EX-99 3 exhibit99.txt Exhibit 99.1 For Immediate Release Kronos Contact: Paul Lacy (978) 947-4944 placy@kronos.com Kronos(R) REPORTS FOURTH QUARTER AND YEAR END RESULTS FOR FISCAL 2003 CHELMSFORD, Mass., Oct. 28, 2003 -- Kronos(R) Incorporated (Nasdaq: KRON) today reported financial results for the fourth quarter and full year of Fiscal 2003, reflecting sustained double-digit growth in both net income and revenue. Net income for the fourth quarter of Fiscal 2003 rose 16 percent to $12.0 million, or $.57 per diluted share, as compared to $10.4 million, or $.52 per diluted share, for the same period a year ago. Revenue for the fourth quarter rose 14 percent to $112.9 million as compared to $99.2 million for the same period a year ago. For the twelve-month period, net income rose 20 percent to $34.7 million, or $1.68 per diluted share, as compared to $28.8 million, or $1.42 per diluted share, for the same period last year. For the twelve-month period, revenue rose 16 percent to $397.4 million as compared to $342.4 million for the twelve months of the prior year. These results compare favorably to guidance given by Kronos at the beginning of the fiscal year of revenue in the range of $375-385 million and earnings in the range of $1.55-1.65 per share. Mark S. Ain, Kronos' chief executive officer, said, "We are pleased that our financial results reflect strong, continued demand for our solutions as organizations strive to align diverse and complex workforces with ever-changing work and business goals. With double-digit growth in earnings and revenue for both the quarter and the year, it is clear that Kronos continues to profitably grow despite the current economic environment." (more) This marks Kronos' 95th straight quarter of revenue growth compared to the same period in the previous year, and 66th consecutive quarter of profitability (Note 1). Kronos' balance sheet remains strong with $131 million in cash and investments and no debt. Total deferred maintenance, professional services, and product revenue at the end of the quarter was $126 million. Cash flow from operations was $29.4 million for the quarter compared to $27.5 million for the same period last year. For the twelve-month period, cash flow from operations was $82.6 million compared to $70.2 million for the same period last year. Days sales outstanding (DSO) for accounts receivable was 63 days at the end of the quarter. "We are delighted with the acceptance of our new HR and payroll applications which we introduced at the end of last year. We have customer wins across a wide range of vertical markets representing organizations large and small. Including the users that we acquired, Kronos now has 200 HR and payroll customers, and has been cited by industry authors as being one of the most active players in the marketplace," continued Ain. "We are extremely pleased with the acceptance of our HR and payroll applications and the growth of our customer base." Quarterly Wins "Kronos continually finds more dynamic ways to help our customers improve the performance of their people and their business. We take an immense amount of pride in helping customers and believe that, among other attributes, our ability to deliver on promises brings them back to Kronos again and again," stated Ain. "Organizations of all sizes continue to embrace our blend of human resources, payroll, scheduling, and time and labor solutions." Notable wins during the quarter included AmeriPath, California Pacific Medical Center, Fort Worth Independent School District, Home Shopping Network, Penn State Milton S. Hershey Medical Center, Republic Services, Sonoma County, and many others. "We unveiled our product roadmap to more than 1,000 customers and prospects last week at our KronosWorks Worldwide Customer Conference and the response was terrific," commented Ain. "Not only were customers very interested in the product previews that we offered, but for the first time since the late 1990s, they seem to have the budgeted funds to spend. These are exciting times for Kronos and Kronos customers alike." (more) Fiscal 2004 Outlook "We anticipate that our upgrade cycle, as well as exciting new applications and enhancements, will support another year of growth. Because Kronos will introduce more significant new applications this fiscal year than during any previous year in our history, we will be making front-end loaded investments to launch products, train our people, and enhance our infrastructure. Because of these active investments in our future and because we overachieved early last fiscal year, we expect profitability to grow at a greater rate in the latter part of the fiscal year," stated Ain. "Assuming that the current economic environment continues but does not worsen, we expect to report first quarter revenue in the range of $99-102 million and earnings in the range of $.35-.39 per share, and Fiscal 2004 revenue of $446-459 million, with earnings per share in the range of $1.90 to $2.02." Conference Call Webcast Kronos senior management plans to review its fourth-quarter and year-end results during a conference call today beginning at 4:30 p.m. Eastern. The conference call will be webcast live at http://www.kronos.com/invest and will be available for replay purposes. About Kronos Incorporated Kronos Incorporated is a single-source provider of human resources, payroll, scheduling, and time and labor solutions. Kronos' best-in-class Employee Relationship Management solution enables organizations to reduce costs and increase productivity, put real-time information in the hands of decision makers, align employee performance with organizational objectives, and improve employee satisfaction. More than 40,000 organizations trust Kronos to solve their employee-centric business challenges. Learn more at www.kronos.com. Safe Harbor Statement This press release contains forward-looking statements that involve a number of risks and uncertainties, including the performance estimates and statements relating to earnings and revenue growth and profitability, the ability to close potential product sales transactions, the ability to realize revenues from the sales pipeline, the market acceptance of our new products and enhancements, our ability to monitor and manage discretionary costs, growth in the market for our products and within the economy generally, and potential acquisitions. Among the important factors that could cause actual operating results to differ materially from those indicated by such forward-looking statements are delays in product development, including enhancements to existing products, product performance issues, competitive pressures, general economic conditions, possible disruption in commercial activities caused by terrorist activity and armed conflict, such as changes in logistics and security arrangement and the risk factors detailed in the company's periodic reports and registration statements filed with the Securities and Exchange Commission. The timing of the release of new products or product enhancements will take place if and when available and at the sole discretion of Kronos. Note 1: Excluding a one-time special charge in the second quarter of Fiscal 2001. ### (C) 2003 Kronos Incorporated. Kronos and the Kronos logo are registered trademarks of Kronos Incorporated or a related company. All other product and company names mentioned are used for identification purposes only and may be trademarks of their respective owners. KRONOS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and per share amounts) UNAUDITED
Three Months Ended Twelve Months Ended ------------------------------- -------------------------------- September 30, September 30, September 30, September 30, 2003 2002 2003 2002 ------------- ------------- ------------- ------------- Net revenues: Product ...................................... $ 53,392 $ 48,815 $ 178,607 $ 158,466 Maintenance .................................. 33,434 28,041 124,911 105,519 Professional services ........................ 26,123 22,388 93,837 78,392 ------------ ------------ ------------ ------------ 112,949 99,244 397,355 342,377 Cost of sales: Costs of product ............................. 12,054 10,621 42,507 37,577 Costs of maintenance and professional services 31,241 25,547 112,897 94,061 ------------ ------------ ------------ ------------ 43,295 36,168 155,404 131,638 ------------ ------------ ------------ ------------ Gross profit ............................. 69,654 63,076 241,951 210,739 Operating expenses and other income: Sales and marketing .......................... 32,463 30,194 123,937 109,780 Engineering, research and development ........ 10,534 10,760 38,463 36,970 General and administrative ................... 7,386 6,082 25,884 21,196 Amortization of intangible assets ............ 988 857 3,481 2,970 Other income, net ............................ (564) (1,001) (4,375) (4,668) ------------ ------------ ------------ ------------ 50,807 46,892 187,390 166,248 Income before income taxes ............... 18,847 16,184 54,561 44,491 Provision for income taxes ...................... 6,876 5,824 19,895 15,664 ------------ ------------ ------------ ------------ Net income ............................... $ 11,971 $ 10,360 $ 34,666 $ 28,827 ============ ============ ============ ============ Net income per common share: Basic .................................... $ 0.59 $ 0.53 $ 1.74 $ 1.47 ============ ============ ============ ============ Diluted .................................. $ 0.57 $ 0.52 $ 1.68 $ 1.42 ============ ============ ============ ============ Weighted-average common shares outstanding: Basic .................................... 20,180,863 19,612,567 19,889,961 19,608,877 ============ ============ ============ ============ Diluted .................................. 21,054,345 19,946,839 20,668,679 20,362,541 ============ ============ ============ ============
KRONOS INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) UNAUDITED
September 30, September 30, 2003 2002 ------------- ------------- ASSETS Current assets: Cash and equivalents ................................................................... $ 69,884 $ 34,117 Marketable securities .................................................................. 17,056 16,096 Accounts receivable, less allowances of $7,833 ......................................... 84,275 84,128 at September 30, 2003 and $9,697 at September 30, 2002 Deferred income taxes .................................................................. 8,427 6,893 Other current assets ................................................................... 18,649 17,835 --------- --------- Total current assets ............................................................ 198,291 159,069 Property, plant and equipment, net .......................................................... 39,263 38,635 Marketable securities ....................................................................... 44,065 24,534 Intangible assets ........................................................................... 22,938 20,545 Goodwill .................................................................................... 70,446 56,167 Capitalized software, net ................................................................... 23,012 22,237 Other assets ................................................................................ 14,791 11,837 --------- --------- Total assets .................................................................... $ 412,806 $ 333,024 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable ....................................................................... $ 6,584 $ 6,212 Accrued compensation ................................................................... 35,655 32,674 Accrued expenses and other current liabilities ......................................... 16,169 10,831 Deferred product revenues .............................................................. 3,387 6,853 Deferred professional service revenues ................................................. 39,745 33,551 Deferred maintenance revenues .......................................................... 75,505 66,550 --------- --------- Total current liabilities ....................................................... 177,045 156,671 Deferred maintenance revenues ............................................................... 7,319 8,588 Deferred income taxes ....................................................................... 8,190 4,565 Other liabilities ........................................................................... 3,655 3,531 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 50,000,000 shares, 20,293,185 and 19,911,952 shares issued at September 30, 2003 and September 30, 2002, respectively 203 199 Additional paid-in capital ............................................................. 38,211 31,494 Retained earnings ...................................................................... 177,841 143,175 Cost of Treasury Stock (173 shares and 366,062 shares at September 30, 2003 and September 30, 2002, respectively) ........................... (6) (14,020) Accumulated other comprehensive loss: Foreign currency translation ....................................................... (8) (1,372) Net unrealized gain on available-for-sale investments .............................. 356 193 --------- --------- 348 (1,179) Total shareholders' equity ...................................................... 216,597 159,669 --------- --------- Total liabilities and shareholders' equity ...................................... $ 412,806 $ 333,024 ========= =========