EX-99.1 2 exhibit99-1.htm

EXHIBIT 99.1

For Immediate Release Kronos Contact:    Paul Lacy
(978)947-4944
placy@kronos.com

KRONOS® REPORTS THIRD QUARTER FISCAL 2004 RESULTS

Revenue up 17 percent on strong demand for Workforce Central® 5

CHELMSFORD, Mass., July 27, 2004 — Kronos® Incorporated (Nasdaq: KRON) today reported financial results for the third quarter of Fiscal 2004. Net income for the third quarter of Fiscal 2004 increased 33 percent to $11.2 million, or $.35 per diluted share, as compared to $8.4 million, or $.27 per diluted share, for the same period a year ago. Revenue for the third quarter increased 17 percent to $114.7 million as compared to $98.2 million for the same period a year ago.

For the nine-month period, net income has risen 24 percent to $28.2 million, or $.88 per diluted share, as compared to $22.7 million, or $.74 per diluted share, for the same period last year. For the nine-month period, revenue is up 13 percent to $322.4 million, as compared to $284.4 million for the first nine months of the prior year.

“We are very pleased with our third-quarter results. We are experiencing the benefits of our new product offering, which is being enthusiastically embraced by both new and existing customers,” said Mark S. Ain, Kronos’ chief executive officer. “Even in a somewhat volatile economic environment, the power of our Workforce Central® 5 suite had a tremendous impact on our third quarter. Workforce Central 5 sales activity drove product revenue up 21 percent year-over-year and fueled growth in each of our vertical markets.”

Kronos has shipped well over one million employee licenses of Workforce Central 5 to new and existing customers since announcing general availability in March.

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This marks Kronos’ 98th straight quarter of revenue growth compared to the same period in the previous year, and 69th consecutive quarter of profitability (Note 1). Total deferred maintenance, professional services, and product revenue at the end of the quarter was $133.1 million. In addition to this deferred revenue, the company has a growing backlog of professional services engagements not reflected on the balance sheet. Kronos’ balance sheet remains strong with $167.4 million in cash and investments and no debt.

Third-Quarter Highlights

Leading organizations around the world continue to choose Kronos solutions to staff, develop, deploy, track, and reward their workforce. Notable wins from new and existing customers during the quarter for enterprise-wide deployments of Kronos solutions included:

  o The City of Atlanta, Georgia signed on as a new customer, representing one of the largest cities to completely automate all employees with Kronos;

  o The Mobile County Public School System in Alabama selected Kronos solutions in an effort to electronically collect time and attendance data for its 9,000 employees;

  o Superior Super Warehouse pared down three different vendors and chose Kronos as its trusted, single-source provider for human resources, payroll, scheduling, and time and labor solutions for use by 3,500 employees; and

  o Visteon Corporation, an automotive supplier, is deploying a Kronos solution for its thousands of employees in the U.K., France Germany, Spain, and Portugal. The Kronos suite required no customizations, highlighting its wide-ranging applicability across borders.

In addition to broad customer acceptance of Kronos’ recently introduced workforce management solutions — including Workforce Central 5 and Kronos iSeries Central 5 — highlights of the third quarter included being recognized among the top “HR Management Systems” vendors evaluated by Forrester Research. Kronos is increasingly being recognized for the full breadth of its extensive line-up of workforce management solutions, as well as for its remarkably consistent financial performance.

Other highlights of the quarter included Kronos’ ranking as one of the “100 Fastest-Growing Technology Companies” by Business 2.0, one of the “Hottest Companies of 2004” by START magazine, one of the The Boston Globe’s “Globe 100” companies, one of the “Top 100” companies by MSI magazine, and one of the “Healthcare Informatics 100” companies by Healthcare Informatics.

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Outlook

Kronos will sustain its Workforce Central 5 momentum in the fourth quarter by shipping two additional Web-based workforce management applications: an advanced scheduling solution for retail, and a solution for administering disciplinary and perfect attendance policies in the workplace.

“Our people are clearly energized, our new products are being enthusiastically embraced by customers, and our sales pipeline is healthy. We’re in great shape going into the final quarter of Fiscal 2004,” concluded Ain. “We expect to report fourth quarter revenue in the range of $124-129 million and earnings in the range of $.47-.53 per share, which translates to expectations of Fiscal 2004 revenue of $446-451 million, with earnings per share in the range of $1.35-1.41.”

Conference Call Webcast

Kronos senior management plans to review its third-quarter 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 the most trusted name in workforce management. Kronos helps organizations staff, develop, deploy, track, and reward their workforce, resulting in reduced costs, increased productivity, better decision-making, improved employee satisfaction, and alignment with organizational objectives. More than 20 million people use a Kronos solution every day. Learn more about Kronos’ high-impact enterprise solutions 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.

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© 2004 Kronos Incorporated. Kronos, Workforce Central, and the Kronos logo are registered trademarks of Kronos Incorporated or a related company. iSeries is a trademark of International Business Machines Corporation. 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
Nine Months Ended
July 3,
2004
 June 28,
2003
 July 3,
2004
 June 28,
2003
Net revenues:                    
      Product     $ 50,941   $ 42,185   $ 135,047   $ 125,215  
      Maintenance       35,427     32,826     104,169     91,477  
      Professional services       28,332     23,205     83,136     67,714  
        114,700     98,216     322,352     284,406  
Cost of sales:                            
      Costs of product       10,802     10,097     31,014     30,453  
      Costs of maintenance and professional services       34,157     28,664     99,505     82,937  
        44,959     38,761     130,519     113,390  
           Gross profit       69,741     59,455     191,833     171,016  
Operating expenses and other income:    
      Sales and marketing       33,627     30,544     96,991     90,193  
      Engineering, research and development       11,028     9,894     31,476     27,929  
      General and administrative       7,943     6,063     22,355     18,498  
      Amortization of intangible assets       1,003     985     3,011     2,493  
      Other income, net       (973 )   (1,384 )   (4,344 )   (3,811 )
        52,628     46,102     149,489     135,302  

           Income before income taxes		       17,113     13,353     42,344     35,714  
Provision for income taxes       5,958     4,969     14,157     13,019  
           Net income     $ 11,155   $ 8,384   $ 28,187   $ 22,695  
Net income per common share:    
           Basic     $ 0.36   $ 0.28   $ 0.91   $ 0.76  
           Diluted     $ 0.35   $ 0.27   $ 0.88   $ 0.74  
Weighted-average common shares outstanding:                            
           Basic       31,109,965     29,828,427     30,930,863     29,689,491  
           Diluted       32,050,336     30,982,514     31,986,345     30,810,186  

       KRONOS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
UNAUDITED

July 3,
2004
 September 30,
2003
                        ASSETS                
Current assets:            
      Cash and equivalents     $ 49,391   $ 42,509  
      Marketable securities       40,549     44,431  
      Accounts receivable, less allowances of $8,337    
           at July 3, 2004 and $7,833 at September 30, 2003       88,306     84,275  
      Deferred income taxes       8,048     8,427  
      Other current assets       19,094     18,649  
               Total current assets       205,388     198,291  

Marketable securities		       77,412     44,065  
Property, plant and equipment, net       40,705     39,263  
Intangible assets       21,501     22,938  
Goodwill       74,076     70,446  
Capitalized software, net       23,036     23,012  
Other assets       17,918     14,791  
               Total assets     $ 460,036   $ 412,806  
                        LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:    
      Accounts payable     $ 8,374   $ 6,584  
      Accrued compensation       37,011     35,655  
      Accrued expenses and other current liabilities       12,188     16,169  
      Deferred product revenues       8,241     3,387  
      Deferred professional service revenues       37,830     39,745  
      Deferred maintenance revenues       79,681     75,505  
               Total current liabilities       183,325     177,045  

Deferred maintenance revenues 		      7,393     7,319  
Deferred income taxes       9,168     8,190  
Other liabilities       2,783     3,655  
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, 31,170,523 and 30,439,518 shares                
           issued at July 3, 2004 and September 30, 2003,                
            respectively       312     304  
      Additional paid-in capital       50,860     38,104  
      Retained earnings       206,028     177,841  
      Accumulated other comprehensive income:    
           Foreign currency translation       489     (8 )
           Net unrealized gain (loss) on available-for-sale investments       (322 )   356  
        167     348  

                Total shareholders' equity		       257,367     216,597  
                Total liabilities and shareholders' equity     $ 460,036   $ 412,806