8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 27, 2006

KRONOS INCORPORATED

(Exact name of registrant as specified in its charter)

0-20109

(Commission file number)

	Massachusetts				04-2640942
(State or other jurisdiction of				(I.R.S. Employer
		incorporation)	Identification Number)

297 Billerica Road, Chelmsford, MA 01824

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (978) 250-9800

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On July 27, 2006, Kronos Incorporated announced its financial results for the fiscal quarter ended July 1, 2006. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits

(c) Exhibits

The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:

99.1 Press Release, entitled “Kronos® reports third quarter fiscal 2006 results,” issued by Kronos Incorporated on July 27, 2006.

SIGNATURE

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 hereunto duly authorized.

KRONOS INCORPORATED

Date: July 27, 2006 By: /s/ Mark V. Julien__________

Mark V. Julien

Chief Financial Officer

(Duly Authorized Officer and Principal

Financial Officer)

EXHIBIT INDEX

Exhibit No. Description

99.1 Press Release, entitled “Kronos® reports third quarter fiscal 2006 results,” issued by Kronos Incorporated on July 27, 2006.

EX-99

Exhibit 99.1

For Immediate Release Kronos Contact: Paul Lacy

(978) 947-4944

placy@kronos.com

KRONOS^® REPORTS THIRD-QUARTER FISCAL 2006 RESULTS

Revenue and Earnings In Line With Updated Guidance

CHELMSFORD, Mass., July 27, 2006 — Kronos^® Incorporated (Nasdaq: KRON) today reported total revenue for the third quarter of Fiscal 2006 of $141.4 million compared to $130.0 million for the same period a year ago. GAAP net income for the third quarter of Fiscal 2006 was $10.3 million, or $0.32 per diluted share compared to $12.6 million, or $0.39 per diluted share, for the same period a year ago. Third-quarter Fiscal 2006 earnings include a charge of $0.09 per diluted share for stock-based compensation, which is not reflected in the previous year’s third-quarter earnings. Third-quarter Fiscal 2006 earnings also include a charge for amortization of intangible assets of $0.04 per diluted share. The charge for amortization of intangible assets was $0.03 per diluted share for the same period a year ago.

For the nine-month period, total revenue was $412.8 million as compared to $368.9 million for the first nine months of the prior year. For the nine-month period, GAAP net income was $26.4 million, or $0.82 per diluted share, compared to $34.5 million, or $1.06 per diluted share, for the same period last year. Earnings for the first nine months of Fiscal 2006 include a charge of $0.27 per diluted share for stock-based compensation, which is not reflected in earnings for the first nine months of Fiscal 2005. Earnings for the first nine months of Fiscal 2006 also include a charge for amortization of intangible assets of $0.11 per diluted share. The charge for amortization of intangible assets was $0.07 per diluted share for the first nine months of Fiscal 2005.

Kronos’ third-quarter results mark the company’s 106^th consecutive quarter of year-over-year revenue growth and 77^th consecutive quarter of profitability, continuing one of the longest records of growth and profitability in the software industry ^{(Note 1)}.

Total deferred maintenance, professional services, and product revenue on the balance sheet at the end of the third quarter of Fiscal 2006 totaled $152.2 million. In addition to this deferred revenue, Kronos has a backlog of uncommitted professional services engagements of approximately $57.0 million.

Kronos exited the third quarter of Fiscal 2006 with $178.2 million in cash and investments and no debt. Days sales outstanding for the quarter was 66 days. During Q3 Fiscal 2006, Kronos repurchased 164,607 shares of common stock for $6.5 million, and made payments on acquisitions of $4.5 million. For the nine-month period, the company has repurchased 503,857 shares of common stock for $20.6 million, and made payments on acquisitions of $13.1 million.

“For both Q3 and the nine months of Fiscal 2006, we continued to grow revenue and earnings, excluding charges related to stock option expense and amortization of intangible assets,” said Kronos Chief Executive Officer Aron Ain. “That being said, we remain keenly aware of the recent variability in our revenue stream and are focused on improving predictability as we continue to execute on our strategy to grow the company. In particular, we believe that our planned acquisition of Unicru, with its significant recurring revenue stream and highly complementary solution, marks an important step in delivering on these objectives. Acquiring Unicru expands our value proposition, offering customers of both organizations the benefits of a combined talent management and workforce management solution to optimize workforce performance. Ultimately, we believe that the Kronos-Unicru combination is not only a natural one, but one which fundamentally changes the game in our industry, carries forward our commitment to solving customers’ greatest workforce management challenges, and positions us to continue to expand our business.”

Third-Quarter Highlights

• Technology and market leadership further extended with the newest release of the Workforce Central^® suite — With the launch of Workforce Central 5.2 in Q3, Kronos further extended its position as the leading workforce management solutions provider. Kronos’ innovative and comprehensive suite of applications enables organizations to create a Demand-Driven Workforce Management environment by aligning complex workforces with business drivers, regulatory requirements, and employee needs to optimize organizational performance. The new release features dozens of significant enhancements to all products, as well as the introduction of new modules such as Workforce Operations Planner™, a collaborative, enterprise budgeting solution for long-term labor forecasting and demand driven workforce management for the retail sector.

• ClarityMatters acquisition delivers on Workforce Analytics vision — Recognizing the growing role of business intelligence in managing the workforce, Kronos acquired privately held ClarityMatters, a workforce analytics solution provider and business analytics consulting firm. The ClarityMatters solution is being offered as Workforce Analytics™, a best-in-class business intelligence tool optimized for workforce management that is fully integrated with the other powerful applications in the Workforce Central suite.

• Healthcare industry leadership — Highlighting the company’s continued growth, sustained profitability, and focus on the healthcare industry, leading analyst firm Gartner, Inc. positioned Kronos in the “Market Forces” category in “The U.S. Healthcare ERP Market Looks for Innovation” written by John-David Lovelock, Chad Eschinger, and Vi Shaffer and published on April 18, 2006. According to Gartner, "Market force vendors are typically companies that have more than 10 percent of market share. Vendors in this space have an established healthcare reputation and market penetration.”

• Notable customer wins — Organizations across a wide range of industries continue to choose Kronos solutions to staff, develop, deploy, track, and reward their workforce. Notable wins during the quarter included:

• The State of Colorado Department of Human Services purchased Kronos’ time and labor and absence management applications for thousands of employees at hundreds of locations. This customer selected Kronos because of its superior product and service capabilities, and its longstanding relationship with the company.

• Somerfield, a leading UK grocer, has selected Kronos for Retail to optimize the deployment of 50,000 colleagues across its 1,100 store chain. Somerfield's deployment of Kronos for Retail will enable an integrated demand-driven approach to workforce management, including budgeting, forecasting, scheduling, and time and attendance. This will allow the organization to increase productivity, and improve customer and employee satisfaction.

• Carilion Health System, a physician clinic and hospital network, signed an agreement for 12,000 employee licenses of Workforce Central, including absence management, which will be deployed across multiple locations. Carilion will utilize Kronos’ attendance and leave applications to streamline the process and reduce costs associated with their compliance to the Family Medical Leave Act (FMLA).

Outlook

In anticipation of the closure of the planned acquisition of Unicru, Inc. on July 31, 2006, Kronos management offers the following guidance for the fourth quarter of Fiscal 2006 and Fiscal Year 2006:

Fourth-Quarter Fiscal 2006:

• Total revenue is expected to be in the range of $157.0-$165.0 million.

• Net income per diluted share is expected to be in the range of $0.41-$0.47.

• The charge for stock-based compensation, which is included in the above-mentioned range of earnings expectations, is expected to be approximately $0.09 per diluted share.

• The charge for amortization of intangible assets, which is included in the above-mentioned range of earnings expectations, is expected to be approximately $0.07 per diluted share.

• Earnings guidance for the fourth quarter of Fiscal 2006 includes a one-time charge of $0.01 per diluted share for the repatriation of earnings from foreign subsidiaries, under Internal Revenue Code section 965.

Fiscal Year 2006:

• Total revenue is expected to be in the range of $570.0-$578.0 million.

• Net income per diluted share is expected to be in the range of $1.23-$1.29.

• The charge for stock-based compensation, which is included in the above-mentioned range of earnings expectations, is expected to be approximately $0.36 per diluted share.

• The charge for amortization of intangible assets, which is included in the above-mentioned range of earnings expectations, is expected to be approximately $0.18 per diluted share.

• Earnings guidance for Fiscal Year 2006 includes a one-time charge of $0.01 per diluted share for the repatriation of earnings from foreign subsidiaries, under Internal Revenue Code section 965.

Conference Call Webcast

Kronos senior management plans to review its third-quarter Fiscal 2006 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 empowers organizations around the world to effectively manage their workforce. At Kronos, we are experts who are solely focused on delivering software and services that enable organizations to reduce costs, increase productivity, improve employee satisfaction, and ultimately enhance the level of service they provide. Kronos serves customers in more than 50 countries through its network of offices, subsidiaries, and distributors. Widely recognized as a market and thought leader in managing the workforce, Kronos has unrivaled reach with more than 30 million people using a Kronos solution every day. Learn more about Kronos at www.kronos.com.

Safe Harbor Statement

This press release contains statements about the business prospects and estimates of Kronos’ financial results for future periods that are 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 and backlog, market acceptance of our new products and enhancements, including those formerly offered by AD OPT Technologies, our ability to monitor and manage discretionary costs, growth in the market for our products and within the economy generally, and potential acquisitions. These statements are based on management’s expectations of future events as of the date of this press release, and Kronos assumes no obligation to update any forward-looking statements as a result of new information or future events or developments. Actual results could differ materially from management’s expectations. 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 Annual Report on Form 10-K filed with the SEC on December 9, 2005 and its quarterly report on Form 10-Q filed with the SEC on May 11, 2006. 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.

###

© 2006 Kronos Incorporated, Kronos, Workforce Central, and the Kronos logo are registered trademarks and Workforce Analytics is a trademark 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						Nine Months Ended
	July 1, 2006			July 2, 2005			July 1, 2006			July 2, 2005
Net revenues:
Product	$	53,639		$	53,366		$	160,664		$	152,949
Maintenance		49,103			43,780			142,582			124,899
Professional services		38,636			32,845			109,598			91,040
		141,378			129,991			412,844			368,888
Cost of sales:
Costs of product		10,900			11,988			36,369			35,012
Costs of maintenance		14,889			11,293			43,655			33,416
Costs of professional services		31,024			26,920			91,534			76,591
		56,813			50,201			171,558			145,019
Gross profit		84,565			79,790			241,286			223,869
Operating expenses and other income:
Sales and marketing		42,631			36,547			123,798			107,025
Engineering, research and development		14,841			12,707			41,764			37,523
General and administrative		11,571			11,590			35,653			28,582
Amortization of intangible assets		1,479			1,160			4,686			3,450
Other income, net		(1,653	)		(1,119	)		(5,018	)		(4,432	)
		68,869			60,885			200,883			172,148
Income before income taxes		15,696			18,905			40,403			51,721
Provision for income taxes		5,363			6,276			13,992			17,211
Net income	$	10,333		$	12,629		$	26,411		$	34,510
Net income per common share:
Basic	$	0.32		$	0.39		$	0.83		$	1.08
Diluted	$	0.32		$	0.39		$	0.82		$	1.06
Weighted-average common shares outstanding:
Basic		32,030,501			31,985,327			31,913,196			31,822,612
Diluted		32,294,587			32,583,532			32,272,370			32,672,326
Stock-based compensation expense:
Costs of product	$	98		$	--			277		$	--
Costs of maintenance		313			--			902			--
Costs of professional services		651			--			1,847			--
Sales and marketing		1,393			--			4,049			--
Engineering, research and development		677			--			2,347			--
General and administrative		1,066			--			3,215			--
	$	4,198		$	--		$	12,637		$	--

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

	July 1, 2006			September 30, 2005
ASSETS
Current assets:
Cash and equivalents	$	80,965		$	43,492
Marketable securities		74,182			37,078
Accounts receivable, less allowances of $9,734
at July 1, 2006 and $11,156 at September 30, 2005		107,524			120,746
Deferred income taxes		7,281			10,937
Other current assets		23,168			20,142
Total current assets		293,120			232,395
Marketable securities		23,064			59,865
Property, plant and equipment, net		59,735			56,158
Customer related intangible assets		30,952			31,085
Other intangible assets		15,242			15,818
Goodwill		157,760			142,665
Capitalized software, net		22,792			23,092
Other assets		20,927			18,348
Total assets	$	623,592		$	579,426
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	10,320		$	9,013
Accrued compensation		45,764			43,379
Accrued expenses and other current liabilities		24,316			27,877
Deferred product revenues		2,739			3,938
Deferred professional service revenues		21,506			36,530
Deferred maintenance revenues		120,712			102,038
Total current liabilities		225,357			222,775
Deferred maintenance revenues		7,215			4,921
Deferred income taxes		13,036			15,261
Other liabilities		5,052			4,435
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, 31,970,308 and
31,724,460 shares issued at July 1, 2006 and September 30, 2005, respectively		320			317
Additional paid-in capital		65,848			52,802
Retained earnings		304,406			277,995
Accumulated other comprehensive income:
Foreign currency translation		2,771			1,307
Net unrealized (loss) on available-for-sale investments		(413	)		(387	)
		2,358			920
Total shareholders' equity		372,932			332,034
Total liabilities and shareholders' equity	$	623,592		$	579,426