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, 2004

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 Exchange Act Rule 12b-2).  Yes  o  No  ý

Applicable only to issuer’s 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.

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

As of August 6, 2004, there were 1,598,270 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		Page
Item 1. Financial Statements:
	Consolidated Balance Sheets - June 30, 2004 and December 31, 2003	3
	Consolidated Statements of Operations and Comprehensive Income Three and Six Months Ended June 30, 2004 and 2003	4
	Consolidated Statements of Cash Flows - Six Months Ended June 30, 2004 and 2003	5
	Notes to Consolidated Financial Statements	6-12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		12-19
Item 3. Quantitative and Qualitative Disclosures About Market Risk		19
Item 4. Controls and Procedures		19
Part II - Other Information
Item 1. Legal Proceedings		20
Item 2. Changes in Securities and Use of Proceeds		20
Item 3. Defaults Upon Senior Securities		20
Item 4. Submission of Matters to a Vote of Security Holders		20
Item 5. Other Information		20
Item 6. Exhibits and Reports on Form 8-K		20-23
Signatures		23

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PART I – FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

KAISER GROUP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	June 30, 2004		December 31, 2003
ASSETS
Current Assets
Cash and cash equivalents	$	8,800	$	11,151
Restricted cash and cash equivalents	4,328		7,049
Prepaid expenses and other current assets	883		971
Net assets of discontinued operations	3,000		3,000
Total Current Assets	17,011		22,171
Other Assets
Investments in and advances to affiliates	47,500		45,788
Notes receivable	5,894		5,894
Other long-term assets	179		227
	53,573		51,909
Total Assets	$	70,584	$	74,080
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	100	$	304
Post retirement benefit plan obligation	6,768		6,913
Other accrued expenses	5,031		4,432
Interest payable on preferred stock	348		409
Deferred tax liability	4,579		6,495
Income taxes payable	2,018		275
Total Current Liabilities	18,844		18,828
Long Term Liabilities
Mandatorily redeemable preferred stock	29,899		35,175
Commitments and Contingencies
Common stock, par value $.01 per share:
Authorized—3,000,000 shares Issued and outstanding–1,598,270 and 1,594,270 shares at June 30, 2004 and December 31, 2003, respectively	16		16
Capital in excess of par	8,063		7,975
Retained earnings	13,724		12,049
Accumulated other comprehensive income	38		37
Total Shareholders’ Equity	21,841		20,077
Total Liabilities and Shareholders’ Equity	$	70,584	$	74,080

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,
	2004			2003			2004			2003
Gross Revenue.	$	—		$	—		$	—		$	—
Subcontract and direct material costs	—			—			—			—
Service Revenue	—			—			—			—
Operating Expenses
Administrative expenses	1,816			1,447			3,061			2,893
Reserve for Settlement of Remaining Class 4 Claims	—			—			1,400			—
Operating Loss	(1,816		)	(1,447		)	(4,461		)	(2,893		)
Other Income
Equity income in earnings of affiliate, net of amortization of $881 for each of the three months ended June 30, 2004 and 2003 and $1,762 for each of the six months ended June 30, 2004 and 2003	4,322			4,267			8,606			8,632
Interest income	160			207			335			450
Interest expense for preferred dividends	(517		)	—			(1,087		)	—
Other income	—			—			25			—
Income from Continuing Operations Before Income Tax	2,149			3,027			3,418			6,189
Income tax expenses	(995		)	(1,161		)	(1,743		)	(2,404		)
Income From Continuing Operations	1,154			1,866			1,675			3,785
Loss from discontinued operations, net of tax	—			—			—			—
Net Income	1,154			1,866			1,675			3,785
Preferred stock dividends	—			(702		)	—			(1,532		)
Income (Loss) Applicable to Common Shareholders	$	1,154		$	1,164		$	1,675		$	2,253
Basic and Diluted Loss Per Common Share:
Continuing operations, net of tax	$	0.72		$	0.73		$	1.05		$	1.41
Discontinued operations, net of tax	—			—			—			—
Net Income (Loss) Per Share	$	0.72		$	0.73		$	1.05		$	1.41
Weighted average shares for basic and diluted earnings per common share	1,597			1,595			1,596			1,594
Comprehensive Income
Net Income	$	1,154		$	1,866		$	1,675		$	3,785
Other Comprehensive Income (Loss):
Realization of gain on securities, net of tax	—			—			—			—
Change in cumulative foreign translation adjustments	(1		)	(1		)	1			68
Total Comprehensive Income	$	1,153		$	1,865		$	1,676		$	3,853

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,
	2004			2003
	(Unaudited)
Operating Activities:
Net income	$	1,675		$	3,785
Adjustments to reconcile net income to net cash used in operating activities:
Deferred taxes related to continuing operating activities	(1,916		)	2,171
Equity in earnings of affiliate	(8,606		)	(8,632		)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	136			1,174
Accounts payable and accrued expenses	430			(1,499		)
Income taxes payable	1,743			72
Other operating activities	103			24
Net Cash Used in Operating Activities	(6,435		)	(2,905		)
Investing Activities:
Distributions from affiliate	6,894			6,000
Net Cash Provided by Investing Activities	6,894			6,000
Financing Activities:
Transfer from restricted cash for the redemption of preferred stock	2,646			8,913
Payment of preferred stock dividends	—			(1,701		)
Redemption of preferred stock	(5,276		)	(14,146		)
Purchase of preferred treasury stock	—			(119		)
Net Cash Used in Financing Activities	(2,630		)	(7,053		)
Increase (decrease) in Cash and Cash Equivalents	(2,171		)	(3,958		)
Cash and Cash Equivalents at Beginning of Period	10,971			17,413
Cash and Cash Equivalents at End of Period	$	8,800		$	13,455

See notes to consolidated financial statements.

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KAISER GROUP HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.Basis of Presentation

The accompanying consolidated financial statements of Kaiser Group Holdings, Inc. and subsidiaries (the Company), except for the December 31, 2003 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, 2003.  Certain reclassifications have been made to the prior period financial statements to conform them to the presentation used in the June 30, 2004 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 (DOE) Rocky Flats 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 not at this time 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.

•a new subsidiary, Kaiser Analytical Management Services, Inc. (“KAMS”), which will attempt to take advantage of the successful history of Kaiser in the government services market.

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

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order to take into consideration the risks and uncertainties inherent in such projections.  The cash flow projections were based 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.  See Note 6 below for information concerning a recent Bankruptcy Court ruling with respect to these 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 were 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, $123.5 million of asserted claims have been withdrawn, negotiated or mediated to an agreed amount, resulting in cash payments approximating $2.6 million and issuances of 683 shares of New Preferred and 823 shares of New Common. As of August 6, 2004, the amount of unresolved claims was approximately $7.0 million. The Company expects to resolve the remaining claims by the fourth quarter of 2004.  The Company currently believes that the total amount of Class 4 claims ultimately to be allowed in the Old Kaiser bankruptcy proceeding will not exceed

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$142.0 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 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 established a reserve for the remaining unresolved claims in the amount of $1.4 million during the first quarter of 2004.  The Company intends to continue to use this settlement alternative during the resolution of remaining Class 4 claims.

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, classified as interest expense subsequent to July 1, 2003, on retained shares of New Preferred) must be used to redeem outstanding shares of New Preferred.  See Note 5 for a schedule of past redemptions of New Preferred and the amount of restricted cash used to facilitate the redemption.

3.Earnings Per Share

Basic earnings per share (EPS) is computed by dividing net income by the weighted average number of common shares outstanding for the period.  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 2004, the effect of preferred dividends of $0.5 million and $1.1 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, 2004.  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.  As discussed in Note 5, the Company adopted FAS 150 effective July 1, 2003.  Therefore, all of the 2004 preferred stock dividends have been shown as interest expense.

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 and six months ended June 30 (in thousands):

	2004	2003
Current assets	108,512	111,368
Non-current assets	128,213	99,538
Current liabilities	109,511	115,941
Non-current liabilities	55,647	28,644

	Three Months Ended				Six Months Ended
	June 30, 2004		June 30, 2003		June 30, 2004		June 30, 2003
Gross revenue	$	161,408	$	175,918	$	299,238	$	351,773
Net income	10,407		10,295		20,736		20,787

5.Mandatorily Redeemable 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 $29.9 million and $35.2 million, respectively, at June 30, 2004 and December 31, 2003, net of $5.6 million of treasury stock at both June 30, 2004 and December 31, 2003.  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. The New Preferred ranks ahead of Kaiser Holdings’ New Common.

The Company adopted FAS 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” effective July 1, 2003.  Due to the mandatorily redeemable feature of the New Preferred, described in greater detail below, the New Preferred has been reclassified from mezzanine equity to a long term liability on the consolidated balance

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sheet, and the preferred stock dividends have been reclassified to interest expense on the consolidated statement of operations effective July 1, 2003.  There was no transition adjustment recognized upon adoption of FAS 150.  There were 543,610 and 639,542 shares of New Preferred outstanding at June 30, 2004 and December 31, 2003, respectively, net of 101,471 treasury shares.  The New Preferred is shown at liquidation value of $55 per share.

Pursuant to approval by the Company’s Board of Directors, the Company purchased a total of 101,471 shares, net of redemptions, of outstanding New Preferred at prices ranging from $25.62 to $50.55 per share.  The treasury shares have been recorded at liquidation preference, $55 per share, as a reduction to preferred stock and the remaining difference between cost and the liquidation preference was 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, classified as interest expense subsequent to July 1, 2003, 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, 2004, totaling approximately $0.5 million, was paid on August 6, 2004.  At June 30, 2004, in addition to the $0.7 million of cash reserves for unresolved claims, the Company had $0.7 million in cash reserved for the payment of accrued dividends on any future issuances of New Preferred issued as a result of remaining bankruptcy claims resolutions (any New Preferred issued as a result of claims 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. The Company is required to offer to purchase the New Preferred at 100% of the liquidation preference per share plus all accrued and unpaid dividends in connection with a change of control of Kaiser Holdings.  In addition, any net proceeds in excess of $3.0 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, such cash 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 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.

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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, 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 has received distributions from Kaiser-Hill that triggered the put rights – effectively requiring 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 requirements in the Plan of Reorganization to use certain restricted cash balances, and in the terms of the New Preferred, to use certain available cash, for preferred redemptions.  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.

As of August 6, 2004, the Company has redeemed the following shares of New Preferred (in thousands except per share amounts):

Date of Redemption	Use of Unrestricted Cash		Use of Restricted Cash		Total Amount of Redemption		Number of Shares Redeemed
July 2004	$	2,990	$	—	$	2,990	54,361
February 2004	2,646		2,630		5,276		95,932
October 2003	4,650		1,594		6,244		113,530
January 2003	5,233		8,913		14,146		257,200

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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:

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 construction of a steel mini-mill in the Czech Republic for Nova Hut.  After construction of the 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, including fee and retention amounts with release of performance guarantee instruments.  Nova Hut, however, asserted that the first test was not successful. Kaiser Netherlands believes that such contention may have been put forth in response to severe financial constraints on Nova Hut’s operations resulting from weakening conditions in the worldwide steel market and the significant amounts that Kaiser Netherlands believed it was contractually due. To date, this dispute has not been resolved, and Kaiser Netherlands has resorted to legal proceedings to enforce its rights.  Until recently, the primary legal venue has been the Delaware bankruptcy proceeding for Old Kaiser, where the Company has asserted claims against Nova Hut and the International Finance Corporation (“IFC”).  The Delaware bankruptcy court had previously ruled that the Company, as opposed to Kaiser Netherlands, could proceed with prosecution of its specific claims against Nova Hut and IFC in the Delaware bankruptcy court venue.  Both Nova Hut and IFC appealed this ruling and, during the first quarter 2004, the Delaware bankruptcy court’s decision regarding the IFC was overturned by the District Court, ruling that the IFC enjoys sovereign immunity from prosecution.  Kaiser Holdings has filed a notice of appeal with the Third Circuit regarding this decision in favor of the IFC.  The disposition of Kaiser Holdings’ appeal to the Third Circuit Court is still pending.  With regards to the Nova Hut appeal, the District Court has ruled that U.S. Bankruptcy proceedings should be stayed pending completion of international arbitration proceedings.

In January 2004, Kaiser Netherlands filed arbitration claims against Nova Hut in the amount of $51.1 million with the International Chamber of Commerce (“ICC”).  The arbitration panel has been constituted, and the first hearing is scheduled to take place during the third quarter of 2004 with the earliest possible final award ruling being issued sometime in 2005.  Nova Hut has submitted a $49.7 million counterclaim against Kaiser Netherlands in these same ICC proceedings.

In December 2003, the ICC, under the dispute resolution provisions of the Nova Hut mini-mill subcontract between Kaiser Netherlands and the mini-mill’s main equipment supplier, Tippins, Inc., issued a final award that was on balance favorable to Kaiser Netherlands.  As a result of the ruling, Kaiser Netherlands was relieved of the obligation to pay additional retention to Tippins and Kaiser Netherlands was awarded a net cash settlement of $2.6 million.  The Company has not recorded this award due to the uncertainties regarding collectibility.  However, the Company intends to vigorously pursue collection of this award.

The continued litigation of these disputes has had and will continue to have a negative impact on the cash flow of Kaiser Netherlands and Kaiser Holdings.

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 and the lack of a settlement resulting from an earlier bankruptcy court-sponsored mediation in the fourth quarter of 2003, the Company further reduced the carrying value of the remaining Nova Hut project assets from $6.0 million to $3.0 million by recording an additional reserve of $3.0 million, net of a $1.1 million income tax benefit, through a charge to “Loss from Discontinued Operations”.  This reserve is in addition to a reserve recorded in 2001, which reduced the carrying value of the Nova Hut project assets from $21.6 million to $6.0 million by recording a reserve of approximately $9.8 million, net of a $5.8 million income tax benefit, through a charge to “Loss from Discontinued Operations”.  These adjustments to the project asset carrying value have been determined based on the Company’s estimate of Nova Hut’s current ability to pay such liability.

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

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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.  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.  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 store nuclear waste at other 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.

Common Stock

On January 20, 2004, the United States Bankruptcy Court for the District of Delaware ruled on a claim in favor of former shareholders of ICT Spectrum Constructors, Inc.  The Bankruptcy Court has refused to reconsider its decision and the Company has appealed. Should the Company be unsuccessful in its efforts to achieve reversal of the Bankruptcy Court’s ruling, the Company could be required to issue to former ICT Spectrum shareholders an additional 247,350 common shares, which would then comprise approximately 13.4% of the aggregate common shares outstanding. The Company believes that issuing such a substantial number of additional common shares could be expected to have a materially dilutive effect on the value of common shares presently outstanding.

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 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 (the Second Amended Plan of Reorganization (the Plan)) 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.

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Under the Plan, Kaiser Group International, Inc. sold some of its businesses and made payments of cash and stock to various classes of creditors described in Note 2 to the Consolidated Financial Statements.  We now 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 site.  Kaiser-Hill has performed for the Department of Energy at this site since 1995 and in January 2000 was awarded a new contract to manage the closure of the site.  The level of success experienced by Kaiser-Hill in achieving timely closure of the Rocky Flats site, and the cost of achieving such closure, have been and continue to be the primary determinants of our long-term financial performance following the completion of the reorganization process.  See “Kaiser-Hill” below for additional information on Kaiser-Hill.

•We have a substantial claim, pending resolution, against the owner of a steel mini-mill that we constructed for Nova Hut, s.a. 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 from 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 not at this time issuing new policies and is solely involved in resolving remaining claims made against previously issued policies.  However, we have begun the necessary regulatory and legal process to enable our wholly-owned captive insurance company to offer derivative captive insurance services to third party clients through a sponsored captive subsidiary.

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

•We formed a new subsidiary in April 2004, Kaiser Analytical Management Services, Inc. (“KAMS”), to attempt to take advantage of the successful history of Kaiser in the government services market.  At July 1, 2004, KAMS began operations.

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 site near Denver, Colorado (Closure Contract). 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, 2004 AND 2003

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 factors involving the actual cost of completing the site closure project and the actual date of physical completion, both as compared to contracted targets.  On March 24, 2004 Kaiser-Hill received a contract modification that motivates safe continuing positive performance by increasing the maximum fee ceiling that may be earned under the Closure Contract.  The same contract modification reduces the minimum fee floor and includes other provisions related to work scope changes.  The potential fee to be earned pursuant to the Closure Contract as recently modified ranges from $75.0 million to $560.0 million based on Kaiser-Hill’s cost to complete the site closure being within the range of completion cost of $3.1 billion and $4.9 billion, and completion at various dates between 2005 and 2007.  For project

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costs saved below the target level, Kaiser-Hill retains a varying percentage share, ranging from 20% to 30%, as additional incentive fee.  Similarly, for project costs incurred above a target level, Kaiser-Hill’s incentive fee is reduced by the 30% share.

Kaiser-Hill’s favorable performance on the Closure 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, 2004, Kaiser-Hill’s cost estimate to complete the project is $3.7 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.  In the event that Kaiser-Hill is able to complete physical performance of the Closure Contract within cost and time thresholds that would yield fees in excess of the $424 million currently estimated, there may be uncertainty with regard to the timeframe of the actual receipt of such fees by Kaiser-Hill.  Additionally, there may remain significant uncertainties involving the timeframe necessary to completely “close-out” the contract with the Department of Energy as contract cost and compliance audits will be required.    Kaiser-Hill will continue to periodically consider the appropriateness of financial statement reserves to address the uncertainties associated with such matters.

For the three- and six-month periods ended June 30, 2004 and 2003, 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.

Closure Contract Billing Provisions

Since the inception of the Closure Contract in February 2000 through June 30, 2004, Kaiser-Hill has invoiced DOE for the performance fee based on the contract provisions, and has collected approximately $135.0 million in fees from the DOE.

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 to either of its two owners.  Since inception of the Closure Contract through June 30, 2004, Kaiser-Hill has distributed $57.0 million to each of its two owners.  Adjusted for the effects of the 50% retainage holdback, Kaiser-Hill expects that its performance fee invoices to DOE will yield distributions of $3.5 million per quarter to each of its two owners in 2004.  Similar to 2002 and 2003, Kaiser-Hill is anticipating that DOE will approve a non-recurring fee payment during the fourth quarter of 2004 acknowledging Kaiser-Hill’s continued favorable progression on the project.  Historically, the fourth quarter fee payment has ranged from an additional $10.0 million to $16.0 million above the typically recurring quarterly fee payment.  However, there are no assurances as to the amount or timing of any additional fourth quarter fee payment.

In the future, as Kaiser-Hill continues to accrue performance fees 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 fees and the collected fees 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.

Administrative Expenses

Administrative expenses for the three and six months ended June 30, 2004 were $1.8 million and $3.1 million, respectively, a increase of $0.4 million and $0.2 million, respectively, compared to the three and six months ended June 30, 2003.  The increase in administrative expense is due primarily to $0.3 million paid in May 2004 in connection with the pending Nova Hut arbitration hearing.  Our cost to provide certain post-employment medical benefits to a capped group of retirees is also treated as an administrative expense.  In the three and six month periods ended June 30, 2004, the expense related to this plan was $0.2 million and $0.5 million, respectively, compared to $0.2 million and $0.3 million for the three and six month periods ended June 30, 2003, respectively.

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Reserve for Settlement of Class 4 Claims

In the first quarter of 2004, we recorded $1.4 million liability for the remaining unresolved Class 4 claims.

Interest Income

Interest income for the three and six months ended June 30, 2004 was $0.2 million and $0.3 million, respectively, which results in no change compared to the three months ended June 30, 2003 and a decrease of  $0.2 million compared with the six months ended June 30, 2002.  The decrease is primarily due to the reduction in average outstanding interest earning bank balances.

Interest Expense

As a result of the adoption of FAS 150 effective July 1, 2003 and the classification of the Series 1 Redeemable Cumulative Preferred Stock (New Preferred) as a liability, preferred stock dividends of $0.5 million and $1.1 million for the three and six months ended June 30, 2004, respectively, have been shown as interest expense.  As required by FAS 150, prior dividends have not been reclassified.

Income Tax Expense

We recorded an income tax expense of $1.0 million and $1.7 million, respectively, on operating income from continuing operations of $2.1 million and $3.4 million, respectively, during the three and six months ended June 30, 2004.  Our effective income tax rate of 46% and 51% for the three and six months ended June 30, 2004, respectively, is reflective of the non-deductibility of certain expenditures, primarily interest expense on the New Preferred, for federal income tax purposes.  For the three and six months ended June 30, 2003, we recorded an income tax expense of $1.2 million and $2.4 million, respectively,  on operating income from continuing operations of $3.0 million and $6.2 million, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

We used $6.4 million and $2.9 million of cash during the six months ended June 30, 2004 and 2003, respectively, primarily for the extinguishment of obligations arising out of our bankruptcy, including professional fees, retiree benefits and various other wind-down expenditures.  The increase in the use of operating cash for the six months ended June 30, 2004 compared to the six months ended June 30, 2003 is due to the effect of preferred dividends of $1.1 million being included in continuing operations in 2004 and an increase in professional fees related to the pending Nova Hut arbitration.

Investing Activities

We received $6.9 million in distributions from Kaiser-Hill during the six month period ended June 30, 2004 compared to $6.0 million in the six month period ended June 30, 2003.  The increase of Kaiser-Hill cash distributions is a result of the continued favorable progress in its performance.

Financing Activities

During the six months ended June 30, 2004 and 2003, we paid $1.1 million and $1.7 million, respectively, in dividends on our preferred stock.  Due to the adoption of FAS 150 effective July 1, 2003, $1.1 million of preferred stock dividends have been shown as interest expense for the six months ended June 30, 2004, and are no longer reflected as preferred stock dividends on the statement of cash flows.

During the six months ended June 30, 2004, we redeemed $5.3 million liquidation preference of our preferred stock.    Pursuant to the terms of the Plan of Reorganization, the Company used $2.6 million in excess restricted cash in addition to $2.7 million of unrestricted cash to fund this redemption.

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

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redemption.

Liquidity and Capital Resource Outlook

We currently have no debt as a result of the effectiveness of the Plan of Reorganization. However, as a result of the adoption of FAS 150 effective July 1, 2003, and due to the mandatorily redeemable provisions of the New Preferred, the New Preferred has been shown as a long term liability.  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 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 or interest 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, 2004.  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). However, this table does reflect that the Company redeemed a total of $3.0 million of New Preferred, or 54,361 shares, on July 31, 2004. 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	$	7,325	$	2,093	$	4,186	$	1,046

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.

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 remaining primary source of funding is from Kaiser-Hill distributions, which are subject to uncertainties that may adversely impact our ability to meet our obligations on our preferred stock and to permit our consideration and funding of strategic alternatives for the Company.

The fee income we anticipate receiving in the future from Kaiser-Hill is dependent upon the ability of Kaiser-Hill to close the Rocky Flats site at a predetermined targeted cost of between $3.1 billion and $4.9 billion and closing date ranging from December 31, 2005 to not later than March 31, 2007, both of which are subject to operational risks and uncertainties.

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Our long-term outlook is largely dependent 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 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.  Although unanticipated, if Kaiser-Hill fails to complete the closure within the target cost for the project, 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.

Kaiser-Hill has historically incurred expenses that are not reimbursable by the Department of Energy pursuant to 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 to its two owners. 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.  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.  Although the Department 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 store nuclear waste at other 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.

We do not have a business plan beyond Kaiser-Hill and we may undertake new activities with start-up risks.

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 we develop 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. In considering whether we should attempt to develop a new revenue base, our Board of Directors authorized the establishment of a new subsidiary to attempt to take advantage of our successful history of performance in the government services market and the commencement of the process to enable our wholly-owned captive insurance company to offer derivative captive insurance services.  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.

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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.

We may have to issue a substantial number of additional common shares.

On January 20, 2004, the United States Bankruptcy Court for the District of Delaware ruled on a claim in favor of former shareholders of ICT Spectrum Constructors, Inc.  The Bankruptcy Court has refused to reconsider its decision and we have appealed.  Should we be unsuccessful in our efforts to achieve reversal of the Bankruptcy Court’s ruling, we could be required to issue to former ICT Spectrum shareholders an additional 247,350 common shares, which would then comprise approximately 13.4% of the aggregate common shares outstanding.  We believe that issuing such a substantial number of additional common shares could be expected to have a materially dilutive effect on the value of common shares presently outstanding.

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 April 3, 2003, which was filed with the Securities and Exchange Commission by Tennenbaum & Co., LLC on April 3, 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 June 30, 2004, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and

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operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act).  Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2004.  There were no significant changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or that 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, 2003.

ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a)  None

(b)  None

(c)  None

(d)  Not applicable

(e)  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 5, 2004 Annual Meeting of Shareholders, the only matter up for a vote was the election of directors.

1.Election for Directors

The following individuals were elected to a one-year term expiring at the 2005 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	1,588,566	9,092	1,597,658
John T. Grigsby, Jr.	1,523,440	74,218	1,597,658
James J. Maiwurm	1,522,933	74,725	1,597,658
Frank E. Williams, Jr.	1,588,551	9,107	1,597,658

(*) “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.

ITEM 5.  OTHER INFORMATION

(a)  None

(b)  None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

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)

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)

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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)

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)

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9.  Amendment No. 9 dated June 19, 2003 (Incorporated by reference to Exhibit 10(c)(9) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the second quarter of fiscal 2003 filed with the Commission on August 14, 2003)

10.  Amendment No. 10 dated March 17, 2004 (Incorporated by reference to Exhibit 10(c)(10) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the first quarter of fiscal 2004 filed with the Commission on May 24, 2004)

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 (Incorporated by reference to Exhibit 10(e)(8) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the second quarter of fiscal 2003 filed with the Commission on August 14, 2003)

9.  Amendment No. 9 dated June 19, 2003 (Incorporated by reference to Exhibit 10(e)(9) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the second quarter of fiscal 2003 filed with the Commission on August 14, 2003)

10.  Amendment No. 10 dated March 17, 2004 (Incorporated by reference to Exhibit 10(e)(10) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the first quarter of fiscal 2004 filed with the Commission on May 24, 2004)

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)  Contract between Kaiser-Hill Company, LLC 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)

1.  Modification M116 to Contract #DE-AC34-00RF01904, effective March 24, 2004 (Incorporated by reference to Exhibit 10(g)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 30, 2004)

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10(h)  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)

10(i)  Subcontract between The S.M. Stoller Corporation and Kaiser Group Holdings, Inc. dated June 30, 2004

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

10(j)  Kaiser Group Holdings, Inc. 2002 Equity Compensation Plan, as amended (Incorporated by reference to Exhibit No. 10 to Registration Statement on Form S-8 (Registration No. 333-107912) filed with the Commission on August 13, 2003)

10(k)  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 14 — Corporate Code of Conduct

14(a)  Kaiser Group Holdings, Inc. Corporate Code of Conduct (Incorporated by reference to Exhibit 14.1 to Current Report on Form 8-K (Registrant No. 1-12248) filed with the Commission on January 13, 2004)

Exhibit No. 21 — Consolidated Subsidiaries of the Registrant as of August 2, 2004

Exhibit No. 31.1 — Certification of the Principal Executive Officer

Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934

Exhibit No. 31.2 — Certification of the Principal Financial Officer

Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934

Exhibit No. 32.1 — Certification of the Principal Executive Officer

Pursuant to 18 U.S.C. Section 1350

Exhibit No. 32.2 — Certification of the Principal Financial Officer

Pursuant to 18 U.S.C. Section 1350

(b)  Reports on Form 8-K

None

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 13, 2004
	/s/ Marian P. Hamlett
	Marian P. Hamlett
	Executive Vice President and Chief Financial
	Officer (Duly authorized officer and principal
	financial officer)

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EX-10.(I)

Exhibit 10(i)

MONTHLY MANAGEMENT FEE PLUS PROFIT SHARING SUBCONTRACT

No. SMS-KGHI 1030

ISSUED BY:  THE S.M. STOLLER CORPORATION

TO:    KAISER GROUP HOLDINGS, INC.

Subcontract No. SMS-KGHI 1030

TABLE OF CONTENTS

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3

SUBCONTRACT TERMS AND CONDITIONS

This Monthly Management Fee plus Profit Sharing Subcontract Agreement is entered into effect the thirtieth day of June 2004, by and between THE S.M. STOLLER CORPORATION (Stoller), a Delaware corporation with offices at 990 S. Public Road, Suite A, Lafayette, Colorado 80026, as Contractor, and KAISER GROUP HOLDINGS, INC. (KGH), a company with offices at 12303 Airport Way, Bloomfield, CO 80021, as Subcontractor.

A.Contractor has been awarded a contract by Kaiser-Hill Company, L.L.C., hereinafter referred to as Prime.

B.Contractor desires the Subcontractor to perform certain work or services within the scope of this Agreement described above under the terms and conditions set forth below.

C.Subcontractor is a firm experienced and expert in providing the desired services.

D.Subcontractor has expressed a willingness to perform such services.

In consideration of the mutual promises herein contained, Contractor and Subcontractor agree as follows:

ARTICLE 1.  ACCEPTANCE AND MODIFICATION OF TERMS

Acceptance of this Subcontract by Subcontractor may be made by signing below, and any such acceptance shall constitute an unqualified agreement to all terms and conditions set forth herein unless otherwise modified in writing by the parties. No addition, alteration or modification to, and no waiver of any of the provisions herein contained shall be valid unless made in writing and executed by Contractor and Subcontractor. Subcontractor shall perform in accordance with the Description/Quantity schedule set forth in this Subcontract and all attachments thereto.

ARTICLE 2.  SCOPE OF SERVICES

A.During the term of this Subcontract, Subcontractor shall furnish management, coordination and operational support and services as set forth in Attachment A.  Responsibility for performance of Subcontractor with respect to the Prime Contract resides with the Contractor.  

B.If the services are to be performed at Prime’s plant, Subcontractor’s employees shall abide by all rules established by Prime that shall be made available to Subcontractor.

C.In the event that oral instructions are necessary, they shall be given only by the Stoller General Manager.  Oral instructions shall be confirmed in writing as soon as practicable.

D.Contractor may from time to time request, by way of letter of instruction, that Subcontractor perform other services related to the work.  Subcontractor, upon receiving such requests from Contractor, may furnish those services if deemed reasonable and appropriate by Subcontractor, and an equitable adjustment shall be made according to Article 23, as mutually agreed by the parties.

E.Subcontractor shall start the work promptly and shall execute it diligently, orderly, and as rapidly as practicable, subject always to reasonable directions as to the rate of execution and targeted completion dates, as set forth in Attachment A.

F.Subcontractor shall perform all services in accordance with recognized standards of good practice at the time the services are rendered.

ARTICLE 3.  TERM

The base period of performance for this Subcontract is from July 1, 2004 through September 30, 2005, plus a separate option from October 1, 2005 through December 15, 2006.  The Contractor may extend the term of this Subcontract by giving written notice to Subcontractor within fifteen (15) days of the expiration of the base and each option period.  If Contractor exercises this option, the Subcontract as extended shall be deemed to include this option provision.  Contractor agrees to exercise the options if the Prime exercises the options in the prime contract.

ARTICLE 4.  PRICES

A.As compensation for the services to be performed by Subcontractor hereunder, Contractor will pay Subcontractor a firm fixed price monthly fee in the amount of $157,416.67 paid in accordance with Article 7, not to exceed $2,361,250 over the term of this Subcontract (excluding any options). Subcontractor is not authorized to exceed this monthly fee or aggregate total sum without written notice from Contractor’s authorized representative.

4

ARTICLE 5.  ADDITIONAL SERVICES

In the event that Contractor requires Subcontractor to provide additional services that are not covered by the work details and set forth on Attachment A, Subcontractor agrees to work with Contractor to develop a scope of work, prices and schedule for such additional services. The agreed-upon scope, prices and schedule shall be incorporated into this Subcontract pursuant to Article 23, Changes.

ARTICLE 6.  FEE (PROFIT) SHARING – Laboratory Revenues

A.The Parties agree that after deducting an amount for payment of incentive bonuses to the employees of Subcontractor (initially 10 slots) performing the services required by this Subcontract as provided herein (the “Employee Incentive Compensation”), any profit earned on the prime contract on the revenues generated from the services covered by Line Item Codes will be shared according to the terms in this ARTICLE 6. Profit shall consist of total sample process billings charged to the Prime for LICS less costs paid to the applicable Laboratories for the processing of such samples.

B.The profit share for each Party is shown in the table below:

Company	Share of first $350,000 in profit earned in each year	Share of any profit in excess of first $350,000 in each year
S.M. Stoller Corporation	30%	70%
Kaiser Holdings Group	70%	30%

C.The Parties agree that the profits will be calculated quarterly, based on Contractor’s fiscal year schedule, and a year-to-date total will be maintained to determine profit sharing, and within 15 days after the end of each quarter, Contractor shall pay Subcontractor its share of the profits for that quarter together with the amount of Employee Incentive Compensation payable for such quarter determined in accordance with paragraph D below.  Each such payment will be accompanied by a statement setting forth the calculation of the profit sharing for such quarter, which statement shall be certified as accurate by Contractor’s chief financial officer.

D.Employee Incentive Compensation shall not to exceed 4% of an employee’s gross annual salary and shall be determined based upon the extent to which quarterly profit objectives, mutually agreed upon by Contractor and Subcontractor, are achieved.  Within 10 days after the end of each quarter, representatives of Contractor and Subcontractor shall review the profits for that quarter and calculate the amount of Employee Incentive Compensation, if any, for that quarter.

ARTICLE 7.  BILLING

A.Subcontractor shall invoice Contractor monthly for all services completed through the end of each month.  Properly certified Subcontractor invoices shall be submitted to:

The S.M. Stoller Corporation

990 S. Public Road

Suite A

Lafayette, CO  80026

Attention:  Accounts Payable

All invoices are subject to verification prior to payment.  Invoices submitted by Subcontractor will make reference to this Subcontract by Subcontract Number.  Invoices must provide a detail of charges that include the period of performance and the services performed.  The Contractor will pay the amount of the invoice 5 days after the receipt of payment to the Contractor by the Prime for the services covered by Subcontractor’s invoice. To ensure prompt payment to both the Subcontractor and itself, the Contractor will pursue prompt payment from the Prime. 

B.Contractor reserves the right to retain final payment hereunder until Subcontractor has furnished the Contractor with complete information with respect to inventions, discoveries, or improvements conceived or reduced to practice in connection with the services performed hereunder or with a statement that no inventions, discoveries, or improvements emanated from such services. Payment of this retained payment shall not be unreasonably withheld.

C.Each invoice submitted shall be certified by a responsible representative of Subcontractor as follows:

5

“Subcontractor certifies that, to the best of its knowledge and belief that (1) the amounts requested are for performance in accordance with the specifications, statement of work, terms and conditions of the Subcontract, (2) payments to lower-tier subcontractors and craft, to include appropriate taxes, covered by this certification, have been made in accordance with the subcontract, (3) the amounts requested do not include any amounts that the Subcontractor intends to withhold or retain from a lower-tier subcontractor, and (4) the amounts requested do not include any amounts invoiced by any other means.”

D.Each invoice submitted shall accurately reflect the work or services accomplished by Subcontractor and identify any other authorized expenses incurred hereunder.

E.Contractor’s obligation to deliver to Subcontractor the final payment due under this Agreement is conditioned upon the execution and delivery by Subcontractor to Contractor of a release discharging Contractor from all liabilities, obligations, and claims arising out of or under this Agreement, subject only to the following exceptions:

(i)Specified claims in stated amounts, or in estimated amounts if the amounts are not susceptible of exact statement by Subcontractor.

(ii)Claims, together with reasonable incidental expenses, based upon the liabilities of Subcontractor to third parties arising out of the performance of this Agreement, that are not known to Subcontractor on the date of execution of the release, and of which Subcontractor gives notice in writing to Contractor not more than one year after the date of the release or the date of any notice to Subcontractor that Contractor is prepared to make final payment, whichever is earlier.

ARTICLE 8.  DELIVERY

Time is of the essence in the Subcontract.  The date specified for delivery or performance is the required delivery date at the Contractor’s or other specified location.  Contractor reserves the right to refuse any services and to cancel all or any part hereof if Subcontractor fails to deliver all or any part of any services in accordance with the term specified herein.  Delivery shall not be deemed to be complete until orders for services have been performed, received and inspected.

ARTICLE 9.  INSPECTION

All services performed shall be subject to inspection by Contractor and Prime at all reasonable times and places whether during or after performance, and notwithstanding the terms of delivery or payment.  In the event services are not in accordance with the specifications, Contractor may require prompt correction or re-performance thereof at Contractor’s option and Subcontractor’s sole expense.  If Subcontractor is unable to accomplish the foregoing, then Contractor may procure such services from another source and charge to Subcontractor’s account all costs, expenses and damages associated herewith.  Such charges shall not be subject to netting out of valid invoice payments to be made by the Contractor to the Subcontractor.

ARTICLE 10.  ACCEPTANCE

Acceptance of any part of this Subcontract shall not bind Contractor to accept future performance of services, and shall not be deemed to be a waiver of Contractor’s rights to cancel services because of failure to conform to the Subcontract, or other breach of warranty, or to make any claim for damages, including loss of profits, injury to reputation or other special, consequential and incidental damages.

ARTICLE 11.  WARRANTY

Subcontractor warrants that any service performed hereunder shall be performed in accordance with the specifications and with that degree of skill and judgment exercised by recognized professional firms performing services of a similar nature and consistent with best practices in the industry.  All representations and warranties of Subcontractor shall run to Contractor and Contractor’s customers. Remedies under this warranty shall include, without limitation, at Contractor’s option and at Subcontractor’s sole expense, re-performance or reimbursement of the applicable Line Item Code price. The foregoing shall survive any delivery, inspection, acceptance or payment by Contractor.

ARTICLE 12.  COMPLIANCE WITH LAWS

Subcontractor shall comply with the applicable provisions of any state, federal, or local law and ordinance and all orders, rules and regulations issued there under.

6

ARTICLE 13.  COMMUNICATIONS

All communications relating to this Subcontract with the Prime or Government agencies being supported by work hereunder shall pass through the Contractor unless the Subcontractor shall have been specifically authorized by the Contractor’s Project Manger to provide information directly to another party.

Notwithstanding any provisions of the attached scope of work to the contrary, all reports and deliverables required shall be submitted to the Contractor unless direct submission to the Government or Prime is specifically authorized in writing.

ARTICLE 14.  NOTICES AND ADMINISTRATION

Any notice or order provided for in this Agreement shall be considered as having been given, subject to the following procedures:

A.Mr. Curt Hull, General Manager, has overall responsibility for the direction of the work on behalf of Contractor. Technical documents to the Contractor are to be addressed to:

Mr. Curt Hull
General Manager
The S.M. Stoller Corporation
990 S. Public Road, Suite A
Lafayette, CO  80026
(303) 546-4314 phone
(303) 443-1408 fax
chull@stoller.com

B.Contractual documents to Contractor are to be addressed to:

Ms. Claire Neville
Contract Administrator
The S.M. Stoller Corporation
990 S. Public Road, Suite A
Lafayette, CO  80026
(303) 546-4414 phone
(303) 443-1408 fax
cneville@stoller.com

C.Virgene Ideker Mulligan has responsibility for the direction of the work on behalf of Subcontractor. Technical documents to Subcontractor are to be addressed to:

Virgene Ideker Mulligan
Kaiser Analytical Management Services, Inc.
12303 Airport Way
Broomfield, CO 80021
720-889-2773 phone
720-889-2775 fax

D.Contractual documents to Subcontractor are to be addressed to:

Douglas W. McMinn
Kaiser Group Holdings, Inc.
12303 Airport Way, Suite 125
Broomfield, CO 80021
703-934-3655 phone
703-934-3029 fax
dmcminn@kaisergroup.com email

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ARTICLE 15.  LOWER-TIER SUBCONTRACTS

Subcontractor shall obtain Contractor’s written consent before placing any Lower-Tier Subcontract for furnishing any of the work called for in this Agreement except for the purchase of raw material or commercial stock items and for purchases from the on-going subcontracts assigned to the Subcontractor at the beginning of the execution of the work under this Subcontract.  Lower-Tier Subcontracts shall be approved by the Prime prior to receipt of Contractor’s written consent.

ARTICLE 16.  INSURANCE

In accordance with subparts (a) and (b) below, Subcontractor agrees to provide Certificates of Insurance evidencing that the required insurance coverages are in force and providing not less than 30 days notice prior to any cancellation or restrictive modification of the policies.  Further, the required insurance coverages below shall be primary and non-contributing with respect to any other insurance that my be maintained by Contractor.  The below required coverages and their limits in no way lessen nor affect Subcontractor’s other obligations or liabilities set forth in this Subcontract.

A.To the extent that Subcontractor is performing services under this Subcontract, Contractor agrees to purchase and maintain at its own expense the following insurance coverages with minimum limits as stated:

(i)Statutory Worker’s Compensation and Employer’s Liability in an amount no less than $1 Million per occurrence covering its employees, including a waiver of subrogation obtained from the carrier in favor of Contractor.

(ii)Commercial General Liability in an amount no less than $1 Million per occurrence and $2 Million in the aggregate covering bodily injury, broad form property damage, personal injury, products and completed operations, contractual liability, and independent contractor’s liability. Subcontractor, its officers and employees shall be included, as Additional Insureds and a waiver of subrogation shall be obtained from the carrier in favor of the Contractor.

(iii)Automobile liability in an amount no less than $1 Million Combined Single Limit for Bodily Injury covering use of all owned, non-owned, and hired vehicles.  Contractor, its officers and employees shall be included as Additional Insureds on the policy;

(iv)Professional liability in an amount no less than $1 Million per occurrence covering damages caused by any acts, errors, and omissions arising out of the professional services performed by Subcontractor, or any person for whom the Subcontractor is legally liable.  To the extent that coverage for Subcontractor’s services are not excluded in (ii) above by virtue of being deemed not of a professional nature, this requirement does not apply.

(v)All-Risk Property Insurance in an amount adequate to replace property, including supplies covered by this Subcontract, of Contractor and/or Client which may be in the possession or control of Subcontractor. Contractor shall be named as a Loss Payee with respect to loss or damage to said property and/or supplies furnished by Contractor.

ARTICLE 17.  ADVERTISING

Subcontractor and its lower-tier subcontractors shall not publish photographs or articles, give press releases or make statements of any sort about, or otherwise publicize the existence of or scope of this Agreement, or any generalities or details about the work relating to this Agreement, without first obtaining Contractor’s written consent.  Contractor’s consent shall be given only upon written approval by Prime.

ARTICLE 18.  TAXES

The prices in this Agreement include all applicable federal, state, and local taxes.  Except for any taxes, which are subject to reimbursement pursuant to Article 4, Subcontractor shall indemnify Contractor against all liability for all taxes that are imposed on, or with respect to, or are measured by amounts associated with the work furnished hereunder, and the wages, salaries, and other remuneration’s paid persons employed in connection with the performance of this Agreement.

ARTICLE 19.  RECORDS AND AUDITING

A.Subcontractor shall maintain such books, records, and accounts as are necessary for proper financial management of the work.  These shall be set up and maintained in accordance with generally accepted accounting principles and practices consistently applied.  These systems, and the procedures associated therewith, shall be subject to examination by the DOE or Prime during normal business hours and upon reasonable notice.

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B.Subcontractor shall organize its books, records, and accounts to provide for information segregation and retrieval as Prime or its representative may reasonably request.

C.The DOE or Prime shall have access, at all reasonable times during the term of this Agreement and for three years following completion or termination, to Subcontractor’s books, records, and accounts pertaining to the work performed under this Agreement for inspection and audit.

ARTICLE 20.  NONSOLICITATION

Neither party will knowingly solicit, recruit, hire or otherwise employ or retain the employees of the other party during the term of this Subcontract and for one (1) year thereafter, but either party may solicit generally in the media or hire an employee of the other party who answers any advertisement or who otherwise voluntarily applies for hire without having been personally solicited or recruited by the hiring party.

ARTICLE 21.  DEFAULT AND REMEDY

In the event of:  (a) any breach by Subcontractor of any provisions of this Agreement which Subcontractor fails to remedy within ten (10) days after receipt of notice thereof from Contractor or, if the breach cannot reasonably be remedied within ten (10) days, Subcontractor fails immediately to commence and promptly to complete the remedying thereof or (b) any initiation by or against Subcontractor of any bankruptcy, insolvency, receivership, or similar proceedings, Contractor shall send a written request to KGH requesting a meeting with senior management of KGH to discuss the breach and negotiate a mutually plan of action to remedy the breach.  If Contractor and KGH are unable to agree upon such a plan within thirty (30) days after Contractor requests such meeting, Contractor has the right, in addition to other rights or remedies it may have hereunder or by law, to terminate Subcontractor’s right to proceed with the performance of this Agreement, by giving notice to Subcontractor and, by itself or its nominee, to take over and complete such performance.  In such a case, Contractor will pay Subcontractor, in full satisfaction of its obligations to Subcontractor, for (a) all work furnished prior to termination and (b) all other costs reasonably incurred by Subcontractor and approved by Contractor as a result of termination (including reasonable costs of personnel and office demobilization), less the aggregate amount of all payments previously made by Contractor to Subcontractor hereunder.

ARTICLE 22.  EXCUSED NON-PERFORMANCE

Either Contractor or Subcontractor shall be excused from performance of its obligations hereunder in the event of and to the extent that such performance is delayed or prevented by (a) any circumstances reasonably beyond its reasonable control or (b) fire, explosion, accidental breakdown of machinery or equipment, strikes or other labor disputes, riots or other civil disturbances, or compliance with any law, ordinance, regulation, or order of any governmental authority.  Either Contractor or Subcontractor shall give the other party notice, as soon as reasonably practicable, of the occurrence or anticipated occurrence of any existing circumstance affecting it, and shall exercise all reasonable efforts to mitigate or eliminate such circumstance.

ARTICLE 23.  CHANGES

A.The Subcontractor shall make no changes in the work or timing of its performance except as ordered in a written letter of instruction by Contractor.  Additional work performed by Subcontractor without authorization for Contractor will not entitle Subcontractor to reimbursement or payment for such work.  Written changes to the Contract may be ordered, at any time, to the Contract, including but not limited to (a) revising or adding to the work or deleting portions thereof, or (b) revising the period of performance or schedules.

B.If any change under this paragraph causes an increase or decrease in the cost of, or the time required for performance of, the work, or otherwise affects any other provision to this Agreement, an equitable adjustment shall be made by Contractor in (a) the Agreement price, (b) the period of performance and work schedules, and/or (c) such other provisions of this Agreement as may be so affected, and this Agreement shall be modified in writing accordingly. 

C.Any claim by Subcontractor for adjustment under these paragraphs shall be asserted in writing to Contractor within fifteen (15) working days from the date of receipt by Subcontractor of the change order.  Contractor shall respond in writing within ten (10) days to acknowledge receipt of such a claim.

ARTICLE 24.  TERMINATION, SUSPENSION, OR EXTENSION FOR CONTRACTOR’S CONVENIENCE

A.Contractor may terminate, suspend, or extend all or any part of the work upon delivery of written letter of instruction to Subcontractor.  Subcontractor, upon receiving such notice, shall terminate, suspend, or extend performance of the work as directed therein.  In the event of suspension or extension, Subcontractor shall resume performance of the work when so notified by Contractor.  Notwithstanding anything in this Subcontract to the contrary, Contractor shall

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not be entitled to terminate this Subcontractor in whole or in part for convenience (or reduce the work to be performed by Subcontractor hereunder by a change order or otherwise) unless the Prime has terminated the prime contractor, in whole or part, or has reduced or eliminated from the prime contract the work to be performed by the Subcontractor under this Subcontract.

B.In case of such suspension or extension, Contractor will reimburse and compensate Subcontractor in accordance with Article 4 for any work furnished during the suspension or extension and when reactivating the services at the end of the suspension or extension provided, however, that such work shall be limited to that reasonably and necessarily required by Subcontractor and requested or approved by Contractor.

C.In case of termination, Contractor shall reimburse Subcontractor for all work performed prior to termination and any costs reasonably incurred by Subcontractor and approved by Contractor, as set forth in ARTICLE 23.

D.In the event that a total suspension of work by Contractor exceeds ninety (90) consecutive days, Subcontractor may terminate this Agreement by giving Contractor thirty (30) days’ written notice.  In the event of termination, whether initiated by Contractor or Subcontractor, Subcontractor shall:

(i)Stop performance of all work except that reasonably necessary to carry out termination.

(ii)Make no further monetary commitments except with consent of Contractor.

(iii)Assign to Contractor, upon Contractor’s request, all rights of Subcontractor to any or all outstanding lower-tier subcontracts.

(iv)At Contractor’s request, terminate any or all outstanding lower-tier subcontracts.

(v)Take any other action toward termination that Contractor may reasonably request.

E.For subcontracts assigned to Contractor pursuant to this article, Contractor will assume all outstanding contractual obligations of Subcontractor to third parties from the date of termination and will assume responsibility for and take possession of all work, material, and equipment pertaining thereto.

ARTICLE 25.  DISPUTES

All disputes arising under or relating to this subcontract shall be submitted to Contractor’s Project Manager.  If, within thirty (30) days after such submission, the parties have not reached a mutually acceptable resolution of the dispute, either party must pursue the matter in the Boulder County District Court in Boulder.  If a decision on a question is issued by the Prime under the Contractor Subcontract, and the decision relates to Agreement between Contractor and Subcontractor, said decision shall be binding according to its terms upon Contractor under Contractor Subcontract and shall also be binding upon Contractor and Subcontractor with respect to this Agreement.  However, if Subcontractor is affected by such a decision, and if Contractor elects not to appeal such decision, Contractor shall so notify Subcontractor within ten (10) days of receipt of the decision.  If Subcontractor submits within ten (10) days a written request to Contractor to appeal such decision, Contractor shall file an appeal with the Prime.  All costs and expenses incurred by Subcontractor and Contractor as part of such an appeal at Subcontractor’s request shall be paid by Subcontractor and shall not be reimbursable or otherwise compensable as a cost under this subcontract unless the Board of Contract Appeals or the court rules that such costs are or should be recoverable.  Pending the resolution of any dispute, Subcontractor shall proceed as directed by Contractor in writing in accordance with the subcontract, and subject to a claim for an equitable adjustment in (a) the Agreement price, (b) the period of performance and work schedules, and/or (c) such other provision of this Agreement as may be so affected, if appropriate.

ARTICLE 26.  WAIVER

No right or obligation of, or default by, either Contractor or Subcontractor shall be deemed waived by any other waiver of the same or any other right, obligation, default, or by any previous or subsequent forbearance or course of dealing.

ARTICLE 27.  ASSIGNMENT

Except as otherwise provided herein, neither this Agreement nor any claim against either party arising directly or indirectly out of or in connection with this Agreement shall be assignable or transferable by either party or by operation of law, without the prior written consent of the other.  Notwithstanding the foregoing, KGH shall have the right to assign this Subcontract to its affiliate, Kaiser Analytical Management Services, Inc.

 ARTICLE 28.  PATENTS AND INVENTIONS

A.It is mutually agreed that neither Contractor nor Subcontractor shall acquire directly or by implication any rights in the patents and inventions of the other party hereto.

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B.Any inventions or discoveries made or conceived by one or more employees of Contractor or Subcontractor during the term of this Subcontract shall be the sole property of that party.

C.It is mutually agreed that any invention made jointly by one or more employees of Contractor and Subcontractor in the course of work under this Subcontract shall be jointly owned by the Contractor and Subcontractor, with Contractor and Subcontractor owning an undivided one-half interest in all such joint inventions.  The costs of preparation, filing, and prosecution of patent applications for such jointly owned inventions shall be borne by the party electing to prepare and to prosecute such application.  So far as practicable, Contractor and Subcontractor will equally divide the joint applications each is to file and prosecute hereunder.  The other party shall, and hereby agrees to, furnish the filing party with all documents, papers, assignments, or other assistance that may be necessary or desirable in the filing and prosecution of each such application.

D.With respect to each joint invention, the party which elects to file a patent application in the United States shall have the first right of election to file corresponding patent applications in foreign countries.  Within a six-month period commencing from the date a corresponding U.S. application is filed, such party shall notify the other party of those foreign countries, if any, in which it elects to file corresponding patent applications.  After said six-month period, the other party shall have the right to file patent applications in all foreign countries not elected and designated for filing by said party.

E.In the case of an application for patent for joint invention which is filed in a country which requires the payment of annual taxes or annuities on a pending application or an issued patent, the party which files the application shall, prior to filing, request the other party to indicate whether or not it will agree to pay one-half of such annual taxes or annuities.  If such other party refuses to pay its share, that other party shall, and hereby agrees to, assign its share of the title to the application or to the patent, as the case may be, to the filing party, subject to the retention of a royalty-free, nonexclusive and nonassignable license to make, have made, use, lease and sell, such invention under such patent.

F.The party that prepares and prosecutes applications under this Subcontract shall be the sole judge as to the extent of prosecution it desires to carry on and as to the scope of the claims it elects to prosecute therein.  Where one party is prosecuting an application in which the other party has rights thereunder, in the event said one party elects to discontinue or abandon prosecution or not to perfect an appeal or other matter in any ex parte or inter partes proceeding, said one party shall, upon request, appoint and grant the other party full power of attorney with the right to intervene in and control said prosecution, appeal, or other matter.

ARTICLE 29.  COPYRIGHTS AND DATA

A.It is mutually agreed that neither Contractor nor Subcontractor shall acquire directly or by implication any rights in the data and copyrights of the other, including, but not limited to, copyrights in works of authorship, including software, firmware or other forms of computer programs.

B.Any rights in data or copyrights in works of authorship, including software, firmware or other forms of computer programs, created by one or more employees of Contractor or Subcontractor during the term of this Subcontract shall be the sole property of that party.  Copies of data and works of authorship released by the party owning such to the other party hereto (the “receiving party”):

(i)shall be treated by the receiving party as Proprietary, whenever such copies bear a stamp or legend indicating the copies are of a proprietary nature; and

(ii)shall be treated by the receiving party in accordance with the applicable U.S. Copyright Laws and any license or other agreement setting forth restrictions on use.

C.It is mutually agreed that any rights in data and copyrights in works of authorship created jointly by one or more employees of Contractor and Subcontractor in the course of work under this Subcontract shall be jointly owned by the parties with each party owning an undivided one-half interest in all such joint rights in data and copyrights.  The costs of preparing, filing, and maintaining registrations for such jointly owned copyrights shall be borne by the party electing to apply for registration.  So far as practicable, the parties will equally divide the joint applications for registration each is to file and maintain hereunder.  The other party shall, and hereby agrees to, furnish the filing party with all documents, papers, assignments, or other assistance that may be necessary or desirable in the filing and maintenance of each such application and registration resulting therefrom.

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ARTICLE 30.  INDEMNIFICATION

A.Subcontractor shall indemnify, defend and hold Stoller and Stoller’s customers harmless from and against any and all damages, losses, liabilities and expenses (including reasonable attorney’s fees) arising out of or relating to any claims, causes of action, lawsuits or other proceedings, regardless of legal theory, that result, in whole or in part, from Subcontractor’s (or any of Subcontractor’s subcontractors, suppliers, employees, agents or representatives): (i) intentional misconduct, negligence, or fraud, (ii) breach of any representation, warranty or covenant made herein, or (iii) products or services including, without limitation, any claims that such products or services infringe any United States patent, copyright, trademark, trade secret, or any other proprietary right of any third party.

B.Contractor shall promptly notify Subcontractor o any claim against Contractor that is covered by this indemnification provision and shall authorize representatives of Subcontractor to settle or defend any such claim or suit and to represent Contractor in, or take charge of, any litigation in connection therewith.

ARTICLE 31.  INFRINGEMENT INDEMNITIES

Subcontractor shall indemnify, defend and hold Contractor and Contractor’s customers (hereinafter collectively referred to as “Contractor) harmless from and against any claim, suit or proceeding (“claim”) brought against Contractor asserting that the goods or services, or any part thereof, furnished under this Subcontract, or Contractor’s use (including resale) thereof, constitutes an infringement of any patent, trademark, trade secret, copyright or other intellectual property right, and Subcontractor shall pay all damages costs awarded against and reasonable expenses incurred by Contractor in connections with such claim including reasonable attorney’s fees.  In the event such goods or services or use thereof are enjoined in whole or in part, Subcontractor shall at its expense and option undertake one of the following: (i) obtain for Contractor the right to continue the use of such goods or services; (ii) in a manner acceptable to Contractor, substitute equivalent goods or services or make modifications thereto so as to avoid such infringement and extend this indemnity thereto; or (iii) refund to Contractor an amount equal to the purchase price for such goods or services plus any excess costs or expenses incurred in obtaining substitute goods or services from another source.

ARTICLE 32.  NON-WAIVER OF RIGHTS

The failure of Contractor to insist upon strict performance of any of the terms and conditions in this Subcontract or to exercise any rights or remedies, shall not be construed as a waiver of its rights to assert any of same or to rely on any such terms and conditions at any time thereafter.  Any rights and remedies specified under this Subcontract shall be cumulative, non-exclusive and in addition to any other rights and remedies available at law or equity.  The invalidity in whole or in part of any term of condition of this Subcontract shall not affect the validity of other parts thereof.

ARTICLE 33.  INDEPENDENT CONTRACTOR

It is understood and agreed that Subcontractor is not an employee for any purpose whatsoever.  Subcontractor agrees that in all matters relating to this Subcontract it shall be acting as an independent contractor and shall assume and pay all liabilities and perform all obligations imposed with respect to the performance of this Subcontract. Subcontractor shall have no right, power or authority to create any obligation, expressed or implied, on behalf of Contractor and or Prime and shall have no authority to represent Contractor as an agent.

ARTICLE 34.  GOVERNING LAW

This Agreement shall be construed and otherwise governed pursuant to the laws of the State of Colorado.

ARTICLE 35.  COMPLETE AGREEMENT

This Agreement, including all documents incorporated herein by reference, shall constitute the entire agreement and understanding between the parties hereto and shall supersede and replace any and all prior or contemporaneous representations, agreements or understandings of any kind, whether written or oral, relating to the subject matter hereof.

ARTICLE 36.  ORDER OF PRECEDENCE

In the event of an inconsistency or conflict between provisions of this Subcontract, the inconsistency or conflict shall be resolved by giving precedence in the following order:

1. Subcontract Terms and Conditions and Exhibits thereto

2. Specifications and/or drawings

3. Other provisions when attached

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ARTICLE 37.  SUBCONTRACTOR PREQUALIFICATION

Subcontractor shall submit a completed Representation and Certifications, and Health and Safety Worksheet, attached.

ARTICLE 38.  ATTACHMENTS and EXHIBITS

The attachments and appendices listed below are hereby attached to and made a part of this subcontract.

Attachment A – Scope of Work

Attachment B – Left Blank Intentionally

Exhibit C – Representation and Certifications

Exhibit D – Health and Safety Worksheet

Exhibit E – General Provisions

Exhibit F – Special Provisions

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

KAISER GROUP HOLDINGS, INC.		THE S.M. STOLLER CORPORATION
By:	/s/ Douglas W. McMinn		By:	/s/ Curtis G. Hull
Name:	Douglas W. McMinn		Name:	Curtis G. Hull
Title:	Senior Vice President		Title:	Senior Vice President

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Attachment A

STATEMENT OF WORK

FOR

STOLLER ANALYTICAL SERVICES

OPERATIONS AND INTEGRATION

July 1, 2004

TABLE OF CONTENTS

Section
TABLE OF CONTENTS
INTRODUCTION
GENERAL BACKGROUND
SCOPE
1.0	ORGANIZATION AND KEY PERSONNEL REQUIREMENTS
1.1	Organization
1.2	Key Personnel
1.2.1	Chief Operating Officer
1.2.2	Deputy Chief Operating Officer
1.2.3	Data Management Administrator
1.2.4	Technical Lead Administrator
1.3	Other Organizational Areas
1.3.1	Contractor Technical Representatives
1.3.2	Records Management
1.3.3	Data Management
EXHIBIT B: GENERAL REQUIREMENTS
1.0	KEY PERSONNEL
2.0	MEETINGS
3.0	AUDITS
4.0	SOW MAINTENANCE
5.0	WORK SCHEDULE
5.1	OFF-HOUR AVAILABILITY
6.0	EMERGENCY OPERATIONS SUPPORT
7.0	ACTIVITIES NOT COVERED BY UNIT PRICING
7.1	SOW MANAGEMENT
7.1.1	SOW Development
7.1.2	SOW Changes
7.2	Rocky Flats Contract Closure Activities
7.3	Long Term Stewardship Support and Transition
EXHIBIT C: Evidentiary Requirements
1.0	QUALITY ASSURANCE PROGRAM
2.0	DATA MANAGEMENT
3.0	HEALTH AND SAFETY REQUIREMENTS

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INTRODUCTION

This Statement of Work (SOW) describes the technical services required to provide operation and management support to SM Stoller Corporation for centralized management of full service analytical support capabilities.

GENERAL BACKGROUND

Kaiser-Hill (KH) is the Integrating Management Contractor for the Department of Energy (DOE)’s Rocky Flats Environmental Technology Site (RFETS or Site) near Denver, Colorado.  The Site is a former nuclear weapons processing facility currently undergoing deactivation and decommissioning (D&D).  Kaiser Group Holdings(KGH) has a 50% stake in KH.

K-H Analytical Services Division (ASD) has provided comprehensive analytical support to the RFETS that includes sample planning and consultation; sample tracking; sample collection and sample shipment; laboratory procurement; data receipt, examination, verification, and validation; data problem resolution; hard copy and electronic data management; laboratory performance assessment; and data archival/maintenance.  ASD has also been responsible for processing and approving laboratory invoices, direct vendor payment and conducting laboratory audits. 

These activities are currently performed by a combination of Kaiser-Hill and subcontractor personnel.  In keeping with the DOE and K-H’s privatization and outsourcing goals, K-H wishes to divest the remaining in-house ASD functions to a Sample Management (SM) Subcontractor.  This Statement of Work defines the functions for KGH in support of the Stoller Centralized Analytical Services Organization..

SCOPE

Personnel will be provided by KGHI to support the Stoller Centralized Analytical Services Organization.  The primary functions supported by KGHI include:

•Chief Operating Officer of Analytical Services

•Sample Planning and Technical Consultation

•Contract Technical Oversight

•Data Management

•Records Management

•Quality Oversight

A brief description of each of the primary functions is provided below.

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Chief Operating Officer of Analytical Services

Provides oversight for day-to-day operational management of KGH and oversight of Stoller Centralized Analytical Services activities to ensure services are fully integrated for an accurate, safe, and cost effective operation to secure quality data and reduce liability to the customer.

Planning and Technical Consultation Services

Provides technical support during the development and implementation of sampling and analysis plans, schedules sampling events, coordinates radiological screening and laboratory resources, initiates work requests through software tracking applications, generates and processes paperwork, tracks sample data through report delivery, performs preliminary data assessment, and resolves technical issues with the customer and laboratories.  Subject matter expertise is provided in the areas of chemical, industrial hygiene, biota, microbiology, geotechnical, bioassay and radiochemical analysis.

Contract Technical Oversight

Provides technical oversight of contracts with commercial laboratories and vendors.  All contracts are procured, maintained and approved for according to Stoller and specific site Procurement Quality Assurance Evaluated Suppliers List (ESL) prior to use. 

Data Management Services

Provides accurate and cost effective analytical results to the customer through electronic data receipt, data processing and tracking, and database storage.  Services include database applications, web based services, programming support, and data system operations and maintenance that allow ease of sample and data tracking, data distribution, data retrieval, data archiving, and automated vendor payment.  

Records Management Services

Provides services to receive, track, manage, and archive analytical records in compliance with Federal Records Management Regulations including data entry, document receipt and distribution, document storage and archiving, and document retrieval.

Quality System Management

Provides quality oversight to all aspects of Analytical Services. This includes oversight of data assessment services, participation in commercial and onsite laboratory audits, procurement quality assessment, and the continual assessment and improvement of the quality systems required by the customer and regulators.

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EXHIBIT A:

SUMMARY OF REQUIREMENTS

1.0ORGANIZATION AND KEY PERSONNEL REQUIREMENTS

1.1Organization

KGHI will provide operations oversight and management, chemist SMEs, contractor technical representatives, records management, and analytical services specific data management for the Stoller Centralized Analytical Services Organization by utilizing both KGHI employees and subcontractor capability. KGHI shall provide résumés for personnel holding key positions in the proposal. Résumés shall include position description, title, education (pertinent to the duties performed for this SOW), number of years of experience (pertinent to the duties performed for this SOW), month and year hired, previous experience, patents and publications.

1.2KEY PERSONNEL

1.2.1Chief Operating Officer

Name:Virgene Ideker Mulligan

Responsibility:  Responsible for the management and integration of all services provided under this SOW.  Ensures all K-H analytical services needs are met or exceeded through Site closure.

Education:  Bachelor’s Degree in Biology and Chemistry.  Masters work in Molecular Genetics and Environmental Chemistry with an emphasis on Radiochemistry.

Experience:Manager of the Kaiser-Hill Analytical Services division for over seven years.  Responsible for organizational structure that has been recognized by the Department of Energy as a model for the complex.  DOECAP qualified lead auditor with qualifications also in quality assurance, radiochemistry,  materials management and Laboratory Information Systems.  Technical team lead for the Integrated Contractor Procurement Team.  Certified Hazardous Materials Manager. 

1.2.2Deputy Chief Operating Officer

Name:Edward A. Brovsky

Responsibility:  Responsible for oversight of data quality and data assessment activities, Statement of Work development and maintenance, maintenance of the Evaluated Suppliers List (ESL) and serving for the COO during her absence.

Education:  Bachelor’s Degree in Chemistry.

Experience:Deputy manager of Kaiser-Hill Analytical Services Division for over seven years.  Responsible for Statement of Work development and maintenance, Quality Oversight, and covering for the ASD manager in her absence.  Previous experience includes chemist responsibilities in the Rocky Flats laboratory system and management of sampling operations.  Certified DOECAP Quality Assurance auditor.

1.2.3Data Management Administrator

Name:  Mark Wood

Responsibility:  Oversight of all Data Management Activities including the Analytical Services Management System (ASMS), Geographical Information System (GIS), , web based services, electronic image and data receipt

Education:

Experience:  Data Management Administrator for the KH Analytical Services Division since 2000.  Previous experience includes project management of significant environmental cleanup projects.

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1.2.4Technical Lead Administrator

Name:  Shelly Johnsen

Responsibility:  Oversight of team responsible for planning and technical consulting activities.

Education:  Bachelor’s degree in Chemistry and Biology

Experience:  Project Lead for the Kaiser-Hill Analytical Services Division since 2000.  Previous experience includes data validation and laboratory bench chemistry.  Certified DOECAP auditor for inorganic and organic chemistry.

1.3OTHER ORGANIZATIONAL AREAS

1.3.1Contractor Technical Representatives

Responsibility:   The direct contact with the laboratory for all technical issues.  Duties include technical guidance, invoice approval, performance assessment, purchase order development, task order development, and monitoring nonconformances.

1.3.2Records Management

Responsibility: Quality Records management, data system input, report distribution, and records archive using micro film processing per the requirements identified in the SOW for Analytical Services Document and Record Management, AS05 (current version). 

1.3.3Data Management

Responsibility: Database management and maintenance; application development, and Web based services per the requirements in Data Management Services, AS04.

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EXHIBIT B:

GENERAL REQUIREMENTS

1.0KEY PERSONNEL

KGHI shall ensure that sufficient personnel are maintained to meet all requirements. KGHI shall notify Stoller in writing of any proposed changes to Key Personnel. 

2.0MEETINGS

•KGHI personnel shall attend and conduct meetings as required to ensure applicable information is disseminated to every employee. 

•A Biweekly Analytical Services Management & Integration Staff Meeting shall be held to address issues and to disseminate relevant information.

•Biweekly functional area meetings shall be held to address issues within the specific area and to maintain cost efficient quality service to the customer.

3.0AUDITS

KGHI personnel shall conduct internal and external audits on laboratories and vendors.  These audits will be conducted in conjunction with the Department of Energy Consolidated Audit Program (DOECAP) or through the KGHI audit program.  KGHI shall participate in the following audits:

•DOECAP LABORATORY ASSESSMENTS

•PRE-CONTRACT AWARD AUDITS

•POST CONTRACT CLOSURE AUDITS

•SURVEILLANCE AUDITS OF LABORATORIES AND VENDORS NOT INCLUDED IN THE DOECAP

•PROGRAM/PROJECT REQUIRED AUDITS, E.G. BIOASSAY PROGRAM

Post contract closure audits shall be conducted when a laboratory or vendor’s services are no longer needed in support of the Site. 

4.0SOW MAINTENANCE

KGHI shall update existing SOWs to ensure requirements reflect the work being performed or requested.  Changes to SOWs shall be made to accommodate a change in requirements and a change in the conduct of business.  All other changes will be addressed as defined in section 7.0 of this SOW.

SOWs shall be revision controlled to establish a chronological history of how data or services were performed.  All active or superceded SOWs shall be maintained and archived as quality documents.

5.0WORK SCHEDULE

KGHI shall align work schedules to the Project or program supported and to the type of service being provided. 

5.1OFF-HOUR AVAILABILITY

KGHI shall provide personnel to support activities identified in this SOW during non-working hours when Site work activities extend past normal work schedules, when the Site moves to a 7 day/week operation, or when emergency situations occur

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6.0EMERGENCY OPERATIONS SUPPORT

KGHI shall provide a representative for the Environmental position in the Hazards Action Center (HAC) for the Emergency Operations Center.  In addition, KGHI shall provide representatives to the Environmental Functional Work Center (FWC) for emergency operations.  The HAC representative shall serve one time per month.  The FWC will be covered every week.

7.0ACTIVITIES NOT COVERED BY UNIT PRICING

A task order will be required for all activities that are not covered by the unit pricing for this SOW.  For critical requests and with Stoller approval, KGHI will assume risk and will perform the activity concurrently with Task Order development.  If time permits, a Task Order will be developed and pricing completed prior to work performance.

Activities not covered by the unit pricing include but are not limited to:

7.1SOW MANAGEMENT

KGHI shall be responsible for the development and maintenance of all SOWs applicable to the Stoller Centralized Analytical Services Division.  SOWs shall be written in a manner that ensures quality service that meets the analytical needs.

7.1.1SOW Development

Special requests for analyses shall result in the development of new SOWs or the modification of existing ones.  KGHI shall provide subject matter expertise in areas of need to develop a concise set of requirements that results in the generation of high quality data or services.

7.1.2SOW Changes

Changes to SOWs to incorporate new ideas or cost savings, method development or at the request of the Stoller will result in additional cost.

7.2Rocky Flats Contract Closure Activities

Activities associated with subcontract closure that are a result of Rocky Flats closure are not covered by this SOW.  At the time that Kaiser-Hill identifies definitive closure activities and KH proves a task order or contract modification to Stoller to complete additional work, a task order or contract modification will be negotiated between KGHI and Stoller.

7.3Long Term Stewardship Support and Transition

Activities associated with any Long Term Stewardship activities are not covered by this SOW.  Such activities will require a task order or contract modification.

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EXHIBIT C:

Evidentiary Requirements

1.0QUALITY ASSURANCE PROGRAM

KGHI will operate under the Stoller Quality Assurance Program.

2.0DATA MANAGEMENT

KGHI shall ensure that all data management activities are conducted in accordance with documented QA/QC procedures.  Data management activities shall follow Good Automated Laboratory Practices (GALPs – EPA 2185) for data acquisition, entry, update, correction, deletion, storage, and security of computer readable data and files.

3.0HEALTH AND SAFETY REQUIREMENTS

Operations performed under this Subcontract shall be compliant to the Stoller Health & Safety Plan (HSP).

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Exhibit C

REPRESENTATIONS, CERTIFICATIONS OF OFFERORS

Various statutes and regulations require the Contractor to obtain certain representations, certifications, and other statements from Offerors in connection with the award of contracts. To this end, all Offerors submitting a proposal in response to this solicitation must complete the following representations/certifications, which are marked with an “ý“.

ý	1.	Certification Regarding Debarment, Suspension, Proposed Debarment, and Other Responsibility Matters
ý	2.	Small Business Program Representations
o	3.	Equal Low Bids
ý	4.	Certification of Non-segregated Facilities
ý	5.	Previous Contracts and Compliance Reports
ý	6.	Certification and Disclosure Regarding Payments to Influence Certain Federal Transactions
o	7.	Foreign Ownership, Control, or Influence Over Contractor
o	8.	Organizational Conflicts of Interest - Disclosure
ý	9.	Affirmative Action Compliance
o	10.	Exemption from Application of Service Contract Act Provisions for Contracts for Maintenance, Calibration, and/or Repair of Certain Information Technology, Scientific and Medical and/or Office and Business Equipment Contractor Certification
ý	11.	Clean Air and Water Certification
ý	12.	Agreements Regarding Workplace Substance Abuse programs at DOE Facilities
ý	13.	Certification of Toxic Chemical Release Reporting
ý	14.	Cost Accounting Standards, Notices, and Certification
o	15.	Royalty Information
ý	16.	Authorized Negotiators
ý	17.	Taxpayer Identification
ý	18.	Compliance with Veterans Employment Reporting Requirements

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REPRESENTATIVES, CERTIFICATIONS, ANF OTHER STATEMENTS

OF OFFERORS

1.CERTIFICATION REGARDING DEBARMENT, SUSPENSION, PROPOSED DEBARMENT, AND OTHER RESPONSIBILITY MATTERS (MAR 1996) (FAR 52.209-5)

1.The Offeror certifies, to the best of its knowledge and belief, that –

(i)The Offeror and/or any of its Principals –

(A)Are o are not ý presently debarred, suspended, proposed for debarment, or declared ineligible for the award of contracts by any Federal agency.

(B)Have o have not ý, within a 3-year period preceding this offer, been convicted of or had a civil judgment rendered against them for: commission of fraud or a criminal offence in connection with obtaining, attempting to obtain, or performing a public (Federal, state or local) contract or subcontract; violation of Federal or state antitrust statutes relating to the submission of offers; or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, or receiving stolen property; and

(C)Are o are not ý presently indicated for, or otherwise criminally or civilly charged by a government entity with, commission of any of the offenses enumerated in subdivision (a)(1)(i)(B) of this provision.

(ii)The Offeror has o has not ý, within a 3-year period preceding this offer, had one of more contracts terminated for default by any Federal agency.

2.“Principals,” for the purposes of this certification, means officers; directors; owners; partners; and. Persons having primary management of supervisory responsibilities within a business entity (e.g., general manager, plant manager, head of a subsidiary, division, or business segment, and similar positions).

This certification concerns a matter within the jurisdiction of an agency of the United Stated and the making of a false, fictitious, or fraudulent certification may render the maker subject to prosecution under section 1001, title 18, United States Code.

3.The Offeror shall provide immediate written notice to the Contracting Officer in, at any time prior to contract award, the Offeror learns that its certification was erroneous when submitted or has become erroneous by reason of changed circumstances.

4.A certification that any of the items in paragraph (a) of this provision exists will not necessarily result in withholding of an award under this solicitation. However, the certification will be considered in connection with a determination of the Offeror’s responsibility. Failure of the Offeror to furnish a certification or provide such additional information as requested by the Contracting Officer may render the Offeror non-responsible.

5.Nothing contained in the foregoing shall be constructed to require establishment of a system of records in order to render, in good faith, the certification requires by paragraph (a) of this provision. The Knowledge and information of an Offeror is not required to exceed that which is normally possessed by a prudent person in the ordinary course of business dealings.

6.The certification in paragraph (a) of this provision is a material representation of fact upon which reliance was placed when making award. If it is later determined that the Offeror knowingly rendered an erroneous certification, in addition to other remedies available to the Government, the Contracting Officer may terminate the contract resulting from this solicitation for default.

2.SMALL BUSINESS PROGRAM REPRESENTATIONS (OCT 2000) (FAR 52.219-1)

The North American Industry Classification System (NAICS) code for this acquisition is 541990. The small business size standard is $6.0 million.

The small business size standard for a concern which submits an offer in its own name, other than on a construction or service contract, but which proposes to furnish a product which it did not itself manufacture, is 500 employees.

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Representations.

(1)The Offeror represents as part of its offer that it o is, ý is not a small business concern.

(2)(Complete only if the Offeror represented itself as a small business concern in paragraph (b)(1) of this provision.) The Offeror represents, for general statistical purposes, that it o is, o is not, a small disadvantage business concern as defined in 13 CRF 124.1002.

(3)(Complete only is the Offeror represented itself as a small business concern in paragraph (b)(1) of this provision.) The Offeror represents as part of its offer that it o is, o is not a woman-owned small business.

(4)(Complete only if Offeror represented itself as a small business concern in paragraph (b)(1) of this provision.) The Offeror represents as part of its offer, that –

(i)It o is, o is not a HUBZone small business concern listed, on the date of this representation, on the List of Qualified HUBZone Small Business Concerns maintained by the Small Business Administration, and no material change in ownership and control, principal office, or HUBZone employee percentage has occurred since it was certified by the Small Business Administration in accordance with 13 CFR Part 126; and

(ii)It o is, o is not a joint venture that complies with the requirements of 13 CFR Part 126, and the representation in paragraph (b)(4)(i) of this provisions is accurate for the HUBZone small business concern or concerns that are participating in the joint venture. (The Offeror shall enter the name or names of the HUBZone small business concern or concerns that are participating in the joint venture:             .) Each HUBZone small business concern participating in the joint venture shall submit a separate signed copy of the HUBZone representation.

Definitions.

‘Small Business Concern,” as used in this provision, means a concern, including its affiliates, that is independently owned and operated, not dominant in the field of operation in which it is bidding on Government contracts, and qualified as a small business under the criteria in 13 CFR Part 121 and the size standard in paragraph (a) of this provision.

“Women-owned small business concern,” as used in this provision means a small business concern –

(1)Which is at least 51 percent owned by one or more women or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women; and

(2)Whose management and daily business operations are controlled by one or more women.

Notice.

(1)If this solicitation is for supplies and has been set aside, in whole or in part, for small business concerns, then the clause in this solicitation providing notice of the set-aside contains restrictions on the source of the end items to be furnished.

(2)Under 15 U.S.C.645(d), any person who misrepresents a firm’s status as a small, small disadvantages, or woman-owned small business concern in order to obtain a contract to be awarded under the preference programs established pursuant to section 8(a), 8(d), 9, or 15 of the Small Business Act or any other provision of Federal law that specifically references section 8(d) for a definition of program eligibility, shall –

(i)Be punished by imposition of fine, imprisonment, or both

(ii)Be subject to administrative remedies, including suspension and debarment; and

(iii)Be ineligible for participation in programs conducted under the authority of the Act.

3.EQUAL LOW BIDS (OCT 1995) (FAR 52.219-2)

Not Applicable.

4.CERTIFICATION OF NON-SEGREGATED FACILITIES (APR 1984) (FAR 52.222-21)

“Segregated facilities,” as used in this provision, means any waiting rooms, work areas, rest rooms and wash rooms, restaurants and other eating areas, time clocks, locker rooms, and other storage or dressing areas, parking lots, drinking fountains, recreation or entertainment areas, transportation, and housing facilities provided for employees, that are segregated by explicit directive or are in fact segregated on the basis of race, color, religion, or national origin because of habit, local custom, or otherwise.

By the submission of this offer, the Offeror certifies that it does not and will not maintain or provide for its employees any segregated facilities at any of its establishments, and that it does not and will not permit its employees to perform their services at any location under its control where segregated facilities are maintained. The Offeror agrees that a breach of this certification is a violation of the Equal Opportunity clause in the contract.

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The Offeror further agrees that (except where it had obtained identical certifications from proposed subcontractors for specific time periods) it will –

(1)Obtain identical certifications from proposed subcontractors before the award of subcontracts under which the Subcontractors will be subject to the Equal Opportunity clause;

(2)Retain the certifications in the files; and

(3)Forward the following notice to the proposed subcontractors (except is the proposed subcontractors have submitted identical certifications for specific time periods):

NOTICE TO PROSPECTIVE SUBCONTRACTORS OF REQUIREMENT FOR CERTIFICATIONS OF NON-SEGREGATED FACILITIES.

NOTE: A Certification of Non-segregated Facilities must be submitted before the award of a subcontract under which the Subcontractor will be subject to the Equal Opportunity clause. The certification may be submitted either for each subcontract or for all subcontracts during a period (i.e. quarterly, semiannually, or annually).

The penalty for making false statements in offers is prescribed in 18 U.S.C. 1001.

5.PREVIOUS CONTRACTS AND COMPLIANCE REPORTS (APR 1984) (FAR 52.222-22)

The Offeror represents that

(a) it o has, ý has not participated in a previous contract or subcontract subject to the Equal Opportunity clause of this solicitation, the clause originally contained in Section 310 of Executive Order No. 10925, or the clause contained in Section 201 of Executive Order No. 1114;

(b) it o has, ý has not, filed all required compliance reports; and

(c) Representations indicating submission of required compliance reports, signed by proposed subcontractors, will be obtained before subcontract awards.

6.CERTIFICATIONS AND DISCLOSURE REGARDING PAYMENTS TO INFLUENCE CERTAIN FEDERAL TRANSACTIONS (APR 1991) (FAR 52.203-11)

(Applicable if offer exceeds $100,000)

(a) The definitions and prohibitions contained in the clause, at FAR 52.203-12, Limitation on Payments to Influence Certain Federal Transactions, included in this solicitation, are hereby incorporated by reference in paragraph (b) of this certification.

(b) The Offeror, by signing its offer, hereby certifies to the best of his or her knowledge and belief that on or after December 23, 1989—

(1)No Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of a Member of Congress on his or her behalf in connection with the awarding of a contract resulting from this solicitation.

(2)If any funds other than Federal appropriated funds (including profit or fee received under a covered Federal transaction) have been paid, or will be paid, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress on his or her behalf in connection with this solicitation, the Offeror shall complete and submit, with its offer, OMB standard form LLL Disclosure of Lobbying Activities, to the Contracting Officer, and

(3)He or she will include the language of this certification in all subcontract awards at any tier and require that all recipients of subcontract awards in excess of $100,000 shall certify and disclose accordingly.

(c) Submission of this certification and disclosure is a prerequisite for making or entering into this contract imposed by section 1352 title 31, United States Code. Any person who makes an expenditure prohibited under this provision or who fails to file or amend the disclosure form to be filed or amended by this provision, shall be subject to a civil penalty of not less than $10,000 and not more than $100,000, for each such failure.

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7.FOREIGN OWNERSHIP, CONTROL, OR INFLUENCE OVER CONTRACTOR (JUL 1997)(DEAR 952.204-73)

See attached RFPD-66B (this will be provided at time of award)

8.ORGANIZATIONAL CONFLICTS OF INTEREST – DISCLOSURE – ADVISORY AND ASSISTANCE SERVICES (JUN 1997) (DEAR 952.209-8)

Not Applicable

9.AFFIRMATIVE ACTION COMPLIANCE (APR 1984) (FAR 52.222-25)

The Offeror represents that (a) it o has developed and has on file, o has not developed and does not have on file, at each establishment, affirmative action programs required by the rules and regulations of Secretary of Labor (41 CFR 60-1 and 60-2, or (b) it ý has not previously had contracts subject to the written affirmative action programs requirements of the rules and regulations of the Secretary of Labor.

10.EXEMPTION FROM APPLICATION OF SERVICE CONTRACT ACT PROVISIONS FOR CONTRACTS FOR MAINTENANCE, CALIBRATION, AND/OR REPAIR OF CERTAIN INFORMATION TECHNOLOGY, SCIENTIFIC AND MEDICAL AND/OR OFFICE AND BUSINESS EQUIPMENT – CONTRACTOR CERTIFICATION (AUG 1996) (FAR 52.222-48)

Not Applicable

11.CLEAN AIR AND WATER CERTIFICATION (APR 1984) (FAR52.223-1)

The Offeror Certifies that –

(a)Any facility to be used in the performance of this proposed contract is o, Is not ý listed on the Environmental Protection Agency List of Violating Facilities;

(b)The Offeror will immediately notify the Contracting Officer, before award, of the receipt of any communication from the Administrator, or a designee, of the Environmental Protection Agency, indicating that any facility that the Offeror proposes to use for the performance of the contract is under consideration to be listed on the EPA List of Violating Facilities; and

(c)The Offeror will include a certification substantially the same as this certification, including this paragraph (c), in every nonexempt subcontract.

12.AGREEMENT REGARDING WORKPLACE SUBSTANCE ABUSE PROGRAMS AT DOE FACILITIES(SEP 1997) (DEAR 970.5204.57)

(a)Any contract awarded as a result of this solicitation will be subject to the policies, criteria, and procedures of 10 CFR part 707, Workplace Substance Abuse Programs at DOE Sites.

(b)By submission of its offer, the Offeror agrees to provide to the Contracting Officer, within 30 days after notification of selection for award, or award of a contract, whichever occurs first, pursuant to this solicitation, its written workplace substance abuse program consistent with the requirements of CFR Part 707.

(c)Failure of the Offeror to agree to the condition of responsibility set forth in paragraph (b) of this provision, renders the Offeror unqualified and ineligible for award.

13.CERTIFICATION OF TOXIC CHEMICAL RELEASE REPORTING. (10/96) FAR 52.223-13

CERTIFICATION OF TOXIC CHEMICAL RELEASE REPROTING (OCT 1996)

(a)Submission of this certification is a prerequisite for making or entering into this contract imposed by Executive Order 12969, August 8, 1995.

(b)By signing this offer, the Offeror certifies that –

(1)As the owner or operator of facilities that will be used in the performance of this contract that are subject to the filing and reporting requirements described in section 313 of the Emergency Planning and Community Right-to-Know Act of 1986 (EPCRA) (42 U.S.C 11023) and Section 6607 of the Pollution Prevention Act of 1990

6

(PPA) (42 U.S.C. 13106), the Offorer will file and continue to file for such facilities for the life of the contract the Toxic Chemical Release Inventory Form (Form R) as described in Sections 313(a) and (g) of EPCRA and Section 6607 of PPA; or –

(2)None of its owned or operated facilities to be used in the performance of this contract is subject to the Form R filing and reporting requirements because each such facility is exempt for at least one of the following reasons: (Check each block that is applicable.)

ý(i)The facility does not manufacture, process, or otherwise use any toxic chemicals listed under Section 313(c) of EPCRA, 42 U.S.C. 11023(c);

o(ii)The facility does not have 10 or more full-time employees as specified in Section 313(b)(1)(A) of EPCRA, 42 U.S.C. 11023(b)(1)(A);

o(iii)The facility does not meet the reporting thresholds of toxic chemicals established under Section 313(f) of EPCRA, 42 U.S.C. 11023(f) (including the alternate thresholds at 40 CRM 372.27, provided an appropriate certification form has been filed with EPA);

o(iv)The facility does not fall within Standard Industrial Classification Code (SIC) designations 20 through 39 as set forth in Section 19.102 of the Federal Acquisition Regulation; or

o(v)The facility is not located within any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American Soma, the United States Virgin Islands, the Northern Mariana Islands, or any other territory or possession over which the United States has jurisdiction.

14.COST ACCOUNTING STANDARDS NOTICES AND CERTIFICATION (APR 1998) (FAR 52.230-1)

Note:This notice does not apply to small business or foreign governments. This notice is in three parts, identifies by Roman Numerals I though III. Offerors shall examine each part and provide the requested information in order to determine Cost Accounting Standards (CAS) requirements applicable to any resultant contract.

If the Offeror is an educational institution, Part II does not apply unless the contemplated contract will be subject to fill or modifies CAS coverage pursuant to 48 CFR 9903.201-2(c)(5) or 9903.201-2(c)(6), respectively.

I.DISCLOSURE STATEMENT – COST ACCOUNTING PRACTICES AND CERTIFICATION

(a)Any contrast in excess of $500,000 resulting from this solicitation, will be subject to the requirements of the Cost Accounting Standards Board (48 CFR Chapter 99) except for those contracts which are exempt as specified in 48 CFR 9903.201-1.

(b)Any Offeror submitting a proposal which, if accepted, will result in a contract subject to the requirements of 48 CFR, Chapter 99 must, as a condition of contracting, submit a Disclosure Statement as required by 48 CFR 9903.202. When required, the Disclosure Statement must be submitted as a part of the Offeror’s proposal under this solicitation unless the Offeror has already submitted a Disclosure Statement disclosing the practices used in connection with the pricing of the proposal. If an applicable Disclosure Statement has already been submitted, the Offeror may satisfy the requirement for submission by providing the information requested in paragraph (c) of Part I of this provision.

CAUTION: In the absence of specific regulations or agreement, a practice disclosed in a Disclosure Statement shall not, by virtue of such disclosure, be deemed to be a proper, approved, or agreed-to practice for pricing proposals or accumulating and reporting contract performance cost data.

(c)Check the appropriate box below:

o(1)Certificate of Concurrent Submission of Disclosure Statement.

The Offeror hereby certifies that, as a part of the offer, copies of the Disclosure Statement have been submitted as follows:

(i)Original and one copy to the cognizant Administrative Contracting Officer (ACO), or cognizant Federal agency official authorized to act in that capacity (Federal Official) as applicable; and

7

(ii)One copy to the cognizant Federal auditor.

(Disclosure must be Form Number CASB-DS-1 or CASB-DS-2, as applicable. Forms may be obtained from the cognizant ACO or Federal Official and/or from the loose-leaf version of the Federal Acquisition Regulation.)

Date of Disclosure Statement:

Name and Address of Cognizant ACO or Federal Official where filed:

The Offeror further certifies that practices used in estimating costs in pricing the proposal are consistent with the cost accounting practices disclosed in the Disclosure Statement.

o(2)Certificate of Previously Submitted Disclosure Statement.

The Offeror hereby certifies that the required Disclosure Statement was filed as follows:

Date of Disclosure Statement:

Name and Address of Cognizant ACO or Federal Official where filed:

The Offeror further certifies that practices used in estimating costs in pricing this proposal are consistent with the cost accounting practices disclosed in the applicable Disclosure Statement.

ý(3)Certificate of Monetary Exemption.

The Offeror hereby certifies that the Offeror, together with all divisions, subsidiaries, and affiliates under common control, did not receive net awards of negotiated prime contracts and subcontracts subject to CAS totaling more than $25 million ( of which at least one award exceeded $1 million) in the cost accounting period immediately preceding the period in which this proposal was submitted. The Offeror further certifies that if such status changes before an award resulting from this proposal, the Offeror will advise the Contracting Officer immediately.

o(4)Certificate of Interim Exemption.

The Offeror hereby certifies that (i) the Offeror first exceeded the monetary exemption for disclosure, as defined in (3) of this subsection, in the cost accounting period immediately preceding the period in which this offer was submitted and (ii) in accordance with 48 CFR, 9903.202-1, the Offeror is not yet required to submit a Disclosure Statement. The Offeror further certifies that if an award resulting from this proposal has not been made within ninety (90) days after the end of that period, the Offeror will immediately submit a revised certificate to the Contracting Officer, in the form specified under subparagraph (c)(1) or (c)(2) of Part I of this provision, as appropriate, to verify submission of a completed Disclosure Statement.

CAUTION:Offerors currently required to disclose because they were awarded a CAS-covered prime contract or subcontract of $25 million or more in the current cost accounting period may not claim this exemption (4). Further, the exemption applies only in connection with proposals submitted before expiration of the 90-day period following the cost accounting period in which the monetary exemption was exceeded.

o(5)Certificate of Disclosure Statement Due by Educational Institution

If the Offeror is an educational institution that, under the transition provisions of 48CFR 9903.202-1 (f), is or will be required to submit a Disclosure Statement after receipt of this award, the Offeror hereby certifies that (check one and complete):

o(i)A Disclosure Statement filing due date of                         has been established with the cognizant Federal agency.

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o(ii)The Disclosure Statement will be submitted within the six (6) month period ending                     months after receipt of this award.

Name and Address of cognizant ACO or Federal official where Disclosure Statement is to be filed:

II.Cost Accounting Standards – Eligibility for Modified Contract Coverage

If the Offeror is eligible to use the modified provisions of 48 CFR 9903.201-2(b) and elects to do so, the Offeror shall indicate by checking the box below. Checking the box below shall mean that the resultant contract is subject to the Disclosure and Consistency of Cost Accounting Practices clauses in lieu of the Cost Accounting Standards clause.

ý The Offeror hereby claims an exemption from the Cost Accounting Standards clause under the provisions of 48 CFR 9903.201-2(b) and certifies that the Offeror is eligible for use of the Disclosure and Consistency of Cost Accounting Practices clause because during the cost accounting period immediately preceding the period in which this proposal was submitted, the Offeror received less than $25 million in awards of CAS covered prime contracts and subcontracts, or the Offeror did not receive a single CAS-covered award exceeding $1 million. The Offeror further certifies that if such status changes before an award resulting from this proposal, the Offeror will advise the Contracting Officer immediately.

CAUTION: An Offeror may not claim the above eligibility for modifies contract coverage if this proposal is expected to result in the award of a CAS-covered contract of $25 million or more or is, during its current cost accounting period, the Offeror has been awarded a single CAS-covered prime contract or subcontract of $25 million or more.

III.Additional Cost Accounting Standards Applicable to Existing Contracts

The Offeror shall indicate below whether award of the contemplated contract would, in accordance with subparagraph (a)(3) of the Cost Accounting Standards clause, require a change in established cost accounting practices affecting existing contracts and subcontracts.

o Yesý No

15.ROYALTY INFORMATION. (4/84) (FAR 52.227-6)

Not Applicable

16.AUTHORIZED NEGOTIATORS

The Offeror or quoter represents that the following persons are authorized to negotiate on its behalf with the Contractor in connection with this request for proposals or quotations. List name(s), title(s), and telephone number(s) of the authorized negotiator(s)

Douglas W. McMinn	703-934-3655
Name	Telephone No.
CEO
Title

17.TAXPAYER IDENTIFICATION

Definitions.

“Common parent,” as used in this solicitation provision, means that a corporate entity that owns or controls an affiliated group of corporations that files its Federal Income tax returns on a consolidated basis, and of which the Offeror is a member.

“Corporate status” as used in this solicitation provision, means a designation as to whether the Offeror is a corporate entity, an unincorporated entity (e.g. sole proprietorship or partnership), or a corporation providing medical and health care services.

“Taxpayer Identification Number (TIN)”, as used in this solicitation provision, means the number required by the IRS to be used by the Offeror in reporting income tax and other returns.

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All Offerors are required to submit the information required in below in order to comply with reporting requirements of 26 U.S.C. 6041, 6041A, and 6050M and implementing regulations issued by the Internal Revenue Service (IRS). If the resulting subcontract is subject to reporting requirements described in FAR 4.903 the failure or refusal by the Offeror to furnish the information may result in a 31% reduction of payments otherwise due under the subcontract.

(a)Taxpayer Identification Number (TIN).

ý TIN 68-058 4637

o TIN has been applied for.

o TIN is not required because:

o Offeror is nonresident alien, foreign corporation, or foreign partnership that does not have income effectively connected with the conduct of a trade or business in the U.S. and does not have an office or place of business or a fiscal paying agent in the U.S.;

o Offeror is an agency or instrumentality of a foreign government;

o Offeror is an agency or instrumentality of a Federal, state or local government;

o Other. State basis

(b)Corporate Status.

o Corporation providing medical and health care services, or engaged in the billing and collecting of payments for such services.

ý Other corporate entity.

o Not a corporate entity.

o Sole proprietorship.

o Partnership.

o Hospital or extended care facility described in 26 CFR 501 © (3) that is exempt from taxation under 26 CFR 501(a).

(c)Common Parent.

o Offeror is not owned or controlled by a common parent as defined in paragraph (a) of this provision.

ý Name and TIN of common parent.

Name KAISER GROUP HOLDINGS, INC.

TIN 54-2014870

18.“COMPLIANE WITH VETERANS EMPLOYMENT REPORTING REQUIREMENTS (APPLICABLE IF THIS SUBCONTRACT WILL NOT EXCEED $25,000 IN VALUE)

The Offeror represents that, if it is subject to the reporting requirements of 38 U.S.C. 4212 (d) (i.e. the VETS-100 report required by the Federal Acquisition Regulation clause 52.222-37, Employment Reports on Disabled Veterans of the Vietnam Era), it has o, has not ý submitted the most recent report required by 38 U.S.C. 4212(d).

An Offeror who checks “has not” may not be awarded a contract until the required reports are filed. ( 31 U.S.C. 1354)

10

Signature/Certification

By signing below, the Offeror certifies, under penalty of law, that the representations and certifications are accurate, current, and complete. The Offeror further certifies that it will notify the Contractor of any changes to these representations and certifications. The representations and certifications made by the Offeror, as contained herein, concern matters within the jurisdiction of an agency of the United Stated and the making of a false, fictitious, or fraudulent representation or certification may render the maker subject to prosecution under Title 18, United States Code, Section 1001.

/s/ DOUGLAS W. MCMINN	7-21-04
Signature of the Offeror or Employee	Date of Execution
Responsible for the Offer/Offeror
DOUGLAS W. MCMINN
Typed/Printed and Title of the Officer or Employee Signing Above
KAISER ANALYTICAL MANAGEMENT SERVICES, INC.
Name of Offeror
12303 AIRPORT WAY, SUITE 125
BROOMFIELD, COLORADO 80021
Address
Solicitation KH 020510

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Exhibit D

SUBCONTRACTOR SAFETY AND HEALTH WORKSHEET

NOTE:An asterisk* denotes that an attachment (when applicable) is required for this item and must be submitted.  If an item is “not applicable”, please annotate with “N/A” and provide an explanation in the appropriate section below or submit as an attachment on a separate sheet of paper.  Failure to provide information, attachments, or explanations can delay or prevent contract award.

COMPANY:   Kaiser Analytical Management Services, Inc.

MAIN STANDARD INDUSTRIAL CLASSIFICATION (SIC) NUMBER:    541990

AVERAGE # OF EMPLOYEES (Last 3 complete years):	New company / No history
	Formed in April 2004

Year: Year: Year:

WORKERS COMPENSATION EXPERIENCE MODIFICATION RATE

(Last 3 complete years) – attach letter from Insurance Courier denoting EMR’s* or stating reason an EMR has not been established.

New company / No history
	3 Year Average

Year: Year: Year:

BUREAU OF LABOR STATISTICS (BLS) LOG AND SUMMARY OF OCCUPATIONAL INJURIES AND ILLNESSES (OSHA NO. 200)

(Last 3 Complete Years) – attach copies of OSHA 200 Logs*.  NOTE: Please state reason if OSHA 200 Logs are not required.  Incidence rates are calculated as follows:  (# of OSHA Recordable Cases or Day Away from Work Cases x 200,000) / Hours Worked.

Year	Total Hours Worked	# of Recordable Cases (Sum of OSHA 200 Column A)	Incidence Rate	# of Day Away from Work Cases (Sum of OSHA 200\ columns 3 & 10)	Incidence Rate
		N/A
Total

OSHA CITATIONS

Has your company received any citations from the Occupational Safety and Health Administration (OSHA) in the past three years*?

Yes oNo ý

If yes, attach copies (one each) of any citations received, indicating the type of citation, fines levied, and negotiated settlements or fines paid.

WRITTEN SAFETY AND HEALTH PROGRAM

Does your company have a comprehensive written safety and health program*?

Yes oNo ý

If yes, attach a copy of the program manual’s table of contents.

CERTIFICATION

I certify to the best of my knowledge that the above information contained is true and correct.

Print Name:	Douglas W. McMinn	Title:	CEO
Signature:	/s/ Douglas W. McMinn	Date:   7-15-04

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 Analytical Management Services, 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
	II.	Monument Select Insurance Company							Vermont
		III.	MSIC, Inc.					Delaware
	II.	Tudor Engineering Company							Delaware

EX-31.1

Exhibit 31.1

Certification of the Principal Executive Officer

Pursuant to Rule 13a-14(a) and 15d-14(a)

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 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 report;

3)Based on my knowledge, the financial statements, and other financial information included in this 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 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 controls and procedures 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 report is being prepared;

b)Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47968;

c)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

d)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; and

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 functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control 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 control over financial reporting.

August 13, 2004	/s/ John T. Grigsby, Jr.
	John T. Grigsby, Jr.,
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of the Principal Financial Officer

Pursuant to Rule 13a-14(a) and 15d-14(a)

I, Marian P. Hamlett, 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 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 report;

3)Based on my knowledge, the financial statements, and other financial information included in this 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 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 controls and procedures 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 report is being prepared;

b)Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47968;

c)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

d)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; and

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 functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control 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 control over financial reporting.

August 13, 2004	/s/ Marian P. Hamlett
	Marian P. Hamlett,
	Executive Vice President and
	Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of the Principal Executive Officer

Pursuant to 18 U.S. C. Section 1350

In connection with the Quarterly Report on Form 10-Q of Kaiser Group Holdings, Inc. (the “Company”) for the period ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John T. Grigsby, Jr., Chief Executive 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, as amended; 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 13, 2004	/s/ John T. Grigsby, Jr.
	John T. Grigsby, Jr.,
	President and Chief Executive Officer

This certification accompanies this Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification of the Principal Financial Officer

Pursuant to 18 U.S. C. Section 1350

In connection with the Quarterly Report on Form 10-Q of Kaiser Group Holdings, Inc. (the “Company”) for the period ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Marian P. Hamlett, 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, as amended; 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 13, 2004	/s/ Marian P. Hamlett
	Marian P. Hamlett,
	Chief Financial Officer

This certification accompanies this Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.