10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2003

Commission File No. 1-12248

KAISER GROUP HOLDINGS, INC.

(successor issuer to Kaiser Group International, Inc.)

(Exact name of registrant as specified in its charter)

Delaware	54-2014870
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

12303 Airport Way, Suite 125, Broomfield, Colorado	80021-0007
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number including area code: (720) 889-2770

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No ý

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes ý No o

The Plan of Reorganization of Kaiser Group International, Inc. under Chapter 11 of the Bankruptcy Code became effective on December 18, 2000.  The Plan provides, among other things, that holders of shares of common stock of Kaiser Group International, Inc. received shares of common stock of Kaiser Group Holdings, Inc. and that holders of specified outstanding debt obligations and other specified claimants received cash and shares of preferred stock and common stock of Kaiser Group Holdings, Inc., all in accordance with the terms set forth in the Plan. The initial distribution of securities occurred as of April 17, 2001.

As of August 12, 2003, there were 1,594,062 shares of Kaiser Group Holdings, Inc. Common Stock, par value $0.01 per share, outstanding.

KAISER GROUP HOLDINGS, INC.

INDEX TO FORM 10-Q

Part I - Financial Information
Item 1. Financial Statements:
	Consolidated Balance Sheets - June 30, 2003 and December 31, 2002.
	Consolidated Statements of Operations and Comprehensive Income Three and Six Months Ended June 30, 2003 and 2002.
	Consolidated Statements of Cash Flows - Six Months Ended June 30, 2003 and 2002.
	Notes to Consolidated Financial Statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings .
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures

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KAISER GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	June 30, 2003		December 31, 2002
	(unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	13,455	$	17,413
Restricted cash and cash equivalents	9,432		18,679
Prepaid expenses and other current assets	1,230		2,404
Net assets of discontinued operations	6,000		6,000
Total Current Assets	30,117		44,496
Other Assets
Investments in and advances to affiliates	48,295		45,663
Notes receivable	5,894		5,894
Other long-term assets	197		142
	54,386		51,699
Total Assets	$	84,503	$	96,195
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	383	$	922
Post retirement benefit plan obligation	7,053		7,193
Other accrued expenses	5,548		6,501
Preferred stock dividend payable	487		654
Deferred tax liability	8,709		6,538
Income taxes payable	712		640
Total Current Liabilities	22,892		22,448
Commitments and contingencies
Preferred stock, par value $.01 per share:
Authorized—2,000,000 shares
Issued and Outstanding — 756,872 and 1,017,120 shares at June 30, 2003 and December 31, 2002, respectively, net of 97,671 and 119,587 treasury shares; stated at liquidation value of $55 per share	41,628		55,942
Common stock, par value $.01 per share:
Authorized—3,000,000 shares
Issued and outstanding– 1,594,062 and 1,590,062 shares at June 30, 2003 and December 31, 2002, respectively	16		16
Capital in excess of par	8,465		8,606
Retained earnings	11,466		9,215
Accumulated other comprehensive income (loss)	36		(32		)
Total Shareholders’ Equity	19,983		17,805
Total Liabilities and Shareholders’ Equity	$	84,503	$	96,195

See notes to consolidated financial statements

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KAISER GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except per share amounts)

	For the Three Months Ended June 30,						For the Six Months Ended June, 30
	2003			2002			2003			2002
Gross Revenue	$	—		$	—		$	—		$	—
Subcontract and direct material costs	—			—			—			—
Service Revenue	—			—			—			—
Operating Expenses
Administrative expenses	1,447			2,641			2,893			5,269
Operating Loss	(1,447		)	(2,641		)	(2,893		)	(5,269		)
Other Income
Equity income in earnings of affiliate, net of amortization of $881 for each of the three months ended June 30, 2003 and 2002 and $1,762 for each of the six months ended June 30, 2003 and 2002	4,267			3,382			8,632			7,026
Gain on sale of securities	—			—			—			106
Interest income	207			135			450			259
Income from Continuing Operations Before Income Tax	3,027			876			6,189			2,122
Income tax expenses	(1,161		)	(379		)	(2,404		)	(926		)
Income From Continuing Operations	1,866			497			3,785			1,196
Loss from discontinued operations, net of tax	—			(127		)	—			(197		)
Net Income	1,866			370			3,785			999
Preferred stock dividends	(702		)	(1,094		)	(1,532		)	(2,172		)
Income (Loss) Applicable to Common Shareholders	$	1,164		$	(724	)	$	2,253		$	(1,173	)
Basic and Diluted Loss Per Common Share:
Continuing operations, net of tax	$	0.73		$	(0.38	)	$	1.41		$	(0.62	)
Discontinued operations, net of tax	—			(0.08		)	—			(0.12		)
Net Income (Loss) Per Share	$	0.73		$	(0.46	)	$	1.41		$	(0.74	)
Weighted average shares for basic and diluted earnings per common share	1,595			1,590			1,594			1,589
Comprehensive Income
Net Income	$	1,866		$	370		$	3,785		$	999
Other Comprehensive Income (Loss):
Realization of gain on securities, net of tax	—			—			—			(393		)
Change in cumulative foreign translation adjustments	(1		)	23			68			10
Total Comprehensive Income	$	1,865		$	393		$	3,853		$	616

See notes to consolidated financial statements.

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KAISER GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Six Months ended June 30,
	2003			2002
	(Unaudited)
Operating Activities:
Net income	$	3,785		$	999
Adjustments to reconcile net income to net cash used in operating activities:
Loss of discontinued operations, net of tax	—			197
Deferred taxes related to continuing operating activities	2,171			(1,423		)
Gain on sale of stock	—			(106		)
Equity in earnings of affiliate	(8,632		)	(7,026		)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	1,174			70
Accounts payable and accrued expenses	(1,499		)	1,170
Income taxes payable	72			1,299
Other operating activities	24			81
Net Cash Used in Operating Activities	(2,905		)	(4,739		)
Investing Activities:
Distributions from affiliate	6,000			6,450
Proceeds from sale of stock	—			5,961
Net Cash Provided by Investing Activities	6,000			12,411
Financing Activities:
Transfer to restricted cash	—			(626		)
Transfer from restricted cash for the redemption of preferred stock	8,913			—
Payment of preferred stock dividends	(1,701		)	(2,206		)
Redemption of preferred stock	(14,146		)	—
Purchase of preferred treasury stock	(119		)	(244		)
Net Cash Used in Financing Activities	(7,053		)	(3,076		)
Increase (decrease) in Cash and Cash Equivalents	(3,958		)	4,596
Cash and Cash Equivalents at Beginning of Period	17,413			8,848
Cash and Cash Equivalents at End of Period	$	13,455		$	13,444

See notes to consolidated financial statements.

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KAISER GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.             Basis of Presentation

The accompanying consolidated financial statements of Kaiser Group Holdings, Inc. and subsidiaries (the Company), except for the December 31, 2002 balance sheet (derived from audited financial statements), are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) for interim financial information.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included.

These statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes and the other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.  Certain reclassifications have been made to the prior period financial statements to conform them to the presentation used in the June 30, 2003 financial statements.

Kaiser Group Holdings, Inc. is a Delaware holding company that was formed on December 6, 2000 for the purpose of owning all of the outstanding stock of Kaiser Group International, Inc. (Old Kaiser), which in turn continues to own the stock of its remaining subsidiaries. On June 9, 2000, Old Kaiser and 38 of its domestic subsidiaries voluntarily filed for protection under Chapter 11 of the United States Bankruptcy Code in the District of Delaware (case nos. 00-2263 to 00-2301). Old Kaiser emerged from bankruptcy with an approved plan of reorganization (the Second Amended Plan of Reorganization (the Plan)) that was effective on December 18, 2000 (the Effective Date). The Company is deemed a “successor issuer” to Old Kaiser by virtue of Rule 12g-3(a) under the Securities Exchange Act of 1934. References to the “Company” or “Kaiser Holdings” in this report refer to Kaiser Group Holdings, Inc. and its consolidated subsidiaries. A summary of the Plan for Old Kaiser can be found in a Current Report on Form 8-K dated December 5, 2000 filed by Old Kaiser.

Currently, apart from resolving remaining bankruptcy claims, the Company has only a limited number of activities, assets and liabilities, primarily consisting of:

•the ownership of a 50% interest in Kaiser-Hill Company, LLC (Kaiser-Hill), which serves as the general contractor at the U.S. Department of Energy’s Rocky Flats Environmental Technology Site near Denver, Colorado, for the performance of a contract for the closure of the site (the Closure Contract). (See note 4 for summarized financial information.)

•the closeout and resolution of a completed contract for the engineering and construction of a steel mini-mill for Nova Hut in the Czech Republic (Nova Hut project).

•the holding of an interest-bearing promissory note from ICF Consulting Group, Inc. (ICF Consulting), a division that Old Kaiser sold in 1999.

•a wholly-owned captive insurance company that is no longer issuing new policies and is simply involved in resolving remaining claims.

•an ongoing obligation to fund a capped, post-employment medical benefit plan for a fixed group of retirees.

The Company adopted fresh start reporting in its consolidated balance sheet as of December 31, 2000. The American Institute of Certified Public Accountants’ Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code” (SOP 90-7), requires that under certain circumstances resulting from a bankruptcy, a new entity is created for financial reporting purposes upon the emergence of that entity from bankruptcy.  Accordingly, the value of the reorganized enterprise becomes the established amount for the emerging balance of shareholders’ equity, and any accumulated deficit of the predecessor entity is offset against available paid-in-capital to result in an emerging retained earnings of zero.  Additionally, assets and liabilities are recorded at their fair values.

The value of the emerged enterprise used for fresh start reporting as of December 31, 2000 was $87.5 million and was determined by management with the assistance of independent advisors.  The methodology employed involved estimation of the enterprise value taking into consideration a discounted cash flow analysis.  The discounted cash flow analysis was based on a seven-year cash flow projection prepared by management, taking into consideration the terminal value of its assets and liabilities as of immediately prior to its emergence from bankruptcy on December 18, 2000.  Terminal values of assets and liabilities were determined based either on contracted amounts, actuarial present values and/or management’s estimates of the outcome of certain operating activities. Net after-tax cash flows, assuming a 40% effective tax rate, were discounted at 17% in order to take into consideration the risks and uncertainties inherent in such projections.  The cash flow projections were based

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on estimates and assumptions about circumstances and events that had not yet taken place.  Estimates and assumptions regarding individual retained matters which form the collective composition of the overall enterprise value as of December 18, 2000 are inherently subject to significant economic and competitive uncertainties and contingencies beyond the control of the Company.  Accordingly, there may be differences between projections and actual results because events and circumstances frequently do not occur as expected and may be significant.  More specifically, assumptions within the valuation related to the amount and timing of the ultimate performance and related cash flows of the Company’s investment in Kaiser-Hill have the greatest impact on the overall enterprise valuation.

2.             General Terms of Plan and Status of Bankruptcy Distributions

The effectiveness of the Old Kaiser Plan of Reorganization as of December 18, 2000 did not, in and of itself, complete the bankruptcy process. The process of resolving in excess of $500 million of claims initially filed in the bankruptcy is ongoing. Old Kaiser objected to the majority of the unresolved claims, and if such claims are not settled via the objection or dispute resolution processes or other means, they will ultimately be heard and determined by the Bankruptcy Court. Once a claim is resolved with an amount due to the creditor, such portion of the claim is deemed to be an allowed claim by the Bankruptcy Court (an allowed claim). The Company cannot predict with accuracy when the claims resolution process will be complete or what the total amount of allowed claims will be upon completion.

In general terms, the Plan contemplated three basic classes of creditors:

•Allowed “Class 3 claims” against the Old Kaiser bankruptcy estate generally consisted of trade and similar creditors’ claims of $20,000 or less.  Holders of allowed Class 3 claims received cash for their claims.

•Allowed “Class 4 claims”, the largest class of claims against the Old Kaiser bankruptcy estate, is made up of creditor claims other than Class 3 claims and equity claims. Class 4 claims included holders of Old Kaiser senior subordinated notes due 2003 (Old Subordinated Notes). Holders of allowed Class 4 claims received a combination of cash and Kaiser Holdings preferred and common stock in respect of their claims. Such holders received one share of Kaiser Holdings’ preferred stock (New Preferred) and one share of Kaiser Holdings’ common stock (New Common) for each $100 of claims. However, the number of shares of New Preferred issued was reduced by one share for each $55.00 of cash received by the holder of an allowed Class 4 claim.

•The third class of claims recognized in the Old Kaiser bankruptcy are equity claims, consisting of holders of Old Kaiser common stock (Old Common) and other “Equity Interests” as defined in the Plan. Under the Plan, holders of Equity Interests will receive a number of shares of New Common equal to 17.65% of the number of shares of such common stock issued to holders of allowed Class 4 Claims. In the initial distribution, one share of New Common was issued for each 96 shares of previously outstanding Old Common. Additional distributions of New Common may be made in the future as additional shares of New Common are issued to holders of newly allowed Class 4 claims, if any. Apart from holders of Old Common, the only holders of Equity Interests of which the Company is aware are the former shareholders of ICT Spectrum Constructors, Inc., a corporation acquired by merger with a subsidiary of Old Kaiser in 1998. The Bankruptcy Court confirmed the equity nature of those claims.

Pursuant to the terms of Old Kaiser’s Plan, the Company was required to complete its initial bankruptcy distribution within 120 days of the effective date of the Plan.  Accordingly, on April 17, 2001, the Company effected its initial distribution.  At that time, there were approximately $136.8 million of Class 4 claims that had been allowed in the bankruptcy process.  The amount of unresolved claims remaining at April 17, 2001 was approximately $130.5 million.

To address the remaining unresolved claims, the Bankruptcy Court issued an order on March 27, 2001 establishing an Alternative Dispute Resolution (ADR) procedure whereby the remaining claimants and Old Kaiser produce limited supporting data relative to their respective positions and engage in initial negotiation efforts in an attempt to reach an agreed claim determination.  If necessary, the parties are thereafter required to participate in a non-binding mediation before a mediator pre-selected by the Bankruptcy Court.  All unresolved claims as of March 27, 2001 are subject to the ADR process. Since April 17, 2001, the date of the initial distribution, $109.2 million of asserted claims have been withdrawn, negotiated or mediated to an agreed amount, resulting in cash payments approximating $1.4 million and issuances of 683 shares of New Preferred and 823 shares of New Common. As of August 11, 2003, the amount of unresolved claims was approximately $29.5 million. The Company expects that substantial progress will continue to be made in the resolution of claims over the balance of 2003.  The Company currently believes that the amount of Class 4 claims ultimately to be allowed in the Old Kaiser bankruptcy proceeding will not exceed $145.0 million.  As demonstrated by the claim settlements completed since April 17, 2001, and based on the belief that it is in the best interest of the Company and its current shareholders, the Company has been settling

7

certain remaining Class 4 claims entirely for cash payments in lieu of the combination of cash and New Preferred and New Common as contemplated in the Plan.  The Company intends to continue to use this settlement alternative during its resolution of remaining Class 4 claims, but has no ability to determine the effect of the outcome on its overall financial condition in the event such settlements are accepted in the future.

With respect to the unresolved claims, the Plan required that, at the date of the initial distribution, sufficient cash reserves be retained by the Company such that, if all remaining unresolved claims were ultimately deemed allowed at the originally claimed amount, the Company would be able to satisfy the allowed claims, including dividends accruing on related preferred stock, since April 17, 2001.  The cash reserve requirement, and the fact that the Company had not yet received a substantial cash payment the Company asserted it was due from Nova Hut, limited the amount of cash available at the time of the initial distribution to the holders of allowed Class 4 claims. The Company determined that an aggregate of $25.0 million, or approximately $0.09347 per $1.00 of allowed and “deemed allowed” Class 4 claims, was available at the time of the initial distribution to allowed Class 4 claim holders.  Thus, more shares of New Preferred were issued than would have been had the claims resolution process advanced more quickly and had more cash been available from the Nova Hut project and/or other sources.  Due to the proportion of remaining unresolved Class 4 claims in relation to the total of all resolved and unresolved claims, approximately $12.3 million of the $25.0 million in available cash was reserved and classified as Restricted Cash on April 17, 2001.

From time to time in the future, as remaining unresolved claims are resolved, excess cash from the “reserve” fund (including cash added to “reserve” fund in payment of pro forma dividends on retained shares of New Preferred) must be used to redeem outstanding shares of New Preferred.

3.             Earnings Per Share

Basic earnings per share (EPS) is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period.  The weighted average shares outstanding for the period ended June 30, 2003 retroactively adjusts for the conversion of the Old Common to New Common effective with the adoption of fresh-start reporting.  As additional distributions of New Common are made to holders of newly allowed Class 4 claims, the conversion ratio of 96 shares to one share may be adjusted to reflect the final total number of shares of New Common (as discussed in Note 2).

Diluted EPS normally includes the weighted-average effect of dilutive securities outstanding during the period.  Pursuant to the Plan that was effective as of December 18, 2000, all then outstanding common stock equivalents were cancelled.  Accordingly, no anti-dilutive information is presented herein.

In 2003, the effect of preferred dividends of $0.7 million and $1.5 million has been included in continuing operations in the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2003, respectively.  In 2002, the effect of preferred dividends of $1.1 million and $2.2 million has been included in continuing operations in the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2002, respectively.

4.             Summarized Financial Information of Unconsolidated Affiliate

Kaiser Group owns 50% of Kaiser-Hill Company LLC.  Summarized, unaudited financial information of Kaiser-Hill is as follows for the three months ended June 30, 2003 and 2002 (in thousands):

	2003	2002
Current assets	111,368	168,952
Non-current assets	99,538	17,419
Current liabilities	115,941	149,802
Non-current liabilities	28,644	12,800

	Three Months Ended						Six Months Ended
	June 30, 2003			June 30, 2002			June 30, 2003			June 30, 2002
Gross revenue	$	175,918		$	165,909		$	351,773		$	308,439
Subcontracts and materials	114,196			108,545			226,398			201,218
Service revenue	61,722			57,364			125,375			107,221
Operating expenses	(51,458		)	(48,884		)	(104,618		)	(89,732		)
Other income	31			47			30			87
Net income	$	10,295		$	8,527		$	20,787		$	17,576

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5.             Preferred Stock

Kaiser Holdings’ certificate of incorporation authorizes the issuance of 2,000,000 shares of New Preferred. The Company had New Preferred outstanding with a liquidation preference of $41.7 million and $55.9 million, respectively, as of June 30, 2003 and December 31, 2002 (net of treasury stock of $4.7 million and $6.6 million, respectively).  The New Preferred is a series of authorized preferred stock designated as “Series 1 Redeemable Cumulative Preferred Stock,” and has a par value of $0.01 per share and a liquidation preference of $55 per share. The New Preferred ranks ahead of Kaiser Holdings’ New Common.

Pursuant to approval by the Company’s Board of Directors, in 2003 and 2002 the Company purchased 3,048 and 119,587 shares of outstanding New Preferred at prices ranging from $25.62 to $39.05 per share.  The purchase of the treasury shares was recorded as a reduction to preferred stock equal to the $55 per share liquidation preference with the remaining difference between cost and the liquidation preference recorded as an increase to paid-in capital.

The certificate of incorporation of Kaiser Holdings and Delaware law permit the Board of Directors to issue additional series of preferred stock, except that the Board of Directors may not authorize the issuance of any securities that rank senior to or on a parity with the New Preferred without the consent of holders of at least two-thirds of the New Preferred.

Cumulative dividends on the New Preferred are payable on a quarterly basis, as of April 30, July 31, October 31 and January 31, either in cash at an annual rate of 7% of the liquidation preference per share or in additional shares of New Preferred at an annual rate of 12% of the per share liquidation preference. Dividends accrue on the New Preferred commencing with the initial distribution date, April 17, 2001. Dividends will not be paid to any affiliate of Kaiser Holdings on account of that affiliate’s ownership of shares of preferred stock. If Kaiser Holdings fails to pay a quarterly dividend when due, holders of New Preferred will have the right to elect an additional director for each dividend payment missed, up to a maximum of two additional directors, but only until such dividend is paid or provided for in full.   The dividend due to holders of record on July 31, 2003, totaling approximately $0.7 million, was paid on August 7, 2003.  At June 30, 2003, in addition to the $2.8 million of cash reserves for unresolved claims, the Company had $2.1 million in cash reserved for the payment of accrued dividends on any future issuances of New Preferred issued as a result of remaining bankruptcy claim resolutions (any New Preferred issued as a result of claim resolutions also carries the right to dividends retroactively from April 17, 2001).

The New Preferred has a liquidation preference of $55 per share plus the amount of unpaid dividends, if any. Upon the liquidation or dissolution of Kaiser Holdings, each holder of New Preferred (other than an affiliate of Kaiser Holdings) is entitled to this per share liquidation preference before any holders of New Common or any other junior securities of Kaiser Holdings receive any payment for their shares. If, in a liquidation or dissolution setting, assets remaining after distribution to holders of debt and other obligations are insufficient to pay all holders of New Preferred the per share liquidation preference, then such assets will be distributed on a proportionate basis to the holders of New Preferred (other than affiliates of Kaiser Holdings) and any securities ranking on a parity with the New Preferred.

The Company has the option to redeem the New Preferred at any time, in whole or in part, at a redemption price of 100% of the liquidation preference per share plus all accrued and unpaid dividends. In addition, any net proceeds in excess of $3 million in a calendar year received by the Company or any of its direct or indirect subsidiaries from the disposition of assets to an unaffiliated party outside of the ordinary course of business must be used to redeem New Preferred at a redemption price of 100% of the liquidation preference per share plus all accrued and unpaid dividends. Furthermore, to the extent that certain categories of cash are received from Nova Hut, it must be used to redeem New Preferred at a redemption price of 100% of the liquidation preference per share plus all accrued and unpaid dividends.

All outstanding shares of New Preferred are required to be redeemed by the Company on or before December 31, 2007, and if such redemption does not occur, holders of New Preferred will be entitled to elect two-thirds of the directors of the Company. If shares of preferred stock are held by any affiliate of the Company, those shares may not be redeemed pursuant to any of the redemption provisions otherwise applicable to the New Preferred.

Holders of New Preferred generally are entitled to vote with holders of New Common on all matters submitted to a vote of shareholders, with each share of New Preferred being entitled to one-tenth of a vote. In addition, holders of New Preferred have the right to vote separately as a class to exercise their right to elect an additional director due to a failure to pay a quarterly dividend, to elect two-thirds of the directors if the New Preferred is not redeemed by December 31, 2007, and to consent to the issuance of any senior or parity securities. The terms of the New Preferred may not be materially or adversely

9

modified without the consent of holders of at least two-thirds of the New Preferred. If the Company or any of its affiliates holds any New Preferred, they will not be entitled to vote that New Preferred.

The Plan provides that Major Stockholders (defined as holders of 10% or more of the outstanding shares of New Preferred or New Common, or a person who is an “affiliate” of Kaiser Holdings as defined under the Federal securities laws) have certain registration rights. In general, a Major Stockholder may request Kaiser Holdings to register under the Securities Act of 1933 for the sale of all, but not less than all, of the New Preferred and/or New Common owned by the Major Stockholder. Upon request for such a registration from a Major Stockholder, Kaiser Holdings is required to give notice to other Major Stockholders and use its best efforts to cause a registration statement to become effective as expeditiously as possible and maintain such registration statement current for a period of 12 months. Major Stockholders are not entitled to request registration until one year after the effective date of the Plan, and Kaiser Holdings is not obligated to file a registration statement in response to a request from a Major Stockholder until such time as Kaiser Holdings is eligible to use Form S-3 under the Securities Act of 1933 for such an offering. Kaiser Holdings is not required to effect more than one registration for Major Stockholders during any twelve-month period. These registration rights expire on December 31, 2007. The Plan also contemplates that Major Stockholders will have “piggyback” registration rights in connection with a proposed underwritten public offering of Kaiser Holdings New Common or New Preferred solely for cash and for its own account.

Kaiser Government Programs, Inc.’s (“KGP”) Put Rights

KGP is the Company subsidiary that owns (through a wholly owned subsidiary of KGP) the 50% interest in Kaiser-Hill Company LLC.  KGP has outstanding put rights, expiring on December 31, 2007, that obligate it to purchase New Preferred owned by a holder of the put right, at the holder’s option, under three circumstances:

•if KGP receives net after-tax proceeds from any cash distributions from Kaiser-Hill that, on a quarterly basis, exceed 2.8 times the amount of cash required to pay all past accrued but unpaid cash dividends on the New Preferred, plus the next scheduled quarterly cash dividend on New Preferred;

•if KGP receives net after-tax proceeds from any direct or indirect disposition of any interest in Kaiser-Hill; or

•if KGP receives net after-tax proceeds from an extraordinary distribution from Kaiser-Hill.

Upon exercise of a put, KGP will pay an exercising holder 100% of the liquidation preference of the preferred stock that is the subject of the KGP put rights, plus all accrued and unpaid dividends on the preferred stock. KGP will purchase shares of preferred stock on a pro rata basis based upon the number of shares of preferred stock as to which puts have been properly exercised, but only up to the amount of the available net after-tax proceeds from triggering events. KGP will not purchase any fractional shares. KGP put rights will not become exercisable more frequently than every 12 months unless the cumulative amount of available net after-tax proceeds from triggering events is at least $3 million.  KGP put rights are transferable except that puts shall cease to be transferable if KGP determines that any further transfer would require registration of the puts as a class of securities under the Securities Exchange Act of 1934. Kaiser Holdings does not presently plan to arrange for trading of the KGP put rights on the NASD electronic bulletin board or otherwise.

The Company received distributions from Kaiser-Hill during the fourth quarter of 2002 in an amount that resulted in a trigger of the put rights – effectively requiring an offer by the Company to redeem certain New Preferred.  In addition, the Company had certain restricted cash balances available, which pursuant to the terms of its Plan of Reorganization, are required to be used to redeem outstanding New Preferred.  Rather than using the mechanism of the put rights to satisfy the Company’s obligations to holders of the put rights after a trigger, the Company observed the requirement in the Plan of Reorganization to use certain restricted cash balances for preferred redemptions and redeemed a total of $15.5 million of New Preferred, or 307,128 shares, as of January 31, 2003.  The Company believes this was a more cost-efficient manner of satisfying the obligations associated with the KGP put rights and plans to continue to use this redemption process to satisfy such obligations in the future.

6.             Other Contingencies

Kaiser Holdings has various obligations and liabilities from its continuing operations, including general overhead expenses in connection with maintaining, operating and winding down the various entities and net assets comprising Kaiser Holdings.  Additionally, the Company believes contingent liabilities may exist in the following areas:

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Nova Hut

Although Old Kaiser sold its Metals, Mining and Industry business unit in August, 2000, it retained its Netherlands subsidiary, Kaiser Netherlands, B.V., which had been responsible for a turnkey engineering and construction services contract for the Nova Hut project.  After construction of the steel mini-mill was complete in 2000, the contract with Nova Hut provided for a maximum of three possible performance tests. The first performance test was completed on November 13, 2000. Kaiser Netherlands believes that the first performance test was successful and that Nova Hut should have agreed to final acceptance of the mini-mill and made final payment of amounts accrued by Kaiser Netherlands throughout the project.  Instead, Nova Hut asserted that the first test was not successful.  To date, this dispute has not been resolved, and the Company has resorted to legal proceedings to enforce its rights and those of its subsidiary.  The primary legal venue at this time is the Delaware bankruptcy proceedings for Old Kaiser, where Old Kaiser has asserted claims against Nova Hut and the International Finance Corporation (IFC), while rejecting substantial claims involving contract breach from Nova Hut and the IFC.  The claims filed by Nova Hut and the IFC in the Delaware bankruptcy court have been withdrawn.  The Company’s claims remain active.  The cost of the litigation of this dispute, as well as the cost of maintaining an ongoing presence in Ostrava, Czech Republic, has had, and may continue to have, a negative impact on the cash flow of Kaiser Netherlands and the Company.

In February 2002, representatives of the Company, Nova Hut and the IFC met under the auspices of a Delaware bankruptcy court-sponsored mediation.  The details of these discussions are subject to a confidentiality agreement.  At the date of this Report, the Company continues to pursue claims against Nova Hut and the IFC through the Delaware bankruptcy court proceedings and the court-sponsored mediation.  However, there are still no assurances that settlement will ultimately be achieved in this matter.

The components of the “Net Assets of Discontinued Operations” consist entirely of the carrying value of the net assets of the Nova Hut project.  Based on the Company’s continued concern over Nova Hut’s financial difficulties, the uncertainties of a possible settlement arising out of the bankruptcy court-sponsored mediation and the uncertainties of a possible settlement or ruling in the context of a possible future international arbitration proceeding, in the fourth quarter of 2001, the Company established additional reserves at December 31, 2001 to reduce the net carrying value of the remaining Nova Hut project to $6.0 million.

Kaiser Hill

Under Kaiser-Hill’s contract with the DOE, Kaiser-Hill is not responsible for, and the DOE pays all costs associated with, any liability, including, without limitation, any claims involving strict or absolute liability and any civil fine or penalty, expense, or remediation cost, but limited to those of a civil nature, which may be incurred by, imposed on, or asserted against Kaiser-Hill arising out of any act or failure to act, condition, or exposure which occurred before Kaiser-Hill assumed responsibility on July 1, 1995 (pre-existing conditions). To the extent the acts or omissions of Kaiser-Hill constitute willful misconduct, lack of good faith, or failure to exercise prudent business judgment on the part of Kaiser-Hill’s managerial personnel and cause or add to any liability, expense, or remediation cost resulting from pre-existing conditions, Kaiser-Hill is responsible, but only for the incremental liability, expense, or remediation caused by Kaiser-Hill.

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

The clean-up and closure of the DOE’s Rocky Flats site involve substantial performance risks.  Among other things, Kaiser-Hill’s activities at the Rocky Flats site involve the clean-up, packaging and transportation of nuclear waste, and the demolition and destruction of facilities where nuclear weapons components were previously produced.  Some of the activities have not been previously performed elsewhere, and therefore require the development of innovative and untested approaches.  Kaiser-Hill emphasizes safety in its performance, but the nature of the Rocky Flats site and the activities of Kaiser-Hill and its subcontractors at the site are such that serious injuries, or even deaths, are possible.  Significant safety incidents at the site could stop or significantly impede the progress of work being performed at the site by Kaiser-Hill and its subcontractors.  The DOE contract contemplates that all, or substantially all, of the nuclear waste at Rocky Flats will be transported to other sites operated or managed by the DOE.  The appropriate sites for storage of certain of those nuclear wastes have not yet been identified.  In addition, objections have arisen from time to time with regard to the transportation and storage of nuclear waste at certain sites previously scheduled by the DOE to receive waste from Rocky Flats, including the DOE’s Savannah River site in South Carolina.  Deliveries of waste to the Savannah River site were delayed as a result of objections interposed by the

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Governor of South Carolina.  Deliveries to the Savannah River site have begun, but it is possible that similar objections will be raised with respect to the transportation and storage of waste from Rocky Flats at other DOE sites.  Although the DOE contract contemplates that the DOE is responsible for providing transportation and storage sites for nuclear waste from Rocky Flats, an inability to ship plutonium and other nuclear waste to DOE sites would pose a substantial risk to the timely closure of the Rocky Flats site, and could interfere with Kaiser-Hill’s ability to earn fees to which Kaiser-Hill believes it should be entitled.

As the contract between Kaiser-Hill and the DOE is cost-reimburseable in nature, the costs invoiced by Kaiser-Hill for reimbursement by the DOE are subject to audit by the U.S. government.  Also since the inception of Kaiser-Hill, the Company invoiced certain management oversight costs to Kaiser-Hill.  Government audits at Kaiser-Hill are in process for the years of the predecessor contract, which ran from 1995 until January 2000.  Although Kaiser-Hill and the Company have historically provided for their estimates of disallowed costs on cost-reimburseable contracts, uncertainties exist with regard to whether government audits will result in any disallowed costs needing to be refunded to the government customer.  The continued adequacy of provisions for reserves with regard to unallowable costs is reviewed regularly.

With respect to a revolving credit facility obtained by Kaiser-Hill in November 1999, both parents of Kaiser-Hill granted a first lien security interest to the Kaiser-Hill lenders in all of the ownership and equity interest of Kaiser-Hill and have agreed to cure any events of default by Kaiser-Hill on the facility.  As of June 30, 2003 and December 31, 2002, Kaiser-Hill had no outstanding balances on its revolving credit facility.

7.             Recent Accounting Pronouncements

In December 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of FASB Statement No. 123.”  SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair market value based method of accounting for stock-based compensation.  We do not presently expect to make such a voluntary change.  In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.  These amended disclosure requirements are applicable for financial statements issued for interim periods beginning after December 15, 2002.  The Company has recently adopted the 2002 Equity Compensation Plan, however, it does not currently have any outstanding stock options requiring disclosures under SFAS No. 148.

In November 2002, FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34,” (“FIN 45”) was issued.  FIN 45 clarifies the requirements of SFAS No. 5, “Accounting for Contingencies,” relating to guarantors’ accounting for, and disclosure of, the issuance of certain types of guarantees.  The disclosure provisions of FIN 45 are applicable to interim or annual periods that end after December 15, 2002, and did not have an impact on the June 30, 2003 financial statements.  The provisions for initial recognition and measurement under FIN 45 are effective on a prospective basis for guarantees that are issued or modified after December 31, 2002.  The initial recognition and measurement provisions under FIN 45 did not have any impact on our financial statements.

On May 31, 2003, FASB issued FASB Statement No. 150 (FAS 150), “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”.  FAS 150 improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity and requires that those instruments be classified as liabilities (or assets in certain circumstances) in statements of financial position.  FAS 150 also requires disclosures about alternative ways of settling the instruments and the capital structure of entities – all of whose shares are mandatorily redeemable.  FAS 150 is generally effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the fist interim period beginning after June 15, 2003.  The adoption of FAS 150 will result in the classification of the Company’s preferred stock as a liability effective July 1, 2003.

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

General Overview

Kaiser Group Holdings, Inc. is a Delaware holding company formed on December 6, 2000 for the purpose of owning all of the outstanding stock of Kaiser Group International, Inc.  Kaiser Group International, Inc. continues to own the stock of its remaining subsidiaries.  On June 9, 2000, Kaiser Group International, Inc. and 38 of its domestic subsidiaries voluntarily filed

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for protection under Chapter 11 of the United States Bankruptcy Code in the District of Delaware (case nos. 00-2263 to 00-2301). Kaiser Group International, Inc. emerged from bankruptcy with a confirmed Plan of Reorganization that was effective on December 18, 2000.  In this document, we frequently use the terms “we” and “Kaiser” to refer to Kaiser Group Holdings, Inc., Kaiser Group International, Inc. and other subsidiaries we own.

Under the Plan of Reorganization, Kaiser Group International, Inc. sold some of its businesses and made payments of cash, stock or notes to various classes of creditors.  Currently, we are trying to resolve some outstanding creditor claims through an alternative dispute resolution process.  We have only a limited number of activities, assets and liabilities, primarily consisting of the following:

•We own Kaiser-Hill Company, LLC equally with CH2M Hill Companies Ltd.  Kaiser-Hill is our major source of income.  Kaiser-Hill currently serves as the general contractor at the U.S. Department of Energy’s Rocky Flats Environmental Technology Site near Denver, Colorado.

•We have a substantial claim, pending resolution, against Nova Hut a.s., the owner of a steel mini-mill for Nova Hut in the Czech Republic.  The engineering and construction of the mini-mill was completed in 2000 by a subsidiary of Kaiser Group International, Inc. called Kaiser Netherlands, B.V.

•Until September 30, 2002 we held a minority ownership interest in ICF Consulting Group, Inc. (a division that Kaiser Group International, Inc. sold in 1999).  We continue to hold an 8½% subordinated promissory note of ICF Consulting due June 25, 2006 in the principal amount of $6.4 million as a result of that transaction.

•We have a wholly-owned captive insurance company that is no longer issuing new policies and is solely involved in resolving remaining claims made against previously issued policies.

•We have an ongoing obligation to fund a capped, post-employment medical benefit plan for a fixed group of retirees.

Kaiser-Hill

Our major remaining asset and source of income is our 50% ownership interest in Kaiser-Hill Company, LLC.  Kaiser-Hill was formed solely for the performance of the current and former Rocky Flats contracts.  CH2M Hill designates three of the five members of Kaiser-Hill’s Board of Managers and we designate two members.

Kaiser-Hill currently serves as the general contractor at the U.S. Department of Energy’s Rocky Flats Environmental Technology Site near Denver, Colorado. Kaiser-Hill has performed since 1995 at this site, a former Department of Energy nuclear weapons production facility.  Kaiser-Hill is working to stabilize and safely store radioactive materials at the site and other locations, clean up areas contaminated with hazardous and radioactive waste, and  restore much of the 6,000 acre site to the public.  The level of success experienced by Kaiser-Hill in achieving timely closure of the Rocky Flats site, and the cost of achieving such closure, are the primary determinants of our long-term financial performance.

RESULTS OF RETAINED OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2003 AND 2002

Equity Income In Earnings of Affiliate

Our major remaining source of income is a 50% ownership in Kaiser-Hill.  The financial information contained herein for Kaiser-Hill is reflected on the equity basis.

Closure Contract Provisions for Revenue and Performance Award

The economic terms of the Closure Contract provide that Kaiser-Hill will earn revenue equal to the actual cost of physical completion plus a performance fee based on a combination of the actual cost of completing the site closure project and the actual date of physical completion, both as compared to contracted targets.   The potential fee to be earned pursuant to the Closure Contract ranges from $151.0 million to $463.0 million based on Kaiser-Hill’s costs to complete the site closure being within the range of targeted completion cost of $3.6 billion and $4.8 billion, and completion at various dates between 2005 - 2007. Physical completion for a total cost in excess of the target cost would result in a reduction to the potential fee because Kaiser-Hill will share 30% in all costs incurred in excess of the target.  Kaiser-Hill is also subject to a $20.0 million maximum penalty if the December 31, 2007 closure date is not met.

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Kaiser-Hill’s favorable performance on the contract since its inception in February of 2000 has resulted in a trend of cautious but continuously improving estimates of completion dates, cost estimates and potential fee earning opportunities.   As of June 30, 2003, Kaiser-Hill’s cost estimate to complete the project is $3.75 billion, with an estimated completion date of December 2006, resulting in a potential fee of $424 million.  Kaiser-Hill has goals of further improving its ultimate project performance; however, goals are not free of risk, and the ability to accurately predict the ultimate results are highly uncertain.  See “Risk Factors Relating to Kaiser Holdings and Forward-Looking Statements” below.

For the three and six months ended June 30, 2003, the Company recorded its equity in Kaiser-Hill’s income, recognizing $4.3 million and $8.6 million, respectively, (50% of Kaiser-Hill’s $10.3 million and $20.8 million income, respectively, less amortization of the intangible asset attributed to Kaiser-Hill of $0.9 million and $1.8 million, respectively), an increase of $0.9 million and $1.6 million, respectively, over the amount recorded for the three and six months ended June 30, 2002.  The increases for the three and six months ended June 30, 2003 are due to the increasing estimates of the performance fee to be earned over the duration of Kaiser-Hill’s contract.

Closure Contract Billing Provisions

Throughout the period of the Closure Contract (beginning in February 2000), Kaiser-Hill has invoiced DOE for the performance fee based on the target levels within the contract, resulting in fee invoices of approximately $6.1 million per quarter.  In December 2002, Kaiser-Hill’s continued favorable progress on the project resulted in an award by the DOE of an additional $10.0 million in fee. Adjusted for the effects of the 50% retainage holdback, Kaiser-Hill expects that its performance fee invoices to DOE will continue to be approximately $7.1 million per quarter.

Fee payments made by DOE to Kaiser-Hill, less certain non-reimbursable costs, will continue to be distributed to the joint venture owners upon receipt.  Kaiser-Hill has historically incurred expenses that are not reimbursable by the DOE pursuant to the Federal regulations.  Accordingly, such expenses, which Kaiser-Hill estimates could approximate up to 15% - 20% of the total award fee, are deducted from the total fee earned and collected by Kaiser-Hill prior to any distributions of net fees to either Kaiser Group or CH2M Hill Companies Ltd.  Since January 1, 2003, Kaiser-Hill has been distributing approximately $3.0 million per quarter to each of its two owners based on its fee invoicing level with DOE.  From the commencement of the new Closure Contract through June 30, 2003, Kaiser-Hill has received an aggregate of $82.1 million in fee from the DOE.

In the future, as Kaiser-Hill continues to accrue performance fee based on its currently projected total, less reserves deemed appropriate in the circumstances, and remains subject to a 50% retainage holdback on its performance fee invoicing, the level of unbilled accounts receivable on its balance sheet will begin to increase substantially.  Kaiser-Hill will classify the difference between recorded performance fee and the collected fee as long-term unbilled accounts receivable on its balance sheet, which will be included as a component of Investment in Affiliate on the Company’s balance sheet.  The Closure Contract also contains provisions for DOE to release portions of the retainage holdback prior to contract completion if the DOE deems appropriate.  Kaiser-Hill is not able to estimate whether any of the retainage holdback will be released prior to contract completion.

For the three- and six-month periods ended June 30, 2003 and 2002, the equity income in earnings of affiliate is net of $0.9 million and $1.8 million, respectively, of amortization of the excess of our carrying value of our investment in Kaiser-Hill over our ownership percentage of the underlying Kaiser-Hill equity.  We increased the carrying value of this investment by $21.1 million as part of our adoption of Fresh-Start reporting as of December 31, 2000 and will continue to amortize that difference over the estimated life of the Kaiser-Hill investment of approximately 6 years.

Administrative Expenses

Administrative expenses for the three and six months ended June 30, 2003 were $1.4 million and $2.9 million, respectively, a decrease of $1.2 million and $2.4 million, respectively, compared to the three and six months ended June 30, 2002.  The decrease in administrative expense is due primarily to reductions in legal and professional fees.  These decreases result from our progress in winding down the discontinued operations of Kaiser Group International.  We anticipate further declines in general and administrative spending as remaining litigation and bankruptcy claims are resolved.

Gain on Sale of Stock

We disposed of our investment in the common stock of Prudential Insurance Company in February 2002 and recorded a gain of $106,000 at the time of the sale.

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Interest Income

Interest income for the three and six months ended June 30, 2003 was $0.2 million and $0.5 million, respectively, an increase of $0.1 million and $0.2 million, respectively, compared with the six months ended June 30, 2002.  The increase is primarily due to the accrual of interest income on the ICF Consulting notes.  At June 30, 2002, we were not accruing interest income on the ICF Consulting notes due to uncertainties over the collectibility of accrued interest.  As of September 30, 2002, we restructured the ICF Consulting notes and began accruing interest on the new notes.

Income Tax Expense

We recorded an income tax expense of $1.2 million and $2.4 million, respectively, on operating income from continuing operations of $1.9 million and $3.8 million, respectively, during the three and six months ended June 30, 2003.  Our effective income tax rate of 39% is reflective of the non-deductibility of certain expenditures for federal income tax purposes.  For the three and six months ended June 30, 2002, we recorded an income tax expense of $0.4 million and $0.9 million, respectively,  on operating income from continuing operations of $0.9 million and $2.1 million, respectively.

Loss from Discontinued Operations

The loss from discontinued operations for the three and six months ended June 30, 2002 consists of the activities associated with the Nova Hut project.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

We used $2.9 million and $4.7 million of cash during the six months ended June 30, 2003 and June 30, 2002, respectively, primarily for the extinguishment of obligations arising out of our bankruptcy, including professional fees, retiree benefits, income taxes and various other wind-down expenditures.

Investing Activities

We received $6.0 million in distributions from Kaiser-Hill during the six month period ended June 30, 2003 compared to $6.5 million in the same period ended June 30, 2002.

During the first quarter of 2002, we liquidated our holdings of shares of stock of Prudential Insurance Company and received approximately $6.0 million.  We had acquired the Prudential stock through the demutualization transaction effected by the insurance company during the fourth quarter of 2001.

Financing Activities

During the six months ended June 30, 2003, we redeemed $15.5 million liquidation preference of our preferred stock, net of $1.4 million liquidation preference of shares held as treasury stock.  Pursuant to the terms of the Plan of Reorganization, the Company used $8.9 million in excess restricted cash in addition to $5.2 million of unrestricted cash to facilitate this redemption.

During the six months ended June 30, 2003 and 2002, we paid $1.7 million and $2.2 million, respectively, in dividends on our preferred stock.   During the six months ended June 30, 2002, we acquired 3,000 shares of preferred stock for $0.1 million.  The reduction in dividend expense is due to the $15.5 million redemption of the outstanding preferred stock in January 2003, discussed above.

Liquidity and Capital Resource Outlook

We currently have no debt as a result of the effectiveness of the Plan of Reorganization. We have financed the initial bankruptcy distribution requirements and follow-on working capital needs in part through the use of the available cash and distributions from Kaiser-Hill and from other asset sale proceeds. Based on (i) current expectations for operating activities and results, (ii) expected Kaiser-Hill distributions, (iii) our current available cash position, (iv) recent trends and projections in liquidity and capital needs, and (v) current expectations of total allowed claims upon the completion of the bankruptcy

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proceedings, management believes we have sufficient liquidity to cover the required cash distributions resulting from the resolution of claims in the bankruptcy process, our future operating needs and income tax requirements, as well as the dividend requirements applicable to the our preferred stock.  Furthermore, as allowed Class 4 claims are resolved, we will continue to review the timing of additional partial preferred stock redemptions.

We have obligations to pay dividends on outstanding preferred stock at June 30, 2003.  Accordingly, we are required to present the following table assuming that no preferred stock redemptions are made until the mandatory redemption date of December 31, 2007, no additional shares are issued and that all future dividends are paid in cash (irrespective of this disclosure requirement, we are not representing intentions with regard to the timing of preferred stock redemptions).  The effect these obligations are expected to have on our liquidity and cash flow in future periods are as follows:

	Total		Less Than One Year		One to Three Years		After Three Years
Preferred Stock dividends	$	13,113	$	2,914	$	5,828	$	4,371

Other Matters

We have various obligations and liabilities from our continuing operations, including general overhead expenses in connection with maintaining, operating and winding down the various entities.  Additionally, we believe contingent liabilities may exist in the areas described in Note 6 to the Consolidated Financial Statements.

Recent Accounting Pronouncements

In December 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of FASB Statement No. 123.”  SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair market value based method of accounting for stock-based compensation.  We do not presently expect to make such a voluntary change.  In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.  These amended disclosure requirements are applicable for financial statements issued for interim periods beginning after December 15, 2002.  The Company has recently adopted the 2002 Equity Compensation Plan, however, it does not currently have any outstanding stock options requiring disclosures under SFAS No. 148.

In November 2002, FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34,” (“FIN 45”) was issued.  FIN 45 clarifies the requirements of SFAS No. 5, “Accounting for Contingencies,” relating to guarantors’ accounting for, and disclosure of, the issuance of certain types of guarantees.  The disclosure provisions of FIN 45 are applicable to interim or annual periods that end after December 15, 2002, and did not have an impact on the June 30, 2003 financial statements.  The provisions for initial recognition and measurement under FIN 45 are effective on a prospective basis for guarantees that are issued or modified after December 31, 2002.  The initial recognition and measurement provisions under FIN 45 did not have any impact on our financial statements.

On May 31, 2003, FASB issued FASB Statement No. 150 (FAS 150), “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”.  FAS 150 improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity and requires that those instruments be classified as liabilities (or assets in certain circumstances) in statements of financial position.  FAS 150 also requires disclosures about alternative ways of settling the instruments and the capital structure of entities – all of whose shares are mandatorily redeemable.  FAS 150 is generally effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the fist interim period beginning after June 15, 2003.  The adoption of FAS 150 will result in the classification of the Company’s preferred stock as a liability effective July 1, 2003.

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RISK FACTORS RELATING TO KAISER HOLDINGS AND

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains, and our periodic filings with the Securities and Exchange Commission and written or oral statements made by our officers and directors to press, potential investors, securities analysts and others, may contain, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These forward-looking statements are not historical facts, but rather are predictions and generally can be identified by use of statements that include phrases such as “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “foresee” or other words or phrases of similar import.  Similarly, statements that describe or contain information related to matters such as our intent, belief, or expectation with respect to financial performance, claims resolution, cash availability, stock redemption plans, contract awards and performance, potential acquisitions and joint ventures, and cost-cutting measures are forward-looking statements. These forward-looking statements often reflect a number of assumptions and involve known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from those currently anticipated in these forward-looking statements.  In light of these risks and uncertainties, including those described below, the forward-looking events might or might not occur.

Our long-term future profitability is significantly tied to Kaiser-Hill, which is subject to uncertainties that may adversely affect our operating results.

The fee income we will receive from Kaiser-Hill is dependent upon the ability of Kaiser-Hill to close the Rocky Flats site at a predetermined targeted cost of between $3.6 billion and $4.8 billion and closing date of not later than March 31, 2007, both of which are uncertain.

Our long-term future profitability will be dependent, to a significant extent, on the performance of Kaiser-Hill under its contract with the Department of Energy.  Kaiser-Hill serves as the general contractor at the Rocky Flats Environmental Technology site near Denver, Colorado, a former nuclear weapons production facility. Kaiser-Hill’s contract with the Department of Energy includes a performance fee based upon a combination of the actual costs incurred to complete the site closure and the actual date of completion of the closure.  If Kaiser-Hill fails to complete the closure within the target cost for the project of between $3.6 billion and $4.8 billion, Kaiser-Hill’s fee will be reduced to a level significantly less than the fee estimate currently being used to recognize income on the project and further reduced by 30% of the costs incurred after the target date of March 31, 2007.  Kaiser-Hill is also subject to a $20.0 million maximum penalty if the December 31, 2007 closure date is not met.

Kaiser-Hill has historically incurred expenses that are not reimbursable by the Department of Energy pursuant to the federal regulations.  Accordingly such expenses, which Kaiser-Hill estimates could approximate up to 15% - 20% of the total award fee, will be deducted from the total fee prior to any distributions of net fees to either us or CH2M Hill Companies, Ltd. For reasons similar to those described in the following paragraph, it is difficult to estimate either the amount of net fee to be distributed to the owners of Kaiser-Hill and or the effect, if any, that such unreimbursable costs would have on our future cash flows.  A decrease in our cash flows could result in a decrease in the value of our common and preferred stock.

There are substantial performance risks associated with Kaiser-Hill’s work at the Rocky Flats site.  The performance risks may impact the timing and cost of closing the site, which in turn could impact our fee income from Kaiser-Hill.

The clean-up and closure of the Department of Energy’s Rocky Flats site involve substantial performance risks.  Among other things, Kaiser-Hill’s activities at the Rocky Flats site involve the clean-up, packaging and transportation of nuclear waste, and the demolition and destruction of facilities where nuclear weapons components were previously produced.  Some of these activities have not been previously performed elsewhere, and therefore require the development of innovative and untested approaches.  Kaiser-Hill emphasizes safety in its performance, but the nature of the Rocky Flats site and the activities of Kaiser-Hill and its subcontractors at the site are such that serious injuries, or even deaths, are possible.  Significant safety incidents at the site could stop or significantly impede the progress of work being performed at the site by Kaiser-Hill and its subcontractors.  The Department of Energy contract contemplates that all, or substantially all, of the nuclear waste at Rocky Flats will be transported to other sites operated or managed by the Department of Energy.  The appropriate sites for storage of certain of those nuclear wastes have not yet been identified.  In addition, third-party objections have arisen from time to time with regard to the transportation to, and storage of nuclear waste at, certain sites previously designated by the Department of Energy to receive waste from Rocky Flats, including the Department of Energy’s Savannah River site in South Carolina.  Deliveries of waste to the Savannah River site were delayed as a result of objections interposed by the Governor of South Carolina.  Deliveries to the Savannah River site have begun, but it is possible that similar objections will be raised with respect to the transportation to, and storage of waste from Rocky Flats at, other Department of Energy sites.  Although the Department

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of Energy contract contemplates that the Department of Energy is responsible for providing transportation and storage sites for nuclear waste from Rocky Flats, an inability to ship plutonium and other nuclear waste to Department of Energy sites would pose a substantial risk to the timely closure of the Rocky Flats site, and could interfere with Kaiser-Hill’s ability to earn the fees to which Kaiser-Hill believes it should be entitled.  This loss of fee income could adversely affect our operating results, which could in turn result in a decrease in the value of our common and preferred stock.

There are potential substantial liabilities and costs associated with Kaiser-Hill’s Department of Energy contract, which may directly and indirectly impact our fee income from Kaiser-Hill.

Under the Department of Energy contract, Kaiser-Hill is responsible for, and the Department of Energy will not pay for costs associated with, liabilities caused by the willful misconduct or lack of good faith of Kaiser-Hill’s managerial personnel or the failure to exercise prudent business judgment by Kaiser-Hill’s managerial personnel. If Kaiser-Hill were found liable for any of these reasons, the associated costs could be substantial, which could have an adverse effect on our operating results. A decrease in our operating results could cause a decrease in the value of our common and preferred stock.

We face significant contingencies, which may adversely impact our ability to meet our obligations on our preferred stock, to fund our continuing operations and to undertake new operations.

Our cash flow is partially dependent on the wind-down of the Nova Hut project and the probability of receiving our payment from Nova Hut is currently uncertain.

Our cash flow is partially dependent on the resolution of disputes relating to Kaiser Netherlands’ performance under its fixed-price contract for turnkey engineering and construction services relating to the Nova Hut project and on the ability of Nova Hut, which is in financial difficulty, to pay for such services.

We do not have a business plan beyond Kaiser-Hill and the Nova Hut project, and we may or may not undertake new activities.

Our long-term future profitability will be dependent, to a significant extent, on our ability to develop a business plan for ongoing operations. Unless and until our Board of Directors develops such a business plan, we are unable to determine either the amount of risk that future operations will involve or whether we have the ability to realize long-term profitability. It is possible that our ongoing business plan will be limited to resolving issues related to the Nova Hut project and participating in the activities of Kaiser-Hill.  However, our Board of Directors is considering whether we should attempt to develop a new revenue base.  Such efforts could, for example, attempt to take advantage of our successful history of performing in the government services market, both independently and through Kaiser-Hill.  Our efforts to develop a revenue base separate from Kaiser-Hill may involve start-up activities with risks peculiar to activities of this type, which may adversely impact our cash flow and operating results. A decrease in our cash flows and operating results could result in a decrease in the value of our common and preferred stock.

We may be unable to obtain performance guarantees, which may limit our ability to undertake new activities.

Given the reorganization history of Kaiser Group Holdings, Inc., we may not be able to obtain satisfactory contract performance guaranty mechanisms, such as performance bonds and letters of credit, at all or on satisfactory terms, to the extent such mechanisms are needed for new projects.  These factors could limit the nature of the business activities in which we could engage should we decide to attempt to develop a new revenue base apart from Kaiser-Hill, which may adversely impact our cash flow and operating results and result in a decrease in the value of our common and preferred stock.

We may be unable to generate funds to meet our obligations and we may be unable to access additional capital.

We may be unable to continue to generate sufficient funds to meet our obligations, notwithstanding the significant improvements in our operations and financial condition.  Although we believe that we will be able to generate sufficient funds to meet our working capital needs for the foreseeable future, our ability to gain access to additional capital, if needed, is not certain. Due to reorganization history of Kaiser Group Holdings, Inc. and current financial markets, it is difficult to predict whether additional capital would be available to us in the event that we were unable to general funds to meet our obligations.  Our inability to gain access to additional capital may also limit our ability to undertake new activities.  Ultimately, our inability to meet our existing obligations or to undertake new activities could adversely impact our cash flow and operating results.  A decrease in our cash flows and operating results could result in a decrease in the value of our common and preferred stock.

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In the event of a change of control, we may not have the financial resources to redeem preferred stock.

Our preferred stock is redeemable at the option of the holder upon a change of control as defined in the terms of the preferred stock.  We are not presently aware of any events that would cause a change of control.  However, based on a Report on Form 4 dated February 12, 2003, which was filed with the Securities and Exchange Commission by Tennenbaum & Co., LLC on February 13, 2003, we believe that Tennenbaum & Co., LLC and Michael E. Tennenbaum together own approximately 47.2% of our common stock.  The terms of our preferred stock provide that a change of control occurs when, among other things, a person or “group” (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) directly or indirectly acquires “beneficial ownership” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of more than 50% of all classes of our common equity (defined in the terms of our preferred stock as capital stock entitled to vote in the election of directors).

In the event that we are required to redeem preferred stock due to a change of control, we may not have available capital to redeem the stock.  Our ability to gain access to additional capital from outside sources, if needed, is not certain.  The inability to gain access to additional capital may limit our ability to meet the redemption obligations with respect to the preferred stock.

ITEM 3.  QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK

We do not believe that we have significant exposures to market risk as we do not presently have any debt.  The interest rate risk associated with our obligation to fund a capped retiree medical obligation is not sensitive to interest rate risk other than via the determination of the present value of our remaining obligation there under.  A 10% increase or decrease in the average annual prime rate would result in a decrease in the carrying value of the plan obligation but would not change the actual cost of the plan.

ITEM 4.  CONTROLS AND PROCEDURES

As of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer evaluated, with the participation of our management, the effectiveness of our disclosure controls and procedures.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that material information is recorded, processed, summarized and reported by our management on a timely basis in order to comply with our disclosure obligations under the Securities Exchange Act of 1934 and the SEC rules thereunder.  There were no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

As previously reported in the Annual Report on Form 10-K for the year ended December 31, 2002.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

(a)  None

(b)  None

(c)  None

(d)  Not applicable

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

(a)  None

(b)  None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the May 7, 2003 Annual Meeting of Shareholders, the two matters up for vote were the election of directors and the approval of the 2002 Equity Compensation Plan.

1.             Election for Directors

The following individuals were elected to a one-year term expiring at the 2004 Annual Meeting of Shareholders, and the total number of votes cast for and withheld for each were as follows:

	For	Withheld	Total
Jon B. Bennett	1,290,103	2,858	1,292,961
John T. Grigsby, Jr.	1,288,754	4,207	1,292,961
James J. Maiwurm	1,287,803	5,158	1,292,961
Frank E. Williams, Jr.	1,290,072	2,889	1,292,961

(*) “Votes Withheld” means that the shareholder marked the box on his/her proxy card labeled “withheld.”  This is equivalent to a “No” for all four nominees.  This vote total includes situations in which the shareholder wrote in the name of the director or directors he/she did not want to vote for.

2.             Approval of the 2002 Equity Compensation Plan

For	Against	Abstain	Total
1,009,435	16,295	6,753	1,032,483

ITEM 5.  OTHER INFORMATION

None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

Exhibit No. 2—Plan of Acquisition, reorganization, arrangement, liquidation or succession

2(a) Second Amended Plan of Reorganization (Incorporated by reference to Exhibit 2 to Current Report on Form 8-K (Registrant No. 1-12248) filed with the Commission on December 14, 2000)

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Exhibit No. 3—Articles of Incorporation and By-laws of the Registrant

3(a)  Certificate of Incorporation of Kaiser Group Holdings, Inc. (Incorporated by reference to Exhibit 3(i) to Current Report on Form 8-K (Registrant No. 1-12248) filed with the Commission on December 14, 2000)

3(b)  By-laws of Kaiser Group Holdings, Inc. (Incorporated by reference to Exhibit 3(ii) to Current Report on Form 8-K (Registrant No. 1-12248) filed with the Commission on December 14, 2000)

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

4(a)  Form of Put Agreement relating to preferred stock of Kaiser Group Holdings, Inc. (Incorporated by reference to Exhibit 4 to Current Report on Form 8-K (Registrant No. 1-12248) filed with the Commission on December 14, 2000)

Exhibit No. 10 — Material Contracts

10(a)  Kaiser Group International, Inc. Employee Stock Ownership Plan (as amended and restated as of January 1, 1996)  (Incorporated by reference to Exhibit No. 10(b) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 17, 2000)

1.  Amendment No. 1 with the effective date of January 1, 1998  (Incorporated by reference to Exhibit No. 10(b)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 17, 2000)

2.  Amendment No. 2 with the effective date of January 1, 1996  (Incorporated by reference to Exhibit No. 10(b)(2) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 17, 2000)

3.  Amendment No. 3 dated April 19, 1999  (Incorporated by reference to Exhibit No. 10(b)(3) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 17, 2000)

4.  Amendment No. 4 dated June 25, 1999 (Incorporated by reference to Exhibit No. 10(b)(4) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 17, 2000)

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

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

1.  Amendment No. 1 dated April 24, 1995 (Incorporated by reference to Exhibit No. 10(d)(1) to Annual Report on Form 10-K (Registrant No. 1- 12248) filed with the Commission on May 23, 1995)

2.  Amendment No. 2 dated December 15, 1995 (Incorporated by reference to Exhibit No. 10(d)(2) to Transition Report on Form 10-K (Registrant No. 1-12248) for the transition period from March 1, 1995 to December 31, 1995 filed with the Commission on March 29, 1996)

3.  Amendment No. 3 dated December 13, 1996 (Incorporated by reference to Exhibit No. 10(d)(3) to Registration Statement on Form S-1 (Registrant No. 333-19519) filed with the Commission on January 10, 1997)

4.  Amendment No. 4 dated April 19, 1999 (Incorporated by reference to Exhibit No. 10(d)(4) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 17, 2000)

5.  Amendment No. 5 dated June 25, 1999 (Incorporated by reference to Exhibit No. 10(d)(5) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 17, 2000)

6.  Amendment No. 6 dated August 30, 1999 (Incorporated by reference to Exhibit No. 10(d)(6) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 17, 2000)

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7.  Amendment No. 7 dated April 13, 2000 (Incorporated by reference to Exhibit 10(d)(7) on Form 8-K (Registrant No. 1-12248) filed with the Commission on May 2, 2000)

8.  Amendment No. 8 dated June 8, 2000 (Incorporated by reference to Exhibit 10(d)(8) to Quarterly Report on Form  10-Q (Registrant No. 1-12248) for the second quarter of fiscal 2000 filed with the Commission on September 6, 2000)

9.  Amendment No. 9 dated June 19, 2003

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

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

1.  Amendment No. 1 dated April 24, 1995 (Incorporated by reference to Exhibit No. 10(p)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) for fiscal 1995 filed with the Commission on May 23, 1995)

2.  Amendment No. 2 dated December 15, 1995 (Incorporated by reference to Exhibit No. 10(p)(2) to Transition Report on Form 10-K (Registrant No. 1-12248) for the transition period from March 1, 1995 to December 31, 1995 filed with the Commission on March 29, 1996)

3.  Amendment No. 3 dated December 13, 1996 (Incorporated by reference to Exhibit No. 10(q)(3) to Registration Statement on Form S-1 (Registrant No. 333-19519) filed with the Commission on January 10, 1997)

4.  Amendment No. 4 dated April 8, 1999 (Incorporated by reference to Exhibit No. 10(k)(4) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 17, 2000)

5.  Amendment No. 5 dated June 25, 1999 (Incorporated by reference to Exhibit No. 10(k)(5) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 17, 2000)

6.  Amendment No. 6 dated April 13, 2000 (Incorporated by reference to Exhibit 10(k)(6) on Form 8-K (Registrant No. 1-12248) filed with the Commission on May 2, 2000)

7.  Amendment dated January 1, 2001 (Incorporated by reference to Exhibit No. 10(m)(7) to Annual Report on Form  10-K (Registrant No. 1-2248) filed with the Commission on March 30, 2001)

8.  Amendment No. 8 dated December 10, 2002

9.  Amendment No. 9 dated June 19, 2003

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

10(g)  Asset Purchase Agreement between The IT Group, Inc. and ICF Kaiser International, Inc. dated March 9, 1999 (Incorporated by reference to Exhibit C to Registration Statement on Form 8-K (Registrant No. 1- 12248) filed with the Commission on April 23, 1999)

10(h) Contract between Kaiser-Hill Company, LLC, a subsidiary of the Corporation, and the U.S. Department of Energy dated January 24, 2000 (Incorporated by reference to Exhibit No. 10(o) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 17, 2000)

10(i)  Master Transaction Agreement between Tyco Group S.a.r.l. and Kaiser Group International, Inc. dated June 9, 2000 (Incorporated by reference to Exhibit 10(p) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the second quarter of fiscal 2000 filed with the Commission on September 6, 2000)

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1.  Amendment No. 1 to the Master Transaction Agreement between Tyco Group S.a.r.l. and Kaiser Group International, Inc. dated June 9, 2000 (Incorporated by reference to Exhibit 10(p)(1) to Quarterly Report on Form 10-Q (Registrant No.  1-12248) for the second quarter of fiscal 2000 filed with the Commission on September 6, 2000)

10(j)  Master Transaction Agreement between Hatch Associates, Inc. and Kaiser Group International, Inc. dated July 6, 2000 (Incorporated by reference to Exhibit 10(q) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the second quarter of fiscal 2000 filed with the Commission on September 6, 2000)

10(k)  Assignment of Membership Interest in Hunters Branch Leasing, LLC by and between Kaiser Holdings Unlimited, Inc. (Assignor) and Nutley Partners, LC (Assignee), dated January 1, 2001 (Incorporated by reference to Exhibit No. 10(r) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 2, 2001)

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

10(l)  Kaiser Group Holdings, Inc. 2002 Equity Compensation Plan, as amended (Incorporated by reference to Exhibit 10 to Registration Statement on Form S-8 (Registrant No. 33-51460) filed with the Commission on August 13, 2003)

10(m)  Amended and Restated Employment Agreement with John T. Grigsby, Jr., President and Chief Executive Officer, effective as of December 19, 2000 (Incorporated by reference to Exhibit No. 10(m) to Registration Statement on Form S-4 (Registrant No. 333-100640) filed with the Commission on October 18, 2002)

Exhibit No. 21—Consolidated Subsidiaries of the Registrant as of July 31, 2003

Exhibit No. 31.1 – Certification of Principal Executive Officer

Pursuant to Section 302 of The Sarbanes-Oxley Act Of 2002

Exhibit No. 31.2 – Certification of Principal Financial Officer

Pursuant to Section 302 of The Sarbanes-Oxley Act Of 2002

Exhibit No. 32.1 – Certification of Principal Executive Officer and Principal Financial Officer

Pursuant 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)  Reports on Form 8-K

On July 17, 2003, the Company filed a Current Report on Form 8-K.  Pursuant to Item 5 of its Report, the Company disclosed that it had relocated its principal address from Fairfax, Virginia to Broomfield, Colorado effective as of June 1, 2003.

SIGNATURES

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

	KAISER GROUP HOLDINGS, INC.
	(Registrant)
Date: August 14, 2003
	/s/ Marijo L. Ahlgrimm
	Marijo L. Ahlgrimm
	Executive Vice President and Chief Financial
	Officer (Duly authorized officer and principal financial officer)

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EX-10.(C)(9)

Exhibit 10(c)(9)

NINTH AMENDMENT
TO THE
ICF KAISER INTERNATIONAL, INC.
RETIREMENT PLAN

WHEREAS, the ICF Kaiser International, Inc. Retirement Plan (hereinafter referred to as the “Plan”) was established effective August 1, 1971;

WHEREAS, the Plan was most recently restated effective January 1, 1996, by ICF Kaiser International, Inc. (currently known as Kaiser Group International, Inc. and hereinafter referred to as the “Company”);

WHEREAS, the restated Plan was amended subsequently on eight occasions;

WHEREAS, the Company has retained the authority to amend and merge the Plan pursuant to Sections 10.2 and 10.3 of the Plan; and

WHEREAS, the Company desires to (i) merge the Plan into, and transfer the Plan’s assets to the trustee of, the ICF Kaiser International, Inc. Section 401(k) Plan, (ii) simplify the forms of benefit payment available under the Plan, and (iii) make miscellaneous changes required by the Internal Revenue Code or applicable regulations;

NOW, THEREFORE, effective as of the dates stated below, the Plan is hereby amended as follows:

1.Effective January 1, 2003, Section 1.8 is amended to replace the reference to “ICF Kaiser International, Inc.” with a reference to “Kaiser Group International, Inc.”

2.Effective January 1, 2001, Section 1.10 is amended to add the clause, “, as well as qualified transportation fringe benefits excluded from gross income by reason of Code section 132(f)(4),” after the clause, “and the ICF Kaiser International, Inc. Section 401(k) Plan,” in the fourth sentence.

3.Effective January 1, 2002, Section 1.40 is amended to read as follows:

“[Reserved]”

4.Effective January 1, 2001, Section 4.4(b)(iii) is amended to add a phrase at the end to read as follows:

“, including, elective amounts that are not includible in a Participant’s gross income by reason of Code section 132(f)(4).”

5.Effective January 1, 2003, a new Section 8.13 is amended to read as follows:

“8.13Minimum Distribution Requirements

(a)General Rules

(i)Effective date.  The provisions of this Section 8.13 will apply for purposes of determining required minimum distributions for calendar years beginning with the 2003 calendar year.

(ii)Precedence.  The requirements of this Section 8.13 will take precedence over any inconsistent provisions of the Plan.

1

(iii)Requirements of Treasury regulations incorporated.  All distributions required under this Section 8.13 will be determined and made in accordance with the Treasury regulations under section 401(a)(9) of the Code.

(iv)TEFRA section 242(b)(2) elections.  Notwithstanding the other provisions of this Section 8.13, distributions may be made under a designation made before January 1, 1984, in accordance with section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA) and the provisions of the Plan that relate to section 242(b)(2) of TEFRA.

(b)Time and Manner of Distribution

(i)Required Beginning Date.  The Participant’s entire interest will be distributed, or begin to be distributed, to the Participant no later than the Participant’s Required Beginning Date.

(ii)Death of Participant before distributions begin.  Except as provided in Section 8.13(d), if the Participant dies before distributions begin, the Participant’s entire interest will be distributed, or begin to be distributed, no later than as follows:

(1)If the Participant’s surviving spouse is the Participant’s sole designated beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70½, if later.

(2)If the Participant’s surviving spouse is not the Participant’s sole designated beneficiary, then distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died.

(3)If there is no designated beneficiary as of September 30 of the year following the year of the Participant’s death, the Participant’s entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(4)If the Participant’s surviving spouse is the Participant’s sole designated beneficiary and the surviving spouse dies after the Participant but before distributions to the surviving spouse begin, this Section (b)(2), other than section (b)(2)(i), will apply as if the surviving spouse were the Participant.

For purposes of this Section (b)(ii) and Section (d), unless Section (b)(ii)(4) applies, distributions are considered to begin on the Participant’s Required Beginning Date. If Section (b)(ii)(4) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under Section (b)(ii)(1).  If distributions under an annuity purchased from an insurance company irrevocably commence to the participant before the Participant’s Required Beginning Date (or to the Participant’s surviving spouse before the date distributions are required to begin to the surviving spouse under Section (b)(ii)(1)), the date distributions are considered to begin is the date distributions actually commence.

(iii)Forms of distribution.  Unless the Participant’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the Required Beginning Date, as of the first distribution calendar year distributions will be made in accordance with Sections (c) and (d) below.  If the Participant’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of section 401(a)(9) of the Code and the Treasury regulations.

(c)Required Minimum Distributions During Participant’s Lifetime

(i)Amount of required minimum distribution for each distribution calendar year.  During the Participant’s lifetime, the minimum amount that must be distributed for each distribution calendar year is the lesser of:

(1)the quotient obtained by dividing the Participant’s Account balance by the distribution

2

period in the Uniform Lifetime Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the Participant’s age as of the Participant’s birthday in the distribution calendar year; or

(2)if the Participant’s sole designated beneficiary for the distribution calendar year is the Participant’s spouse, the quotient obtained by dividing the Participant’s Account balance by the number in the Joint and Last Survivor Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the Participant’s and spouse’s attained ages as of the Participant’s and spouse’s birthdays in the distribution calendar year.

(ii)Lifetime required minimum distributions continue through year of Participant’s death.  Required minimum distributions must be determined under this Section (c) beginning with the first distribution calendar year and up to and including the distribution calendar year that includes the Participant’s date of death.

(d)Required Minimum Distributions After Participant’s Death

(i)Death on or after date distributions begin

(1)Participant survived by designated Beneficiary.  If the Participant dies on or after the date distributions begin and there is a designated beneficiary, the minimum amount that must be distributed for each distribution calendar year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s Account balance by the longer of the remaining life expectancy of the Participant or the remaining life expectancy of the Participant’s designated beneficiary, determined as follows:

(A)The Participant’s remaining life expectancy is calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

(B)If the Participant’s surviving spouse is the Participant’s sole designated beneficiary, the remaining life expectancy of the surviving spouse is calculated for each distribution calendar year after the year of the Participant’s death using the surviving spouse’s age as of the spouse’s birthday in that year.  For distribution calendar years after the year of the surviving spouse’s death, the remaining life expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse’s birthday in the calendar year of the spouse’s death, reduced by one for each subsequent calendar year.

(C)If the Participant’s surviving spouse is not the Participant’s sole designated beneficiary, the designated beneficiary’s remaining life expectancy is calculated using the age of the beneficiary in the year following the year of the Participant’s death, reduced by one for each subsequent year.

(2)No designated beneficiary.  If the Participant dies on or after the date distributions begin and there is no designated beneficiary as of September 30 of the year after the year of the Participant’s death, the minimum amount that must be distributed for each distribution calendar year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s Account balance by the Participant’s remaining life expectancy calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

(ii)Death before date distributions begin

(1)Participant survived by designated beneficiary.  If the Participant dies before the date distributions begin and there is a designated beneficiary, distribution to the designated beneficiary is not required to begin by the date specified in Section (b)(ii), but the Participant’s entire interest must be distributed to the designated beneficiary by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.  If the Participant’s surviving spouse is the Participant’s sole designated beneficiary and the

3

surviving spouse dies after the Participant but before distributions to either the Participant or the surviving spouse begin, this election will apply as if the surviving spouse were the Participant.

(2)No designated beneficiary.  If the Participant dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the Participant’s death, distribution of the Participant’s entire interest must be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(e)Definitions

(i)Designated beneficiary.  The individual who is designated as the beneficiary under Section 8.2(c) of the Plan and is the designated beneficiary under section 401(a)(9) of the Code and section 1.401(a)(9)-1, Q&A-4, of the Treasury regulations.

(ii)Distribution calendar year.  A calendar year for which a minimum distribution is required.  For distributions beginning before the Participant’s death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant’s Required Beginning Date.  For distributions beginning after the Participant’s death, the first distribution calendar year is the calendar year in which distributions are required to begin under Section (b)(ii).  The required minimum distribution for the Participant’s first distribution calendar year will be made on or before the Participant’s Required Beginning Date.  The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the Participant’s Required Beginning Date occurs, will be made on or before December 31 of that distribution calendar year.

(iii)Life expectancy.  Life expectancy as computed by use of the Single Life Table in section 1.401(a)(9)-9 of the Treasury regulations.

(iv)Participant’s Account balance.  The Account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the Account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date.  The Account balance for the valuation calendar year includes any amounts rolled over or transferred to the Plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year.

(v)Required Beginning Date.  Required Beginning Date means April 1 of the calendar year following the later of the calendar year in which the Participant attains age 70½ or the calendar year in which the Participant retires; however, in the case of a Participant who is a 5 percent owner (within the meaning of section 416(i) of the Code), required beginning date means the April 1 of the calendar year following the calendar year in which the Participant attains age 70½.”

6.Effective as of the later of July 30, 2003, or the 90^th day after individuals have been furnished a summary that reflects the elimination from the Plan of the optional forms of benefit payment, other than a lump sum payment, Section 8.2(a) is amended to replace the phrase, “Sections 8.4 and 8.5,” with the phrase, “Section 8.5.”

7.Effective as of June 1, 2003, Section 8.3(a) is amended to delete (1) the clause, “or at the time of any prior distribution exceeded,” from the fourth sentence, and (2) the clause, “and has never exceeded,” from the sixth sentence.

8.Effective as of the later of July 30, 2003, or the 90^th day after individuals have been furnished a summary that reflects the elimination from the Plan of the optional forms of benefit payment, other than a lump sum payment, the fourth sentence in Section 8.3(a) is amended to read as follows:

“Notwithstanding the above, a terminated Participant’s Vested benefit may not be paid without the written consent of the Participant if the present value of his accrued benefit exceeds $5,000.”

4

9.Effective as of the later of July 30, 2003, or the 90^th day after individuals have been furnished a summary that reflects the elimination from the Plan of the optional forms of benefit payment, other than a lump sum payment, Section 8.4(a) is amended to read as follows:

“(a)Lump sum.  The Participant’s Vested Account balance shall be distributed in the form of a single lump sum payment.”

10.Effective as of the later of July 30, 2003, or the 90^th day after individuals have been furnished a summary that reflects the elimination from the Plan of the optional forms of benefit payment, other than a lump sum payment, Section 8.4(b) is amended to (1) delete the first sentence, including Subsections (i), (ii), and (iii); (2) designate Subsection (iv) as Subsection (b); (3) designate current Subsections (iv)(1), (2), and (3), as Subsections (b)(i), (ii), and (iii), respectively; and (4) amend any references in the Plan to these Subsections accordingly.

11.Effective as of June 1, 2003, Section 8.4(c) is amended to delete the clause, “, and has not exceeded $5,000 at the time of any prior distribution.”

12.Effective as of the later of July 30, 2003, or the 90^th day after individuals have been furnished a summary that reflects the elimination from the Plan of the forms of benefit described in Sections 8.5(a) and (h), Section 8.5 is amended to (1) delete Subsections (a) through (f), and Subsection (h); (2) renumber Subsections (g), (i), and (j) as Subsections (b), (c), and (d); (3) amend any references in the Plan to these Subsections accordingly; and (4) add a new Subsection (a) to read as follows:

“(a)Form of death benefit.  Any death benefit paid to a Beneficiary after the death of the Participant shall be paid in the form of a single lump sum payment.  Such lump sum payment shall be distributed to the Beneficiary within five years after the Participant’s death.”

13.Effective June 1, 2003, Section 8.5(b) (as renumbered pursuant to item 12 above) is amended to delete (1) the clause, “and has not exceeded $5,000 at the time of any prior distribution,” in the first sentence and (2) the last sentence.

14.Effective as of June 30, 2003, Section 10.3 is amended to add a new paragraph to read as follows:

“The Plan shall be merged into the ICF Kaiser International, Inc. Section 401(k) Plan, effective June 30, 2003.  The merger shall satisfy the requirements of Code section 414(l). The Plan shall cease to exist as a separate entity as of such date.  The Plan assets shall be transferred as soon as administratively feasible on such date or thereafter to the Trustee of the ICF Kaiser International, Inc. Section 401(k) Plan.”

15.Effective January 1, 2002, unless otherwise stated, a new Article XII is added to read as follows:

“ARTICLE XII – EGTRRA PROVISIONS

PREAMBLE

A.Adoption and Effective Date of Article XII.  This Article XII of the Plan is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”).  This Article is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder.  Except as otherwise provided, this Section shall be effective as of the first day of the first Plan Year beginning after December 31, 2001, and shall end December 31, 2010, unless otherwise extended by law or otherwise.

B.Supersession of Inconsistent Provisions.  This Article XII shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this Section.

12.1Limitations On Contributions

(a)Effective Date. This subsection shall be effective for limitation years beginning after December 31, 2001.

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(b)Maximum Annual Addition. Notwithstanding Section 4.4, except to the extent permitted under section 414(v) of the Code, if applicable, the annual addition that may be contributed or allocated to a Participant’s Account under the Plan for any limitation year shall not exceed the lesser of:

(i)$40,000, as adjusted for increases in the cost-of-living under section 415(d) of the Code, or

(ii)100 percent of the Participant’s compensation (as defined in section 4.4(b)(iii) for the limitation year.

The compensation limit referred to in (ii) shall not apply to any contribution for medical benefits after separation from service (within the meaning of section 401(h) or section 419A(f)(2) of the Code) which is otherwise treated as an annual addition.

12.2Increase in Compensation Limit

Notwithstanding anything in the definition of Compensation in Article I to the contrary, for Plan Years beginning on or after January 1, 2002, the annual Compensation of each Participant taken into account in determining allocations for any Plan Year shall not exceed $200,000, as adjusted for increases in the cost-of-living in accordance with section 401(a)(17)(B) of the Code.  Annual Compensation means Compensation during the Plan Year or such other consecutive 12-month period over which Compensation is otherwise determined under the Plan (the determination period).  The cost-of-living adjustment in effect for a calendar year applies to annual Compensation for the determination period that begins with or within such calendar year.

12.3Modification Of Top-Heavy Rules

(a)Effective Date. This Section shall apply for purposes of determining whether the Plan is a top-heavy plan under section 416(g) of the Code for Plan Years beginning after December 31, 2001, and whether the Plan satisfies the minimum benefits requirements of section 416(c) of the Code for such years.  This subsection amends Article V of the Plan.

(b)Determination of Top-Heavy Status

(i)Key employee.  Key employee means any Employee or former Employee (including any deceased Employee) who at any time during the Plan Year that includes the determination date was an officer of the Employer having annual compensation greater than $130,000 (as adjusted under section 416(i)(1) of the Code for Plan Years beginning after December 31, 2002), a 5-percent owner of the Employer, or a 1-percent owner of the Employer having annual compensation of more than $150,000.  For this purpose, annual compensation means compensation within the meaning of section 415(c)(3) of the Code. The determination of who is a key employee will be made in accordance with section 416(i)(1) of the Code and the applicable regulations and other guidance of general applicability issued thereunder.

(c)Determination of Present Values and Amounts. This Section shall apply for purposes of determining the present values of accrued benefits and the amounts of account balances of Employees as of the determination date.

(i)Distributions during year ending on the determination date. The present values of accrued benefits and the amounts of account balances of an Employee as of the determination date shall be increased by the distributions made with respect to the Employee under the Plan and any plan aggregated with the Plan under section 416(g)(2) of the Code during the 1-year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under section 416(g)(2)(A)(i) of the Code.  In the case of a distribution made for a reason other than severance from employment, death, or disability, this provision shall be applied by substituting “5-year period” for “1-year period.”

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(ii)Employees not performing services during year ending on the determination date. The accrued benefits and accounts of any individual who has not performed services for the Employer or an affiliate during the 1-year period ending on the determination date shall not be taken into account.

(d)Minimum Benefits

(i)Matching contributions.  Employer matching contributions shall be taken into account for purposes of satisfying the minimum contribution requirements of section 416(c)(2) of the Code and the Plan. The preceding sentence shall apply with respect to matching contributions under the plan or, if the plan provides that the minimum contribution requirement should be met in another plan, such other plan.  Employer matching contributions that are used to satisfy the minimum contribution requirements shall be treated as matching contributions for purposes of the actual contribution percentage test and other requirements of section 401(m) of the Code.

(ii)Contributions under other plans.  The Plan shall satisfy the minimum benefit requirement to the extent not met by any other plan qualified under Code section 401(a) maintained by the Employer.

12.4Direct Rollovers of Plan Distributions

(a)Effective Date.  Notwithstanding Section 8.4(b) (as renumbered pursuant to item 10), this Section shall apply to distributions made after December 31, 2001.

(b)Modification of Definition of Eligible Retirement Plan.  For purposes of the direct rollover provisions in Section 8.4(b) of the Plan, an eligible retirement plan shall include an annuity contract described in section 403(b) of the Code and an eligible plan under section 457(b) of the Code that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan.  The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code.

(c)Modification of Definition of Eligible Rollover Distribution to Exclude Hardship Distributions.  For purposes of the direct rollover provisions in Section 8.4(b) of the Plan, any amount that is distributed on account of hardship shall not be an eligible rollover distribution and the distributee may not elect to have any portion of such a distribution paid directly to an eligible retirement plan.

(d)Modification of Definition of Eligible Rollover Distribution to Include After-tax Employee Contributions.  For purposes of the direct rollover provisions in Section 8.4(b) of the Plan, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions that are not includible in gross income.  However, such portion may be transferred only to an individual retirement account or annuity described in section 408(a) or (b) of the Code, or to a qualified defined contribution plan described in section 401(a) or 403(a) of the Code that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

12.5Rollovers Disregarded In Involuntary Cash-Outs

Effective for distributions made after June 1, 2003, and without regard to the date the Participant terminated employment, for purposes of Sections 8.3, 8.4, and 8.5, the value of a Participant’s Vested Account balance shall be determined without regard to that portion of the Account balance that is attributable to rollover contributions (and earnings allocable thereto) within the meaning of sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) of the Code.  If the value of the Participant’s Vested Account balance as so determined is $5,000 or less, the Plan shall immediately distribute the Participants entire Vested Account balance.

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Executed this 19^th day of June, 2003.

KAISER GROUP INTERNATIONAL, INC.
(formerly known as ICF Kaiser International, Inc.)
By:	/s/ John T. Grigsby, Jr.
		Title:  Chief Executive Officer

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EX-10.(E)(8)

Exhibit 10(e)(8)

EIGHTH AMENDMENT TO THE
KAISER GROUP INTERNATIONAL, INC.
SECTION 401(k) PLAN

WHEREAS, Kaiser Group International, Inc., which was formerly named ICF Kaiser International, Inc. (the “Company”), maintains that Kaiser Group International, Inc. Section 401(k) Plan (the “Plan”), which was most recently restated effective January 1, 1996;

WHEREAS, the Company would like to amend the Plan regarding Gap Period Earnings;

WHEREAS, the Company has retained the authority pursuant to Section 10.2 of the Plan to amend the Plan;

NOW THEREFORE, BE IT RESOLVED, that, effective January 1, 2001, the following amendments are hereby adopted:

1.Section 4.4(c) is amended by the addition of the following paragraph at the end thereof to provide as follows:

Any adjustments to salary deferrals or employer matching contributions shall be subject to gap period earnings.  The plan will apply “gap period” earnings for all corrections of Excess Contributions, Excess Aggregate Contributions and Excess Annual Additions. Gap period earning shall be defined as follows:

The amount of income or loss allocable to a Participant’s Excess for the period between the end of the taxable year of the Participant and the date of distribution (“gap period”).  The income or loss allocable to each such period is calculated separately and is determined by multiplying the income or loss allocable to the Participant’s Excess for the respective period by a fraction. The numerator of the fraction is the Participant’s Excess for the taxable year of the Participant.  The denominator is the balance, as of the last day of the respective period, of the Participant’s Account that is attributable to the Participant’s Account reduced by the gain allocable to such total amount for the respective period and increased by the loss allocable to such total amount for the respective period.

2.Section 4.7(d)(ii) is amended by the addition of the following paragraph at the end thereof to provide as follows:

Any adjustments to salary deferrals or employer matching contributions shall be subject to gap period earnings.  The plan will apply “gap period” earnings for all corrections of Excess Contributions, Excess Aggregate Contributions and Excess Annual Additions. Gap period earning shall be defined as follows:

The amount of income or loss allocable to a Participant’s Excess for the period between the end of the taxable year of the Participant and the date of distribution (“gap period”).  The income or loss allocable to each such period is calculated separately and is determined by multiplying the income or loss allocable to the Participant’s Excess for the respective period by a fraction. The numerator of the fraction is the Participant’s Excess for the taxable year of the Participant.  The denominator is the balance, as of the last day of the respective period, of the Participant’s Account that is attributable to the Participant’s Account reduced by the gain allocable to such total amount for the respective period and increased by the loss allocable to such total amount for the respective period.

3.Section 4.8 is amended by the addition of the following paragraph at the end thereof to provide as follows:

Any adjustments to salary deferrals or employer matching contributions shall be subject to gap period earnings.  The plan will apply “gap period” earnings for all corrections of Excess Contributions, Excess Aggregate Contributions and Excess Annual Additions. Gap period earning shall be defined as follows:

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The amount of income or loss allocable to a Participant’s Excess for the period between the end of the taxable year of the Participant and the date of distribution (“gap period”).  The income or loss allocable to each such period is calculated separately and is determined by multiplying the income or loss allocable to the Participant’s Excess for the respective period by a fraction. The numerator of the fraction is the Participant’s Excess for the taxable year of the Participant.  The denominator is the balance, as of the last day of the respective period, of the Participant’s Account that is attributable to the Participant’s Account reduced by the gain allocable to such total amount for the respective period and increased by the loss allocable to such total amount for the respective period.

Executed this 10^th day of December, 2002.

KAISER GROUP HOLDINGS, INC.

  /s/ John T. Grigsby, Jr.

By:  John T. Grigsby, Jr.

Title:  President and Chief Executive Officer

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EX-10.(E)(9)

Exhibit 10(e)(9)

NINTH AMENDMENT
TO THE
ICF KAISER INTERNATIONAL, INC.
SECTION 401(k) PLAN

WHEREAS, the ICF Kaiser International, Inc. Section 401(k) Plan (hereinafter referred to as the “Plan”), was established effective March 1, 1989;

WHEREAS, the Plan was most recently restated effective January 1, 1996, by ICF Kaiser International, Inc. (currently known as Kaiser Group International, Inc. and hereinafter referred to as the “Company”);

WHEREAS, the restated Plan was amended subsequently on eight occasions;

WHEREAS, the Company also maintains the ICF Kaiser International, Inc. Retirement Plan (“Retirement Plan”), which is a profit-sharing plan qualified under section 401(a) of the Internal Revenue Code;

WHEREAS, the Company has retained the authority to amend and merge the Plan pursuant to Sections 10.2 and 10.3 of the Plan; and

WHEREAS, the Company desires to (i) merge the Retirement Plan into the Plan, effective June 30, 2003, (ii) amend the Plan to provide the profit-sharing contribution previously provided under the Retirement Plan, (iii) simplify the forms of benefit payment available under the Plan, (iv) facilitate the distribution of small account balances, (v) increase the percentage of compensation that participants may elect to defer into the Plan, and (vi) make miscellaneous changes required by the Internal Revenue Code or applicable regulations;

NOW, THEREFORE, effective as of the dates stated below, the Plan is hereby amended as follows:

1.Effective June 30, 2003, the second sentence of Section 1.1 is amended to read as follows:

“The balance to the credit of a Participant under this Plan originates from Salary Deferrals, Employer matching contributions, rollover contributions, Employer profit-sharing contributions, and his or her Retirement Plan Account (if any), and income (or losses) attributable thereto.”

2.Effective January 1, 2003, Section 1.7 is amended to replace the reference to “ICF Kaiser International, Inc.” with a reference to “Kaiser Group International, Inc.”

3.Effective January 1, 2001, Section 1.9 is amended to add the clause, “, as well as qualified transportation fringe benefits excluded from gross income by reason of Code section 132(f)(4),” after the clause, “and this Plan,” in the fourth sentence.

4.Effective June 30, 2003, Section 1.29 (as numbered in the restated Plan document) is amended to read as follows:

“‘Participant’ shall mean any Employee or former Employee with an Account in the Plan, including any Employee or former Employee who had an account in the ICF Kaiser International, Inc. Retirement Plan that was transferred to this Plan.”

5.Effective June 30, 2003, Section 3.1 is amended to read as follows:

“(a)Vesting of Salary Deferrals and Employer Matching Contributions

Except as provided in Section 5.3 or 3.1(b),  a Participant’s Account shall be fully Vested at all times.

(b)Vesting of Employer Profit-Sharing Contributions.

(i)Vesting schedule.  Employer profit-sharing contributions, and earnings thereon, of any Employee eligible to participate in the ICF Kaiser International, Inc. Retirement Plan on June 30, 2003, prior to its merger into this Plan, shall be fully Vested at all times.

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Employer profit-sharing contributions, and earnings thereon, of any other Employee shall vest in accordance with the following schedule, except to the extent the schedule in Section 5.3(b) applies:

Period of Service	Percentage
less than 3 years	0	%
3 years	20	%
4 years	40	%
5 years	60	%
6 years	80	%
7 years	100	%

This vesting schedule shall apply to the vesting of the non-Vested portion of any Retirement Plan Account, as described in Section B.3.

Notwithstanding the schedule described above, a Participant shall be fully Vested in Employer profit-sharing contributions, and earnings thereon, on his date of death, Normal Retirement Date, or the date he becomes disabled, provided he is an Employee on such date.  A Participant is disabled if he incurs a disability that qualifies him for disability under Title II of Title XVI of the federal Social Security Act.  A Participant shall be deemed disabled on the date he is entitled to such disability benefits, as determined by the Social Security Administration.

(ii)Reemployment.  If an Employee terminates employment and is subsequently rehired by the Employer, his Period of Service and Account will be restored in accordance with the following provisions:

(1)Reemployment prior to One-Year Break In Service.  If a former Employee has a Reemployment Commencement Date prior to the occurrence of a One-Year Break in Service, his pre-Break Period of Service shall be restored immediately upon reemployment.

(2)Reemployment after One-Year Break in Service.  If a former Employee has a Reemployment Commencement Date after incurring a One-Year Break in Service, his pre-Break Period of Service shall be restored immediately upon his reemployment unless his consecutive One-Year Breaks in Service equals or exceeds five, in which case, his pre-Break Period of Service shall not be restored.

(3)Restoration of forfeited Account balance. If a former Employee has a Reemployment Commencement Date before incurring five consecutive One-Year Breaks in Service and all or a portion of his non-Vested Account was forfeited because of a distribution of all or a portion of the Vested portion of such Account, the amount previously forfeited shall not be restored unless he repays the full amount previously distributed from such Account prior to the last day of the Plan Year in which the fifth anniversary of his date of reemployment occurs.  If repayment is made in accordance with the preceding sentence, the amount previously forfeited will be restored without adjustment for any gains or losses of the Trust.

(iii)Amendment of vesting schedule.  If the Plan’s vesting schedule is amended or the Plan is amended in any way that directly or indirectly affects the computation of a Participant’s vesting percentage, each Participant who is credited with at least a three year Period of Service (without regard to any periods of service disregarded pursuant to Code section 411(a)(4)) may elect, within sixty days after the latest of the amendment adoption date, the amendment effective date, or the date the Participant is given written notice of the amendment by the Plan Administrator, to have his vesting percentage determined under

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the pre-amendment vesting program.  No amendment to the Plan may have the effect of decreasing a Participant’s vesting percentage determined without regard to such amendment as of the later of the date the amendment is adopted or the date such amendment becomes effective.  In the event that a Participant who is eligible to make an election under this Section fails to make such an election, the Participant shall be deemed to have made such an election to have his vesting percentage determined under the pre-amendment vesting program if his Vested interest under the pre-amendment vesting program would be greater than under the post-amendment vesting program immediately after the effective date of such amendment.

(iv)Definitions.  For purposes of this Section 3.1(b), the following definitions shall apply:

(1)“Employment Commencement Date” shall mean the first day on which an Employee is credited with an Hour of Service.

(2)“Hour of Service” shall mean each hour for which an Employee is paid or entitled to payment for the performance of duties for the Employer in accordance with ERISA Reg. § 2530-200(b)-2(b) and (c).

(3)“One-Year Break in Service” shall mean a Period of Severance of at least 12-consecutive months.  In the case of an individual who is absent from work for maternity or paternity reasons, the 12-consecutive month period beginning on the first anniversary of the first date of such absence shall not constitute a One-Year Break in Service.  For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence by reason of the Employee’s pregnancy, birth of the Employee’s child, placement of a child with the Employee in connection with the adoption of such child, or any absence for the purpose of caring for such child for a period immediately following such birth or placement.

(4)“Period of Service” shall be calculated using the elapsed time method of counting service in accordance with the following rules:

(a)Except as provided in the following subsections of this definition, the Employee’s Period of Service shall include all of the Employee’s periods of service with the Employer and any Member of a Controlled Group.  A Period of Service begins on the Employee’s Employment or Reemployment Commencement Date, and ends on the Employee’s next Severance from Service Date.

(b)The Employee’s Period of Service shall include the following periods:

(1)authorized leaves of absences, provided the Employee returns to service at or prior to the expiration of the leave, or, if not specified therein, within the period of time which accords with the Employer’s policy with respect to permitted absences;

(2)effective December 12, 1994, in accordance with Code section 414(u), authorized leaves of absence during which the Employee is serving in the armed forces of the United States, provided the Employee (A) is entitled under applicable federal law to reemployment by the Employer upon his discharge from active duty and (B) he returns to employment with the Employer within the period required under the law pertaining to veterans’ reemployment rights.

(c)The Employee’s Period of Service shall include a Period of Severance if the Employee has a Reemployment Commencement Date within 12 months of the earlier of:

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(1)the date on which the Employee quits, retires, or is discharged, or

(2)the date on which the Employee was first absent from service, if the Employee severs from service during the absence by quitting, retiring, or being discharged.

(d)All days included in the Employee’s Period of Service shall be aggregated.

(5)“Period of Severance” shall mean certain periods of absence of an Employee.  A Period of Severance shall be calculated using the elapsed time method of counting service in accordance with the following rules:

(a)A Period of Severance begins on an Employee’s Severance from Service Date and ends on the Employee’s next Reemployment Commencement Date.

(b)Effective December 12, 1994, any Period of Severance of an Employee who is absent from employment due to qualified military service shall be determined taking into account Code section 414(u).

(6)“Reemployment Commencement Date” means the first date following a Severance from Service Date on which an Employee is credited with an Hour of Service.

(7)“Severance from Service Date” means the earlier of the date on which an Employee quits, retires, is discharged, or dies, or the first anniversary of the first date of a period in which an Employee remains absent from service for any reason.  A transfer of service among Members of a Controlled Group shall not result in a Severance from Service Date.”

6.Effective June 30, 2003, Section 4.1 is amended to replace the reference to “15%” with a reference to “50%.”

7.Effective January 1, 2001, Section 4.4(b)(iii) is amended to add a phrase at the end to read as follows:

“, including elective amounts that are not includible in the gross income of the Participant by reason of Code section 132(f)(4).”

8.Effective June 30, 2003, upon the merger of the ICF Kaiser International, Inc. Retirement Plan into the Plan, Section 4.10 is amended to read as follows:

“If a Participant terminates employment with the Employer and all Members of a Controlled Group and receives a distribution of his Vested Account, any non-Vested Account shall be forfeited immediately at the time of the distribution.  If a Participant is 0% Vested in his Employer contributions at the time of distribution, he shall be deemed to have received a distribution of his Vested Employer contributions.  If a Participant does not receive a distribution of his Vested Account upon termination of employment, the non-Vested Account shall be forfeited as of the date on which he incurs five consecutive One-Year Breaks in Service.

Forfeitures arising from Employer matching contributions shall be allocated to all Participant Accounts in proportion to the amount of their Salary Deferrals for the Plan Year in which the forfeiture occurs.  Forfeitures arising from Employer profit-sharing contributions, as well as any forfeitures arising under the ICF Kaiser International, Inc. Retirement Plan merged into this Plan as of June 30, 2003, shall be applied first, if the Company elects, to the payment of administrative expenses of the Plan and then to the reduction of Company contributions, and shall not be applied to increase benefits to any Participant.”

9.Effective June 30, 2003, a new Section 4.11 is added to read as follows:

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“4.11Employer Profit-Sharing Contributions

(a)Amount of Employer Profit-Sharing Contribution.  For each Plan Year, the Employer will contribute to the Trust for each Participant who has satisfied the criteria described in the following paragraph an amount that equals 4% of his Compensation for the Plan Year, plus 4% (but not a percentage greater than the OASDI Tax Rate) multiplied by the amount of such Participant’s Compensation that exceeds the taxable wage base for purposes of making Social Security contributions in effect at the beginning of the Plan Year.  For purposes of this Section, “taxable wage base for purposes of making Social Security contributions” does not refer to the wage base used for purposes of Medicare taxes.

A Participant shall receive a contribution pursuant to this Section 4.11 only if he (1) is employed by the Employer on the last day of the Plan Year and has completed 1,000 Hours of Service during the Plan Year, or (2) terminates employment during the Plan Year on or after his Early Retirement Date or Normal Retirement Date or on account of a Total and Permanent Disability, or  (3) dies during the Plan Year. A Participant who is on disability leave or on Authorized Leave of Absence for any approved reason on the last day of the Plan Year shall be treated as employed for purposes of determining the Participant’s eligibility for the Employer profit-sharing contribution.

(b)Form of Employer Contribution.  The Employer’s profit-sharing contribution may be made in cash, Company Stock, or other property reasonably acceptable to the Trustee.  The form in which the Company’s contribution is to be made shall be determined by the Board in its sole discretion, and there shall be no presumption in favor of a contribution in the form of cash.

(c)Accounting.  The profit-sharing contribution for each Participant shall be credited to his Account.  When a contribution is made in a form other than cash, until such contribution is reduced to cash, a Participant’s Account shall contain an allocable share of such contribution, provided that an allocation of Company Stock shall be in whole shares, with the value of any fractional shares to be allocated in cash.

(d)Timing of Contribution.  The Employer profit-sharing contribution shall be paid to the Trust not later than the due date for filing the Employer’s federal income tax return for that year, including extensions of such date.

(e)Definitions.  For purposes of this Section 4.11, the following definitions shall apply:

(i)“Compensation” shall mean Compensation as defined in Section 1.9, but shall include bonuses (including completion bonuses).

(ii)“OASDI Tax Rate” shall mean the rate of tax applicable at the beginning of the Plan Year under section 3111(a) of the Code which relates to the system of old-age, survivor and disability insurance established under Title II of the Social Security Act and the Federal Insurance Contributions Act.

(iii)“Total and Permanent Disability” means a disability that qualifies a Participant for disability benefits under Title II of Title XVI of the Federal Social Security Act.  A Participant shall be deemed to incur a Total and Permanent Disability on the date that he is entitled to such disability benefits, as determined by the Social Security Administration.”

10.Effective as of the later of July 30, 2003, or the 90^th day after individuals have been furnished a summary that reflects the elimination from the Plan of the optional form of benefit described in Section 8.3(d), Section 8.3(b) is amended to delete, “and (d),” in the first sentence.

11.Effective as of the later of July 30, 2003, or the 90^th day after individuals have been furnished a summary that reflects the elimination from the Plan of the optional form of benefit described in Sections 8.3(d), (e), and (f), Sections 8.3(d), (e), and (f) are deleted and subsequent subsections renumbered accordingly.

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12.Effective June 1, 2003, section 8.3(f)(7) is amended to replace “$3,500” with “$5,000” and to delete the clause, “and has not exceeded $3,500 at the time of any prior distribution,” from the first sentence.

13.Effective as of the later of July 30, 2003, or the 90^th day after individuals have been furnished a summary that reflects the elimination from the Plan of the optional form of benefit described in Sections 8.3(d), (e), and (f), Section 8.5(e) is deleted.

14.Effective June 30, 2003, Section 8.6 is amended to add, “Employer profit-sharing contributions, his Retirement Plan Account,” after “and the balance in his Account attributable to Employer matching contributions, Rollovers,” in the first sentence.

15.Effective June 1, 2003, Section 8.7 is amended to read as follows:

“Notwithstanding any other provision to the contrary, if the Vested Account of a Participant does not exceed $5,000, the Participant’s Vested Account shall be paid without the written consent of the Participant following his severance from employment.  If the Vested Account balance is zero, the Participant will be deemed to have received an immediate distribution of such Vested Account balance and the non-Vested Account balance will be forfeited.”

16.Effective January 1, 2003, a new Section 8.9 is added to read as follows:

“8.9Minimum Distribution Requirements

(a)General Rules

(i)Effective date.  The provisions of this Section 8.9 will apply for purposes of determining required minimum distributions for calendar years beginning with the 2003 calendar year.

(ii)Precedence.  The requirements of this Section 8.9 will take precedence over any inconsistent provisions of the Plan.

(iii)Requirements of Treasury regulations incorporated.  All distributions required under this Section 8.9 will be determined and made in accordance with the Treasury regulations under section 401(a)(9) of the Code.

(iv)TEFRA election 242(b)(2) elections.  Notwithstanding the other provisions of this Section 8.9, distributions may be made under a designation made before January 1, 1984, in accordance with section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA) and the provisions of the Pan that relate to section 242(b)(2) of TEFRA.

(b)Time and Manner of Distribution

(i)Required beginning date.  The Participant’s entire interest will be distributed, or begin to be distributed, to the Participant no later than the Participant’s Required Beginning Date.

(ii)Death of Participant before distributions begin.  Except as provided in Section 8.9(d), if the Participant dies before distributions begin, the Participant’s entire interest will be distributed, or begin to be distributed, no later than as follows:

(1)If the Participant’s surviving spouse is the Participant’s sole designated beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70½, if later.

(2)If the Participant’s surviving spouse is not the Participant’s sole designated beneficiary, then distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died.

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(3)If there is no designated beneficiary as of September 30 of the year following the year of the Participant’s death, the Participant’s entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(4)If the Participant’s surviving spouse is the Participant’s sole designated beneficiary and the surviving spouse dies after the Participant but before distributions to the surviving spouse begin, this Section (b)(ii), other than section (b)(ii)(1), will apply as if the surviving spouse were the Participant.

For purposes of this Section (b)(ii) and Section (d), unless Section (b)(ii)(4) applies, distributions are considered to begin on the Participant’s Required Beginning Date. If Section (b)(ii)(4) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under Section (b)(ii)(1).  If distributions under an annuity purchased from an insurance company irrevocably commence to the participant before the Participant’s Required Beginning Date (or to the Participant’s surviving spouse before the date distributions are required to begin to the surviving spouse under Section (b)(ii)(1)), the date distributions are considered to begin is the date distributions actually commence.

(iii)Forms of distribution.  Unless the Participant’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the Required Beginning Date, as of the first distribution calendar year distributions will be made in accordance with Sections (c) and (d) below.  If the Participant’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of section 401(a)(9) of the Code and the Treasury regulations.

(c)Required Minimum Distributions During Participant’s Lifetime

(i)Amount of required minimum distribution for each distribution calendar year.  During the Participant’s lifetime, the minimum amount that will be distributed for each distribution calendar year is the lesser of:

(1)the quotient obtained by dividing the Participant’s Account balance by the distribution period in the Uniform Lifetime Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the Participant’s age as of the Participant’s birthday in the distribution calendar year; or

(2)if the Participant’s sole designated beneficiary for the distribution calendar year is the Participant’s spouse, the quotient obtained by dividing the Participant’s Account balance by the number in the Joint and Last Survivor Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the Participant’s and spouse’s attained ages as of the Participant’s and spouse’s birthdays in the distribution calendar year.

(ii)Lifetime required minimum distributions continue through year of Participant’s death.  Required minimum distributions will be determined under this Section (c) beginning with the first distribution calendar year and up to and including the distribution calendar year that includes the Participant’s date of death.

(d)Required Minimum Distributions After Participant’s Death

(i)Death on or after date distributions begin

(1)Participant survived by designated Beneficiary.  If the Participant dies on or after the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after

7

the year of the Participant’s death is the quotient obtained by dividing the Participant’s Account balance by the longer of the remaining life expectancy of the Participant or the remaining life expectancy of the Participant’s designated beneficiary, determined as follows:

(A)The Participant’s remaining life expectancy is calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

(B)If the Participant’s surviving spouse is the Participant’s sole designated beneficiary, the remaining life expectancy of the surviving spouse is calculated for each distribution calendar year after the year of the Participant’s death using the surviving spouse’s age as of the spouse’s birthday in that year.  For distribution calendar years after the year of the surviving spouse’s death, the remaining life expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse’s birthday in the calendar year of the spouse’s death, reduced by one for each subsequent calendar year.

(C)If the Participant’s surviving spouse is not the Participant’s sole designated beneficiary, the designated beneficiary’s remaining life expectancy is calculated using the age of the beneficiary in the year following the year of the Participant’s death, reduced by one for each subsequent year.

(2)No designated beneficiary.  If the Participant dies on or after the date distributions begin and there is no designated beneficiary as of September 30 of the year after the year of the Participant’s death, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s Account balance by the Participant’s remaining life expectancy calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

(ii)Death before date distributions begin

(1)Participant survived by designated beneficiary.  If the Participant dies before the date distributions begin and there is a designated beneficiary, distribution to the designated beneficiary is not required to begin by the date specified in Section (b)(ii), but the Participant’s entire interest must be distributed to the designated beneficiary by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.  If the Participant’s surviving spouse is the Participant’s sole designated beneficiary and the surviving spouse dies after the Participant but before distributions to either the Participant or the surviving spouse begin, this election will apply as if the surviving spouse were the Participant.

(2)No designated beneficiary.  If the Participant dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the Participant’s death, distribution of the Participant’s entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(e)Definitions

(i)Designated beneficiary.  The individual who is designated as the beneficiary under Section 8.2(c) of the Plan and is the designated beneficiary under section 401(a)(9) of the Code and section 1.401(a)(9)-1, Q&A-4, of the Treasury regulations.

(ii)Distribution calendar year.  A calendar year for which a minimum distribution is required.  For distributions beginning before the Participant’s death, the first distribution calendar year is the calendar year immediately preceding the calendar year which

8

contains the Participant’s Required Beginning Date.  For distributions beginning after the Participant’s death, the first distribution calendar year is the calendar year in which distributions are required to begin under Section (b)(ii).  The required minimum distribution for the Participant’s first distribution calendar year will be made on or before the Participant’s Required Beginning Date.  The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the Participant’s Required Beginning Date occurs, will be made on or before December 31 of that distribution calendar year.

(iii)Life expectancy.  Life expectancy as computed by use of the Single Life Table in section 1.401(a)(9)-9 of the Treasury regulations.

(iv)Participant’s Account balance.  The Account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the Account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date.  The Account balance for the valuation calendar year includes any amounts rolled over or transferred to the Plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year.

(v)Required beginning date.  For Plan Years beginning after 1996, Required Beginning Date means April 1 of the calendar year following the later of the calendar year in which the Participant attains age 70½ or the calendar year in which the Participant retires; however, in the case of a Participant who is a 5 percent owner (within the meaning of section 416(i) of the Code), required beginning date means the April 1 of the calendar year following the calendar year in which the Participant attains age 70½.”

17.Effective June 30, 2003, a new Section 8.10 is added to read as follows:

“8.10Distribution of After-Tax Contributions

A Participant may receive a distribution of any after-tax contributions or voluntary contributions credited to his Account prior to his severance from employment, in accordance with procedures established by the Committee.”

18.Effective as of June 30, 2003, Section 10.3 is amended to add a new paragraph to read as follows:

“The ICF Kaiser International, Inc. Retirement Plan is merged into this Plan, effective June 30, 2003.  The merger shall satisfy the requirements of Code section 414(l). The assets of the ICF Kaiser International, Inc. Retirement Plan shall be transferred to the Trustee and merged with this Plan as soon as administratively feasible on or after such date.  Special provisions applicable to the merged assets are set forth in Exhibit B to the Plan.”

19.Effective June 1, 2003, Section 11.3(c) is amended to replace the reference to “$3,500.00” with a reference to “$5,000.00.”

20.Effective January 1, 2002, unless otherwise stated, a new Article XII is added to read as follows:

“ARTICLE XII – EGTRRA PROVISIONS

PREAMBLE

A.Adoption and Effective Date of Article XII.  This Article XII of the Plan is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”).  This Article is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder.  Except as otherwise provided, this Section shall be effective as of the first day of the first Plan Year beginning after December 31, 2001, and shall end December 31, 2010, unless otherwise extended by law or otherwise.

9

B.Supersession of Inconsistent Provisions.  This Article XII shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this Section.

12.1Limitations On Contributions

(a)Effective Date. This subsection shall be effective for limitation years beginning after December 31, 2001.

(b)Maximum Annual Addition. Notwithstanding Section 4.4, except to the extent permitted under section 414(v) of the Code, if applicable, the annual addition that may be contributed or allocated to a Participant’s Account under the Plan for any limitation year shall not exceed the lesser of:

(i)$40,000, as adjusted for increases in the cost-of-living under section 415(d) of the Code, or

(ii)100 percent of the Participant’s compensation (as defined in Section 4.4(b)(iii)) for the limitation year.

The compensation limit referred to in (ii) shall not apply to any contribution for medical benefits after separation from service (within the meaning of section 401(h) or section 419A(f)(2) of the Code) which is otherwise treated as an annual addition.

12.2Increase in Compensation Limit

Notwithstanding anything in the definition of Compensation in Article I to the contrary, for Plan Years beginning on or after January 1, 2002, the annual Compensation of each Participant taken into account in determining allocations for any Plan Year shall not exceed $200,000, as adjusted for increases in the cost-of-living in accordance with section 401(a)(17)(B) of the Code.  Annual Compensation means Compensation during the Plan Year or such other consecutive 12-month period over which Compensation is otherwise determined under the Plan (the determination period).  The cost-of-living adjustment in effect for a calendar year applies to annual Compensation for the determination period that begins with or within such calendar year.

12.3Modification Of Top-Heavy Rules

(a)Effective Date. This Section shall apply for purposes of determining whether the Plan is a top-heavy plan under section 416(g) of the Code for Plan Years beginning after December 31, 2001, and whether the Plan satisfies the minimum benefits requirements of Section 416(c) of the Code for such years.  This subsection amends Article V and Sections 1.23 and 1.37 of the Plan.

(b)Determination of Top-Heavy Status

(i)Key employee.  Key employee means any Employee or former Employee (including any deceased Employee) who at any time during the Plan Year that includes the determination date was an officer of the Employer having annual compensation greater than $130,000 (as adjusted under section 416(i)(1) of the Code for Plan Years beginning after December 31, 2002), a 5-percent owner of the Employer, or a 1-percent owner of the Employer having annual compensation of more than $150,000.  For this purpose, annual compensation means compensation within the meaning of section 415(c)(3) of the Code. The determination of who is a key employee will be made in accordance with section 416(i)(1) of the Code and the applicable regulations and other guidance of general applicability issued thereunder.

(c)Determination of Present Values and Amounts. This Section shall apply for purposes of determining the present values of accrued benefits and the amounts of account balances of Employees as of the determination date.

10

(i)Distributions during year ending on the determination date. The present values of accrued benefits and the amounts of account balances of an Employee as of the determination date shall be increased by the distributions made with respect to the Employee under the Plan and any plan aggregated with the Plan under section 416(g)(2) of the Code during the 1-year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Section 416(g)(2)(A)(i) of the Code.  In the case of a distribution made for a reason other than severance from employment, death, or disability, this provision shall be applied by substituting “5-year period” for “1-year period.”

(ii)Employees not performing services during year ending on the determination date. The accrued benefits and accounts of any individual who has not performed services for the Employer or an affiliate during the 1-year period ending on the determination date shall not be taken into account.

(d)Minimum Benefits

(i)Matching contributions.  Employer matching contributions shall be taken into account for purposes of satisfying the minimum contribution requirements of section 416(c)(2) of the Code and the Plan. The preceding sentence shall apply with respect to matching contributions under the plan or, if the plan provides that the minimum contribution requirement should be met in another plan, such other plan.  Employer matching contributions that are used to satisfy the minimum contribution requirements shall be treated as matching contributions for purposes of the actual contribution percentage test and other requirements of section 401(m) of the Code.

(ii)Contributions under other plans.  The Plan shall satisfy the minimum benefit requirement to the extent not met by any other plan qualified under Code section 401(a) maintained by the Employer.

12.4Direct Rollovers of Plan Distributions

(a)Effective Date.  Notwithstanding Section 8.3(c), this Section shall apply to distributions made after December 31, 2001.

(b)Modification of Definition of Eligible Retirement Plan.  For purposes of the direct rollover provisions in Section 8.3(c) of the Plan, an eligible retirement plan shall include an annuity contract described in section 403(b) of the Code and an eligible plan under section 457(b) of the Code that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan.  The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code.

(c)Modification of Definition of Eligible Rollover Distribution to Exclude Hardship Distributions.  For purposes of the direct rollover provisions in Section 8.3(c) of the Plan, any amount that is distributed on account of hardship shall not be an eligible rollover distribution and the distributee may not elect to have any portion of such a distribution paid directly to an eligible retirement plan.

(d)Modification of Definition of Eligible Rollover Distribution to Include After-tax Employee Contributions.  For purposes of the direct rollover provisions in Section 8.3(c) of the Plan, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions that are not includible in gross income.  However, such portion may be transferred only to an

11

individual retirement account or annuity described in section 408(a) or (b) of the Code, or to a qualified defined contribution plan described in section 401(a) or 403(a) of the Code that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

12.5Rollovers Disregarded In Involuntary Cash-Outs

Effective for distributions made after June 1, 2003, and without regard to the date the participant terminated employment, for purposes of Sections 8.3(f)(7) and 8.7, the value of a Participant’s Vested Account balance shall be determined without regard to that portion of the Account balance that is attributable to rollover contributions (and earnings allocable thereto) within the meaning of sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) of the Code.  If the value of the Participant’s Vested Account balance as so determined is $5,000 or less, the Plan shall immediately distribute the Participants entire Vested Account balance.

12.6Repeal of Multiple Use Test

The multiple use test described in Treasury Regulation section 1.401(m)-2 and Section 4.8 of the Plan shall not apply for Plan Years beginning after December 31, 2001.

12.7Elective Deferrals – Contribution Limitation

No Participant shall be permitted to have elective deferrals made under this Plan, or any other qualified plan maintained by the Company or a Member of a Controlled Group during any taxable year, in excess of the dollar limitation contained in section 402(g) of the Code in effect for such taxable year, except to the extent permitted under Section12.10 and section 414(v) of the Code, if applicable.

12.8Catch-Up Contributions

Effective January 1, 2002, all Participants who are eligible to make Salary Deferrals under this Plan and who have attained age 50 before the close of the Plan Year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, section 414(v) of the Code.  Such catch-up contributions shall not be taken into account for purposes of the provisions of the Plan implementing the required limitations of sections 402(g) and 415 of the Code. The Plan shall not be treated as failing to satisfy the provisions of the Plan implementing the requirements of section 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416 of the Code, as applicable, by reason of the making of such catch-up contributions.  Catch-up contributions are eligible for Employer matching contributions, to the extent permitted by various limitations described in the Plan.

12.9Suspension Period Following Hardship Withdrawal

Notwithstanding Section 8.6, a Participant who receives a withdrawal of Salary Deferrals after June 30, 2003, on account of hardship shall be prohibited from making elective deferrals and employee contributions under this Plan for 6 months after receipt of the withdrawal.

12.10Distribution Upon Severance From Employment

Effective June 30, 2003, notwithstanding Sections 8.3(a) or 8.8, effective for distributions made after December 31, 2001, regardless of when the severance from employment occurred, a Participant’s Vested Account balance shall be distributable on account of the Participant’s severance from employment.  However, such a distribution shall be subject to the other provisions of the Plan regarding distributions, other than provisions that require a separation from service before such amounts may be distributed.”

21.Effective June 30, 2003, a new Exhibit B is added to read as follows:

12

“Exhibit B – Provisions Applicable to
Merged Retirement Plan Accounts

B.1Transfer of Plan Assets

Effective June 30, 2003, the assets and liabilities of the ICF Kaiser International, Inc. Retirement Plan (“Retirement Plan”) are merged into this Plan and its Trust.  All Participant Retirement Plan accounts that are merged into this Plan shall be held in a Retirement Plan account in this Plan (“Retirement Plan Account”), which shall be a sub-account within the Participant’s Account, and shall be adjusted for earnings and losses as provided for in Articles VI and VII.  Retirement Plan Accounts may be comprised of subaccounts as necessary for the administration of the merged assets.  Any forfeitures merged into this Plan shall be held in a Retirement Plan Forfeiture Account to be applied in accordance with Section 4.10 toward the payment of Plan expenses and Company contributions.

B.2Eligibility

Effective June 30, 2003, any Employee or former Employee with an Account in the Retirement Plan that is merged into this Plan shall be a Participant in this Plan with respect to his Account so merged.  Such an Employee or former Employee shall be eligible to have contributions made on his behalf in this Plan only to the extent he otherwise meets any applicable eligibility requirements described in Article II.

B.3Vesting

A Retirement Plan Account of any Participant who has been an Employee eligible to participate in the Retirement Plan on or after June 1, 2000 shall be fully Vested.  The Retirement Plan Account of any other Participant shall vest in accordance with the vesting schedule described in Section 3.1(b).

B.4Special Distribution Provisions

The distribution provisions described in Article VIII shall apply to the distribution of Retirement Plan Accounts.  In addition, the following special distribution provisions shall apply:

(a) In-service Distributions.  A Participant may not receive an in-service distribution from his Retirement Plan Account except as a distribution on account of hardship, pursuant to Section 8.6.  This Section B.4(a) does not preclude a Participant from receiving a Plan loan in accordance with Section 8.5.

(b)  Expedited Distribution.  A Participant who becomes an officer or employee of the United States Government or any independent agency of the United States, in a position that could involve regulatory oversight or administrative discretion over Company activities (a “Qualifying Position”) may request an expedited payment of profit-sharing contributions and expedited distribution of his Retirement Plan Account upon termination of employment and assumption of a Qualifying Position.  Such a request should include information sufficient to enable the Company to determine that the Participant has assumed a Qualifying Position.  If the Company so determines, in the exercise of its reasonable discretion, Employer profit-sharing contributions shall be paid to the Trust as soon as practicable after the Participant has terminated employment, and the Participant’s Account shall be distributed as soon as administratively feasible after the Participant’s request for distribution has been received.

(c)  Payment of Minimum Required Distributions.  The election of any non-retired Participant (other than a 5% owner) who attained age 70½ prior to January 1, 1999, and who filed an election to either terminate or defer minimum required distributions until after his retirement under the Retirement Plan shall be given effect under this Plan.  If such a Participant did not file such an election, distributions shall be made to him pursuant to the provisions of Code section 401(a)(9) as in effect prior to January 1, 1997.

(d)  Optional Forms of Benefit Payments.  Until the later of July 30, 2003, or the 90^th day after individuals in the Retirement Plan have been furnished a summary that reflects the elimination of the forms of benefit described in Sections 8.4(b)(ii) and (iii) of the Retirement Plan, the Retirement Plan Account may be distributed in the following forms of distribution, in addition to the forms otherwise available under Article VIII:

13

(i)Payments over a period certain in monthly, quarterly, semiannual, or annual cash installments, which period shall not extend beyond the Participants’ life expectancy (or the life expectancy of the Participant and his designated Beneficiary); or

(ii)Purchase of an annuity.  However, such annuity may not be in any form that will provide for payments over a period extending beyond either the life of the Participant (or the lives of the Participant and his designated Beneficiary) or the life expectancy of the Participant (or the life expectancy of the Participant and his designated Beneficiary).”

Executed this 19^th day of June, 2003.

KAISER GROUP INTERNATIONAL, INC.
(formerly known as ICF Kaiser International, Inc.)
By:	/s/ John T. Grigsby, Jr.
		Title:  Chief Executive Officer

14

EX-21

Exhibit 21

KAISER GROUP HOLDINGS, INC.
12303 Airport Way, Suite 125
Broomfield, CO 80021
(720) 889-2770

Kaiser Group Holdings, Inc.’s consolidated subsidiaries are listed below.  Consolidated subsidiaries which are less than wholly owned are indicated by the ownership percentage figure in parentheses following the name of the consolidated subsidiary.

Consolidated Subsidiary						Jurisdiction of Formation
I.	Kaiser Group International, Inc.					Delaware
	II.	Kaiser Engineers Group, Inc.				Delaware
		III.	Henry J. Kaiser Company			Nevada
		III.	Kaiser Engineers, Inc.			Ohio
			IV.	KRGW Company (Canada), Inc.		Canada
			IV.	Kaiser Overseas Engineering, Inc.		Delaware
			IV.	Kaiser Engineers and Constructors, Inc.		Nevada
				V.	Kaiser Engenharia, S.A. (50%)	Portugal
			IV.	Kaiser Engineers International, Inc.		Nevada
				V.	Kaiser Engenharia, S.A. (50%)	Portugal
	II.	Kaiser Engineers Massachusetts, Inc.				Delaware
	II.	Kaiser Government Programs, Inc.				Delaware
		III.	Kaiser K-H Holdings, Inc.			Delaware
			IV.	Kaiser-Hill Company, LLC (50%)		Colorado
				V.	Kaiser-Hill Funding Company, L.L.C. (98%)	Delaware
			IV.	Kaiser-Hill Funding Company, L.L.C. (1%)		Delaware
	II.	Kaiser Hanford Company				Delaware
	II.	Kaiser Holdings Unlimited, Inc.				Delaware
		III.	Kaiser Engineers Eastern Europe, Inc.			Delaware
			IV.	Kaiser Netherlands B.V. (10%)		Netherlands
		III.	Kaiser Netherlands B.V. (90%)			Netherlands
	II.	Kaiser Technology Holdings, Inc.				Delaware
		III.	Kaiser Advanced Technology, Inc.			Idaho
			IV.	ICF Kaiser Advanced Technology of New Mexico, Inc.		New Mexico
	II.	Monument Select Insurance Company				Vermont
		III.	MSIC, Inc.			Delaware
	II.	Tudor Engineering Company				Delaware

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John T. Grigsby, Jr., Chief Executive Officer of the registrant, certify that:

1)I have reviewed this quarterly report on Form 10-Q of Kaiser Group Holdings, Inc.;

2)Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3)Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a)designed such disclosure controls and procedures, or caused such disclosure to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

c)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting.

5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a)all significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6)The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

August 14, 2003	/s/ John T. Grigsby, Jr.
		John T. Grigsby, Jr.,
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Marijo L. Ahlgrimm, Chief Financial Officer of the registrant, certify that:

1)I have reviewed this quarterly report on Form 10-Q of Kaiser Group Holdings, Inc.;

2)Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3)Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a)designed such disclosure controls and procedures, or caused such disclosure to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

c)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting.

5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a)all significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6)The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

August 14, 2003	/s/ Marijo L. Ahlgrimm
		Marijo L. Ahlgrimm,
		Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Kaiser Group Holdings, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, John T. Grigsby, Jr., Chief Executive Officer and Marijo L. Ahlgrimm, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 that:

(1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 14, 2003	/s/ John T. Grigsby, Jr.
		John T. Grigsby, Jr.,
		President and Chief Executive Officer
	/s/ Marijo L. Ahlgrimm
		Marijo L. Ahlgrimm,
		Executive Vice President and Chief Financial Officer