SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------------- -----------------------
Commission file number 0-20109
--------------------------------------------------
Kronos Incorporated
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2640942
- -------------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Fifth Avenue, Waltham, MA 02154
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(617) 890-3232
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--------- ---------
As of June 29, 1996, 8,099,255 shares of the registrant's Common Stock,
$.01 par value, were outstanding (after giving effect to the three-for-two stock
split of the Company's Common Stock effected in the form of a stock dividend
paid on January 29, 1996 to stockholders of record on January 15, 1996.)
<PAGE>
KRONOS INCORPORATED
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Statements of Income for
the Three Months and Nine Months Ended
June 29, 1996 and July 1, 1995 1
Condensed Consolidated Balance Sheets at June 29, 1996
and September 30, 1995 2
Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended June 29, 1996 and July 1, 1995 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II.OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit Index
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
KRONOS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
UNAUDITED
Three Months Ended Nine Months Ended
-------------------------- -------------------------
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenues:
Product ........................................... $ 25,018 $ 22,772 $ 70,792 $ 63,248
Service ........................................... 11,232 8,296 30,027 23,179
----------- ----------- ----------- -----------
36,250 31,068 100,819 86,427
----------- ----------- ----------- -----------
Cost of sales:
Product ........................................... 6,595 6,159 18,897 18,352
Service ........................................... 7,229 6,233 20,566 18,118
----------- ----------- ----------- -----------
13,824 12,392 39,463 36,470
----------- ----------- ----------- -----------
Gross profit ................................. 22,426 18,676 61,356 49,957
Expenses:
Sales and marketing ............................... 11,896 10,447 33,133 29,300
Engineering, research and development ............. 3,197 2,131 8,699 5,913
General and administrative ........................ 2,572 2,252 7,330 6,310
Other expense (income), net ....................... (28) 169 85 468
----------- ----------- ----------- -----------
17,637 14,999 49,247 41,991
----------- ----------- ----------- -----------
Income before income taxes ................... 4,789 3,677 12,109 7,966
Provision for income taxes ............................. 1,835 1,399 4,639 3,011
----------- ----------- ----------- -----------
Net income ................................... $ 2,954 $ 2,278 $ 7,470 $ 4,955
=========== =========== =========== ===========
Net income per common share:
Primary ........................................... $ 0.35 $ 0.28 $ 0.90 $ 0.61
Fully diluted ..................................... $ 0.35 $ 0.28 $ 0.90 $ 0.61
Average common and common equivalent shares outstanding:
Primary ...................................... 8,351,419 8,164,064 8,317,527 8,091,239
=========== =========== =========== ===========
Fully diluted ................................ 8,380,359 8,196,329 8,332,036 8,116,262
=========== =========== =========== ===========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
UNAUDITED
June 29, September 30,
1996 1995
-------- --------
<S> <C> <C>
Current assets:
Cash and equivalents .................................................... $ 21,105 $ 17,727
Marketable securities ................................................... 9,509 3,716
Accounts receivable, less allowances for doubtful accounts of $1,138
at June 29, 1996 and $1,001 at September 30, 1995 .................... 26,149 28,159
Inventories ............................................................. 4,744 4,469
Deferred income taxes ................................................... 1,515 1,515
Other current assets .................................................... 3,070 1,273
-------- --------
Total current assets ............................................. 66,092 56,859
Equipment, net ............................................................. 13,697 10,079
Excess of cost over net assets of businesses acquired ...................... 6,520 6,606
Other assets ............................................................... 7,442 4,062
-------- --------
Total assets ..................................................... $ 93,751 $ 77,606
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ................................... $ 9,910 $ 8,352
Accrued compensation .................................................... 8,527 7,149
Federal and state income taxes payable .................................. 2,099 969
Unearned service revenue ................................................ 17,547 13,815
-------- --------
Total current liabilities ........................................ 38,083 30,285
Other liabilities .......................................................... 657 752
Shareholders' equity:
Preferred Stock, par value $1.00 per share: authorized 1,000,000 shares,
no shares issued and outstanding
Common Stock, par value $.01 per share: authorized 12,000,000 shares,
8,099,256 shares and 7,940,468 shares issued at June 29, 1996 and
September 30, 1995, respectively ..................................... 81 79
Additional paid-in capital .............................................. 25,373 24,353
Retained earnings ....................................................... 29,818 22,348
Equity adjustment from translation ...................................... (261) (206)
Cost of shares of Common Stock held in treasury (1 share and 170
shares at June 29, 1996 and September 30, 1995, respectively) ........ (5)
-------- --------
Total shareholders' equity ....................................... 55,011 46,569
-------- --------
Total liabilities and shareholders' equity ....................... $ 93,751 $ 77,606
======== ========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
KRONOS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
UNAUDITED
Nine Months Ended
--------------------
June 29, July 1,
1996 1995
-------- --------
<S> <C> <C>
Operating activities:
Net income .............................................................. $ 7,470 $ 4,955
Adjustments to reconcile net income to net cash and equivalents
provided by operating activities:
Depreciation .................................................... 3,392 2,758
Amortization of deferred software development costs and
excess of cost over net assets of businesses acquired ....... 2,400 1,848
Changes in certain operating assets and liabilities:
Accounts receivable, net .................................... 1,752 453
Inventories ................................................. (265) 522
Unearned service revenue .................................... 3,720 1,400
Accounts payable, accrued compensation
and other liabilities ................................... 4,189 4,777
Net investment in sales-type leases ......................... (2,806)
Other ........................................................... (795) 22
-------- --------
Net cash and equivalents provided by operating activities 19,057 16,735
Investing activities:
Purchase of equipment ................................................... (7,220) (3,037)
Capitalization of software development costs ............................ (2,703) (1,626)
(Increase) decrease in marketable securities ............................ (5,793) 76
Acquisitions of businsesses ............................................. (727) (1,090)
Other ................................................................... (217) (21)
-------- --------
Net cash and equivalents used in investing activities ... (16,660) (5,698)
Financing activities:
Principal payments under capital leases ................................. (22) (93)
Net proceeds from exercise of stock option and employee stock
purchase plans ....................................................... 1,027 648
-------- --------
Net cash and equivalents provided by financing activities 1,005 555
Effect of exchange rate changes on cash and equivalents ...................... (24) (12)
-------- --------
Increase in cash and equivalents ............................................. 3,378 11,580
Cash and equivalents at the beginning of the period .......................... 17,727 7,938
-------- --------
Cash and equivalents at the end of the period ................................ $ 21,105 $ 19,518
======== ========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
KRONOS INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - General
The accompanying unaudited condensed consolidated financial statements include
all adjustments, consisting of normal recurring accruals, that management
considers necessary for a fair presentation of the Company's financial position
and results of operations as of and for the interim periods presented pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
the disclosures in these financial statements are adequate to make the
information presented not misleading. These condensed consolidated financial
statements should be read in conjunction with the Company's audited financial
statements for the fiscal year ended September 30, 1995. The results of
operations for the three month and nine month periods ended June 29, 1996 and
July 1, 1995 are not necessarily indicative of the results for a full fiscal
year.
Certain amounts have been reclassified in fiscal 1995 to permit comparison with
fiscal 1996. These amounts primarily relate to third party maintenance costs
which were previously included in product cost of sales and are currently
included in service cost of sales.
NOTE B - Fiscal Quarters
The Company utilizes a system of fiscal quarters. Under this system, the first
three quarters of each fiscal year end on a Saturday. However, the fourth
quarter of each fiscal year will always end on September 30. Because of this,
the number of days in the first and fourth quarters of each fiscal year may vary
slightly from year to year. The second and third quarters of each fiscal year
will be exactly thirteen weeks long. This policy does not have a material effect
on the comparability of results of operations between quarters.
NOTE C - Marketable Securities
The Company's marketable securities, which primarily consist of state revenue
bonds and generally mature within one year, are classified as held to maturity
and are carried at amortized cost.
<PAGE>
NOTE D - Inventories
Inventories consist of the following (in thousands):
June 29, September 30,
1996 1995
------------------- -------------------
Finished goods $1,972 $1,769
Work - in - process 378 315
Raw materials 2,394 2,385
------------------- -------------------
$4,744 $4,469
=================== ===================
NOTE E - Stock Split
The Company's Board of Directors approved a three-for-two stock split effected
in the form of a 50% stock dividend that was paid on January 29, 1996 to
stockholders of record as of January 15, 1996. Accordingly, the presentation of
shares outstanding and amounts per share have been restated for all periods
presented to reflect the split. The par value of the additional shares was
transferred from additional paid-in capital to Common Stock.
On November 17, 1995, the Company's Board of Directors adopted a Rights
Agreement. Under the Agreement, the Company distributed to stockholders a
dividend of one Right for each outstanding share of Common Stock. As a result of
the stock split, each stockholder has two-thirds of a Right for each share of
Common Stock held as of the Record Date.
NOTE F - Credit Agreement
On May 28, 1996, the Company amended its credit agreement with a bank to extend
the term of the agreement through June 1, 1998.
NOTE G - Subsequent Events
On July 1, 1996, the Company purchased all of the territories covered by
Kronology Pty. Ltd., a dealer of the Company which was headquartered in Sydney,
Australia. As a result of this acquisition, which was accounted for under the
purchase method of accounting, the Company has established a subsidiary to
perform sales and support in Australia. The cost of this acquisition of
approximately $.8 million largely relates to intangible assets which are being
amortized on the straight-line method over a period of eight years.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Revenues. Revenues for the third quarter of fiscal 1996 amounted to $36.3
million as compared with $31.1 million for the third quarter of the prior year.
Revenues for the first nine months of fiscal 1996 were $100.8 million as
compared with $86.4 million for the first nine months of the prior year. The
revenue growth rate of 17% in both the quarter and nine month periods ended June
29, 1996, respectively, declined from 32% and 36% for comparable periods of the
prior year. The decline in the revenue growth rate for both periods presented is
attributable to a variety of factors, the most significant of which was the
unusually strong revenue growth rate experienced in fiscal 1995. The Company's
historical growth trend of approximately 20% accelerated during fiscal years
1994 and 1995 to 37% and 30%, respectively. This acceleration of revenue growth
was attributed to, among other factors, the absorption of acquired dealer
territories and the impact of the start-up of the Company's marketing agreement
with ADP, Inc. As a result of these factors, the Company's revenue growth rate
for the first nine months in fiscal 1996 has been less than that experienced in
comparable periods in fiscal 1995. The Company also believes that its revenue
growth rate in the fourth quarter of fiscal 1996 may be less than the historical
trend because of the Company's product transition from DOS and Unix platforms to
the Windows and client/server environments. However, the Company believes that
demand for its products and services remains strong and that the revenue growth
experienced in the first nine months of fiscal 1996 should continue through the
remainder of the fiscal year. Product revenues for the quarter increased 10% to
$25.0 million. Service revenues for the quarter increased 35% to $11.2 million.
The growth in product revenues was principally driven by customer demand. The
growth in service revenues reflects increases in maintenance and professional
services revenue from expansion of the installed base as well as an increase in
the level of services accompanying the sale of new products. Product revenues
for the first nine months of fiscal 1996 increased 12% to $70.8 million and
service revenues increased 30% to $30.0 million. The growth in product and
service revenues for this nine month period was principally a result of the same
factors discussed in this paragraph for the quarter.
Gross Profit. Gross profit as a percentage of revenues was 62% in the
third quarter of fiscal 1996 as compared with 60% in the third quarter of the
prior year. Product gross profit increased to 74% in the quarter from 73% in the
third quarter of the prior year. The improvement in product gross profit in the
third quarter of fiscal 1996 is primarily attributable to the mix of
distribution channel revenues. Revenues in the third quarter of fiscal 1996
include a higher proportion of direct channel revenues than in the prior year.
Direct channel revenues typically generate higher gross profit than other
distribution channels, and as a result, has a favorable impact on product gross
margin. The Company anticipates that product gross margin should approximate 72%
to 74% of product revenues in the fourth quarter of fiscal 1996. Service gross
profit increased to 36% in the third quarter of fiscal 1996 from 25% in the
third quarter of the prior year. The increase in service gross profit is
primarily attributable to the growth in service revenues. The Company has been
able to absorb the increase in service volume without a ratable increase in
service expenses. Over the past year, the Company has focused on increasing
service revenues from new and existing customers as well as improving the
efficiency and, therefore, reducing the cost of delivering such services. The
improved service margins experienced in the third quarter of 1996 are a result
of this focus.
Gross profit as a percentage of revenues for the first nine months of
fiscal 1996 was 61% as compared with 58% for the first nine months of fiscal
1995. Product gross profit increased to 73% in the first nine months of fiscal
1996 from 71% in the first nine months of the prior year. Service gross profit
increased to 32% for the first nine months of fiscal 1996 from 22% in the first
nine months of the prior year. The increase in both product and service gross
profit was principally a result of the same factors discussed in the paragraph
above for the quarter.
Expenses. Expenses as a percentage of revenues were 49% for the three and
nine month periods ended June 29, 1996 as compared with 48% and 49% for the same
periods of the prior year. The slight increase in spending relative to sales
reflects the Company's concerted effort to increase spending in engineering,
research and development.
Sales and marketing expenses as a percentage of revenues decreased to 33%
in the three and nine month periods ended June 29, 1996 from 34% in the
comparable periods of the prior fiscal year. The decline in sales and marketing
expenses as a percentage of revenues is a result of various programs implemented
by the Company to increase sales productivity and efficiency including but not
limited to the development of industry focused vertical business divisions. The
Company anticipates that sales and marketing expenses as a percentage of
revenues in the fourth quarter of fiscal 1996 should remain comparable to the
level achieved in the first nine months of fiscal 1996.
Engineering, research and development expenses increased as a percentage
of revenues to 9% in the three and nine month periods ended June 29, 1996 as
compared with 7% of the prior year. The growth in engineering, research and
development expenses as a percentage of revenues was anticipated as the Company
continues to invest in new product development, primarily in the Windows and
client/server environments. Expenses of $3.2 million and $2.1 million in the
third quarter of fiscal 1996 and 1995 are net of capitalized software
development costs of $1.2 million and $.6 million, respectively. Expenses of
$8.7 million and $5.9 million in the first nine months of fiscal 1996 and 1995
are net of capitalized software development costs of $2.7 million and $1.6
million, respectively. The growth in spending on capitalizable software
development costs principally reflects enhancements of new products released in
the past four quarters as well as enhancements of existing products.
General and administrative expenses as a percentage of revenues amounted
to 7% for all periods presented. Expenses in the first nine months of fiscal
1996 include start-up costs incurred for an internally funded customer lease
program.
Other expense, net amounted to less than 1% of revenues for all periods
presented. Other expense, net is composed primarily of amortization of
intangible assets related to acquisitions made by the Company which is offset by
interest income earned on its investments.
Income Taxes. The provision for income taxes as a percentage of pretax
income was 38% for all periods presented The Company's effective income tax rate
may fluctuate between periods as a result of various factors, none of which are
material, either individually or in aggregate, to the consolidated results of
operations.
Liquidity and Capital Resources
Working capital as of June 29, 1996, amounted to $28.0 million as
compared with $26.6 million at September 30, 1995. As of those dates, cash and
equivalents and marketable securities amounted to $30.6 million and $21.4
million, respectively. Cash generated from operations increased to $19.1 million
in the first nine months of fiscal 1996 from $16.7 million in the first nine
months of the prior year. The increase in cash generated from operations is
principally due to increased earnings and management of the Company's operating
assets and liabilities. Cash generated from operations was negatively impacted
by the Company's initial investment in its internally funded leasing program.
Cash used in investing activities increased to $16.7 million in the first nine
months of fiscal 1996 from $5.7 million for the same period in the prior year.
Excluding investments in marketable securities, cash used in investing
activities amounted to $10.9 million for the first nine months of fiscal 1996
compared to $4.7 million for the prior year. As anticipated, the Company has
increased spending on equipment, principally for the expansion of the Company's
manufacturing, distribution and corporate facilities and investments in the
Company's internal information systems infrastructure.
Cash generated from operations was more than sufficient to fund
investments in equipment and capitalized software development costs. The Company
expects to fund its investments in equipment and software development costs over
the remainder of its fiscal year with existing cash and equivalents together
with internally generated cash. The Company has available a bank line of credit
of $3.0 million. During the quarter, the line of credit agreement was extended
through June 1, 1998. No amounts were outstanding on the line of credit as of
June 29, 1996.
<PAGE>
Certain Factors That May Affect Future Operating Results
The Company's actual operating results may differ from those indicted
by forward looking statements made in this Quarterly Report on Form 10-Q and
presented elsewhere by management from time to time because of a number of
factors, including the potential fluctuations in quarterly results, timing of
new product announcements or introductions by the Company and its competitors,
competitive pricing pressures, the ability to attract and retain sufficient
technical personnel, the dependence on alternate distribution channels, and the
dependence on the Company's time accounting product line and on key vendors, as
further described below and in the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 30, 1996, which factors are specifically
incorporated by reference herein.
Potential Fluctuations in Quarterly Results. The Company's quarterly
operating results may fluctuate as a result of a variety of factors, including
the timing of the introduction of new products and product enhancements by the
Company and its competitors, market acceptance of new products, mix of products
sold, the purchasing patterns of its customers, competitive pricing pressure and
general economic conditions. The Company historically has realized a relatively
larger percentage of its annual revenues and profits in the fourth quarter and a
relatively smaller percentage in the first quarter of each fiscal year, although
there can be no assurance that this pattern will continue. In addition, while
the Company has contracts to supply systems to certain customers over an
extended period of time, substantially all of the Company's product revenue and
profits in each quarter result from orders received in that quarter. If
near-term demand for the Company's products weakens or if significant
anticipated sales in any quarter do not close when expected, the Company's
revenues for that quarter will be adversely affected. The Company believes that
its operating results for any one quarter are not necessarily indicative of
results for any future period.
Product Development and Technological Change. The markets for time
accounting and data collection systems are characterized by continual change and
improvement in computer software and hardware technology. The Company's future
success will depend largely on its ability to enhance its existing product lines
and to develop new products and interfaces to third party products on a timely
basis for the increasingly sophisticated needs of its customers. Although the
Company is continually seeking to further enhance its product offerings and to
develop new products and interfaces, there can be no assurance that these
efforts will succeed, or that, if successful, such product enhancements or new
products will achieve widespread market acceptance, or that the Company's
competitors will not develop and market products which are superior to the
Company's products or achieve greater market acceptance. The Company is
transitioning its product offerings from DOS and Unix platforms to the Windows
and client/server environments. As a result of this transition, the Company does
not believe that demand for its products in the near future will increase at the
same rate as the Company has experienced in comparable periods in recent years.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Amendment dated June 3, 1996 to Loan Agreement
dated June 30, 1993, as amended, between Fleet
National Bank and the Registrant
11 Statement re Computation of Per Share Earnings
27.1 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during
the fiscal quarter ended June 29, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KRONOS INCORPORATED
By /s/ Paul A. Lacy
Paul A. Lacy
Vice President of Finance
and Administration
(Duly Authorized Officer and
Principal Financial Officer)
August 12, 1996
<PAGE>
KRONOS INCORPORATED
EXHIBIT INDEX
Exhibit
Number Description
10.1 Amendment dated June 3, 1996 to Loan Agreement
dated June 30, 1993, as amended, between Fleet
National Bank and the Registrant
11 Statement re Computation of Per Share Earnings
27.1 Financial Data Schedule
EXHIBIT 10.1
(Graphic - Fleet Letterhead)
May 28, 1996
Mr. Paul Lacy
Vice President of Finance & Administration
Kronos Incorporated
400 Fifth Avenue
Waltham, MA 02154
Dear Paul:
We are pleased to inform you that Fleet National Bank ("Bank"), successor to
Fleet Bank of Massachusetts, N.A., has approved the renewal of the existing
$3,000,000 revolver ("Revolver") held available to Kronos, Inc. ("Borrower") for
two (2) years, until June 1, 1998. As in the past, advances under the Revolver
shall bear interest at your option of either the "Prime" rate, or LIBOR+1.75%.
Also, as in the past, the Bank continues to maintain a 3/8% commitment fee on
the unused portion of the subject Revolver. "Prime Rate" is defined as that rate
from time to time announced and made effective by the Bank as the Prime Rate.
Your borrowing rate shall change as the Prime Rate changes. Interest shall be
made payable monthly in arrears. Interest and fees are calculated on the basis
of a 360 day year and actual days elapsed.
It should be noted that at various times within the terms of this commitment,
advances may be allocated for Letters of Credit so long as that in aggregate,
advances under the revolver do not exceed the total committed amount.
Additionally approved was a two (2) year renewal of the existing $1.0MM Foreign
Exchange Line, until June 1, 1998.
Notwithstanding the aforementioned, all other terms and conditions of the
existing Loan Agreement remain in full force and effect. If the aforementioned
terms and conditions continue to meet with your approval, please acknowledge
your understanding and acceptance by signing this letter and returning it to my
attention at:
Fleet National Bank
75 State Street
Boston, Massachusetts 02109
MABOFO4H
Also, please sign the enclosed Addendum to the existing Loan Agreement which
serves to address the Bank's recent change in name to Fleet National Bank. If
you have any questions, please call me at (617) 346-1856.
Sincerely,
/s/ Ann M. Dillon
Ann M. Dillon
Vice President
Acknowledged and Accepted:
/s/ Paul Lacy 6/3/96
- ------------------------- ------------
Kronos Incorporated Date
Paul Lacy
Vice President of Finance & Administration
<PAGE>
ADDENDUM TO
Loan Agreement dated June 30, 1993, and subsequently amended (the
"Instrument"), between Kronos Incorporated (collectively or singularly, as the
case may be, the "obligor") and the Bank referred to in the instrument.
Notwithstanding anything to the contrary contained in the Instrument, the
Obligor hereby acknowledges and agrees that any and all references therein to
"Fleet Bank of Massachusetts, N.A.," shall be deemed to refer to Fleet National
Bank.
IN WITNESS WHEREOF, the Obligor has executed this Addendum this 3rd day of
June, 1996.
Obligor:
Kronos Incorporated
By: __/s/ Paul Lacy_________________
Print Name: Paul Lacy
Title: Vice President of Finance &
Administration
<TABLE>
<CAPTION>
KRONOS INCORPORATED
Exhibit 11 - Statement re Computation of Per
Share Earnings (In thousands, except
share and per share amounts)
Three Months Ended Nine Months Ended
----------------------- -----------------------
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income .................................. $ 2,954 $ 2,278 $ 7,470 $ 4,955
========== ========== ========== ==========
Net income per common share:
Primary:
Weighted average shares outstanding 8,076,878 7,855,761 8,015,612 7,794,203
Common Stock equivalents .......... 274,541 308,303 301,915 297,036
---------- ---------- ---------- ----------
Total ............................. 8,351,419 8,164,064 8,317,527 8,091,239
========== ========== ========== ==========
Net income per common share ....... $ 0.35 $ 0.28 $ 0.90 $ 0.61
========== ========== ========== ==========
Fully diluted:
Weighted average shares outstanding 8,076,878 7,855,761 8,015,612 7,794,203
Common Stock equivalents .......... 303,481 340,568 316,424 322,059
---------- ---------- ---------- ----------
Total ............................. 8,380,359 8,196,329 8,332,036 8,116,262
========== ========== ========== ==========
Net income per common share ....... $ 0.35 $ 0.28 $ 0.90 $ 0.61
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Financial Statements of the Corporation for the nine
months ended June 29, 1996 and is qualified in its entirety by reference to such
financial statements. </LEGEND>
<CIK> 0000886903
<NAME> Kronos Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Sep-30-1996
<PERIOD-START> Oct-01-1995
<PERIOD-END> Jun-29-1996
<EXCHANGE-RATE> 1
<CASH> 21,105
<SECURITIES> 9,509
<RECEIVABLES> 27,287
<ALLOWANCES> 1,138
<INVENTORY> 4,744
<CURRENT-ASSETS> 66,092
<PP&E> 30,689
<DEPRECIATION> 16,992
<TOTAL-ASSETS> 93,751
<CURRENT-LIABILITIES> 38,083
<BONDS> 0
0
0
<COMMON> 81
<OTHER-SE> 54,930
<TOTAL-LIABILITY-AND-EQUITY> 93,751
<SALES> 70,792
<TOTAL-REVENUES> 100,819
<CGS> 18,897
<TOTAL-COSTS> 39,463
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 226
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 12,109
<INCOME-TAX> 4,639
<INCOME-CONTINUING> 7,470
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,470
<EPS-PRIMARY> 0.90
<EPS-DILUTED> 0.90
</TABLE>
