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 July 4, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-20109
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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)
(781) 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 August 3,1998, 8,282,811 shares of the registrant's Common Stock, $.01 par
value, were outstanding.
<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 July 4, 1998 and June 28, 1997 1
Condensed Consolidated Balance Sheets at July 4, 1998
and September 30, 1997 2
Condensed Consolidated Statements of Cash Flows for the Three
Months and Nine Months Ended July 4, 1998 and June 28, 1997 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 5. Other Information
Signatures
Exhibit Index
<PAGE>
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
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- ---------------------
July 4, June 28, July 4, June 28,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net revenues:
Product ........................................... $ 35,080 $ 29,106 $ 94,952 $ 80,945
Service ........................................... 17,599 14,193 48,772 38,867
---------- ---------- ----------- -----------
52,679 43,299 143,724 119,812
Cost of sales:
Product ........................................... 8,636 7,964 23,419 21,420
Service ........................................... 11,440 9,318 32,063 26,103
---------- ---------- ----------- -----------
20,076 17,282 55,482 47,523
---------- ---------- ----------- -----------
Gross profit ................................... 32,603 26,017 88,242 72,289
Expenses:
Sales and marketing ............................... 17,670 15,015 49,599 41,594
Engineering, research and development ............. 5,334 3,987 14,215 12,125
General and administrative ........................ 3,526 2,905 9,938 8,158
Other (income) expense, net ....................... 159 10 (27) (102)
---------- ---------- ----------- -----------
26,689 21,917 73,725 61,775
---------- ---------- ----------- -----------
Income before income taxes ..................... 5,914 4,100 14,517 10,514
Provision for income taxes ............................. 2,259 1,567 5,546 4,016
---------- ---------- ----------- -----------
Net income ..................................... $ 3,655 $ 2,533 $ 8,971 $ 6,498
========== ========== =========== ===========
Net income per common share:
Basic .......................................... $ 0.44 $ 0.31 $ 1.09 $ 0.79
========== ========== =========== ===========
Diluted ........................................ $ 0.43 $ 0.30 $ 1.05 $ 0.77
========== ========== =========== ===========
Average common and common equivalent shares outstanding:
Basic .......................................... 8,295,670 8,211,414 8,253,562 8,175,900
========== ========== =========== ===========
Diluted ........................................ 8,565,933 8,400,787 8,511,634 8,412,587
========== ========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
UNAUDITED
<TABLE>
<CAPTION>
July 4, September 30,
1998 1997
--------- ---------
ASSETS
<S> <C> <C>
Curren Assets:
Cash and equivalents .................................................... $ 20,503 $ 20,698
Marketable securities ................................................... 23,693 15,530
Accounts receivable, less allowances for doubtful accounts of $1,052
at July 4, 1998 and $1,091 at September 30, 1997 ..................... 39,155 38,817
Inventories ............................................................. 4,095 4,322
Deferred income taxes ................................................... 4,277 4,277
Other current assets .................................................... 8,237 6,539
--------- ---------
Total current assets ............................................. 99,960 90,183
Equipment, net ............................................................. 16,405 17,038
Net investment in sales-type leases ........................................ 5,464 5,312
Excess of cost over net assets of businesses acquired ...................... 9,683 7,855
Other assets ............................................................... 12,069 7,726
--------- ---------
Total assets ...................................................... $ 143,581 $ 128,114
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ................................... $ 15,577 $ 13,217
Accrued compensation .................................................... 9,337 10,105
Federal and state income taxes payable .................................. 1,779 3,497
Unearned service revenue ................................................ 25,206 22,209
--------- ---------
Total current liabilities ......................................... 51,899 49,028
Deferred income taxes ...................................................... 2,587 2,587
Unearned service revenue ................................................... 7,282 3,523
Other liabilities .......................................................... 393 503
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 20,000,000 shares,
8,310,479 shares and 8,246,453 shares issued at July 4, 1998 and
September 30, 1997, respectively ..................................... 83 82
Additional paid-in capital .............................................. 28,985 29,770
Retained earnings ....................................................... 54,016 45,045
Equity adjustment from translation ...................................... (1,268) (262)
Cost of Treasury Stock (11,309 shares and 86,493
shares at July 4, 1998 and September 30, 1997, respectively) ......... (396) (2,162)
--------- ---------
Total shareholders' equity ........................................ 81,420 72,473
--------- ---------
Total liabilities and shareholders' equity ........................ $ 143,581 $ 128,114
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
KRONOS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
UNAUDITED
<TABLE>
<CAPTION>
Nine Months Ended
-------------------
July 4, June 28,
1998 1997
-------- --------
<S> <C> <C>
Operating activities:
Net income ............................................................. $ 8,971 $ 6,498
Adjustments to reconcile net income to net cash and equivalents
provided by operating activities:
Depreciation ................................................... 5,448 4,618
Amortization of deferred software development costs and
excess of cost over net assets of businesses acquired ....... 4,943 3,402
Changes in certain operating assets and liabilities:
Accounts receivable, net .................................... (1,018) (1,924)
Inventories ................................................. 218 (1,222)
Unearned service revenue .................................... 6,862 3,311
Accounts payable, accrued compensation
and other liabilities ................................... (185) 2,827
Net investment in sales-type leases ......................... (602) (3,000)
Other .......................................................... (1,425) (415)
-------- --------
Net cash and equivalents provided by operating activities 23,212 14,095
Investing activities:
Purchase of equipment .................................................. (4,936) (7,485)
Capitalization of software development costs ........................... (4,857) (3,877)
(Increase) decrease in marketable securities ........................... (8,163) 1,970
Acquisitions of businesses ............................................. (6,296) (1,255)
-------- --------
Net cash and equivalents used in investing activities ... (24,252) (10,647)
Financing activities:
Net proceeds from exercise of stock option and employee stock
purchase plans ...................................................... 2,343 1,023
Purchase of treasury stock ............................................. (1,361) (27)
-------- --------
Net cash and equivalents provided by financing activities 982 996
Effect of exchange rate changes on cash and equivalents ..................... (137) (4)
------- --------
Increase (decrease) in cash and equivalents ................................. (195) 4,440
Cash and equivalents at the beginning of the period ......................... 20,698 10,795
-------- --------
Cash and equivalents at the end of the period ............................... $ 20,503 $ 15,235
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<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, 1997. The results of
operations for the three and nine month periods ended July 4, 1998 are not
necessarily indicative of the results for a full fiscal year. Certain amounts
have been reclassified in fiscal 1997 to permit comparison with fiscal 1998.
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 quarter (95 days in fiscal 1998 and 89 days in
fiscal 1997) and fourth quarter (88 days in fiscal 1998 and 94 days in fiscal
1997) of each fiscal year varies 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 - Earnings Per Share
In February 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 128, "Earnings per Share." SFAS No. 128 replaced the previously reported
primary and fully diluted earnings per share with basic and diluted earnings per
share. Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants, and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. All earnings per share amounts presented have been restated
to conform to SFAS No. 128 requirements.
<PAGE>
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------- -----------------------
July 4, June 28, July 4, June 28,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income (in thousands) ...... $ 3,655 $ 2,533 $ 8,971 $ 6,498
========== ========== ========== ==========
Weighted average shares ........ 8,295,670 8,211,414 8,253,562 8,175,900
Effect of dilutive securities:
Employee stock options ......... 270,263 189,373 258,072 236,687
---------- ---------- ---------- ----------
Adjusted weighted average shares
and assumed conversions ...... 8,565,933 8,400,787 8,511,634 8,412,587
========== ========== ========== ==========
Basic earnings per share .......... $ 0.44 $ 0.31 $ 1.09 $ 0.79
========== ========== ========== ==========
Diluted earnings per share ........ $ 0.43 $ 0.30 $ 1.05 $ 0.77
========== ========== ========== ==========
</TABLE>
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FORWARD LOOKING STATEMENTS
This discussion includes certain forward-looking statements about the
Company's business and its expectations. Any such statements are subject to risk
that could cause the actual results to vary materially from expectations. For a
further discussion of the various risks that may affect the Company's business
and expectations, see "Certain Factors That May Affect Future Operating Results"
at the end of Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS
REVENUES. Revenues for the third quarter of fiscal 1998 amounted to $52.7
million as compared with $43.3 million for the third quarter of the prior year.
Revenues for the first nine months of fiscal 1998 were $143.7 million as
compared with $119.8 million for the first nine months of the prior year.
Revenue growth was 22% and 20% in the three and nine month periods ended July 4,
1998, respectively, as compared to 19% for each of the comparable periods of the
prior year. The revenue growth in the three and nine month periods ended July 4,
1998 was principally driven by customer demand in the domestic market. Also
contributing to the revenue growth in the three month period ended July 4, 1998
were revenues of approximately $1.2 million from the Company's Visionware
Division that was established in conjunction with the acquisition of the
Visionware labor productivity technology in March of Fiscal 1998.
Product revenues for the third quarter of fiscal 1998 amounted to $35.1
million as compared with $29.1 million for the third quarter of the prior year.
Product revenues for the first nine months of fiscal 1998 were $95.0 million as
compared with $80.9 million for the first nine months of the prior year. Product
revenue growth of 21% and 17% in the three and nine month periods ended July 4,
1998, respectively, increased from 16% and 14% for comparable periods of the
prior year. Product revenue growth in the three and nine month periods ended
July 4, 1998, was principally driven by customer demand for the Company's
Windows and client/server products. Incremental revenues resulting from
Visionware product sales also favorably impacted product revenue growth in the
three month period ended July 4, 1998. Service revenues for the third quarter of
fiscal 1998 amounted to $17.6 million as compared with $14.2 million for the
third quarter of the prior year. Service revenues for the first nine months of
fiscal 1998 were $48.8 million as compared with $38.9 million for the first nine
months of the prior year. Service revenue growth of 24% and 25% in the three and
nine month periods ended July 4, 1998, respectively, decreased from 26% and 29%
for comparable periods of the prior year. The growth in service revenues
reflects an increase in the level of professional services accompanying new
sales as well as an increase in maintenance revenue from expansion of the
installed base. As the customer installed base continues to grow, management
anticipates that service revenue growth rates will gradually become more
consistent with product revenue growth rates. Incremental revenues resulting
from services accompanying Visionware product sales also favorably impacted
service revenue growth in the three month period ended July 4, 1998.
GROSS PROFIT. Gross profit as a percentage of revenues was 62% and 61% in
the three and nine month periods ended July 4, 1998, respectively, as compared
with 60% in the comparable periods of the prior year. The improvement in gross
profit was evidenced in both product and service gross profit.
Product gross profit as a percentage of product revenues of 75% in each
of the three and nine month periods ended July 4, 1998, increased from 73% and
74%, respectively, for comparable periods of the prior year. The improvement in
product gross profit in both periods is primarily attributable to an increased
proportion of product revenues generated by software, which typically generates
higher gross profit than other product. Service gross profit as a percentage of
service revenues of 35% and 34% in the three and nine month periods ended July
4, 1998, respectively, increased from 34% and 33%, respectively, for comparable
periods of the prior year. The improvement in service gross profit in both
periods is primarily attributable to the growth in service revenues without a
proportionate increase in service expenses. This has been accomplished by more
fully leveraging service resources and improving the efficiency of the system
implementation process.
<PAGE>
EXPENSES. Total operating expenses as a percentage of revenues were 51%
in each of the three and nine month periods ended July 4, 1998, as compared to
51% and 52%, respectively, in the comparable periods of the prior year. Sales
and marketing expenses as a percentage of revenues were 34% and 35% in the three
and nine month periods ended July 4, 1998, respectively, as compared to 35% in
the comparable periods of the prior year. Engineering expenses as a percentage
of revenues were 10% in each of the three and nine month periods ended July 4,
1998, as compared to 9% and 10%, respectively, in the comparable periods of the
prior year. Engineering expenses of $5.3 million and $4.0 million in the third
quarter of fiscal 1998 and 1997, respectively, are net of capitalized software
development costs of $1.8 million and $1.3 million, respectively. Engineering
expenses of $14.2 million and $12.1 million in the first nine months of fiscal
1998 and 1997, respectively, are net of capitalized software development costs
of $4.9 million and $3.9 million, respectively. The growth in engineering,
research and development expenses results primarily from efforts to standardize
products and the development of new products in the client/server environment.
General and administrative expenses as a percentage of revenues amounted
to 7% for all periods presented. Other (income) expense, net amounted to less
than 1% of revenues for all periods presented. Other (income) 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
is material, either individually or in aggregate, to the consolidated results of
operations.
LIQUIDITY AND CAPITAL RESOURCES
Working capital as of July 4, 1998, amounted to $48.1 million as
compared with $41.2 million at September 30, 1997. As of those dates, cash and
equivalents and marketable securities amounted to $44.2 million and $36.2
million, respectively. Cash generated from operations increased to $23.2 million
in the first nine months of fiscal 1998 from $14.1 million in the first nine
months of the prior year, principally due to increased earnings and unearned
service revenues as well as increases in depreciation and amortization charges.
Cash provided from those sources was partially offset by cash used for payment
of income tax obligations and compensation accruals. During fiscal 1998 the
Company used $6.3 million of cash for payments related to the acquisition of
businesses including an investment of approximately $4.4 million to acquire
labor productivity technology and distribution rights in a dealer territory. The
Company's investment in equipment in the first nine months of the fiscal year
decreased from its investment in the first nine months of the prior year due to
the timing of capital projects. Management expects the lower level of capital
spending as compared to the prior year to continue in the fourth quarter of
fiscal 1998.
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 available cash and operating cash flow
generated in fiscal 1998.
YEAR 2000
Many currently installed computer systems and software products will not
function properly in the year 2000 and beyond. As a result, computer systems
and/or software used by many companies may need to be upgraded to comply with
such "year 2000" requirements. Significant uncertainty exists in the software
industry concerning the potential effects associated with the century change.
Although the Company currently offers software products that are designed to
work properly in the year 2000 and beyond, there can be no assurance that the
Company's software products contain all necessary date code changes. The Company
has warranted, and may in the future warrant, to certain customers that its
products will work in the year 2000 and beyond. In addition, the Company has
initiated a program to assess the products offered by it, its internal operating
systems, and third party products incorporated into or used to develop its
products and to develop a timetable for correcting any issues, if necessary. The
Company is currently developing a complete cost estimate but does not anticipate
that costs associated with this program will be material. However, if the
Company's program is not completed on a timely basis, if there is a failure of
the products or systems of other companies on which the Company relies for use
internally or in its products, if customer demand is reduced due to customers'
concerns about year 2000 issues, or if the Company's own products fail in the
year 2000 and beyond, there could be a material adverse effect on the Company's
business, financial condition or results of operations.
<PAGE>
CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
Except for historical matters, the matters discussed in this Quarterly
Report on Form 10-Q are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Act"). The Company
desires to take advantage of the safe harbor provisions of the Act and is
including this statement for the express purpose of availing itself of the
protection of the safe harbor with respect to all forward looking statements
that involve risks and uncertainties.
The Company's actual operating results may differ from those indicated
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 and
market acceptance of new product introductions by the Company and its
competitors, competitive pricing pressures, rapid technological change, new
competitors entering the market, the dependence on alternate distribution
channels, potential effects associated with the century change, the ability to
attract and retain sufficient technical personnel, and the dependence on the
Company's time and attendance product line and on key vendors, as further
described below and in the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1997, 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 period are not necessarily indicative of
results for any future period.
PRODUCT DEVELOPMENT AND TECHNOLOGICAL CHANGE. The markets for time and
attendance, labor management, 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.
Although management believes the Company has substantially completed the product
transition from DOS and UNIX platforms to the Windows and client/server
environments, the Company's revenue growth and results of operations in fiscal
1998 will depend in part on the continuing growth of sales of its Windows and
client/server products.
COMPETITION. The time and attendance, labor management, and data
collection industries are highly competitive. Competition is increasing as
competitors in related industries, such as human resources and payroll, enter
the market. Advances in software development tools have accelerated the software
development process and, therefore, can allow competitors to penetrate certain
of the Company's markets. Maintaining the Company's technological and other
advantages over competitors will require continued investment by the Company in
research and development and marketing and sales programs. There can be no
assurance that the Company will have sufficient resources to make such
investments or be able to achieve the technological advances necessary to
maintain its competitive advantages. Increased competition could adversely
affect the Company's operating results through price reductions and/or loss of
market share.
<PAGE>
DEPENDENCE ON ALTERNATE DISTRIBUTION CHANNELS. The Company markets and
sells its products through its direct sales organization, independent dealers
and OEMs. For the fiscal year ended September 30, 1997, approximately 22% of the
Company's revenues were generated through sales to dealers and OEMs. Reduction
in the sales efforts of the Company's major dealers and/or OEMs, or termination
or changes in their relationships with the Company, could have a material
adverse effect on the results of the Company's operations.
YEAR 2000. Many currently installed computer systems and software
products will not function properly in the year 2000 and beyond. As a result,
computer systems and/or software used by many companies may need to be upgraded
to comply with such "year 2000" requirements. Significant uncertainty exists in
the software industry concerning the potential effects associated with the
century change. Although the Company currently offers software products that are
designed to work properly in the year 2000 and beyond, there can be no assurance
that the Company's software products contain all necessary date code changes.
The Company has warranted, and may in the future warrant, to certain customers
that its products will work in the year 2000 and beyond. In addition, the
Company has initiated a program to assess the products offered by it, its
internal operating systems, and third party products incorporated into or used
to develop its products and to develop a timetable for correcting any issues, if
necessary. The Company is currently developing a complete cost estimate but does
not anticipate that costs associated with this program will be material.
However, if the Company's program is not completed on a timely basis, if there
is a failure of the products or systems of other companies on which the Company
relies for use internally or in its products, if customer demand is reduced due
to customers' concerns about year 2000 issues, or if the Company's own products
fail in the year 2000 and beyond, there could be a material adverse effect on
the Company's business, financial condition or results of operations.
<PAGE>
Part II. OTHER INFORMATION
Item 5. Other Information
Stockholder proposals submitted pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and intended to be presented at the Company's 1999 Annual Meeting
of Stockholders must be received by the Company not later than
August 14,1998 in order to be considered for inclusion in the
Company's proxy materials for that meeting.
The Company's Amended and Restated By-Laws also establish an
advance notice procedure with respect to stockholder nomination
of candidates for election as Directors. A Notice regarding
stockholder nominations for Director must be received by the
Company not less than 60 days nor more than 90 days prior to the
applicable stockholder meeting, provided, however, that in the
event the date of the meeting is not publicly announced by the
Company by mail, press release or otherwise more than 70 days
prior to the meeting, the notice must be received by the Company
not later than the tenth day following the day on which such
announcement of the date of the meeting is made. Any such notice
must contain certain specified information concerning the persons
to be nominated and the stockholder submitting the nomination,
all as set forth in the By-Laws. The presiding officer of the
meeting may refuse to acknowledge any Director nomination not
made in compliance with such advance notice requirements. The
Company has not yet publicly announced the date of the 1999
Annual Meeting.
Stockholder proposals intended to be presented at the Company's
1999 Annual Meeting that are not submitted pursuant to Exchange
Act Rule 14-8 or are not stockholder nominations of candidates
for election as Directors must be received by the Company no
later than October 28, 1998.
Stockholder proposals should be mailed to Clerk, Kronos
Incorporated, 400 Fifth Avenue, Waltham, Massachusetts 02451.
<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 14, 1998
<PAGE>
KRONOS INCORPORATED
EXHIBIT INDEX
Exhibit
Number Description
27.1 Financial Data Schedule
<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 July 4, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000886903
<NAME> Kronos Incorporated
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C> <C>
<PERIOD-TYPE> 9-mos 9-mos
<FISCAL-YEAR-END> Sep-30-1998 Sep-30-1997
<PERIOD-START> Oct-01-1997 Oct-01-1996
<PERIOD-END> Jul-04-1998 Jun-28-1997
<EXCHANGE-RATE> 1 1
<CASH> 20,503 15,235
<SECURITIES> 23,693 20,025
<RECEIVABLES> 40,207 33,529
<ALLOWANCES> 1,052 944
<INVENTORY> 4,095 5,366
<CURRENT-ASSETS> 99,960 82,048
<PP&E> 45,873 39,979
<DEPRECIATION> 29,468 22,336
<TOTAL-ASSETS> 143,581 118,563
<CURRENT-LIABILITIES> 51,899 44,402
<BONDS> 0 0
0 0
0 0
<COMMON> 83 82
<OTHER-SE> 81,337 68,430
<TOTAL-LIABILITY-AND-EQUITY> 143,581 118,563
<SALES> 94,952 80,945
<TOTAL-REVENUES> 143,724 119,812
<CGS> 23,419 21,420
<TOTAL-COSTS> 55,482 47,523
<OTHER-EXPENSES> 73,725 61,775
<LOSS-PROVISION> 370 318
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 14,517 10,514
<INCOME-TAX> 5,546 4,016
<INCOME-CONTINUING> 8,971 6,498
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 8,971 6,498
<EPS-PRIMARY> 1.09 0.79
<EPS-DILUTED> 1.05 0.77
</TABLE>
