to
customers and to third parties for damages arising from performing services for
the Company's clients. A general discussion of potential liabilities arising
out of environmental laws and regulations is contained in the Risk Factors
section of this Prospectus. See "Risk Factors--Environmental Contractor Risks."

ICF Kaiser provides consulting services and performs other work involving or
related to hazardous substances, toxic wastes and other regulated materials,
activities which involve the risks discussed above. The Company has endeavored
to protect itself from potential liabilities resulting from pollution or
environmental damage by obtaining indemnification from its private-sector
clients and intends to continue this practice in the future. Under most of
these contracts, the Company has been successful in obtaining such
indemnification; however, such indemnification generally is not available if
such liabilities arise as a result of breaches by the Company of specified
standards of care.

For EPA contracts involving field services in connection with Superfund
response actions, the Company has obtained indemnification under Section 119 of
CERCLA, as amended by SARA, for pollution and environmental damage liability
resulting from release or threatened release of hazardous substances. Certain
of the Company's clients (including private clients, the DOD and the DOE) are
Potentially Responsible Parties ("PRPs") under CERCLA. Under the Company's
contracts with these PRPs, the Company has the right to seek contribution from
these PRPs for liability imposed on the Company in connection with its work at
these clients' CERCLA sites. In addition, in connection with contracts
involving field services at 11 of the DOE's weapons facilities, including the
DOE's Hanford site, the Company is indemnified under the Price-Anderson Act, as
amended, against liability claims arising out of contractual activities
involving a nuclear incident.

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

INSURANCE

The Company has a comprehensive risk management and insurance program that
provides a structured approach to protecting the Company. Included in this
program are coverages for general, automobile and professional liability;
workers' compensation; and for employers and property liability. The Company
believes that the insurance it maintains, including self-insurance, is in such
amounts and protects against such risks as is customarily maintained by similar
businesses operating in comparable markets. At this time, the

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Company expects to continue to be able to obtain general, automobile, and
professional liability, workers' compensation, and employers and property
insurance in amounts generally available to firms in its industry. There can be
no assurance that this situation will continue, and if insurance of these types
is not available, it could have a material adverse effect on the Company.

PROPERTIES

All of the Company's operations are conducted either in leased facilities or
in facilities provided by the Federal government or other clients. As of
November 30, 1993, the Company leased an aggregate of approximately one million
square feet of space. The terms of these leases range from month-to-month to 15
years, and some may be renewed for additional periods. The Company's
headquarters is located in Fairfax, Virginia. Other offices include Livermore,
Los Angeles, Oakland, and San Rafael, California; Denver, Colorado; Washington,
D.C.; Jacksonville, Florida; Chicago, Illinois; Boston, Massachusetts; Las
Vegas, Nevada; Edison, New Jersey; Albuquerque and Los Alamos, New Mexico;
Pittsburgh, Pennsylvania; Dallas and Houston, Texas; Richland and Seattle,
Washington; Melbourne and Perth, Australia; London, England; Paris, France;
Athens, Greece; Lisbon, Portugal; and Taipei, Taiwan.

Because the Company's operations generally do not require the maintenance of
unique facilities, suitable office space is readily available for lease in most
of the areas served. The Company believes that adequate space to conduct its
operations will be available for the foreseeable future. In 1987, the Company
entered into a 15-year lease agreement for a new headquarters building in
Fairfax, Virginia containing approximately 200,000 square feet of office space.
In 1988, the Company signed a 15-year lease agreement to occupy approximately
100,000 square feet of office space in a new building adjacent to the
headquarters building. In connection with the acquisition of ICF Kaiser
Engineers in 1988, ICF Kaiser acquired the lease for ICF Kaiser Engineers'
headquarters building in Oakland, California. The lease provides for
approximately 142,000 square feet of office space and expires in June 1995.

LEGAL AND REGULATORY PROCEEDINGS

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

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

In 1989, certain former holders of common stock of Kaiser Engineers Group,
Inc. filed an action in Chancery Court of the State of Delaware, County of New
Castle, entitled Aiken v. Kaiser Engineers Group, Inc. for appraisal of the
shares they held at the time ICF Kaiser International, Inc. acquired their
former company. The Company believes that those common shares had no value at
the time of the acquisition and that this litigation will not have a material
adverse effect on the Company.

30
<PAGE>

MANAGEMENT

Set forth below is certain information concerning the directors and executive
officers of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH COMPANY
---- --- ------------------------
<S> <C> <C>
James O. Edwards............... 50 Chairman of the Board and Chief Executive Officer
Stephen W. Kahane.............. 42 President, Environment and Energy Group
Raymond E. List................ 49 Chairman, Engineering and Construction Group
Douglas W. McMinn.............. 46 President, International Operations Group
Norman A. Perry................ 53 Senior Vice President and Corporate Controller
Alvin S. Rapp.................. 53 President, Engineering and Construction Group
Marcy A. Romm.................. 35 Senior Vice President, Human Resources
Michael J. Rowny............... 43 Director, Executive Vice President and Chief Financial Officer
Kenneth A. Schweers............ 47 Chairman, Consulting Group
Ronald R. Spoehel.............. 36 Senior Vice President and Treasurer
Marc Tipermas.................. 45 Director, Executive Vice President and Director of Corporate
Development
Paul Weeks, II................. 50 Senior Vice President, General Counsel and Secretary
Gian Andrea Botta.............. 40 Director
Tom Bradley.................... 75 Director
Tony Coelho.................... 51 Director
Frederic V. Malek.............. 57 Director
Rebecca P. Mark................ 39 Director
Robert W. Page, Sr............. 66 Director
</TABLE>

OUTSIDE DIRECTORS

Gian Andrea Botta is President of IFINT-USA Inc., a subsidiary of IFINT S.A.
He had been Vice President of Acquisitions of IFINT-USA, Inc. from 1987 to
1993. IFINT S.A. is the international investment holding unit of the
IFI/Agnelli Group, a diversified holding company. Mr. Botta has been a director
of ICF Kaiser International, Inc. since March 1993. Mr. Botta also is a
director of Kendall International, Chartwell Re Corporation and Lear Seating
Corporation. Mr. Botta received a degree in economics and business
administration in 1975 from the University of Torino, Italy.

Tom Bradley is a senior counselor at Brobeck, Phleger & Harrison, a law firm
in Los Angeles, California, advising companies on resolving major public and
private sector issues. Previously he had been Mayor of the City of Los Angeles
for five terms, from 1973 to 1993. Mr. Bradley has been a director of ICF
Kaiser International, Inc. since September 1993. Mr. Bradley graduated from
Southwestern University (J.D.).

Tony Coelho has been a Managing Director of Wertheim Schroder & Co.
Incorporated, a New York-based international investment banking and securities
firm, since 1989. He also serves on the firm's Executive Committee, and serves
as President and C.E.O. of Wertheim Schroder Investment Services, Inc. From
1979 to 1989 Mr. Coelho was a member of the U.S. House of Representatives from
California, and from 1986 to 1989 he served as House Majority Whip. Mr. Coelho
has been a director of ICF Kaiser International, Inc. since 1990. He also is a
director of Circus Circus Enterprises, Inc.; Specialty Retail Group, Inc.;
Service Corporation International; Tanknology Environmental, Inc.; and serves
on Fleishman-Hillard's International Advisory Board. He is also a director of
Condyne Technology Inc. and International Planning and Analysis Center and
serves as Chairman of the board of National Ventures, Inc.

Frederic V. Malek is Chairman, Thayer Capital Partners, a merchant bank. In
1992, he was Campaign Manager, Bush-Quayle '92; he also has been Co-Chairman of
the Board of Directors of CB Commercial Group (formerly Coldwell Banker
Commercial Group) since 1989. He was Vice Chairman of Northwest Airlines from
July 1990 to December 1991. He was President of Northwest Airlines from October
1989 to

31
<PAGE>

July 1990. From August 1978 to December 1988, Mr. Malek served as Executive
Vice President of Marriott Corporation and from January 1981 to May 1988 as
President of Marriott's Hotels and Resorts Division. Mr. Malek has been a
director of ICF Kaiser International, Inc. since September 1989. He also serves
as a director of American Management Systems, Inc., Automatic Data Processing,
Inc., Avis, Inc., CB Commercial Group, FPL Group, Inc., Manor Care, Inc.,
National Education Corp., Northwest Airlines, and PaineWebber Mutual Funds. Mr.
Malek graduated from the United States Military Academy (B.S.) and Harvard
University (M.B.A.).

Rebecca P. Mark is Chairman, President and Chief Executive Officer of Enron
Development Corp. She is responsible for Enron's project development activities
worldwide (excluding the U.S.) in power generation, pipelines, LNG and liquid
fuels. Ms. Mark joined Enron Corp. in 1982 and joined Enron Power Corp.'s
executive management team when the company was established in 1986. Before
joining Enron, Ms. Mark held executive positions with Continental Resources
Company and First City National Bank of Houston. Ms. Mark has been a director
of ICF Kaiser International, Inc. since September 1993. She also serves as
director of the Institute of the Americas. Ms. Mark graduated from Baylor
University (B.S. and M.I.M.) and Harvard University (M.B.A.).

Robert W. Page, Sr. retired as an Executive Vice President at McDermott
International, Inc., a leading energy service company, in 1993. Prior to
joining McDermott in 1990, Mr. Page served as Assistant Secretary of the Army
for Civil Works. He also served as Chairman of the Panama Canal Commission.
From 1981 to 1987, Mr. Page worked for Kellogg Rust, Inc., of Houston, Texas,
where he held the positions of Chairman and Chief Executive Officer. From 1976
to 1981, Mr. Page was President and Chief Executive of Rust Engineering. Mr.
Page has been a director of ICF Kaiser International, Inc. since January 1993.
He holds a B.S. in architectural engineering from Texas A & M University.

EXECUTIVE OFFICERS

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

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

Raymond E. List is Chairman of the Company's Engineering and Construction
Group. He has held senior management positions in several of the Company's
operating subsidiaries since 1986. From 1983 to 1986, Mr. List was President of
List and Associates, an international engineering and technology consulting
firm. From 1980 to 1983, Mr. List was Vice President and General Manager at
Planning Research Corporation; previously, he was a Vice President of Arthur D.
Little. Mr. List is a Professional Engineer. He graduated from Union College
(B.C.E.); Manhattan College (M.E.) and Harvard University (M.B.A.).

Douglas W. McMinn is the President of the Company's International Operations
Group. He has held senior management positions with the Company since 1987.
From 1985 to 1987 he was Assistant Secretary for Economic and Business Affairs,
U.S. Department of State. Prior to that time he was Director, International
Economic Affairs, National Security Counsel (1982-1985) and Deputy Chief of
Mission, Office of the United States Trade Representative, Geneva, Switzerland
(1979-1981). Mr. McMinn graduated from Gustavus Adolphus College (B.A.), Johns
Hopkins University (M.L.A.), and Johns Hopkins University School of Advanced
International Studies (M.A.).

32
<PAGE>

Norman A. Perry has been Senior Vice President and Corporate Controller of
the Company since November 1992. He was a manager for Rust International Corp.
from 1978 to 1992 and an administrative manager for Comstock International,
Inc. from 1972 to 1978. He holds a National Certificate in Business Studies
from Worthing and Brighton Colleges of Further Education (U.K.).

Alvin S. Rapp has been President and Chief Executive Officer of the Company's
Engineering and Construction Group since November 1993. Prior to joining the
Company, he was a regional group vice president of Jacobs Engineers Group,
Inc., having joined Jacobs in 1981 as manager of engineering in that company's
Baton Rouge, Louisiana, office. Prior to joining Jacobs, Mr. Rapp held a
variety of management positions with Ciba-Geigy Corporation, U.S.S. Agri-
Chemicals, and E.I. du Pont de Nemours & Company, Inc. Mr. Rapp graduated from
Christian Brothers College (B.S.E.E.), Memphis, Tennessee.

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

Michael J. Rowny has been Executive Vice President and Chief Financial
Officer of ICF Kaiser International, Inc. since April 1992. He was Chairman and
Chief Executive Officer of Ransohoff Company, a manufacturer of environmental
and industrial equipment, from 1989 to 1992. From 1986 to 1989 he was Chairman
and Chief Executive Officer of Hermitage Holding Company, Inc., a manufacturer
of industrial textiles and disposable medical supplies. From 1983 to 1986, Mr.
Rowny was with MCI Communications Corporation, Inc. as Senior Vice President,
Finance and as Treasurer. From 1981 to 1983 he was Vice President, Strategic
Planning of the Bendix Corporation. Mr. Rowny was Deputy Staff Director of the
White House from 1979 to 1981. Mr. Rowny has been a director of ICF Kaiser
International, Inc. since June 1992. Mr. Rowny graduated from the Massachusetts
Institute of Technology (S.B.) and Georgetown University (J.D.).

Kenneth A. Schweers is Chairman of the Company's Consulting Group. He has
held senior management positions in several of ICF Kaiser's operating
subsidiaries since 1976. Mr. Schweers graduated from Stanford University (B.S.,
M.B.A.).

Ronald R. Spoehel has been Senior Vice President of ICF Kaiser International,
Inc. since 1990 and was elected Treasurer in 1992. He was a Vice President of
Shearson Lehman Hutton Inc. from 1985 to 1990 and a Vice President of Bank of
America NT&SA from 1980 to 1985. Mr. Spoehel graduated magna cum laude from The
Wharton School (B.S.E.), The Moore School of Electrical Engineering (M.S.E.),
and The Wharton School (M.B.A.), all at the University of Pennsylvania.

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

Paul Weeks, II has been Senior Vice President, General Counsel, and Secretary
of ICF Kaiser International, Inc. since 1990. He joined ICF Incorporated in May
1987 as its Vice President, General Counsel, and Secretary. From 1973 to 1987
he was employed by Communications Satellite Corporation, where from 1983 to
1987 he was Assistant General Counsel for Corporate Matters. Mr. Weeks
graduated from Princeton University (B.S.E.E.) and The National Law Center of
George Washington University (J.D.).

33
<PAGE>

COMPENSATION OF OUTSIDE DIRECTORS

Directors of the Company who also are employees of the Company are not
compensated separately for their service as directors. Directors who are not
employees of the Company are paid $1,000 for attendance at each meeting of the
Board of Directors and $750 for attendance at each meeting of a committee of
the Board of Directors of which the director is a member. In addition, each
non-employee director receives an annual retainer of $20,000, payable in
quarterly installments.

Under the ICF Kaiser International, Inc. Non-employee Directors Stock Option
Plan, each director of the Company who is not an employee of the Company ("Non-
employee Director") receives a five-year option to purchase 3,000 shares of
Common Stock on the day he or she commences his or her initial term of service
as a director. In addition, each Non-employee Director elected at or continuing
in office following the Company's annual meeting of shareholders receives an
option to purchase 3,000 shares of Common Stock on the date of the annual
meeting in each calendar year after the year in which the Non-employee Director
received his or her initial option grant. The purchase price of each share of
Common Stock subject to an option granted under the plan is the fair market
value of the Common Stock on the date the option is granted. Each option
becomes fully exercisable at the close of business on the next business day
following the date on which the option was granted. Options are not assignable
or transferable other than by will or by the laws of descent and distribution.
Options are exercisable during an optionee's lifetime only by the optionee or
his or her guardian.

CERTAIN TRANSACTIONS WITH CERTAIN DIRECTORS

In December 1990, the Company sold 250 shares of Series 2A Senior Preferred
Stock to IFINT-USA Inc. and Series 2A Warrants to purchase 2,173,913 shares of
Common Stock at $12 per share to an affiliate of IFINT-USA Inc. for an
aggregate purchase price of $24,650,000. As part of the transaction, IFINT-USA
Inc. was given the right to designate one nominee for election to the Board of
Directors of the Company. In January 1992, the Company exchanged all of the
outstanding shares of Series 2A Senior Preferred Stock and the Series 2A
Warrants for an equal number of shares of Series 2C Preferred Stock and Series
2C Warrants to purchase 2,976,190 shares of Common Stock at $8.40 per share. At
the same time, the Company sold 200 shares of Series 2D Preferred Stock to
IFINT-USA Inc., and Series 2D Warrants to purchase 2,680,952 shares of Common
Stock at $8.40 per share to an affiliate of IFINT-USA Inc., for an aggregate
purchase price of $19,900,000. A portion of the proceeds from the sale of the
Warrants and 12% Notes was used to repurchase the Series 2C Preferred Stock and
Series 2C Warrants. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." At the time of such repurchase, the
exercise price for the Series 2D Warrants was reduced to $6.90 per share and
certain other modifications were made to the Series 2D Warrants. See
"Description of Capital Stock--Series 2D Warrants." IFINT-USA's right to
designate a nominee for election to the Board of Directors was retained
following the repurchase of the Series 2C Preferred Stock and the Series 2C
Warrants in this transaction. From 1991 to March 1, 1993, Mr. Mario Garraffo
was IFINT-USA's nominee to the Board. Mr. Botta currently is that nominee.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The independent directors of the Company who were voting members of the
Compensation Committee of the Board of Directors during fiscal year 1993 were
Frederic V. Malek (Chairman), Tony Coelho, and Mario Garraffo. Mr. Garraffo
resigned as a member of the Board of Directors effective March 1, 1993. Mr.
Garraffo was associated with IFINT-USA Inc., the owner of the Company's Series
2D Senior Preferred Stock. This preferred stock ownership is described in the
above section entitled "Certain Transactions with Certain Directors." The full
Board of Directors has designated an inside director of the Company, Mr. James
O. Edwards (the CEO of the Company), as a non-voting member of the Committee
with the right to attend Committee meetings. The Company's outstanding loans to
Mr. Edwards are described in the section of this Prospectus entitled
"Agreements and Transactions with Certain Executive Officers;" the executive
and compensation agreements the Company signed with Mr. Edwards are described
in the same section of this Prospectus. Executive compensation paid to Mr.
Edwards during fiscal years 1991, 1992, and 1993 is described in the
immediately following section of this Prospectus.

34
<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth a summary of annual and long-term compensation
received by the Chief Executive Officer and the other four most highly
compensated executive officers of the Company (the "Named Executive Officers")
for the three fiscal years ended February 28, 1993. The table shows the amounts
received by each Named Executive Officer for all three fiscal years or for the
entire period the Named Executive Officer was an executive officer of the
Company.

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------- --------------------------
(A) (B) (C) (D) (E) (G) (I)
OTHER ANNUAL
NAME AND SALARY BONUS COMPENSATION OPTION/SAR ALL OTHER
PRINCIPAL POSITION YEAR ($) ($) ($)(1) GRANTS (SHARES) COMPENSATION(2)
------------------ ---- -------- ----- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
James O. Edwards........ 1993 $275,000 -- -- 0 $109,154(2)(3)
Chairman and Chief 1992 207,884 -- (1) 22,000 shares (2)
Executive Officer(3) 1991 254,808 -- (1) 75,000 shares (2)
Michael K. Goldman...... 1993 $210,000 -- -- 16,000 repriced options $ 59,154(2)(4)
Executive Vice 1992 179,653 -- (1) -- (2)
President(4) 1991 152,885 -- (1) 40,000 options (2)
Michael J. Rowny........ 1993 $180,769 -- -- 100,000 options $ 7,231(2)
Executive Vice
President and Chief
Financial Officer(5)
Ronald R. Spoehel....... 1993 $175,000 -- $7,239(6) 2,000 options and $ 27,000(2)(6)
Senior Vice President 1992 162,115 -- (1) 10,000 repriced options(6) (2)
and Treasurer(6) 1991 25,962 -- (1) 5,000 options (2)
William C. Stitt........ 1993 $250,000 -- -- 0 $109,154(2)(7)
President and Chief 1992 188,942 -- (1) 22,000 options (2)
Operating Officer(7) 1991 254,839 -- (1) 72,000 options (2)
</TABLE>
- --------
(1) Any amounts shown in the "Other Annual Compensation" column for fiscal 1993
do not include any perquisites and other personal benefits because the
aggregate amount of such compensation for each of the Named Executive
Officers did not exceed the lesser of (i) $50,000 or (ii) 10% of the
combined fiscal 1993 salary and bonus for the Named Executive Officer.
There are no disclosures of "Other Annual Compensation" for fiscal 1991 and
1992 because such amounts are not required to be disclosed under the SEC's
transition rules on executive compensation disclosure.
(2) Allocation of the Company's fiscal 1993 contribution to the individual
Named Executive Officers pursuant to the Company's Retirement Plan had not
been made as of January 13, 1994. There are no disclosures of "All Other
Compensation" for fiscal 1991 and 1992 because such amounts are not
required to be disclosed under the SEC's transition rules on executive
compensation disclosure.
(3) The amount shown in column (i) of the table for Mr. Edwards is comprised of
a $100,000 special cash payment provided for under Mr. Edwards'
compensation agreement signed in December 1990 in connection with his
services as Chief Executive Officer ("CEO") of the Company and a $9,154
fiscal year 1993 ESOP contribution.
(4) The amount shown in column (i) of the table for Mr. Goldman is comprised of
a $50,000 special cash payment provided for under Mr. Goldman's
compensation agreement signed in December 1990 in connection with his
services as Executive Vice President of the Company and a $9,154 fiscal
year 1993 ESOP contribution. Mr. Goldman was granted 16,000 options in May
1991 for his fiscal 1991 services; in May 1992, these 16,000 options were
repriced from $16.23 to $8.25 in recognition of his fiscal 1992 services.
The May 6, 1996, expiration date for the 16,000 options did not change. Mr.
Goldman is not currently an executive officer of the Company.
(5) Mr. Rowny became an employee of the Company on April 6, 1992. The fiscal
year 1993 information shown on the above table for Mr. Rowny is for the
April 6, 1992, to February 28, 1993, time period only. The amount shown in
column (i) is a fiscal year 1993 ESOP contribution. The employment
arrangement with Mr. Rowny under which he became Executive Vice President
and Chief Financial Officer ("CFO") of the Company is described in the
section of this Prospectus entitled "Agreements and Transactions with
Certain Executive Officers."

35
<PAGE>

(6) Mr. Spoehel became an employee of the Company on December 31, 1990. The
fiscal year 1991 information shown on the above table for Mr. Spoehel is
for the December 31, 1990, to February 28, 1991, period only. The
employment arrangement with Mr. Spoehel under which he became a Senior Vice
President of the Company and his outstanding loan with the Company are
described in the section of this Prospectus entitled "Agreements and
Transactions with Certain Executive Officers." The amount shown in column
(i) is comprised of a $20,000 bonus paid pursuant to his employment
arrangement and a $7,000 fiscal year 1993 ESOP contribution. Mr. Spoehel
was granted 10,000 options in May 1991 for his fiscal 1991 services; in May
1992, these options were repriced from $16.23 to $8.25 in recognition of
his fiscal 1992 services. The August 6, 1994, expiration date for the
10,000 options did not change. Mr. Spoehel also was awarded 2,000 options
in May 1992 in recognition of his fiscal 1992 services.
(7) Mr. Stitt resigned as President, Chief Operating Officer ("COO"), and a
director of the Company, effective April 26, 1993. The amount shown in
column (i) of the table for Mr. Stitt is comprised of a $100,000 special
cash payment provided for under Mr. Stitt's compensation agreement signed
in December 1990 in connection with his services as President and COO of
the Company and a $9,154 fiscal year 1993 ESOP contribution. The salary
amount shown for fiscal 1991 includes $25,000 paid in fiscal 1991 for
services rendered in fiscal 1990.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

The Company's Stock Incentive Plan provides for the grant to key employees of
the Company and its subsidiaries of non-qualified stock options, stock
appreciation rights, incentive stock options that are designed to qualify as
"incentive stock options" under Section 422 of the Internal Revenue Code of
1986, as amended, restricted shares and restricted stock units. The following
table provides certain information with respect to options granted to the Named
Executive Officers in fiscal 1993.

<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
------------------------------------------------------------ ----------------
(A) (B) (C) (D) (E) (F)
% OF TOTAL
OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE PRICE GRANT DATE
NAME GRANTED(1) FISCAL YEAR(1) ($ PER SHARE)(2) EXPIRATION DATE PRESENT VALUE(3)
---- ---------- --------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
James O. Edwards........ 0 0 -- -- --
Michael K. Goldman(4)... 16,000 1.5% $8.25 5/6/96 $ 29,028
Michael J. Rowny(5)..... 100,000 9.2% $9.59 7/6/97 $224,592
Ronald R. Spoehel(6).... 12,000 1.1% $8.25 10,000 on 8/6/94 $ 13,257
2,000 on 5/8/97
William C. Stitt........ 0 0 -- -- --
</TABLE>
- --------
(1) The total number of options granted to employees in fiscal 1993 was
1,084,000. Included in this total are 570,000 options at $8.25 which
repriced 570,000 options at $14.32 to $16.23 granted in fiscal 1991 and
1992. The expiration dates for these repriced $8.25 options remained the
same as the original expiration dates established for those options.
(2) The exercise price equals the fair market value of the underlying stock on
the date of grant for all options disclosed on this table.
(3) In accordance with SEC rules, the Company used the Black-Scholes option
pricing model to determine grant date present values. The Company's use of
this model is not an endorsement of its accuracy in valuing options, and
the values determined under this model do not necessarily reflect the value
of any given option. The actual value of an option realized will be
measured by the difference between the stock price and the exercise price
on the date the option is exercised.
(4) 16,000 repriced vested options were granted to Mr. Goldman in May 1992 in
exchange for 16,000 vested options at $16.23 previously granted to Mr.
Goldman. The expiration date for these repriced $8.25 options (May 6, 1996)
remained the same as the original expiration date established for the
$16.23 options.
(5) 100,000 options were granted to Mr. Rowny on April 6, 1992, and vest,
subject to change of control acceleration events specified in the option
grant agreement, as follows: 25,000 on April 6, 1994; 25,000 on April 6,
1995; 25,000 on April 6, 1996; and 25,000 on April 6, 1997.

36
<PAGE>

(6) 10,000 repriced options were granted to Mr. Spoehel in May 1992 in exchange
for 10,000 options at $16.23 previously granted to Mr. Spoehel. The
expiration date for these repriced $8.25 options (August 6, 1994) remained
the same as the original expiration date established for the $16.23
options. These 10,000 options vest as follows: 3,334 on May 8, 1992; 3,333
on May 8, 1993; and 3,333 on May 8, 1994. A total of 2,000 new options were
granted to Mr. Spoehel on May 8, 1992, and vest as follows: 667 on May 8,
1993; 666 on May 8, 1994; and 666 on May 8, 1995.

The following table provides certain information with respect to aggregated
option and SAR exercises in fiscal 1993 and options/SAR values at February 28,
1993 for the Named Executive Officers.

<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE- MONEY
UNDERLYING VALUE OPTIONS/SARS OPTIONS/SARS
OPTIONS REALIZED AT 2/28/93 (#) AT 2/28/93 ($)
NAME EXERCISED (#) ($) (2) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
James O. Edwards........ 0 0 73,000/24,000 (3)
Michael K. Goldman (4).. 30,000 $5,820 44,000/12,000 (3)
Michael J. Rowny........ 0 0 0/100,000 (3)
Ronald R. Spoehel....... 0 0 6,668/10,332 (3)
William C. Stitt........ 0 0 70,000/24,000 (3)
</TABLE>
- --------
(1) All options were granted at 100% of fair market value. The optionees may
satisfy the exercise price (and taxes, if any) by submitting currently
owned shares and/or cash. The Company's Stock Incentive Plan permits the
granting/awarding of SARs, but none have been granted/awarded to date.
(2) Fair market value of the shares underlying the options on the exercise date
minus the exercise price.
(3) Options held by the Named Executive Officers range in price from $8.25 to
$16.23. None of these options is in-the-money, which means that the option
exercise prices for all of the options held by the Named Executive Officers
exceed the current price for the Company's Common Stock on the New York
Stock Exchange.
(4) Mr. Goldman exercised 30,000 options at $8.25 in May 1992. He paid the
exercise price and the associated tax obligation by delivering shares he
previously owned valued at $8.44 per share (the average Nasdaq National
Market trading price for the 20 days preceding the exercise date).

AGREEMENTS AND TRANSACTIONS WITH CERTAIN EXECUTIVE OFFICERS

Mr. Edwards. In December 1990, the Company signed an executive agreement and
a compensation agreement with Mr. Edwards. These agreements were modified in
January 1992. The five-year executive agreement with Mr. Edwards prohibits him
from competing with the Company during that period unless, (i) the Company
files a petition for bankruptcy or reorganization (or a petition is filed
against the Company), (ii) the Company makes a general assignment for the
benefit of creditors, (iii) a trustee or receiver is appointed to take
possession of substantially all of the Company's assets, (iv) the Company's
assets are seized, (v) the Company defaults in the payment of compensation,
(vi) a Change in Control Event (as described in the agreement) occurs, (vii)
Mr. Edwards terminates his employment for good reason, (viii) Mr. Edwards dies
or becomes permanently disabled, (ix) the Company terminates his employment
without cause, or (x) certain investors' voting or investment position in the
Company is substantially reduced. In addition, the executive agreement
prohibits Mr. Edwards from selling, assigning, or disposing of more than a
specified number of shares of Common Stock without the written consent of the
Company. Under the compensation agreement described below, however, Mr. Edwards
may borrow from the Company up to 25% of the "market value" (as defined in the
agreement) of the Common Stock he owned on December 20, 1990. The executive
agreement also prevents him from selling, disposing, or assigning more than a
specified number of shares of Common Stock that he may acquire upon exercise of
options he held on that date without the written consent of the Company. In
order to generate proceeds to reduce indebtedness secured by shares of Common
Stock, Mr. Edwards is allowed to receive cash in lieu of exercising options.

37
<PAGE>

In conjunction with the executive agreement, the Company entered into a five-
year compensation agreement with Mr. Edwards that provides for (i) annual
minimum compensation starting at $250,000 and increasing $25,000 each year,
plus annual $100,000 special cash payments, (ii) immediate vesting of then-
existing options, and (iii) the grant of new options to purchase 40,000 shares
of Common Stock. In addition, Mr. Edwards was granted the right to borrow from
the Company money equal to 25% of the "market value" (as defined in the
agreements) of the shares of Common Stock held by Mr. Edwards on December 20,
1990, to be secured by shares of Common Stock. The compensation agreement may
be terminated for "good reason" (as defined in the agreements), for cause by
the Company, or upon Mr. Edwards' death or permanent disability. In the event
that the Company terminates Mr. Edwards' compensation agreement without cause,
or Mr. Edwards terminates his agreement for "good reason", Mr. Edwards is
entitled to a severance payment equal to 75% of his annual minimum
compensation. Following the execution of the executive and compensation
agreements, similar provisions contained in an existing agreement between the
Company and Mr. Edwards, described below, were modified or suspended.

In November 1989, the Company signed an agreement with Mr. Edwards which
obligated him to provide the Company up to 180 days notice prior to his
voluntarily ceasing full-time employment with the Company, and restricted his
right to transfer more than a certain amount of his Common Stock. In return,
Mr. Edwards was provided severance benefits, and under certain circumstances,
the right to borrow from the Company. This agreement, as modified to account
for the 1990/1992 executive and compensation agreements, suspends the
restrictions on stock sales and the right to borrow money, and modifies the
severance provisions, but only for so long as the 1990/1992 executive and
compensation agreements remain in effect.

In February 1991, the Company loaned Mr. Edwards $622,740, and in August
1991, the Company loaned Mr. Edwards an additional $50,000. These loans bear
interest at 9.0% per annum, and the interest is payable in annual installments
on May 15, 1993, 1994, 1995, and 1996. The entire principal amount is due on
May 15, 1996. In January 1992, the Company loaned Mr. Edwards an additional
$150,000. This loan bears interest at 8.0% per annum, and the interest is
payable in annual installments on May 15, 1993, 1994, 1995, and 1996. The
entire principal amount is due on May 15, 1996. All of these loans were
provided to Mr. Edwards as permitted by his compensation agreement described
above and are non-recourse to Mr. Edwards. The loans are secured by a pledge of
130,665 shares of ICF Kaiser Common Stock. Accrued interest in the amount of
$72,547 on these loans was not paid on May 15, 1993, and, under the terms of
the promissory notes Mr. Edwards executed in 1991 and 1992, the full principal
amount of the loans became due and payable on June 15, 1993. The entire
principal amount of the loans referred to above, together with accrued and
unpaid interest in the aggregate amount of $72,547 at May 15, 1993, plus
accrued interest through the date hereof, was outstanding as of the date
hereof. In November 1993, the Compensation Committee of the Board of Directors
of the Company agreed (a) to extend the May 15, 1993 due date to May 15, 1994
and (b) not to enforce the acceleration provisions with respect to Mr. Edwards'
failure to make the interest payment by June 15, 1993.

Mr. List. In May 1993, the Company entered into a one-year employment
agreement with Mr. List for his services as Chairman of the Company's
Engineering and Construction Group. The agreement delineates Mr. List's areas
of responsibility and reporting line. The agreement provides for base
compensation at the rate of $250,000 a year, plus benefits as are awarded or
accorded to the most senior executives of the Company. The agreement can be
terminated by either Mr. List or the Company upon 30 days written notice. If
the agreement is not terminated prior to March 31, 1994, the Company must
notify Mr. List whether it intends to extend the agreement beyond May 31, 1994.
The Company has no obligation to extend the agreement. Mr. List has held senior
executive positions with the Company or its subsidiaries since 1986. In
September 1989, the Company loaned Mr. List $122,500 which he used to exercise
options to acquire 140,000 shares of Common Stock, 20,000 of which are pledged
to secure repayment of the loan. The loan bears interest at prime plus 1/2% per
annum and was due on June 30, 1993. The unpaid principal balance of $30,625,
together with accrued, but unpaid interest, was outstanding as of the date
hereof.

38
<PAGE>

Douglas W. McMinn. In November 1993, the Company and Mr. McMinn signed an
employment agreement under which Mr. McMinn will provide his services as the
President of the Company's International Operations Group for a two-year period
ending October 15, 1995. The agreement provides for: an initial annual salary
of $220,000; a guaranteed minimum cash bonus of $30,000; eligibility under the
Company's employee benefit plans; additional bonuses based upon a percentage of
the earnings before interest and taxes of the Company's wholly owned
subsidiary, Global Trade and Investment, Inc., of which Mr. McMinn is
President; and options under the Company's Stock Incentive Plan to purchase
75,000 shares of the Company's Common Stock at $4.76 per share (with a vesting
schedule of 25,000 on October 15, 1994; 25,000 on October 15, 1995; 12,500 on
October 15, 1996; and 12,500 on October 15, 1997). All of the options will
expire no later than October 15, 1998. If both Mr. McMinn and the Company
agree, Mr. McMinn's employment will be extended for one year on terms
comparable to those set forth in the agreement. In lieu of such an extension,
the agreement provides for a one-year consulting arrangement between Mr. McMinn
and the Company beginning at the termination of Mr. McMinn's employment.

Mr. Rapp. In November 1993, the Company entered into an employment agreement
with Mr. Rapp for his services as President and Chief Executive Officer of the
Company's Engineering and Construction Group. The agreement delineates Mr.
Rapp's areas of responsibility and reporting line. The agreement provides for
fiscal 1994 base salary of $250,000; a hiring bonus; bonus compensation for
fiscal 1994; eligibility under the Company's employee benefit plans; the grant
of 100,000 five-year options (vesting over five years) at fair market value on
the date of grant; the issuance of 88,105 Restricted Shares under the Company's
Stock Incentive Plan; and interest-free loans to facilitate the sale of Mr.
Rapp's current residence and the purchase of a new residence.

Mr. Rowny. In April 1992, the Company entered into an employment arrangement
with Mr. Rowny for his services as Chief Financial Officer of the Company. In
addition, Mr. Rowny was offered a position as a member of the Company's Board
of Directors. The letter arrangement delineates Mr. Rowny's areas of
responsibility and reporting line. The arrangement provides for a fiscal year
1993 salary of $200,000; eligibility for a bonus range of $0-$100,000 (the
amount to be set by the Company's Compensation Committee against a list of
objectives); eligibility under the Company's employee benefit plans; and the
grant of 100,000 five-year options at fair market value on the date of grant
(first day of employment). The options vest at 25,000 increments on April 6,
1994, 1995, 1996, and 1997; they expire on July 6, 1997. Vesting accelerates in
the event of the occurrence of certain change of control events specified in
the option agreement.

Mr. Schweers. In December 1990, the Company signed an executive agreement and
a compensation agreement with Mr. Schweers. These agreements were modified in
January 1992. The five-year executive agreement with Mr. Schweers prohibits him
from competing with the Company during that period unless, (i) the Company
files a petition for bankruptcy or reorganization (or a petition is filed
against the Company), (ii) the Company makes a general assignment for the
benefit of creditors, (iii) a trustee or receiver is appointed to take
possession of substantially all of the Company's assets, (iv) the Company's
assets are seized, (v) the Company defaults in the payment of compensation,
(vi) a Change in Control Event (as described in the agreement) occurs, (vii)
Mr. Schweers terminates his employment for good reason, (viii) Mr. Schweers
dies or becomes permanently disabled, (ix) the Company terminates his
employment without cause, or (x) certain investors' voting or investment
position in the Company is substantially reduced. In addition, the executive
agreement prohibits Mr. Schweers from selling, assigning, or disposing of more
than a specified number of shares of Common Stock without the written consent
of the Company. Under the compensation agreement described below, however, Mr.
Schweers may borrow from the Company up to 20% of the "market value" (as
defined in the agreement) of the Common Stock he owned on December 20, 1990.
The executive agreement also prevents him from selling, disposing, or assigning
more than a specified number of shares of Common Stock that he may acquire upon
exercise of options he held on that date without the written consent of the
Company. In order to generate proceeds to reduce indebtedness secured by shares
of Common Stock, Mr. Schweers is allowed to receive cash in lieu of exercising
options.

39
<PAGE>

In conjunction with the executive agreement, the Company entered into a five-
year compensation agreement with Mr. Schweers that provides for (i) annual
minimum compensation starting at $175,000 and increasing $25,000 each year,
plus annual $50,000 special cash payments, (ii) immediate vesting of then-
existing options, and (iii) the grant of new options to purchase 20,000 shares
of Common Stock. In addition, Mr. Schweers was granted the right to borrow from
the Company money equal to 20% of the "market value" (as defined in the
agreements) of the shares of Common Stock held by Mr. Schweers on December 20,
1990, to be secured by shares of Common Stock. The compensation agreement may
be terminated for "good reason" (as defined in the agreements), for cause by
the Company, or upon Mr. Schweers' death or permanent disability. In the event
that the Company terminates Mr. Schweers' compensation agreement without cause,
or Mr. Schweers terminates his agreement for "good reason," Mr. Schweers is
entitled to a severance payment equal to 75% of his annual minimum
compensation.

In October 1991, in lieu of his exercising his contractual right to borrow
cash from the Company pursuant to his compensation agreement described above,
the Company loaned Mr. Schweers $1,031,806 which Mr. Schweers used to purchase
shares of Common Stock. The outstanding balance as of November 30, 1993 is
$686,806. The loan bears interest at 9.5% per annum, and the interest is
payable in annual installments on May 15, 1994, 1995, and 1996. The entire
principal is due on May 15, 1996.

Mr. Spoehel. In December 1990, the Company entered into a letter agreement
with Mr. Spoehel for his services as a Senior Vice President of the Company.
The agreement provides for a starting salary of $150,000 per year (performance
to be reviewed annually on March 1), eligibility for an annual bonus ranging
from $0-$100,000; eligibility under the Company's employee benefit plans; and
the grant of at least 5,000 incentive stock options in May of 1991. In
September 1990, the Company loaned Mr. Spoehel $100,000 for use primarily in
the purchase of Common Stock. The outstanding balance as of November 30, 1993,
was $40,000. The loan currently bears interest at 5.3% per annum and is
adjusted annually on June 1 to the "Applicable Federal Rate" as defined by the
Internal Revenue Service. Accrued interest is payable on May 31, 1996. Under
the promissory note between Mr. Spoehel and the Company, $20,000 annual
principal payments on this loan are forgiven each year; the accrued interest
will be forgiven on May 31, 1996.

Mr. Stitt. Effective April 26, 1993, Mr. Stitt resigned as President, Chief
Operating Officer, and a director of the Company under the terms of an
agreement which provided for (a) the termination of Mr. Stitt's December 1990
executive and compensation agreements with the Company, (b) a severance payment
of $325,000, (c) continuing compensation at $300,000 for one year, (d) the
immediate vesting of 24,000 previously awarded options to purchase the
Company's stock at $11.12 per share, (e) the termination of an outstanding loan
in return for the conveyance to the Company of 132,900 shares of the Company's
stock purchased with the loan proceeds, and (f) the repurchase by the Company
at $5.9875 per share of 477,568 shares of Company stock owned by Mr. Stitt.

40
<PAGE>

SECURITY OWNERSHIP

<TABLE>
<CAPTION>
AGGREGATE
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF VOTING
5% SHAREHOLDERS, DIRECTORS AND OFFICERS BENEFICIAL OWNERSHIP(A) CLASS OF STOCK POWER
- --------------------------------------- ----------------------- -------------- ---------
<S> <C> <C> <C>
DIRECTORS
Gian Andrea Botta............. 3,000 shares (b) * *
Tom Bradley................... 3,000 shares (c) * *
Tony Coelho................... 10,000 shares (d) * *
James O. Edwards.............. 416,799 shares (e) 2.0% of 1.8%
Common Stock
Frederic V. Malek............. 27,000 shares (f) * *
Rebecca P. Mark............... 3,000 shares (g) * *
Robert W. Page, Sr............ 3,000 shares (h) * *
Michael J. Rowny.............. 22,323 shares (i) * *
Marc Tipermas................. 275,745 shares (j) 1.3% of *
Common Stock
EXECUTIVE OFFICERS NAMED IN THE
SUMMARY COMPENSATION TABLE
James O. Edwards.............. 416,799 shares (e) 2.0% of 1.8%
Chairman and Chief Executive Common Stock
Officer
Michael K. Goldman............ 136,178 shares (k) * *
Executive Vice President
Michael J. Rowny.............. 22,323 shares * *
Executive Vice President and
Chief Financial Officer
Ronald R. Spoehel............. 26,303 shares (l) * *
Senior Vice President and
Treasurer
William C. Stitt.............. 20,000 shares * *
President and Chief Operating
Officer through April 26,
1993
All Directors and Executive
Officers
as a Group (18 persons)........ 2,163,899 shares (m) 10.2% of 9.1%
Common Stock
5% COMMON SHAREHOLDERS
ICF Kaiser International, Inc. 11.4% of
Employee Stock Ownership Common Stock
Trust........................ 2,377,301 shares (n) 10.2%
ICF Kaiser International, Inc. 6.0% of
Retirement Plan.............. 1,257,306 shares (o) Common Stock 5.4%
FIMA Finance Management Inc... 2,680,952 shares (p) 11.4% of
Common Stock 11.4%
Mathers & Company, Inc. 10.2% of
and Mathers Fund, Inc........ 2,125,600 shares (q) Common Stock 9.1%
State of Wisconsin Investment 1,550,200 shares (r) 7.4% of
Board........................ Common Stock 6.7%
SERIES 2D SENIOR PREFERRED STOCK
IFINT-USA Inc................. 200 shares (p) 100% of 10.2%
Series 2D
</TABLE>
- --------
* = ownership of less than 1%

41
<PAGE>

FOOTNOTES TO SECURITY OWNERSHIP TABLE

(a) Except as noted below, all information in the above table is as of January
12, 1994. A person is deemed to be a beneficial owner of the Company's
stock if that person has voting or investment power (or voting and
investment powers) over any shares of capital stock or has the right to
acquire such shares within 60 days from January 12, 1994. With respect to
ownership of shares which are held by the ESOP but allocated to
individuals' accounts, the information is current as of February 28, 1993,
and includes shares to be allocated to participants' accounts as a result
of the Company's fiscal year 1993 contribution to the ESOP. For shares
shown in the following footnotes as being held in directed investment
accounts in the ICF Kaiser International, Inc. Retirement Plan, the
beneficial owner shown below has investment but not voting power over
those shares and the information is current as of September 30, 1993.
(b) Mr. Botta's share ownership includes 3,000 shares that may be acquired
within 60 days of January 12, 1994, upon the exercise of stock options.
(c) Mr. Bradley's share ownership includes 3,000 shares that may be acquired
within 60 days of January 12, 1994, upon the exercise of stock options.
(d) Mr. Coelho's share ownership includes 9,000 shares that may be acquired
within 60 days of January 12, 1994, upon the exercise of stock options.
(e) Mr. Edwards' share ownership includes 2,575 shares allocated to his ESOP
account, 60,091 shares in his directed investment account under the ICF
Kaiser International, Inc. Retirement Plan (the "Retirement Plan") and
81,000 shares that may be acquired within 60 days of January 12, 1994,
upon the exercise of stock options. See footnotes n and o below.
(f) Mr. Malek's share ownership includes 12,000 shares that may be acquired
within 60 days of January 12, 1994, upon the exercise of stock options.
(g) Ms. Mark's share ownership includes 3,000 shares that may be acquired
within 60 days of January 12, 1994, upon the exercise of stock options.
(h) Mr. Page's share ownership includes 3,000 shares that may be acquired
within 60 days of January 12, 1994, upon the exercise of stock options.
(i) Mr. Rowny's share ownership includes 856 shares allocated to his ESOP
account and 5,000 shares that may be acquired within 60 days of January
12, 1994. Mr. Rowny is a Trustee of the ESOP and a member of the
Retirement Plan Committee of the Retirement Plan. See footnotes n and o
below.
(j) Dr. Tipermas's share ownership includes 7,698 shares allocated to his ESOP
account, 7,525 shares in his directed investment account under the
Retirement Plan and 60,000 shares that may be acquired within 60 days of
January 12, 1994.
(k) Mr. Goldman's share ownership includes 7,364 shares allocated to his ESOP
account and 53,000 shares that may be acquired within 60 days of January
12, 1994, upon the exercise of stock options.
(l) Mr. Spoehel's share ownership includes 1,469 shares allocated to his ESOP
account and 9,834 shares that may be acquired within 60 days of January
12, 1994, upon the exercise of stock options.
(m) This total includes 42,504 shares allocated to ESOP accounts, 91,390
shares in directed investment accounts under the ICF Kaiser International,
Inc. Retirement Plan, and 391,419 shares that may be acquired within 60
days of January 12, 1994, upon the exercise of stock options.
(n) ICF Kaiser International, Inc. Employee Stock Ownership Trust, 9300 Lee
Highway, Fairfax, VA 22031. The ESOP Trustees are James O. Edwards,
Michael J. Rowny and Marcy A. Romm. Of the 2,377,301 shares of Common
Stock held by the ESOP, a total of 1,799,997 shares are allocated to
individual ESOP participants' accounts and are voted by those
participants. The ESOP Trustees vote the remaining 577,304 shares of
Common Stock held by the ESOP. The ESOP Trustees have investment power
over all of the 2,377,301 shares of Common Stock held by the ESOP. Each
ESOP Trustee disclaims beneficial ownership of the shares of Common Stock
held by the ESOP. The individual shareholdings of Mr. Edwards and Mr.
Rowny are shown on the Security Ownership table in this Prospectus. Ms.
Romm beneficially owns 10,215 shares of Common Stock, 250 of which are
shares that may be acquired within 60 days of January 12, 1994 upon the
exercise of stock options. Ms. Romm's address is 9300 Lee Highway,
Fairfax, VA 22031.

42
<PAGE>

(o) ICF Kaiser International, Inc. Retirement Plan, c/oU.S. Trust Company of
California, N.A. (Trustee), 555 South Flower St., Suite 2700, Los Angeles,
CA 90071. The members of the Retirement Plan Committee are James O.
Edwards, Michael J. Rowny and Marcy A. Romm. Of the 1,257,306 shares of
Common Stock held by the Retirement Plan, a total of 353,239 shares are
held in directed investment accounts in which the participants have
investment power over their allocated shares. The Retirement Plan Committee
members and the Trustee have investment power over 904,067 shares held by
the Retirement Plan but not held in directed investment accounts. The
Retirement Plan Committee members direct the Trustee as to how to vote the
1,257,306 shares of Common Stock held by the Retirement Plan. Each
Retirement Plan Committee member disclaims beneficial ownership of the
shares of Common Stock held by the Retirement Plan.
(p) FIMA Finance Management, Inc. Citco Building, Wickhams Cay, P.O. Box 662,
Road Town, Tortola, British Virgin Islands. FIMA Finance Management Inc.
("FIMA") owns Series 2D Warrants for the purchase of 2,680,952 shares of
Common Stock. IFINT-USA Inc. ("IFINT-USA"), 375 Park Avenue, New York, New
York 10182, owns 200 shares of Series 2D Preferred Stock. The terms of the
Series 2D Preferred Stock limit the total vote of the series to 2,380,952.
IFINT-USA and FIMA are wholly owned subsidiaries of IFINT S.A., 2 Blvd
Royal, Luxembourg. Gian Andrea Botta, a director of the Company, is the
President of IFINT-USA. Mr. Botta disclaims beneficial ownership of the
shares of Series 2D Preferred Stock and the Series 2D Warrants.
(q) The information with respect to the shares of Common Stock beneficially
owned by Mathers and Company, Inc. and Mathers Fund, Inc., 100 Corporate
North, Suite 201, Bannockburn, IL 60015 (which firms are controlled by
common officers) is based on a Report on Schedule 13G, Amendment No. 1,
which was filed with the SEC on June 7, 1993, covering the period ended May
31, 1993.
(r) The information with respect to the shares of Common Stock beneficially
owned by the State of Wisconsin Investment Board, P.O. Box 7842, Madison,
WI 53707, is based on a Report on Schedule 13D dated December 2, 1992 and
filed with the SEC.

43
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 90,000,000 shares of
Common Stock and 2,000,000 shares of preferred stock, par value $0.01 per
share. As of January 12, 1994, the outstanding capital stock of the Company
consisted of 20,890,399 shares of Common Stock and 200 shares of Series 2D
Preferred Stock.

COMMON STOCK

The following is a summary of the terms of the Company's Common Stock:

Voting. Each share of Common Stock has one vote per share on all matters
submitted to a vote of shareholders. The Company's Amended and Restated
Certificate of Incorporation provides that no action may be taken by the
holders of shares of Common Stock by written consent in lieu of holding a
meeting of shareholders.

Dividends. The Company has never paid cash dividends on its Common Stock. The
Board of Directors anticipates that for the foreseeable future no cash
dividends will be paid on its Common Stock and that the Company's earnings will
be retained for use in the business. The Board of Directors determines the
Company's Common Stock dividend policy based on the Company's results of
operations, payment of dividends on preferred stock (if any is outstanding),
financial condition, capital requirements, and other circumstances. The
Company's credit agreements allow dividends to be paid on its capital stock
provided that the Company complies with certain limitations imposed by the
terms of such agreements. See "Description of Credit Facility."

Other Terms. Holders of Common Stock have no preemptive or other rights to
subscribe for additional shares of Company stock. Upon liquidation,
dissolution, or winding up of the Company, each share of Common Stock will
share equally in assets legally available for distribution to stockholders.

Transfer Agent. The transfer agent and registrar for the Common Stock is
First Chicago Trust Company of New York, 14 Wall Street, Mail Suite 4680, New
York, New York 10005.

Public Market. Since September 14, 1993, the Common Stock has been traded on
the New York Stock Exchange under the symbol "ICF." Prior to that date, the
Common Stock was traded on the Nasdaq National Market.

PREFERRED STOCK

The preferred stock is available for issuance from time to time at the
discretion of the Board of Directors of the Company, without shareholder
approval. The Board of Directors has authority to prescribe for each series of
preferred stock it establishes the number of shares in that series, the
dividend rate, and the voting rights, conversion privileges, redemption,
sinking fund provisions and liquidation rights, if any, and any other rights,
preferences and limitations of the particular series. The issuance of preferred
stock could decrease the amount of earnings and assets available for
distribution to the holders of Common Stock or adversely affect the rights and
powers, including voting rights, of the holders of Common Stock. Additionally,
the issuance of preferred stock could have the effect of delaying, deferring or
preventing a change in control of the Company without further action by the
shareholders.

SERIES 2D PREFERRED STOCK

The Company has issued 200 shares of Series 2D Preferred Stock, all of which
are currently outstanding. In connection with the issuance of the Series 2D
Preferred Stock, the Company issued the Series 2D Warrants for the purchase of
2,680,952 shares of Common Stock to the purchaser of the Series 2D Preferred
Stock (see "Series 2D Warrants"). The following is a summary of the terms of
the Series 2D Preferred Stock, which

44
<PAGE>

ranks prior to the Company's Common Stock and Series 4 Junior Preferred Stock
(if any is issued) with respect to dividend rights and rights on liquidation,
winding up and dissolution.

Dividends. The Series 2D Preferred Stock pays cumulative dividends of $9,750
per $100,000 of liquidation preference per year, payable quarterly.

Liquidation Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the holders of Series 2D Preferred
Stock are entitled to receive a liquidation preference equal to $100,000 plus
accrued but unpaid dividends per share of Series 2D Preferred Stock before any
distribution is made to the holders of any capital stock of the Company ranking
junior to the Series 2D Preferred Stock.

Redemption. The Company is obligated to redeem all shares of Series 2D
Preferred Stock outstanding on January 13, 1997, for the full liquidation
preference amount, plus accrued and unpaid dividends thereon to the redemption
date. In addition, upon a proposal for or the occurrence of a Change in Control
Event, as defined in the Certificate of Designations creating the Series 2D
Preferred Stock ("Series 2D Certificate of Designations"), the original
purchaser (and current holder) of the shares of Series 2D Preferred Stock (the
"Initial Holder") has the option to require the Company to redeem all or part
of such Initial Holder's shares at a redemption price of $100,000 per share,
together with accrued and unpaid dividends. This Certificate of Designations is
now included in the Company's Amended and Restated Certificate of
Incorporation.

The Company at any time and at its option may redeem all, but not less than
all, of the shares of Series 2D Preferred Stock at a redemption price of
$106,250 per share, plus accrued and unpaid dividends thereon to the redemption
date.

If, as of the date the Company elects to redeem the shares of Series 2D
Preferred Stock, an Initial Holder owns any Series 2D Warrants, then the holder
of such shares may elect to receive, in lieu of the applicable redemption price
described above, consideration per share equal to (i) cash in the amount of
$106,249.99, and (ii) one share of a new series of preferred stock, par value
$0.01 per share (the "Series XD Preferred Stock"), of the Company to be created
pursuant to a Certificate of Designations in the form attached as an exhibit to
the Series 2D Certificate of Designations (the "Series XD Certificate of
Designations"). No dividends will be payable with respect to shares of Series
XD Preferred Stock. The liquidation preference for such shares will be $0.01
per share. Holders of shares of Series XD Preferred Stock will be entitled to
vote together with holders of the Company's Common Stock on all matters to be
voted on by the Company's shareholders. The number of votes entitled to be cast
by holders of such shares of Series XD Preferred Stock is determined separately
with respect to each holder in accordance with formulae set forth in the Series
XD Certificate of Designations. No holder of shares of Series XD Preferred
Stock may transfer any such shares unless such shares are transferred to a
Purchaser Affiliate, as defined in the Securities Purchase Agreement between
the Company and the Initial Holder (the "Securities Purchase Agreement"). The
Company must redeem all outstanding shares of Series XD Preferred Stock at a
redemption price per share equal to the aggregate liquidation preference of
such shares on the first to occur of (i) January 13, 1997 or (ii) the date upon
which an Initial Holder does not hold any Series 2D Warrants.

The Company also has a one-time right to redeem all outstanding shares of
Series 2D Preferred Stock, each share in exchange for (i) a subordinated debt
security (the "Exchange Note") with an aggregate principal amount of $99,999.99
and a minimum interest rate of 9.75%, in the form attached as an exhibit to the
Series 2D Certificate of Designations, bearing interest at a rate that would
preserve the after-federal income tax return on dividends on the Series 2D
Preferred Stock, (ii) cash in an amount equal to all accrued and unpaid
dividends on the Series 2D Preferred Stock, and (iii) one share of a new series
of preferred stock, par value $0.01 per share (the "Series YD Preferred
Stock"), of the Company to be created pursuant to a Certificate of Designations
in the form attached as an exhibit to the Series 2D Certificate of Designations
(the "Series YD Certificate of Designations"). No dividends will be payable
with respect to shares of Series YD Preferred Stock. The liquidation preference
for such shares will be $0.01 per share. The Company may at any time and at its
option redeem all, but not less than all, the shares of Series YD Preferred
Stock at a redemption price

45
<PAGE>

of $0.01 per share. The Company has mandatory redemption obligations to: (i)
redeem all shares of Series YD Preferred Stock outstanding on January 13, 1997
for the full liquidation preference amount, (ii) redeem all or part of the
Initial Holder's Series YD Preferred Stock for the liquidation preference
amount if the Initial Holder exercises its redemption opinion upon the proposal
or occurrence of a Change in Control Event, (iii) concurrently redeem all
outstanding Exchange Notes when Series YD Preferred Stock is redeemed, and (iv)
redeem and purchase outstanding shares of Series YD Preferred Stock pursuant to
the Securities Purchase Agreement. If the holder of such redeemed Series YD
Preferred Stock is an Initial Holder and also holds any outstanding Series 2D
Warrants, then such holder shall receive, for each share of Series YD Preferred
Stock redeemed, a share of Series XD Preferred Stock. Shares of Series XD
Preferred Stock may not be transferred separately from their corresponding
Exchange Notes.

The Initial Holder of the Series 2D Preferred Stock has the right, subject to
a 180-day cure period, to require the Company to redeem all shares of Series 2D
Preferred Stock (or shares of Series YD Preferred Stock and associated Exchange
Notes, as the case may be) held by it under certain circumstances. This right
is exercisable in the event the Company notifies such affiliates that the DOD,
the DOE or the President of the United States has made a final determination on
the grounds of national security that the Company, by reason of the ownership
of such Company securities by the Initial Holder, should forfeit a security
clearance on a material facility or a material government contract, and, in the
reasonable judgment of the Company's Board of Directors, such forfeiture will
have a material adverse effect on the Company. This right is not exercisable,
however, if the parent organization of the Initial Holder acquires more than
20% of the voting power of the Company.

Voting. The number of votes entitled to be cast by any holder of Series 2D
Preferred Stock is equal to the total number of shares of Series 2D Preferred
Stock owned by such holder divided by the total number of outstanding shares of
Series 2D Preferred Stock times the total number of shares of Common Stock (not
to exceed 2,380,952, subject to certain adjustments) for which Series 2D
Warrants are outstanding and unexercised. After such time as there are
outstanding Series 2D Warrants exercisable for 2,380,952 or fewer shares of
Common Stock, the voting power of the Series 2D Preferred Stock is reduced as
Series 2D Warrants are exercised. Thus, the Series 2D Preferred Stock has
voting power similar to that of the Common Stock.

In general, holders of shares of Series 2D Preferred Stock vote together with
the holders of Common Stock and are not entitled to vote as a separate class.
However, the affirmative vote of the holders of a majority of the shares of
Series 2D Preferred Stock, voting as a class with the holders of other series
of preferred stock or as a separate class, in accordance with Delaware law,
would be required for the approval of any proposed amendment of the Amended and
Restated Certificate of Incorporation that would change the par value of the
Series 2D Preferred Stock or alter or change the powers, preferences, or
special rights of the Series 2D Preferred Stock so as to affect such holders
adversely. Such a class vote is also required with respect to any proposed
merger or similar transaction involving an amendment of the Company's Amended
and Restated Certificate of Incorporation if the amendment would materially and
adversely affect the powers, preferences or special rights of the Series 2D
Preferred Stock. Moreover, without the affirmative vote of at least 66 2/3% of
the aggregate voting power of shares of Series 2D Preferred Stock outstanding,
the Company may not (i) authorize or issue preferred stock senior to the Series
2D Preferred Stock, or (ii) authorize or issue equity securities with a
mandatory redemption date earlier than January 13, 1997.

As discussed below (see "Provisions Affecting Changes of Control and
Extraordinary Transactions"), until January 13, 1997 (when the Series 2D
Preferred Stock is required to be redeemed, see "Redemption" above), the
Initial Holder has the right to designate one nominee for election as a
director of the Company.

Rights Upon Dividend Default. In the event the Company is in arrears with
respect to any dividend payable on the Series 2D Preferred Stock for a period
in excess of 100 days or fails to make a mandatory redemption, the holders of
Series 2D Preferred Stock will have the exclusive right to elect two additional
directors. In addition, until such an arrearage or failure to make a mandatory
redemption is cured, if 33% or more of the then outstanding Series 2D Preferred
Stock (or securities issued in exchange therefor) is held by

46
<PAGE>

an Initial Holder, the Company becomes subject to certain restrictive
covenants. Such covenants would prohibit the Company from, among other things:
disposing of assets for consideration of more than $1 million in a single
transaction; entering into mergers; making acquisitions; guaranteeing any
obligation in excess of $1 million; or incurring indebtedness other than as
permitted pursuant to the Indenture governing the Notes without the consent of
such Initial Holder. Further, under such circumstances, the Initial Holder is
relieved from the limitations described below on its right to acquire
additional voting securities of the Company, to subject Series 2D Preferred
Stock to a voting trust, or to solicit proxies in opposition to the Company's
Board of Directors (see "Provisions Affecting Changes of Control and
Extraordinary Transactions").

Transferability. The Series 2D Preferred Stock and Series 2D Warrants were
sold in a private placement exempt from registration under the Securities Act.
Thus, there is no public market for the Series 2D Preferred Stock (or the
Series XD Preferred Stock, Series YD Preferred Stock or Exchange Notes, if any
of such securities are issued) or the Series 2D Warrants. Transfers of any such
securities are further restricted by the Securities Purchase Agreement, which
grants the Company a right of first offer to purchase any such securities prior
to any transfers to any person other than another Initial Holder.

A registration rights agreement provides the holders of Series 2D Warrants
and the holders of any shares of Common Stock issued upon exercise of Series 2D
Warrants with certain rights to register for resale shares of Common Stock
issued upon exercise of the Series 2D Warrants. These registration rights
include customary demand and incidental registration rights.

Other Terms. Except as set forth above, holders of the Series 2D Preferred
Stock have no preemptive or other rights to subscribe for additional shares of
Company stock.

SERIES 2D WARRANTS

In January 1992, the Company sold to an affiliate of IFINT-USA Series 2D
Warrants to purchase 2,680,952 shares of Common Stock (subject to adjustment)
at an exercise price of $8.40 per share. The Series 2D Warrants expire in May
1997. On January 11, 1994, the Company repurchased its Series 2C Senior
Preferred Stock and Series 2C Warrants with a portion of the proceeds from the
sale of the 12% Notes and the Warrants and issued new Series 2D Warrants to the
affiliate of IFINT-USA. The new Series 2D Warrants are exercisable at $6.90 per
share (subject to adjustment). The holder of the Series 2D Warrants is able, in
lieu of exercising such warrants, to require the Company to issue to such
holder Common Stock with an aggregate market value equal to the difference
between the then current market price for the Common Stock and 90% of the
exercise price of the Series 2D Warrants then in effect, multiplied by the
number of Series 2D Warrants for which the holder is requiring such issuance.
In addition, on the expiration date of the Series 2D Warrants, the holder of
such warrants will be able, in lieu of exercising the warrants or having Common
Stock issued as described in the preceding sentence, to require the Company to
pay it cash in the amount of the difference between the then current market
price for the Common Stock and the exercise price of the Series 2D Warrants
then in effect, multiplied by the number of Series 2D Warrants for which the
holder is requiring such payment. In the event that the Company cannot make
such cash payment without violating a covenant or covenants contained in the
Indenture, the New Credit Agreement or any similar agreement relating to
indebtedness for borrowed money of the Company, the Company shall make such
payment in Common Stock as described above.

SHAREHOLDER RIGHTS PLAN

On January 13, 1992, the Board of Directors of the Company declared a
dividend distribution to shareholders of record at the close of business on
January 31, 1992 (the "Record Date") of one Right for each outstanding share of
Common Stock.

Each Right entitles the registered holder to purchase from the Company a unit
consisting of one one-hundredth of a share (a "Preferred Stock Unit") of Series
4 Junior Preferred Stock ("Series 4 Preferred

47
<PAGE>

Stock"), at a purchase price of $50.00 per Preferred Stock Unit ("Purchase
Price"), subject to adjustment. The Rights also are subject to certain
antidilution adjustments. The description of the Rights is set forth in a
Rights Agreement (the "Rights Agreement") between the Company and the Rights
Agent.

A Distribution Date (the "Distribution Date") for the Rights will occur upon
the earlier of (i) 10 business days following a "Stock Acquisition Date," which
is the public announcement that a person or group of affiliated or associated
persons has acquired, or obtained the right to acquire, beneficial ownership of
20% or more of the outstanding shares of Common Stock (such person or group
referred to herein as an "Acquiring Person") or (ii) 10 business days following
the commencement of a tender offer or exchange offer that would if consummated
result in a person or group becoming an Acquiring Person. The Rights are not
exercisable until the Distribution Date and will expire at the close of
business on January 13, 2002, unless earlier redeemed by the Company as
described below.

The Rights Agreement provides, among other things, that the Initial Holder on
the date of the Rights Agreement of the Series 2D Preferred Stock cannot be
deemed an Acquiring Person.

Until the Distribution Date (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such certificates
and (ii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.

In the event that, at any time following the Distribution Date, a person
becomes an Acquiring Person, then each holder of a Right (other than the
Acquiring Person) will thereafter have the right to receive, (x) upon exercise
and payment of the Purchase Price, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the Purchase Price of the Right or (y) at the discretion of the Board of
Directors, upon exercise and without payment of the Purchase Price, Common
Stock (or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to the Purchase Price of the Right. For example,
at a Purchase Price of $50.00 per Right, each Right not owned by an Acquiring
Person (or by certain related parties) following the event set forth above
would entitle its holder to purchase $100 worth of Common Stock (or other
consideration, as noted above) for $50.00. Assuming that the Common Stock has a
per share value of $10.00 at such time, the holder of each Right would be
entitled to purchase 10 shares of Common Stock for a total aggregate purchase
price of $50.00. However, Rights are not exercisable following the occurrence
of the event set forth above until such time as the Rights are no longer
redeemable by the Company as set forth below.

In the event that, at any time following the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation, (ii) the Company is the
surviving corporation in a merger with any Person (as defined in the Rights
Agreement) and its Common Stock is changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (iii) 50% or
more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights held by an Acquiring Person or which
previously have been exercised as set forth above) shall thereafter have the
right to receive, upon exercise, common stock of the acquiring company having a
value equal to two times the Purchase Price of the Right. The events set forth
in this paragraph and in the immediately preceding paragraph are referred to as
the "Triggering Events."

As noted above, following the occurrence of any of the events described
above, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void.

The Purchase Price payable, and the number of Preferred Stock Units or other
securities or property issuable upon exercise of the Rights, are subject to
amendment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Series 4
Preferred

48
<PAGE>

Stock, (ii) if holders of the Series 4 Preferred Stock are granted certain
rights or warrants to subscribe for Series 4 Preferred Stock or convertible
securities at less than the current market price of the Series 4 Preferred
Stock, or (iii) upon the distribution to holders of the Series 4 Preferred
Stock of evidences of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).

With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments amount to at least one percent of the Purchase
Price. In addition, to the extent that the Company does not have sufficient
shares of Common Stock issuable upon exercise of the Rights following the
occurrence of a Triggering Event, the Company may, under certain circumstances,
reduce the Purchase Price. No fractional Preferred Stock Units will be issued
and, in lieu thereof, an adjustment in cash will be made.

In general, the Company may redeem the Rights in whole, but not in part, at a
price of $0.01 per Right (payable in cash, Common Stock or other consideration
deemed appropriate by the Board of Directors), at any time until 10 business
days following the Stock Acquisition Date. After the redemption period has
expired, the Company's right of redemption may be reinstated if an Acquiring
Person reduces its beneficial ownership to less than 10% of the outstanding
shares of Common Stock in a transaction or series of transactions not involving
the Company and there are no other Acquiring Persons. Immediately upon the
action of the Board of Directors ordering redemption of the Rights, and without
any notice to the holder of such Rights prior to such redemption, the Rights
will terminate and the only right of the holders of Rights will be to receive
the $0.01 redemption price.

Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of the Company, including, without limitation, the right to
vote or to receive dividends.

Other than those provisions relating to the principal economic terms of the
Rights (except with respect to increasing the Purchase Price under certain
circumstances described in the Rights Agreement), any of the provisions of the
Rights Agreement may be amended by the Board of Directors of the Company prior
to the Distribution Date. After the Distribution Date, the provisions of the
Rights Agreement may be amended by the Board in order to cure any ambiguity, to
make changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person) or to shorten or lengthen any
time period under the Rights Agreement. However, no amendment to adjust the
time period governing redemption shall be made when the Rights are not
redeemable.

One Right will be distributed to shareholders of the Company for each share
of Common Stock owned of record by them at the close of business on the Record
Date. Until the Distribution Date, the Company will issue a Right with each
share of Common Stock so that all shares of Common Stock will have attached
Rights.

The Rights may be deemed to have certain anti-takeover effects. The Rights
generally may cause substantial dilution to a person or group that attempts to
acquire the Company under circumstances not approved by the Board of Directors
of the Company. The Rights should not interfere with any merger or other
business combination approved by the Board of Directors of the Company since
the Board of Directors may, at its option, at any time prior to the close of
business on the earlier of (i) the tenth business day following the Stock
Acquisition Date or (ii) January 13, 2002, redeem all but not less than all of
the then- outstanding Rights at $0.01 per Right.

PROVISIONS AFFECTING CHANGES OF CONTROL AND EXTRAORDINARY TRANSACTIONS

In addition to the Shareholder Rights Plan, certain provisions of the
Company's Amended and Restated Certificate of Incorporation and By-laws and
other agreements could have the effect of delaying, deferring, or preventing a
change in control of the Company or other extraordinary corporate transaction.

49
<PAGE>

The Company's Amended and Restated Certificate of Incorporation and By-laws
provide for classification of the Board of Directors into three classes, as
nearly equal in number as possible, with one class of directors being elected
each year for three-year terms. Under Delaware law, members of a classified
board may be removed only for cause. Thus, at least two years would be required
to effect a change of control in the Board of Directors, unless a shareholder
had sufficient voting power to amend or repeal the Amended and Restated
Certificate of Incorporation and By-law provisions relating to classification
of the Board of Directors.

In addition, the Amended and Restated Certificate of Incorporation imposes
supermajority voting requirements for certain corporate transactions that apply
if a majority of the Board of Directors has not served in such positions for at
least 12 months. Under those circumstances, the approval of two-thirds of the
voting power of the Company's capital stock would be required in order for the
Company to (i) merge with or consolidate into any other entity, other than a
subsidiary of the Company, (ii) sell, lease or assign all or substantially all
of the assets or properties of the Company, or (iii) amend the voting
provisions of the Amended and Restated Certificate of Incorporation. Other
Amended and Restated Certificate of Incorporation provisions of the type
referred to above include (i) the denial of the right of holders of Common
Stock to take action by written consent in lieu of at a shareholders' meeting
and (ii) the ability of the Board of Directors to determine the rights and
preferences (including voting rights) of the Company's authorized but unissued
preferred stock, and then to issue such stock. Such By-law provisions include
those that (i) require advance nomination of directors, (ii) require advance
notice of business to be conducted at shareholders' meetings, and (iii) provide
that shareholders owning at least 50% of the voting power of the capital stock
are required to call a special meeting of shareholders.

With the exception of the provision that authorizes the Board of Directors to
fix the terms of and issue authorized but unissued shares of preferred stock,
the approval of the holders of at least two-thirds of the voting power of the
Company's capital stock is required to amend, alter, or repeal, or to adopt
provisions inconsistent with, the Amended and Restated Certificate of
Incorporation and By-law provisions described above, regardless of whether a
majority of the members of the Board of Directors has served in such positions
for more than 12 months at the time of such action.

The voting and certain other rights of the holders of the Company's Series 2D
Preferred Stock may also have the effect of delaying, deferring or preventing a
change of control of the Company. As described in the preceding sections, the
terms of the Series 2D Preferred Stock permit the holders of such stock to
require redemption of the stock upon a "Change of Control Event" as defined
therein (in general, (x) the acquisition of 40% or more of the voting power of
the Company by an unrelated third party, (y) a change in the composition of a
majority of the Company's directors over a two-year period or (z) shareholder
approval of (A) a transaction or series of transactions consummated within nine
months which results in the shareholders of the Company prior to such
transaction(s) owning less than 55% of the voting power of the Company, (B)
liquidation of the Company, or (C) sale or disposition of all or substantially
all of the Company's assets). See "Series 2D Preferred Stock".

The agreements relating to the Series 2D Preferred Stock provide that, until
December 20, 1995, the Initial Holder will not, without the consent of a
majority of the Company's directors not designated by the purchaser, (i)
acquire any voting securities of the Company if, after such acquisition, it
would directly or indirectly own or control more than 40% of the voting power
of the Company, (ii) subject the Series 2D Preferred Stock to a voting trust,
or (iii) solicit proxies in opposition to any recommendation of the Company's
Board of Directors. Until January 13, 1997, subject to adjustment, so long as
the purchaser of the Series 2D Preferred Stock (and its affiliates) owns 80% of
such stock (including securities issuable in exchange for such stock) or 80% of
the Series 2D Warrants or the Common Stock issued upon exercise of the Series
2D Warrants, such purchaser (and its affiliates) shall be entitled to designate
a nominee for director to serve on the Company's Board of Directors.

50
<PAGE>

In addition, the warrants to purchase 275,088 shares, subject to antidilution
adjustment, of Common Stock (the "Subordinated Debt Warrants") and the Series
2D Warrants (which are exercisable for 2,680,952 shares, subject to
antidilution adjustment, of Common Stock) provide that, if the Company is a
party to a merger or other extraordinary corporate transaction in which the
Company's outstanding Common Stock is exchanged for securities or other
consideration (including cash), the holders thereof shall have the right to
elect, within 60 days after notice, to receive, at the holder's election, (i)
the consideration which the warrantholder would have received had the warrants
been exercised immediately prior to the transaction or (ii) the number of
shares of the acquiring party's voting stock (with the highest voting power per
share in the case of the Series 2D Warrants) determined by reference to a
formula that gives effect to the fair market value of the consideration paid
for the Company's Common Stock in the transaction. If such a transaction
constitutes a Change of Control Event (as described above), each of the holders
of the Subordinated Debt Warrants and Series 2D Warrants also have the right to
exercise the warrants they hold within the 60-day notice period referred to
above and receive cash in an amount equal to the fair market value of the
highest per share consideration paid in connection with the transaction,
computed as if the warrants had been exercised immediately prior to
consummation of the transaction.

The Company has entered into agreements with certain key employees, including
Messrs. Edwards and Schweers, that contain non-compete provisions and
provisions that require such key employees to obtain the written consent of the
Company prior to transferring a specified amount of the Company's Common Stock.
In addition, Mr. Edwards is required to give the Company notice of his
intention to leave the Company. Finally, in the event of a takeover of the
Company, the agreement with Mr. Edwards provides for automatic vesting of the
options and deferred compensation held by him.

DELAWARE TAKEOVER STATUTE

Section 203 of the Delaware General Corporation Law (the "Delaware Takeover
Statute") applies to Delaware corporations with a class of voting stock listed
on a national securities exchange, authorized for quotation on an inter-dealer
quotation system, or held of record by 2,000 or more persons, and restricts
transactions which may be entered into by such a corporation and certain of its
stockholders. The Delaware Takeover Statute provides, in essence, that a
stockholder acquiring more than 15% of the outstanding voting shares of a
corporation subject to the statute (an "Interested Stockholder"), but less than
85% of such shares, may not engage in certain "Business Combinations" with the
corporation for a period of three years subsequent to the date on which the
stockholder became an Interested Stockholder, unless (i) prior to such date the
corporation's board of directors approved either the Business Combination or
the transaction in which the stockholder became an Interested Stockholder or
(ii) the Business Combination is approved by the corporation's board of
directors and authorized by a vote of at least 66 2/3% of the outstanding
voting stock of the corporation not owned by the Interested Stockholder.

The Delaware Takeover Statute defines the term "Business Combination" to
encompass a wide variety of transactions with or caused by an Interested
Stockholder in which the Interested Stockholder receives or could receive a
benefit on other than a pro rata basis with other stockholders, including
mergers, certain asset sales, certain issuances of additional shares to the
Interested Stockholder, transactions with the corporation which increase the
proportionate interest of the Interested Stockholder, or transactions in which
the Interested Stockholder receives certain other benefits.

DESCRIPTION OF CREDIT FACILITY

Effective on January 11, 1994, the Company entered into a new $60 million
revolving credit and letter of credit facility (the "New Credit Agreement"),
with a syndicate of banks (the "Banks"). The agent for the Banks (the "Agent")
is Chemical Bank. Capitalized terms used in this description of the New Credit
Agreement and not defined herein have the meanings assigned to them in the New
Credit Agreement. The terms of the New Credit Agreement are summarized below:

51
<PAGE>

Borrowing Availability and Termination Date. Under the New Credit Agreement,
loans may be made to the Company and letters of credit may be issued at the
request of the Company for an aggregate amount of the lesser of (i) $60
million, or (ii) the Borrowing Base (the sum of 85% of Eligible Billed Accounts
Receivable plus 30% of Unbilled Accounts Receivable) as reduced by outstanding
additional permitted indebtedness. If the Company sells assets other than in
the ordinary course of business while the New Credit Agreement is in effect,
the borrowing availability will be reduced by one-half of the net proceeds from
each sale; provided, however, that there will be no reduction for the first $10
million in aggregate net proceeds. The New Credit Agreement terminates on
October 31, 1996.

Interest. The New Credit Agreement contains Eurodollar and Alternate Base
Rate ("ABR") options, with applicable margins depending on the Company's ratio
of (i) Consolidated Net Income plus Consolidated Interest Expense and income
taxes to (ii) Consolidated Interest Expense.

Fees. The Company pays certain fees and commissions to the Banks, including a
commitment fee of 1/2% per annum on the unused portion of the facility.
Outstanding letters of credit bear a fee equal to the Eurodollar applicable
margin in effect over the payment period.

Collateral. Advances under the New Credit Agreement are secured on a first
priority basis by a pledge of all of the billed and unbilled accounts of the
Company and certain of its subsidiaries, as well as certain other tangible and
intangible assets of the Company and certain of its subsidiaries.

Subsidiary Guarantees. Certain subsidiaries of the Company (the "Subsidiary
Guarantors") entered into a joint and several guarantee of the Company's
payment obligations under the New Credit Agreement. Each of the Subsidiary
Guarantors also agreed to a number of covenants in favor of the Agent,
including covenants (each with specified exceptions) (i) not to create, incur
or permit to exist any lien on its collateral, (ii) not to sell, transfer,
lease or otherwise dispose of any of its collateral, (iii) not to amend,
modify, terminate or waive any provision of any agreement giving rise to an
Account (as defined in the New Credit Agreement) in a manner that could have a
materially adverse effect upon the value of the Account as collateral, and (iv)
not to grant discounts, compromises or extensions of Accounts except in the
ordinary course of business.

Financial Covenants. The New Credit Agreement contains financial covenants
that require the Company to maintain certain financial ratios above or below
specified limits, including, but not limited, to those described below. The
Company covenants that it will not allow the ratios of (i) Adjusted
Consolidated Net Income to Consolidated Fixed Charges (the "Fixed Charge
Coverage Ratio") and (ii) (x) Consolidated Net Income plus Consolidated
Interest Expense and income taxes to (y) Consolidated Interest Expense (the
"Interest Coverage Ratio"), computed on a consolidated, rolling four quarters
basis to be less than those set forth below:

<TABLE>
<CAPTION>
FIXED CHARGE
COVERAGE
TIME PERIOD RATIO
----------- ------------
<S> <C>
1/11/94 - 8/31/94 1.00:1.00
9/1/94 - 8/31/95 1.05:1.00
Thereafter 1.10:1.00
</TABLE>
<TABLE>
<CAPTION>
INTEREST
COVERAGE
TIME PERIOD RATIO
----------- ---------
<S> <C>
1/11/94 - 2/28/94 1.05:1.00
3/1/94 - 8/31/94 1.10:1.00
9/1/94 - 8/31/95 1.20:1.00
Thereafter 1.30:1.00
</TABLE>

52
<PAGE>

The Company also covenants that it will not allow the ratio of Consolidated
Funded Indebtedness to Consolidated Capital Funds Ratio, on a consolidated,
quarterly basis to exceed those set forth below:

<TABLE>
<CAPTION>
CONSOLIDATED FUNDED
INDEBTEDNESS TO
CONSOLIDATED
TIME PERIOD CAPITAL FUNDS RATIO
----------- -------------------
<S> <C>
1/11/94 - 5/31/94 0.76:1.00
6/1/94 - 11/30/94 0.75:1.00
12/1/94 - 8/31/95 0.74:1.00
9/1/95 - 2/28/96 0.73:1.00
Thereafter 0.72:1.00
</TABLE>

Under the New Credit Agreement, the Company and its subsidiaries agree not
to assume, incur or create any debt except for (i) debt incurred in
conjunction with the issuance of the Notes, (ii) debt under the New Credit
Agreement, (iii) up to $10 million in additional debt (to the extent the
Company has unused Borrowing Base), and (iv) certain other debt specified in
the New Credit Agreement.

Restrictive Covenants. The New Credit Agreement contains certain negative
covenants and restrictions customary for such a facility, including, without
limitation, restrictions on (i) the creation of liens, (ii) mergers and other
extraordinary transactions, (iii) transactions with affiliates and (iv) sale
of assets. Investments in project-related joint ventures will be limited to
$500,000 in any 12-month period, and investments in project-finance ventures
will be limited to an aggregate of $12.5 million. In addition, the New Credit
Facility limits other acquisitions and investments to an aggregate of $5
million (plus the net cash proceeds from dispositions of acquisitions and
investments made after Januay 11, 1994), with any individual acquisition or
investment not to exceed $2 million.

In addition, with certain exceptions, the Company is not permitted to
declare or pay any dividend on its capital stock (other than dividends payable
solely in common stock or rights or other equity securities (not including
preferred stock) of the Company), or pay for the purchase, redemption,
retirement or other acquisition of any shares of any class of the Company's
stock, or make any distribution in respect thereof (such declaration, payments
and other above-referenced transactions hereinafter referred to as "Restricted
Payments"). Permitted Restricted Payments include (i) dividends on capital
stock in amounts which, together with certain permitted redemptions of common
stock, do not exceed the sum of the aggregate amount received by the Company
from the issuance of capital stock after January 11, 1994 and 20% of
Consolidated Net Income for the period commencing September 1, 1993 and (ii)
certain preferred stock dividends, provided that, after giving effect to such
Restricted Payments, no Default or Event of Default will be in existence. The
Company's Subsidiaries may make Restricted Payments to the Company at any
time.

Events of Default. The New Credit Agreement will provide for various events
of default customary for such a facility, including, among others: (i) the
failure to make any payment of principal of, interest on, or any other amount
owing in respect of any obligation under the New Credit Agreement when due and
payable; (ii) the breach of certain of the covenants and restrictive covenants
contained in the New Credit Agreement; (iii) the failure by the Company or any
of its subsidiaries to make a required payment of principal of, interest on,
or under a guarantee obligation with respect to, any indebtedness in excess of
$1 million (other than indebtedness incurred pursuant to the New Credit
Agreement); (iv) the failure of the Company to observe or perform any other
condition or agreement relating to indebtedness or guarantee obligation in
excess of $1 million, where such failure gives the holders the right to
accelerate payment thereof; (v) the occurrence of certain events of insolvency
or bankruptcy (voluntary or involuntary); (vi) the entering of one or more
judgments or decrees against the Company or any of its subsidiaries involving
an aggregate liability in excess of $1 million that is not or are not fully
paid, covered by insurance, vacated, discharged or stayed pending appeal
within 60 days of entry; and (vii) the suspension of the Company or any of its
subsidiaries by an agency or branch of the government, but only if aggregate
gross revenues no longer accruing to the Company or a subsidiary as a result
of the suspended contract shall be at least $10 million. In addition, a Change
of Control

53
<PAGE>

(as such term is defined in the Indenture governing the Notes) will be an event
of default (i) one day before the Indenture requires the Company to purchase
the Notes following a Change of Control, or (ii) 89 days after the Change of
Control occurs, whichever occurs first.

Other Provisions. Affirmative covenants of the Company and its subsidiaries
include the obligations to pay all their material obligations at or before
maturity. The Company is also required to continue, and to cause its
subsidiaries to continue, to engage in businesses of the same general type as
now conducted.

PLAN OF DISTRIBUTION

The Company is offering the Common Stock covered by this Prospectus for sale
upon the exercise of the Warrants. The Company does not anticipate engaging the
services of any underwriters, brokers or dealers in connection with the
distribution of the Common Stock offered hereby.

LEGAL MATTERS

The legality of the securities offered hereby will be passed upon for the
Company by Paul Weeks, II, Esq., Senior Vice President, General Counsel, and
Secretary of ICF Kaiser International, Inc. As of January 12, 1994, Mr. Weeks
was the beneficial owner of 54,293 shares of the Common Stock (including 19,667
shares that may be acquired upon the exercise of stock options).

EXPERTS

The Consolidated Financial Statements of ICF Kaiser International, Inc. and
subsidiaries as listed herein on page F-1, except for the interim financial
statements, have been included herein in reliance on the reports of Coopers &
Lybrand, independent accountants, given upon their authority as experts in
auditing and accounting.

54
<PAGE>

ICF KAISER INTERNATIONAL, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Financial Statements:
Report of Independent Accountants....................................... F-2
Consolidated Balance Sheets--February 28, 1993, February 29, 1992 and
November 30, 1993 (unaudited).......................................... F-3
Consolidated Statements of Operations--For the Years Ended February 28,
1993, February 29, 1992, and February 28, 1991 and the Nine Months
ended November 30, 1993 and 1992 (unaudited)........................... F-4
Consolidated Statements of Shareholders' Equity--For the Years Ended
February 28, 1993, February 29, 1992, and February 28, 1991 and the
Nine Months ended November 30, 1993 and 1992 (unaudited)............... F-5
Consolidated Statements of Cash Flows--For the Years Ended February 28,
1993, February 29, 1992, and February 28, 1991 and the Nine Months
ended November 30, 1993 and 1992 (unaudited)........................... F-6
Notes to Consolidated Financial Statements.............................. F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

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

We have audited the accompanying consolidated balance sheets of ICF Kaiser
International, Inc. and Subsidiaries, formerly ICF International, Inc., as of
February 28, 1993 and February 29, 1992, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended February 28, 1993. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of ICF Kaiser
International, Inc. and Subsidiaries as of February 28, 1993 and February 29,
1992 and the consolidated results of their operations and their cash flows for
each of the three years in the period ended February 28, 1993 in conformity
with generally accepted accounting principles.

As discussed in Note J to the consolidated financial statements, the Company
changed its method of accounting for income taxes for the year ended February
29, 1992.

Coopers & Lybrand

Washington, D.C.
April 30, 1993

F-2
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
NOVEMBER 30, FEBRUARY 28, FEBRUARY 29,
1993 1993 1992
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents............. $ 22,416 $ 8,445 $ 8,516
Contract receivables, net............. 133,983 160,681 152,416
Prepaid expenses and other current
assets............................... 19,418 21,503 21,095
Refundable income taxes............... 1,090 1,294 2,230
Deferred income taxes................. 12,045 12,553 14,542
Net current assets of business held
for disposition...................... -- -- 4,226
-------- -------- --------
Total Current Assets................ 188,952 204,476 203,025
-------- -------- --------
Fixed Assets
Furniture, equipment and leasehold
improvements......................... 40,923 40,120 41,381
Less allowances for depreciation and
amortization......................... 24,335 20,440 17,730
-------- -------- --------
16,588 19,680 23,651
-------- -------- --------
Other Assets
Goodwill, net......................... 52,379 53,896 55,791
Investments in and advances to
affiliates........................... 5,233 2,207 19,488
Due from officers and employees....... 1,301 1,361 1,108
Other................................. 14,004 13,958 15,884
-------- -------- --------
72,917 71,422 92,271
-------- -------- --------
$278,457 $295,578 $318,947
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses. $ 47,287 $ 60,192 $ 66,051
Accrued salaries and employee
benefits............................. 23,465 25,804 24,501
Current portion of long-term
liabilities.......................... 2,850 5,276 7,187
Income taxes payable.................. 735 1,448 2,361
Deferred revenue...................... 12,774 13,804 23,388
Other................................. 9,126 10,107 13,472
-------- -------- --------
Total Current Liabilities........... 96,237 116,631 136,960
-------- -------- --------
Long-term Liabilities, less current por-
tion
Long-term debt........................ 46,474 39,115 49,145
Subordinated debt..................... 30,000 30,000 30,000
Other................................. 3,325 6,487 6,530
-------- -------- --------
79,799 75,602 85,675
-------- -------- --------
Commitments and Contingencies
Redeemable Preferred Stock.............. 44,445 44,824 45,161
Preferred Stock......................... 6,900 6,900 6,900
Common Stock, par value $.01 per share:
Authorized--90,000,000 shares
Issued and outstanding--20,891,052,
21,303,807 and 18,270,652 shares..... 209 213 182
Additional Paid-in Capital.............. 62,351 65,040 64,382
Notes Receivable Related to Common
Stock.................................. (1,732) (2,725) (3,387)
Retained Earnings (Deficit)............. (6,152) (4,206) (7,552)
Cumulative Translation Adjustment....... (1,933) (1,701) (1,041)
ESOP Guaranteed Bank Loan............... (1,667) (5,000) (8,333)
-------- -------- --------
$278,457 $295,578 $318,947
======== ======== ========
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
NOVEMBER 30, YEAR ENDED FEBRUARY 28,
-------------------- -------------------------------
1993 1992 1993 1992 1991
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE
Gross revenue.......... $ 454,069 $ 527,961 $ 678,882 $ 710,873 $ 624,976
Subcontract and direct
material costs........ (180,942) (238,836) (299,606) (337,056) (269,846)
Equity in income of
joint ventures and
affiliated companies.. 3,355 4,447 5,709 6,009 8,188
--------- --------- --------- --------- ---------
Service revenue....... 276,482 293,572 384,985 379,826 363,318
OPERATING EXPENSES
Direct cost of services
and overhead.......... 215,187 222,000 292,005 291,237 269,020
Administrative and
general expense....... 45,223 43,036 58,184 56,339 49,573
Depreciation and
amortization.......... 7,352 8,294 10,766 9,159 11,438
Costs of restructuring
and disposal of
businesses, net....... -- 1,336 1,336 73,354 --
Unusual item, net...... 500 1,400 (50) (6,300) --
--------- --------- --------- --------- ---------
Operating income
(loss)............... 8,220 17,506 22,744 (43,963) 33,287
OTHER INCOME (EXPENSE)
Loss on sale of
investment............ -- -- (929) -- --
Interest income........ 1,116 1,322 1,708 1,931 1,995
Interest expense--core
businesses............ (5,089) (6,550) (8,629) (10,778) (11,264)
Interest expense--
discontinued
businesses............ -- -- -- (1,500) --
--------- --------- --------- --------- ---------
Income (loss) before
income tax........... 4,247 12,278 14,894 (54,310) 24,018
Income tax provision
(benefit)............. 2,208 5,157 6,255 (13,794) 9,727
--------- --------- --------- --------- ---------
Net income (loss)..... 2,039 7,121 8,639 (40,516) 14,291
Preferred stock
dividends............. 3,770 3,770 5,026 2,203 857
--------- --------- --------- --------- ---------
Net income (loss)
available for common
shareholders......... $ (1,731) $ 3,351 $ 3,613 $ (42,719) $ 13,434
========= ========= ========= ========= =========
Net income (loss) per
common share
Primary................ $ (0.09) $ 0.15 $ 0.16 $ (2.25) $ 0.71
Fully diluted.......... $ (0.09) $ 0.15 $ 0.16 $ (2.25) $ 0.68
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED FEBRUARY 28,
NOVEMBER 30 -------------------------
1993 1993 1992 1991
----------------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
SERIES 1 JUNIOR CONVERTIBLE PRE-
FERRED STOCK
Balance at beginning of year.... $ 6,900 $ 6,900 $ 6,900 $ --
Issuance of 69 shares........... -- -- -- 6,900
------- ------- ------- -------
Balance at end of year.......... $ 6,900 $ 6,900 $ 6,900 $ 6,900
======= ======= ======= =======
COMMON STOCK
Balance at beginning of year.... $ 213 $ 182 $ 185 $ 174
Issuance of shares (105,740 in
1993, 1,131,620 in 1992 and
281,852 in 1991)............... -- 1 11 3
Issuance of 197,713 shares...... 2 -- -- --
Repurchase of shares (44,434 in
1993, 954,961 in 1992 and
1,342,788 in 1991)............. -- 0 (9) (13)
Repurchase of 610,468 shares.... (6) -- -- --
Issuance of shares to benefit
plans (1,344,123 in 1992 and
666,666 in 1991)............... -- -- 13 6
Issuance of shares in connection
with acquisitions (1,222,826 in
1992 and 1,494,980 in 1991).... -- -- 12 15
Exchange of 2,975,542 shares of
Class A Common Stock for
Series 3 Preferred Stock....... -- -- (30) --
Conversion of Series 3 Preferred
Stock into 2,971,849 shares.... -- 30 -- --
------- ------- ------- -------
Balance at end of year.......... $ 209 $ 213 $ 182 $ 185
======= ======= ======= =======
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year.... $65,040 $64,382 $55,358 $40,780
Increase in connection with
issuances...................... 913 619 5,541 2,771
Decrease in connection with re-
purchases...................... (3,716) (354) (15,169) (14,950)
Increase in connection with ac-
quisitions..................... -- -- 6,789 20,337
Increase in connection with is-
suance to benefit plans........ -- -- 10,376 6,251
Tax effect from the excercise of
non-qualified stock options.... -- 559 983 --
Other........................... 114 (166) 504 169
------- ------- ------- -------
Balance at end of year.......... $62,351 $65,040 $64,382 $55,358
======= ======= ======= =======
NOTES RECEIVABLE RELATED TO COM-
MON STOCK
Balance at beginning of year.... $(2,725) $(3,387) $ (911) $ (544)
Common stock issued in exchange
for notes receivable........... -- -- (2,476) (367)
Payments received on notes re-
ceivable....................... 993 662 -- --
------- ------- ------- -------
Balance at end of year.......... $(1,732) $(2,725) $(3,387) $ (911)
======= ======= ======= =======
RETAINED EARNINGS (DEFICIT)
Balance at beginning of year.... (4,206) $(7,552) $35,380 $21,978
Net income (loss)............... 2,039 8,639 (40,516) 14,291
Preferred stock dividends....... (3,770) (5,026) (2,203) (857)
Preferred stock accretion....... (202) (267) (213) --
Other........................... (13) -- -- (32)
------- ------- ------- -------
Balance at end of year.......... $(6,152) $(4,206) $(7,552) $35,380
======= ======= ======= =======
CUMULATIVE TRANSLATION ADJUSTMENT
Balance at beginning of year.... (1,701) $(1,041) $ (260) $ --
Current year adjustment......... (232) (660) (781) (260)
------- ------- ------- -------
Balance at end of year.......... $(1,933) $(1,701) $(1,041) $ (260)
======= ======= ======= =======
ESOP GUARANTEED BANK LOAN
Balance at beginning of year.... (5,000) $(8,333) $(7,813) $(4,429)
(Increase) decrease in loan bal-
ance........................... 3,333 3,333 (520) (3,384)
------- ------- ------- -------
Balance at end of year.......... $(1,667) $(5,000) $(8,333) $(7,813)
======= ======= ======= =======
</TABLE>

See notes to consolidated financial statements

F-5
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
NOVEMBER 30, YEAR ENDED FEBRUARY 28,
------------------ ----------------------------
1993 1992 1993 1992 1991
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss).......... $ 2,039 $ 7,121 $ 8,639 $(40,516) $ 14,291
Adjustments to reconcile
net income (loss) to net
cash provided by (used in)
operating activities:
Depreciation and
amortization.............. 7,352 8,294 10,766 9,159 11,438
Provision for losses on
accounts receivable....... 1,677 1,244 2,202 4,359 1,667
Provision for deferred
income taxes.............. 508 5,157 4,311 (13,925) (4,219)
Earnings less than (in
excess of) cash
distributions from joint
ventures and affiliated
companies................. (1,943) (4,029) (3,690) (1,539) 876
Loss on sale of investment. -- -- 929 -- --
Increase (decrease) in
provision for
restructuring and disposal
of businesses, net of
cash...................... -- (6,551) (6,426) 52,289 --
Unusual items.............. -- 1,400 (50) (6,300) --
Changes in operating assets
and liabilities related to
operating activities, net
of dispositions:
Contract receivables...... 25,021 (8,773) (15,263) (23,017) (24,091)
Prepaid expenses and other
current assets........... 2,432 51 2,655 (1,558) (4,936)
Other assets.............. (902) 54 (257) 1,532 (16,452)
Accounts payable and
accrued expenses......... (16,501) (17,858) (8,622) 31,222 3,496
Income taxes payable...... (290) 271 6 (3,522) 4,400
Deferred revenue.......... (1,030) 2,339 (9,251) 13,898 2,623
Other liabilities......... (4,042) (9,024) (2,505) (4,409) (4,835)
-------- -------- -------- -------- --------
Net Cash Provided by (Used
in) Operating Activities.. 14,321 (20,304) (16,556) 17,673 (15,742)
-------- -------- -------- -------- --------
INVESTING ACTIVITIES
Sales of subsidiaries and
affiliates................ -- 5,894 35,695 3,965 --
Investments in subsidiaries
and affiliates, net of
cash...................... (2,381) (1,146) (1,146) (2,515) (21,365)
Purchases of fixed assets,
net....................... (876) (3,563) (4,638) (3,644) (5,629)
Other investing activities. -- 439 387 258 (502)
-------- -------- -------- -------- --------
Net Cash Provided by (Used
in) Investing Activities.. (3,257) 1,624 30,298 (1,936) (27,496)
-------- -------- -------- -------- --------
FINANCING ACTIVITIES
Proceeds from borrowings... 10,000 34,748 34,357 35,108 78,137
Principal payments......... (1,734) (14,590) (42,965) (58,925) (57,384)
Proceeds from (used in)
common stock transactions. (1,814) 132 130 (7,425) (5,410)
Proceeds from sales of
redeemable preferred
stocks.................... (800) (800) -- 19,500 23,470
Proceeds from sales of
Series 1 Junior
Convertible Preferred..... -- -- -- -- 6,900
Redemption of redeemable
Preferred Stock........... -- -- (799) (800) (799)
Preferred stock dividends.. (2,513) (2,623) (3,876) (3,283) (804)
-------- -------- -------- -------- --------
Net Cash Provided by (Used
in) Financing Activities.. 3,139 16,867 (13,153) (15,825) 44,110
-------- -------- -------- -------- --------
Effect of Exchange Rate
Changes on Cash........... (232) (275) (660) (781) (260)
-------- -------- -------- -------- --------
Increase (Decrease) in Cash
and Cash Equivalents...... 13,971 (2,088) (71) (869) 612
Cash and Cash Equivalents
at Beginning of Period.... 8,445 8,516 8,516 9,385 8,773
-------- -------- -------- -------- --------
Cash and Cash Equivalents
at End of Period.......... $ 22,416 $ 6,428 $ 8,445 $ 8,516 $ 9,385
======== ======== ======== ======== ========
SUPPLEMENTAL INFORMATION:
Cash payments for interest. $ 9,242 $ 7,456 $ 9,447 $ 12,313 $ 10,805
Cash payments (refunds) for
income taxes.............. 14 (176) (416) 7,219 7,120
Increase (decrease) of ESOP
guaranteed bank loan...... (3,333) (3,333) (3,333) 520 3,384
Common stock issued to
retirement plan........... -- -- -- 5,287 --
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)

NOTE A--ORGANIZATION

ICF Kaiser International, Inc., formerly known as ICF International, Inc.
("ICF Kaiser" or the "Company"), was formed on October 19, 1987, as the holding
company for ICF Incorporated and the family of companies developed around ICF
Incorporated since its inception (1969). These companies provide consulting,
engineering, and program and construction management services primarily to the
environmental, infrastructure, industrial, and energy markets both in the
United States and abroad.

NOTE B--SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The consolidated financial statements include
all majority-owned subsidiaries of ICF Kaiser. Investments in joint ventures
and affiliated companies are accounted for using the equity method. All
significant intercompany accounts and transactions have been eliminated. As
discussed in Note C, the consolidated financial statements reflect a provision
related to the restructuring and disposal of certain businesses. The disposal
of businesses under the restructuring program was completed in fiscal 1993. At
February 29, 1992, the net current assets of the businesses discontinued under
the restructuring plan are separately reflected as a component of current
assets and the estimated net realizable value of the non-current assets of
these businesses, net of a provision for future operating losses and other
restructuring provisions, is reflected as a component of other long-term
assets. The costs of restructuring and disposal of businesses include the net
of revenue and operating expenses of the discontinued businesses and estimated
future losses of such businesses.

Interim Financial Information: The financial information presented as of
November 30, 1993 and for the nine-month periods ended November 30, 1993 and
1992 is unaudited but has been prepared in accordance with generally accepted
accounting principles for interim financial information. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included.

Shareholders' Equity: On June 27, 1992, the shareholders adopted amendments
to ICF Kaiser's Certificate of Incorporation which reclassified all of the
Class B Common Stock authorized, issued, and outstanding at that time into
shares of Class A Common Stock, thereby placing all of ICF Kaiser's common
stock into a single class, which was renamed "Common Stock". The accompanying
financial statements reflect the combination of the 7,670,529 shares of Class B
Common Stock issued and outstanding on June 27, 1992 into Class A Common Stock
as if the reclassification and renaming had occurred at the beginning of the
periods presented. There were 9,925,811 shares of Class A and 8,344,841 shares
of Class B issued and outstanding at February 29, 1992. Following
implementation of these amendments, the then-outstanding shares of Series 3
Junior Convertible Preferred Stock automatically converted into 2,799,523
shares of ICF Kaiser Common Stock.

Revenue Recognition: Revenue is recorded on cost-type contracts as costs are
incurred. Revenue on time-and-materials contracts is recognized to the extent
of billable rates times hours delivered plus materials expense incurred. Long-
term fixed-price contracts generally are accounted for under percentage-of-
completion methods, and revenue includes a proportion of the earnings expected
to be realized in the ratio that costs incurred bear to estimated total costs.

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

F-7
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
Cash and Cash Equivalents: ICF Kaiser considers all highly liquid financial
instruments purchased with maturities of three months or less to be cash
equivalents. At November 30, 1993 and February 28, 1993, other current assets
include $1,833,000 and $4,606,000, respectively of restricted cash and short-
term investments which primarily supports a letter of credit for one of ICF
Kaiser's subsidiaries.

Statement of Cash Flows: The consolidated statements of cash flows are
prepared on a basis which separately reflects transactions related to the
discontinued businesses. Included in adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities are non-cash expenses of
the continuing businesses and the non-cash activity related to the provision
for restructuring and disposal of businesses.

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

Goodwill: Goodwill represents the excess of cost over the fair value of the
net assets of acquired businesses and is amortized using the straight-line
method over periods ranging from five to forty years. Accumulated amortization
was $8,664,000, $7,147,000 and $5,584,000 at November 30, 1993, February 28,
1993 and February 29, 1992, respectively.

Income Taxes: ICF Kaiser uses the accrual method for income tax reporting
purposes. Deferred income taxes are provided using the liability method on
temporary differences between financial reporting and income tax reporting,
which primarily relate to reserves for adjustments and allowances. If
necessary, management records a valuation allowance for deferred tax assets
that may not be realizable. ICF Kaiser adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes, ("SFAS No. 109"), at
the beginning of fiscal 1992 (see Note J).

Post-Employment Benefits: Effective March 1, 1993, ICF Kaiser adopted
Statement of Financial Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions ("SFAS No. 106"). Prior to the
adoption of SFAS No. 106, ICF Kaiser had been recognizing the cost of
postretirement benefits when paid. ICF Kaiser provides certain benefits,
primarily health insurance, to a limited group of retirees (and their spouses)
who joined ICF Kaiser through an acquisition. The cost of the postretirement
benefits is funded when paid and limited to a fixed amount per retiree or
spouse per month. All service cost related to these benefits has been included
in the Company's transition obligation.

The Company has elected the prospective transition method of recognizing
these postretirement benefit expenses. Under this method, the Company's $14.2
million accumulated postretirement benefit obligation at March 1, 1993 is being
amortized over 14.5 years, the average remaining life expectancy of the
retirees and their spouses. A discount rate of 7% was used to determine the
accumulated postretirement benefit obligation. The Company's ongoing expense
under SFAS No. 106 includes the interest component and the amortization of the
transition obligation, which was approximately $1,425,000 for the nine months
ended November 30, 1993. Under the previous method of accounting for
postretirement benefits, $1,695,000, $1,418,000 and $1,618,000 were included in
expense in fiscal years 1993, 1992 and 1991, respectively. Approximately
$1,174,000 was included in expense for the nine months ended November 30, 1992.

Net Income (Loss) Per Common Share: Net income (loss) per common share is
computed using net income available to common shareholders, as adjusted under
the modified treasury stock method, and the weighted average number of common
stock and common stock equivalents outstanding during the periods presented.
Common stock equivalents include stock options and warrants and the potential
conversion of convertible preferred stock. For the nine months ended November
30, 1993, and fiscal 1993 and 1992, the

F-8
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
adjustments that would be required by the modified treasury stock method to net
income (loss) available for common shareholders and to weighted average number
of shares were anti-dilutive and therefore excluded from earnings per share
computations. In computing earnings per share, net income (loss) available to
common shareholders was adjusted for the amortization of discounts on senior
preferred stock. Primary earnings per share was based on 21,272,000,
19,085,000, and 19,289,000 shares in fiscal years 1993, 1992, and 1991,
respectively, and fully diluted earnings per share was based on 21,272,000,
19,085,000, and 20,308,000 shares in fiscal years 1993, 1992, and 1991,
respectively. Primary and fully diluted earnings per share were based on
20,881,000 and 21,259,000 shares for the nine months ended November 30, 1993
and 1992, respectively.

Concentrations of Credit Risk: The Company maintains cash balances primarily
in overnight Eurodollar deposits and bank certificates of deposit. Short-term
investments are U.S. Government securities having maturities of less than one
year. ICF Kaiser grants uncollateralized credit to its customers. A large
portion of ICF Kaiser's receivables are from the U.S. government (See Note E).
In order to mitigate its credit risk to commercial customers, when practical,
ICF Kaiser obtains advance funding of costs for industrial construction work.

Reclassification: Certain reclassifications have been made to the fiscal 1993
financial statements to conform to the presentation used in fiscal 1994
financial statements, and to fiscal 1992 and 1991 financial statements to
conform to the presentation used in fiscal 1993.

NOTE C--RESTRUCTURING AND DISPOSAL OF BUSINESSES

In fiscal 1993, ICF Kaiser completed its disposal of non-core businesses
under a restructuring plan which began in the first quarter of fiscal 1992. The
plan provided for the sale, liquidation, or other disposition of certain
businesses outside of the Company's core businesses, and the consolidation of
certain operations within the core businesses. The core businesses primarily
provide a broad range of consulting, engineering, and program and construction
management services in the environmental, infrastructure, industrial, and
energy markets. The Company's non-core businesses disposed of under the plan
included ICF Kaiser subsidiaries providing pharmaceutical industry research,
health communications and consulting services, geophysical/seismic data
processing services, and systems integration services. The original plan was
modified in fiscal 1993 to provide for the sale of a health consulting business
determined to be outside the Company's core businesses and to revise estimates
of potential liabilities related to disposed businesses. The modification to
the restructuring plan resulted in a net $1,336,000 charge in fiscal 1993 since
the gain on the sale of the health consulting business was offset by revisions
to the estimates of remaining potential liabilities relating to discontinued
businesses.

The charge for the cost of restructuring and disposal of businesses recorded
in fiscal 1992 was $73.4 million ($52.4 million after tax), which provided for
operating losses of discontinued businesses and losses on the disposal of those
businesses included in the plan at that time, severance and other restructuring
costs. In fiscal 1992, the Company allocated interest expense related to
discontinued businesses on the accompanying statement of operations based on
the imputed reduction in interest cost from the assumed sale of the
discontinued businesses.

NOTE D--ACQUISITIONS

All of the businesses acquired by the Company during the three year period
ended February 28, 1993 were treated as purchases for financial reporting
purposes. Accordingly, the consolidated statements of

F-9
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
operations include the operations of the acquired companies from the date of
acquisition. The excess of the purchase price over the fair value of the assets
and liabilities for these transactions is reflected as goodwill in the
accompanying balance sheet.

In July 1990, ICF Kaiser acquired all of the outstanding stock of Kaiser
Engineers Australia Pty. Ltd. ("KEA") that it did not already own for $10.5
million paid in the form of 617,500 shares of ICF Kaiser Common Stock. Prior to
this purchase, the Company had a 50 percent interest in KEA. In June 1991, in
accordance with the provisions of the agreement, ICF Kaiser repurchased these
shares for $10.5 million. The Company's proportionate share of the fair value
of the assets acquired and liabilities assumed was $12,372,000 and $7,833,000,
respectively.

NOTE E--CONTRACT RECEIVABLES

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED FEBRUARY 28,
NOVEMBER 30, -----------------------
1993 1993 1992
----------------- ----------- -----------
(UNAUDITED) (IN THOUSANDS)
<S> <C> <C> <C>
U.S. government agencies:
Currently due................... $ 25,340 $ 28,563 $ 30,374
Retention....................... 2,302 2,182 2,383
Unbilled........................ 33,172 28,285 26,864
-------- ----------- -----------
60,814 59,030 59,621
-------- ----------- -----------
Commercial clients and state and
municipal
governments:
Currently due................... 59,474 73,539 78,802
Retention....................... 6,122 9,590 6,834
Unbilled........................ 17,389 27,499 16,520
-------- ----------- -----------
82,985 110,628 102,156
-------- ----------- -----------
143,799 169,658 161,777
Less allowances for uncollectible
receivables and other adjust-
ments............................ 9,816 8,977 9,361
-------- ----------- -----------
$133,983 $ 160,681 $ 152,416
======== =========== ===========
</TABLE>

U.S. government receivables arise from U.S. government prime contracts and
subcontracts. Unbilled receivables result from revenues which have been earned
but were not billed as of the end of the year. The unbilled receivables can be
invoiced at contractually defined intervals upon completion of cost-type
contracts for government agencies, completion of federal government overhead
audits, upon attaining certain milestones under fixed-price contracts, or upon
completion of construction on certain projects. Generally, retention is not
expected to be realized within one year; consistent with industry practice,
these receivables are classified as current. Management anticipates that the
remaining unbilled receivables will be substantially billed and collected in
one year.

F-10
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)

NOTE F--JOINT VENTURES AND AFFILIATED COMPANIES

ICF Kaiser has ownership interests ranging from 20% to 50% in certain joint
ventures and affiliated companies that are engaged in the same general business
as the Company. ICF Kaiser's investments in and advances to these joint
ventures and affiliated companies is summarized as follows (in thousands):

<TABLE>
<CAPTION>
OWNERSHIP
INTEREST AT
NOVEMBER 30, NOVEMBER 30, FEBRUARY 28, FEBRUARY 29,
1993 1993 1993 1992
------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Gary PCI Ltd., LP.......... 50% $ 3,025 $ -- $ --
LIFAC North America........ 50% 1,914 1,914 1,212
KJK Joint Venture.......... 33% 3,414 1,735 (744)
American Transit Consul-
tants, Inc................ 33% (944) (883) (291)
Acer Group Limited......... -- -- -- 17,846
Other...................... 20% to 50% 1,062 1,425 1,907
------- ------ -------
8,471 4,191 19,930
Less amounts classified
within current assets..... 3,238 1,984 442
------- ------ -------
$ 5,233 $2,207 $19,488
======= ====== =======
</TABLE>

In February 1993, ICF Kaiser sold its investment in Acer Group Limited for
$17,250,000 resulting in a $929,000 pretax loss.

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

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Current assets........................... $ 22,466 $128,011 $126,335
Non-current assets....................... 20,761 32,788 45,245
Current liabilities...................... 20,630 105,271 101,415
Non-current liabilities.................. -- 28,323 28,287
Gross revenue............................ 226,944 442,142 336,228
Net income............................... 17,471 16,940 25,183
</TABLE>

F-11
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)

NOTE G--INDEBTEDNESS

ICF Kaiser's indebtedness is as follows (in thousands):
<TABLE>
<CAPTION>
NOVEMBER 30, FEBRUARY 28, FEBRUARY 29,
1993 1993 1992
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Revolving credit facility, average
interest rate of 6.2% for the nine
months ended November 30, 1993, 6.8% in
fiscal 1993 and 8.7% in fiscal 1992.... $45,000 $35,000 $43,099
ESOP guaranteed notes, average interest
rate of 6.9% for the nine months ended
November 30, 1993, 7.2% in fiscal 1993
and 8.8% in fiscal 1992................ 1,667 5,000 8,333
Notes payable to current and former
shareholders, principal and interest at
varying rates and installments through
February 1996.......................... 440 748 1,958
Other notes, principal and interest at
varying rates and installments through
February 2010.......................... 2,217 3,643 2,942
------- ------- -------
Total................................. 49,324 44,391 56,332
Less current maturities................. 2,850 5,276 7,187
------- ------- -------
Long-term debt........................ $46,474 $39,115 $49,145
======= ======= =======
</TABLE>

Scheduled maturities of long-term debt outstanding at February 28, 1993, are
as follows: $5,276,000 in fiscal 1994, $37,821,000 in fiscal 1995, $663,000 in
fiscal 1996, $40,000 in fiscal 1997, $32,000 in fiscal 1998 and $559,000
thereafter.

At November 30, 1993, ICF Kaiser's principal working capital financing was a
$107 million total revolving credit line provided by a consortium of banks. The
same group of banks also provide ICF Kaiser with an Employee Stock Ownership
Plan ("ESOP") credit facility (together, the "Credit Facility") of which $1.7
million is outstanding at November 30, 1993 and $5 million is outstanding at
February 28, 1993. The margin on the interest payable under the Credit Facility
decreases in future periods upon the achievement of certain levels of tangible
net worth. The Company and certain of its subsidiaries, which are guarantors of
the Credit Facility, granted the consortium of banks a security interest in
accounts receivable and certain other general intangibles and pledged the
capital stock of certain subsidiaries. The Credit Facility restricts the
payment of cash dividends and requires the maintenance of specified financial
ratios, levels of working capital, and levels of tangible net worth. At
November 30, 1993 and February 28, 1993, ICF Kaiser had $27 million and $23
million, respectively of available credit under the Credit Facility. The
Company repaid the Credit Facility with a portion of the proceeds from the
issuance of the Units described below.

On January 11, 1994, ICF Kaiser issued 125,000 Units, each unit consisting of
$1,000 principal amount of the Company's newly issued 12% Senior Subordinated
Notes due 2003 ("12% Notes") and 4.8 warrants, each to purchase one share of
the Company's Common Stock at $5.00 per share. The warrants expire on December
31, 1998. Of the Units' net issue price of $121,487,500 ($125,000,000 less a
$3,512,500 discount), $900,000 was allocated to the value of the 600,000
warrants and $120,587,500 to the 12% Notes. The net proceeds were used to
retire the Company's 13.5% Senior Subordinated Notes ("13.5% Notes") at 114.17%
($34.3 million), to repurchase warrants issued in connection with the 13.5%
Notes ($1.6 million), to repurchase its Series 1 Junior Convertible Preferred
Stock and pay accrued dividends thereon ($5.1 million), to repurchase its
Series 2C Senior Preferred Stock at 106.25% together with the Series 2C
Warrants ($26.6 million), to repay the Company's current revolving credit
facility ($45.0 million), and to repay, on behalf of

F-12
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
the Company's ESOP, the outstanding balance on the ESOP loan ($1.7 million).
The balance will be used for general corporate purposes. Since the revolving
credit facility and 13.5% Notes were repaid with the proceeds from the Units,
they are classified as long-term liabilities as of November 30, 1993 on the
accompanying balance sheet.

Upon issuance of the 125,000 Units discussed above, an amended $60 million
revolving credit facility became effective (the "New Credit Facility"),
amending the Company's previous credit facility, which was due to expire on
September 30, 1994. The New Credit Facility is provided by a lead bank and a
consortium of other banks with terms and covenants similar to those under the
existing credit facility. The New Credit Facility expires on October 31, 1996
and contains Eurodollar and alternate base rate options with margins dependent
upon the Company's financial operating results.

At February 28, 1993, the Company's ESOP owned 2,656,084 shares of ICF Kaiser
Common Stock, a percentage of which secure the ESOP portion of the Credit
Facility. These shares were purchased from the proceeds of Company
contributions and the ESOP portion of the Credit Facility. ICF Kaiser has
guaranteed the ESOP portion of the Credit Facility and is obligated to
contribute sufficient cash to the ESOP trust to repay this loan. As such, the
ESOP loan is reflected in the Company's long-term debt with a corresponding
reduction in equity.

NOTE H--SUBORDINATED DEBT

ICF Kaiser has outstanding $30,000,000 of 13.5% senior subordinated notes
("Subordinated Notes") and detachable common stock purchase warrants expiring
May 15, 1999 for the purchase of 1,801,681 shares of ICF Kaiser Common Stock.
The Subordinated Notes require interest payments semi-annually at 13.5% of the
outstanding balance and five annual principal payments of $4.5 million
beginning May 15, 1994, with the remaining $7.5 million principal due May 15,
1999. The obligations of ICF Kaiser are guaranteed by certain subsidiaries of
ICF Kaiser ("Guarantors"). These obligations of the Company and the Guarantors
are subordinate to their obligations under the Credit Facility. The warrants
sold in connection with the Subordinated Notes are exercisable at any time for
shares of ICF Kaiser Common Stock at $6.91 per share. Additional warrants may
be issued under certain anti-dilution provisions.

In connection with the issuance of the 13.5% Notes, ICF Kaiser and the
Guarantors agreed to certain business and financial covenants including:
restrictions on indebtedness, leases, dividends, and certain types of
investments and asset sales; and the maintenance of certain financial ratios,
including adjusted net worth at increasing levels over time. The 13.5% Notes
may not be prepaid at the Company's option prior to May 15, 1996. Subsequent to
that date, the Company may prepay the 13.5% Notes at a premium. Under certain
circumstances, which include certain members of senior management decreasing
their ownership of the Company's common stock or becoming less active in
managing the Company, the 13.5% Notes are required to be prepaid with a
substantial premium. ICF Kaiser's President and Chief Operating Officer
resigned on April 26, 1993, which potentially creates such a circumstance. The
holders of the 13.5% Notes have temporarily waived the consideration of a
prepayment event. Such waiver expires on January 14, 1994. The Company retired
the 13.5% Notes using the proceeds from the issuance of the Units discussed in
Note G above.

F-13
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
NOTE I--CONTINGENCIES

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

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

The Company has a substantial number of U.S. government contracts, the costs
of which are subject to audit by the U.S. government. In one such audit, the
government has asserted that certain costs claimed as reimbursable under
government contracts were not allocated in accordance with government cost
accounting standards. Management believes that the potential effect of
disallowed costs, if any, for the periods currently under audit and for periods
not yet audited has been adequately provided for and will not have a material
adverse effect on the Company's financial position.

ICF Kaiser had outstanding letters of credit in the amount of $11.2 million
and $32.6 million at November 30, 1993, and February 28, 1993, respectively,
principally in support of performance guarantees under certain contracts. ICF
Kaiser is also the guarantor of several leasing arrangements involving U.S.
government agencies and a former ICF Kaiser subsidiary. As of November 30,
1993, these leases totaled $6.1 million with expiration dates running through
April 1997.

F-14
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
NOTE J--INCOME TAXES

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

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED FEBRUARY 28,
NOVEMBER 30, -------------------------
1993 1993 1992 1991
----------------- ------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Earnings (loss) before income
taxes:
Domestic........................ $3,511 $13,362 $(60,058) $15,799
Foreign......................... 736 1,532 5,748 8,219
------ ------- -------- -------
$4,247 $14,894 $(54,310) $24,018
====== ======= ======== =======
Provision (benefit) for income
taxes:
Federal:
Current........................ $1,122 $ 1,074 $ (2,041) $ 7,952
Deferred....................... 417 3,517 (11,261) (3,307)
------ ------- -------- -------
1,539 4,591 (13,302) 4,645
------ ------- -------- -------
State:
Current........................ 234 420 (189) 1,921
Deferred....................... 91 794 (2,664) (912)
------ ------- -------- -------
325 1,214 (2,853) 1,009
------ ------- -------- -------
Foreign:
Current........................ 344 450 2,361 4,073
------ ------- -------- -------
$2,208 $ 6,255 $(13,794) $ 9,727
====== ======= ======== =======
</TABLE>

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

<TABLE>
<CAPTION>
NOVEMBER 30, FEBRUARY 28, FEBRUARY 29,
1993 1993 1992
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Bad debt reserve...................... $ 3,541 $ 4,141 $ 3,149
Vacation accrual...................... 2,022 2,991 2,995
Contract loss reserve................. 622 863 1,536
Insurance reserves.................... 1,898 1,368 988
Incentive compensation accrual........ 1,348 1,047 821
Tax operating loss carryforwards...... -- -- 3,185
Tax credit carryforwards.............. 1,247 1,247 1,400
Other................................. 1,367 896 468
------- ------- -------
Total deferred tax benefit............ $12,045 $12,553 $14,542
======= ======= =======
</TABLE>

F-15
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
The effective income tax (benefit) rate varied from the federal statutory
income tax rate over the last three years because of the following differences:

<TABLE>
<CAPTION>
YEAR ENDED
NINE MONTHS ENDED FEBRUARY 28,
NOVEMBER 30, ------------------
1993 1993 1992 1991
----------------- ---- ----- ----
(UNAUDITED)
<S> <C> <C> <C> <C>
Statutory tax rate (benefit)............. 34.0% 34.0% (34.0%) 34.0%
---- ---- ----- ----
Changes in tax rate (benefit) from:
Differences between book and tax basis
of businesses sold.................... -- (3.4) 8.6 --
State income taxes..................... 5.5 5.4 (1.6) 2.8
Goodwill amortization.................. 13.2 5.3 2.6 5.0
Foreign taxes.......................... (1.2) (1.4) 0.3 (1.5)
Other.................................. 0.5 2.1 (1.3) 0.2
---- ---- ----- ----
18.0 8.0 8.6 6.5
---- ---- ----- ----
52.0% 42.0% (25.4%) 40.5%
==== ==== ===== ====
</TABLE>

In fiscal 1993, ICF Kaiser reached a favorable settlement with the Internal
Revenue Service ("IRS") on the examination of ICF Kaiser Engineers Group,
Inc's. ("KEGI") income tax returns for 1977-1986. The IRS had previously
completed its review of KEGI's 1987 and 1988 income tax returns without
adjustment. As such, all years through 1988 are closed. In fiscal 1992, a
foreign tax audit of a KEGI-controlled foreign corporation was resolved
favorably for KEGI. These resolutions allowed the Company to adjust a portion
of the amounts previously provided for in connection with the acquisition of
KEGI and its subsidiaries. The resolution of these pre-acquisition
contingencies has been reflected in unusual items in the accompanying
statements of operations for fiscal 1993 and 1992 (see Note Q). Also, in fiscal
1993 ICF Kaiser reached an agreement with a former subsidiary to retain their
net operating losses, which favorably reduced the effect of differences between
the book and tax basis of the Company.

Carryforwards of net operating losses, business credits, capital losses and
foreign tax credits of acquired companies related to periods prior to their
acquisition are greatly limited under Section 382 of the Internal Revenue Code.
These carryforwards, to the extent utilized in the future, if any, will be
treated as a reduction of goodwill.

As discussed in Note B, ICF Kaiser adopted SFAS No. 109 effective March 1,
1991. The impact to ICF Kaiser of adopting SFAS No. 109 in fiscal 1992 was to
increase the deferred tax benefit by $6.5 million. There was no cumulative
impact resulting from the adoption of SFAS No. 109 as of the beginning of
fiscal 1992, since all of the items giving rise to the additional benefit
occurred in fiscal 1992, namely the costs associated with the restructuring.

F-16
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
NOTE K--LEASES

Future minimum payments on noncancelable operating leases for office space,
and on other noncancelable operating leases with initial or remaining terms in
excess of one year, were as follows on February 28, 1993 (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED OPERATING
FEBRUARY 28 LEASES
----------- ---------
<S> <C>
1994............................................................ $ 27,535
1995............................................................ 24,146
1996............................................................ 18,738
1997............................................................ 15,816
1998............................................................ 12,674
Thereafter...................................................... 48,285
--------
$147,194
========
</TABLE>

The total rental expense for all operating leases was $31,567,000,
$32,582,000 and $28,213,000 in fiscal years 1993, 1992 and 1991, respectively,
and $20,841,000, and $21,360,000 for the nine months ended November 30, 1993
and 1992, respectively. Sublease rental income was $1,435,000, $1,079,000 and
$1,243,000 in fiscal years 1993, 1992 and 1991, respectively, and $1,600,000
and $626,000 for the nine months ended November 30, 1993 and 1992,
respectively. Minimum future sublease rentals to be received under
noncancelable subleases during fiscal 1994 are approximately $2,276,000.

F-17
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
NOTE L--PREFERRED STOCK

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

<TABLE>
<CAPTION>
NOVEMBER 30, FEBRUARY 28, FEBRUARY 29,
1993 1993 1992
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Redeemable Preferred Stock (of
Subsidiary) par value $0.01 per
share; liquidation value
$21,280,000; authorized 3,500,000
shares; issued and outstanding--
700,000, 1,400,000 and 2,100,000
shares............................. $ 799 $ 1,599 $ 2,398
------- ------- -------
Series 2C Senior Preferred Stock,
par value $0.01 per share;
liquidation value $25,000,000; 250
shares designated, issued and
outstanding........................ 25,000 25,000 25,000
Less unamortized discount, warrant
value, and
issue costs........................ (716) (984) (1,342)
------- ------- -------
24,284 24,016 23,658
------- ------- -------
Series 2D Senior Preferred Stock,
par value $0.01 per share;
liquidation value $20,000,000; 200
shares designated, issued and
outstanding........................ 20,000 20,000 20,000
Less unamortized discount, warrant
value, and
issue costs........................ (638) (791) (895)
------- ------- -------
19,362 19,209 19,105
------- ------- -------
Redeemable Preferred Stock.......... $44,445 $44,824 $45,161
======= ======= =======
Series 1 Junior Convertible
Preferred Stock, par value $0.01
per share; liquidation value
$20,000,000; designated 200 shares;
issued and outstanding--69 shares.. $ 6,900 $ 6,900 $ 6,900
Series 4 Junior Preferred Stock, par
value $0.01 per share; liquidation
value $500,000; designated 500,000;
no shares outstanding (see Note M). -- -- --
------- ------- -------
Preferred Stock..................... $ 6,900 $ 6,900 $ 6,900
======= ======= =======
</TABLE>

Redeemable Preferred Stock (of Subsidiary): In connection with the
acquisition of KEGI, 3,500,000 shares of KEGI Series 1 Redeemable Preferred
Stock were issued to the KEGI Employee Stock Plan Trust in partial
consideration for ICF Kaiser's purchase of all of the outstanding shares of
Series A and Series P Preferred Stock of KEGI. Dividends on these shares are
$0.0685 per share per annum noncumulative, payable annually. 700,000 shares
were redeemed during each of the fiscal years 1994, 1993, 1992 and 1991. One
additional redemption is scheduled for September 30, 1994. These shares are
callable by ICF Kaiser at any time through September 1994, at a price of
$1.0817 per share as of February 28, 1993, and thereafter at a price adjusted
to maintain a specified net present value.

Senior Preferred Stock: In fiscal 1992, ICF Kaiser issued 250 shares of
Series 2C Senior Preferred Stock (the "Series 2C Preferred Stock") with five-
year detachable warrants expiring in December 1995 (the "Series 2C Warrants")
in exchange for 250 shares of Series 2A Senior Preferred Stock with five-year
detachable warrants. The Series 2C Warrants may be exercised for 2,976,190
shares of ICF Kaiser Common Stock at an exercise price of $8.40 per share.

F-18
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
In conjunction with the issuance of the Series 2C Preferred Stock and Series
2C Warrants, ICF Kaiser also issued 200 shares of Series 2D Senior Preferred
Stock (the "Series 2D Preferred Stock") together with five-year detachable
warrants expiring in January 1997 (the "Series 2D Warrants") for a price of
$20,000,000 (less a discount of $100,000). The Series 2D Warrants may be
exercised for 2,680,952 shares of ICF Kaiser Common Stock at an exercise price
of $8.40 per share. Of the net price of $19,900,000, $400,000 was allocated to
the value of the warrants and $19,500,000 was allocated to the stock.

Dividends on both the Series 2C Preferred Stock and the Series 2D Preferred
Stock are $9,750 per share per annum, cumulative. Each of the shares has a
liquidation preference of $100,000 ($45 million in aggregate). The issues carry
voting rights equal to 2,173,913 and 2,380,952 shares of ICF Kaiser Common
Stock, respectively. The Series 2C Preferred Stock and the Series 2D Preferred
Stock may be redeemed at ICF Kaiser's option at 106.25% of the original price
and are subject to mandatory redemption at liquidation value on December 20,
1995, and January 13, 1997, respectively. Additional warrants may be issued
under certain anti-dilution provisions contained in the related agreements. The
Company repurchased the Series 2C Preferred Stock and the Series 2C Warrants
using a portion of the proceeds from the issuance of the Units described in
Note G above.

Series 1 Junior Convertible Preferred Stock: In July 1990, the Board
designated 200 shares of preferred stock as Series 1 Junior Convertible
Preferred Stock. Dividends on these shares are $9,250 per share per annum,
cumulative, payable quarterly. Each of the shares has a liquidation preference
of $100,000 ($20,000,000 in the aggregate, assuming all of the shares are
issued); is convertible into 6,667 shares of ICF Kaiser Common Stock; and is
entitled to one vote per share of ICF Kaiser Common Stock into which it is
convertible. In addition, upon their issuance these shares were callable by the
Company at a price of $109,250 per share; thereafter, these shares are callable
at a price declining 1 percent per year to $100,000 per share on and after
August 31, 2001. It is the Company's intention, and the holder has agreed, to
repurchase the Series 1 Junior Convertible Preferred Stock using a portion of
the proceeds from the issuance of the Notes described in Note G above.

NOTE M--COMMON STOCK

Notes Receivable Related to Common Stock: Notes receivable related to ICF
Kaiser Common Stock pertain to the issuance of ICF Kaiser Common Stock in
exchange for promissory notes from certain members of senior management in
accordance with their compensation agreements. The notes are secured by shares
of ICF Kaiser Common Stock.

Shareholder Rights Plan: In fiscal 1992, the Board created a Shareholder
Rights Plan ("Rights Plan"), which is designed to provide the Board with the
ability to negotiate with a person or group that might, in the future, make an
unsolicited attempt to acquire control of ICF Kaiser, whether through the
accumulation of shares in the open market or through a tender offer which does
not offer an adequate price. The Rights Plan provides for one Right ("Right")
for each outstanding share of ICF Kaiser Common Stock and each share of ICF
Kaiser Common Stock into which the Series 1 Preferred Stock is convertible.
Each Right entitles the holder to purchase 1/100 of a share of Series 4 Junior
Preferred Stock at a purchase price of $50. The Rights generally may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board. The Rights should not interfere with any
merger or other business combination approved by the Board because the Board
may, at its option, at any time prior to the tenth business day following the
acquisition by any person or group of 20% of the shares of ICF Kaiser Common
Stock, redeem the Rights upon payment of the redemption price of $0.01 per
Right. The Rights are not triggered by the

F-19
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
acquisition of beneficial ownership of more than 20% of ICF Kaiser Common Stock
by the initial holder of the Series 2C and 2D Preferred Stock. Unless redeemed
earlier by the Board, unexercised Rights expire on January 13, 2002.

Common Stock Issued in Connection with Acquisitions: In fiscal 1992, ICF
Kaiser issued an additional 500,000 shares of ICF Kaiser Common Stock to the
seller of Primark Capital Group Inc., (renamed Health and Sciences Network,
Inc.) to settle ICF Kaiser's obligation to repurchase ICF Kaiser Common Stock
originally issued in the acquisition. ICF Kaiser also issued 123,022 shares and
202,042 options to purchase shares to the former shareholders of Cygna Group,
Inc. in satisfaction of a provision in the agreement under which ICF Kaiser
acquired this company. These transactions were charged to goodwill.

NOTE N--STOCK OPTIONS

The ICF Kaiser Stock Incentive Plan provides for the issuance of options,
stock appreciation rights, restricted shares, and restricted stock units of up
to an aggregate of 6,000,000 shares of ICF Kaiser Common Stock. Awards are made
to employees of ICF Kaiser at the discretion of the Compensation Committee of
the Board. The Plan provides that the option price is not to be less than the
fair market value on the date of grant. In May 1992, the Company cancelled
570,000 options granted to employees at exercise prices of $14.32-$16.23 and
granted an equal number of options to them at an exercise price of $8.25.

Stock option activity under this Plan and other options granted for the last
three years is as follows:

<TABLE>
<CAPTION>
SHARES OPTION PRICE
--------- ---------------
<S> <C> <C>
Balance, March 1, 1990.............................. 1,296,000 $3.46 to $10.00
Granted............................................. 722,000 $9.29 to $14.46
Cancelled........................................... (20,000) $9.10
Expired............................................. (87,000) $6.07 to $12.83
Exercised........................................... (155,000) $3.46 to $ 9.51
---------
Balance, February 28, 1991.......................... 1,756,000 $3.46 to $14.46
Granted............................................. 950,000 $6.07 to $17.00
Cancelled........................................... (134,000) $6.07 to $16.23
Expired............................................. (95,000) $6.07 to $ 9.51
Exercised........................................... (605,000) $4.00 to $ 8.46
---------
Balance, February 29, 1992.......................... 1,872,000 $3.46 to $17.00
Granted............................................. 1,096,000 $5.99 to $ 9.59
Cancelled........................................... (653,000) $3.46 to $16.23
Expired............................................. (339,000) $6.07 to $16.23
Exercised........................................... (30,000) $8.25
---------
Balance, February 28, 1993.......................... 1,946,000 $5.99 to $17.00
Granted............................................. 382,000 $4.76 to $14.70
Cancelled........................................... (3,000) $8.25
Expired............................................. (26,000) $6.07 to $12.83
Exercised........................................... --
---------
Balance, November 30, 1993.......................... 2,299,000 $4.76 to $17.00
=========
Exercisable at November 30, 1993.................... 1,627,000 $5.04 to $17.00
=========
</TABLE>

F-20
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
NOTE O--EMPLOYEE BENEFIT PLANS

ICF Kaiser and certain of its subsidiaries sponsor several benefit plans
covering substantially all employees who meet minimum length of service
requirements. These plans include: the ICF Kaiser International, Inc.
Retirement Plan ("Retirement Plan"), a defined contribution profit-sharing plan
that provides for contributions by the Company based on a percentage of covered
compensation; the ICF Kaiser International, Inc. Employee Stock Ownership Plan
under which the Company made contributions in the form of cash; and a cash or
deferred compensation arrangement 401(k) plan (the "401(k) Plan") which allowed
employees to defer portions of their salary, subject to certain limitations,
with no additional or matching contribution by the Company. The Company has
contributed 4% of covered compensation to the ESOP. Effective March 1, 1993,
the Company's contribution to the ESOP was changed to 2% of covered
compensation and the Company will begin to match a percentage of eligible
employee contributions to the 401(k) Plan for eligible employees. Total
contributions to the Retirement Plan and the ESOP totaled $10,220,000,
$10,440,000 and $10,973,000 for fiscal 1993, 1992 and 1991, respectively, and
$6,349,000 and $7,346,000 for the nine months ended November 30, 1993 and 1992,
respectively.

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

Business Segment: ICF Kaiser operates predominantly in one industry segment,
in which it provides consulting, environmental, engineering, and other
professional services.

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

<TABLE>
<CAPTION>
NINE MONTHS ENDED
NOVEMBER 30, YEAR ENDED FEBRUARY 28,
----------------------- --------------------------
1993 1992 1993 1992 1991
----------- ----------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
U.S. Department of Energy... $195,309 $153,404 $201,149 $188,196 $120,972
U.S. Environmental Protec-
tion Agency................ 47,643 53,303 72,382 70,686 61,492
Other U.S. Government agen-
cies....................... 37,713 35,239 47,896 39,792 68,557
-------- -------- -------- -------- --------
Total U.S. Government..... 280,665 241,946 321,427 298,674 251,021
USX Corporation and affili-
ates....................... 1,508 75,650 90,185 97,767 26,004
-------- -------- -------- -------- --------
$282,173 $317,596 $411,612 $396,441 $277,025
======== ======== ======== ======== ========
</TABLE>

F-21
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
Foreign Operations: Gross revenue and operating income from foreign sales
(including sales originating in the United States) and foreign assets of all
consolidated subsidiaries and branches were as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
------------------------
1993 1992 1991
------- -------- -------
<S> <C> <C> <C>
Foreign gross revenue
Europe............................................... $16,698 $ 35,475 $29,139
Pacific.............................................. 33,709 67,904 55,082
Other................................................ 2,940 2,646 7,012
------- -------- -------
$53,347 $106,025 $91,233
======= ======== =======
Foreign operating income
Europe............................................... $ 682 $ 689 $ 1,085
Pacific.............................................. 2,010 5,224 5,820
Other................................................ 158 160 1,314
------- -------- -------
$ 2,850 $ 6,073 $ 8,219
======= ======== =======
Foreign assets
Europe............................................... $ 4,565 $ 6,505 $ 6,650
Pacific.............................................. 13,880 36,130 44,817
Other................................................ 29 65 95
------- -------- -------
$18,474 $ 42,700 $51,562
======= ======== =======
</TABLE>

NOTE Q--UNUSUAL ITEMS

During the year ended February 28, 1993, the Company recognized the impact of
several unusual items: a $5,000,000 adjustment to pre-acquisition contingencies
(see Note J), offset by a charge to accrue the net settlement cost and legal
expenses related to a shareholder lawsuit ($1,400,000), the write down to net
realizable value of certain software-related assets ($3,000,000), and a charge
for severance and related costs accrued as part of a cost reduction plan
($550,000).

In fiscal 1992, due to the favorable resolution of a foreign tax audit and
management's evaluation of the status of an IRS appeal, the Company adjusted a
portion of the amounts previously provided for in connection with the
acquisition of the related companies.

F-22
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
NOTE R--SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Quarterly financial information for fiscal years 1993 and 1992 and the first
six months of fiscal 1994 is presented in the following tables (in thousands,
except per share amounts):

<TABLE>
<CAPTION>
4TH QTR 3RD QTR 2ND QTR 1ST QTR
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1994
Gross................................... $179,227 $146,830 $128,012
Service revenue......................... 102,054 87,439 86,989
Net income (loss)....................... 1,349 1,347 (657)
Net income per common share:
Primary................................ $ 0.00 $ (0.00) $ (0.09)
Fully diluted.......................... $ 0.00 $ (0.00) $ (0.09)
Market price per share:
High................................... $ 5.38 $ 5.50 $ 6.88
Low.................................... $ 4.00 $ 3.75 $ 4.75
1993
Gross revenue........................... $150,921 $158,086 $172,551 $197,324
Service revenue......................... 91,413 94,687 94,890 103,995
Net income.............................. 1,518 2,206 1,897 3,018
Net income per common share:
Primary................................ $ 0.01 $ 0.04 $ 0.03 $ 0.08
Fully diluted.......................... $ 0.01 $ 0.04 $ 0.03 $ 0.08
Market price per share:
High................................... $ 8.50 $ 7.50 $ 7.75 $ 10.88
Low.................................... $ 5.88 $ 4.00 $ 5.00 $ 7.25
1992
Gross revenue........................... $194,712 $190,124 $172,800 $153,237
Service revenue......................... 86,371 102,199 95,538 95,718
Net income (loss)....................... 1,934 (15,841) 2,500 (29,109)
Net income (loss) per common share:
Primary................................ $ 0.06 $ (0.87) $ 0.10 $ (1.60)
Fully diluted.......................... $ 0.06 $ (0.87) $ 0.10 $ (1.60)
Market price per share:
High................................... $ 11.00 $ 10.00 $ 16.75 $ 18.50
Low.................................... $ 6.25 $ 6.50 $ 8.00 $ 14.25
</TABLE>

F-23
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE NINE MONTHS ENDED NOVEMBER 30, 1993 AND 1992 IS
UNAUDITED)
As described in Note C, in fiscal 1992 ICF Kaiser recorded a $73.4 million
pretax charge for the restructuring and disposal of certain businesses. These
costs and the elimination of the revenues and earnings of these businesses make
direct comparisons to the results for fiscal years 1993 and 1991 less
meaningful.

The sum of net income (loss) per common share for the four quarters of fiscal
1992 does not equal the loss per common share for the year due to changes in
the number of shares of common stock and common stock equivalents outstanding
during the year.

ICF Kaiser adopted SFAS No. 109 in the fourth quarter of fiscal 1992,
requiring retroactive application to March 1, 1991, and a restatement of the
third quarter, resulting in a decrease to third quarter net loss available to
common shareholders of $ 1.8 million, or $0.10 per common share. The remainder
of the impact was attributable to the fourth quarter of fiscal 1992.

At April 13, 1993, there were 21,336,585 shares of common stock outstanding
held by 1,221 holders of record. At November 30, 1993, there were 20,891,052
shares of common stock outstanding held by 1,251 holders of record.

F-24
<PAGE>

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NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OF-
FERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE OTHER INFORMATION CONTAINED HEREIN IS CORRECT AT
ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Prospectus Summary........................................................ 3
The Company............................................................... 5
Risk Factors.............................................................. 7
Use of Proceeds........................................................... 11
Market Prices and Dividend Policy......................................... 12
Capitalization............................................................ 13
Selected Consolidated Financial Data...................................... 14
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 15
Business.................................................................. 22
Management................................................................ 31
Executive Compensation.................................................... 35
Security Ownership........................................................ 41
Description of Capital Stock.............................................. 44
Description of Credit Facility............................................ 51
Plan of Distribution...................................................... 54
Legal Matters............................................................. 54
Experts................................................................... 54
Consolidated Financial Information........................................ F-1
</TABLE>

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(LOGO OF ICF KAISER APPEARS HERE)

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

600,000 SHARES
OF
COMMON STOCK

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

PROSPECTUS

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

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