EXHIBIT 99.1
For Immediate Release | Kronos Contact: | Paul Lacy |
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(978)947-4944 | ||
placy@kronos.com |
KRONOS® REPORTS SECOND QUARTER FISCAL 2004 RESULTS
Results reflect double-digit growth over prior year as customers embrace Kronos’ broad suite of
human resources, payroll, scheduling, and time and labor solutions
CHELMSFORD, Mass., April 26, 2004— Kronos® Incorporated (Nasdaq: KRON) today reported financial results for the second quarter of Fiscal 2004. Net income for the second quarter of Fiscal 2004 increased 32 percent to $9.6 million, or $.30 per diluted share, as compared to $7.3 million, or $.24 per diluted share, for the same period a year ago. Net income was favorably impacted in the quarter by an improvement in the tax rate from 35 percent in the first quarter of Fiscal 2004 to 31 percent, resulting from the completion of tax audits that reduced overall tax exposure for the company. Revenue for the second quarter increased 12 percent to $108.0 million as compared to $96.5 million for the same period a year ago.
For the six-month period, net income rose 19 percent to $17.0 million, or $.53 per diluted share, as compared to $14.3 million, or $.47 per diluted share, for the same period last year. For the six-month period, revenue rose 12 percent to $207.7 million as compared to $186.2 million for the first six months of the prior year.
“We are very pleased with the strong performance we demonstrated this quarter. Solid execution in the field combined with the value inherent in our broadened product portfolio enabled Kronos to generate strong top- and bottom-line results,” said Mark S. Ain, Kronos’ chief executive officer. “With healthy performance across the board in the wide spectrum of markets that we serve, it is clear that organizations of all types and sizes need Kronos solutions to help them better align their workforce with corporate objectives.”
This marks Kronos’ 97th straight quarter of revenue growth compared to the same period in the previous year, and 68th consecutive quarter of profitability(Note 1). Kronos’ balance sheet remains strong with $150.5 million in cash and investments and no debt. Total deferred maintenance, professional services, and product revenue at the end of the quarter was $130.0 million.
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Workforce Central® 5
Kronos announced general availability of Workforce Central 5 during the final week of the quarter. In addition to containing innovative new applications that allow employers to schedule and manage their workforce more efficiently, Workforce Central 5 also includes significant enhancements in Kronos’ integrated human resources and payroll applications. “With Workforce Central 5, Kronos’ value proposition is more apparent now than ever before across our broad spectrum of target markets,” stated Ain. “We see substantial opportunities for Workforce Central 5.”
Quarterly Wins
“Our product portfolio of human resources, payroll, scheduling, and time and labor solutions is being well received by both long-standing and new customers who are grappling with the challenges of controlling costs and improving productivity,” continued Ain. “We experienced very strong activity from customers who moved from a legacy platform to a Kronos solution during the quarter. Indicative of the strong market acceptance of Kronos solutions was the 30 percent increase in contracts greater than $100,000 during the quarter.”
Kronos continues to be the clear choice for large-scale employers seeking enterprise-wide, single-database, centralized deployments of Web-based time and labor solutions. Kronos is the standard time and labor vendor for large employers across all vertical markets, with thousands of satisfied enterprise customers.
Notable wins from new and existing customers during the quarter for enterprise-wide deployments of Kronos solutions included Beaulieu of America, Best Buy Canada, Clemens Markets, Columbia University, Cox Enterprises, Jersey City Medical Center, Louisiana State University Health Science Centers, New York State Unified Court System, Norton Healthcare, Park Nicollet Health Services, Roseburg Forest Products, Roundy’s, and many others.
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Outlook
“We expect to report third quarter revenue in the range of $113-117 million and earnings in the range of $.32-.38 per share,” concluded Ain. “We have slightly adjusted our guidance for Fiscal 2004. We expect to report Fiscal 2004 revenue of $444-451 million, with earnings per share in the range of $1.29-1.35.”
Conference Call Webcast
Kronos senior management plans to review its second-quarter results during a conference call today beginning at 4:30 p.m. Eastern. The conference call will be webcast live athttp://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. 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.
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© 2004 Kronos Incorporated. Kronos, Workforce Central, 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 | Six Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
April 3, 2004 | March 29, 2003 | April 3, 2004 | March 29, 2003 | |||||||||||
Net revenues: | ||||||||||||||
Product | $ | 44,966 | $ | 44,143 | $ | 84,106 | $ | 83,030 | ||||||
Maintenance | 34,595 | 29,666 | 68,742 | 58,651 | ||||||||||
Professional services | 28,418 | 22,672 | 54,804 | 44,509 | ||||||||||
107,979 | 96,481 | 207,652 | 186,190 | |||||||||||
Cost of sales: | ||||||||||||||
Costs of product | 10,512 | 10,929 | 20,212 | 20,356 | ||||||||||
Costs of maintenance and professional services | 33,303 | 28,036 | 65,348 | 54,273 | ||||||||||
43,815 | 38,965 | 85,560 | 74,629 | |||||||||||
Gross profit | 64,164 | 57,516 | 122,092 | 111,561 | ||||||||||
Operating expenses and other income: | ||||||||||||||
Sales and marketing | 32,344 | 30,960 | 63,364 | 59,649 | ||||||||||
Engineering, research and development | 10,773 | 9,552 | 20,448 | 18,035 | ||||||||||
General and administrative | 8,053 | 6,390 | 14,412 | 12,435 | ||||||||||
Amortization of intangible assets | 1,001 | 789 | 2,008 | 1,508 | ||||||||||
Other income, net | (1,853 | ) | (1,522 | ) | (3,371 | ) | (2,427 | ) | ||||||
50,318 | 46,169 | 96,861 | 89,200 | |||||||||||
Income before income taxes | 13,846 | 11,347 | 25,231 | 22,361 | ||||||||||
Provision for income taxes | 4,226 | 4,085 | 8,199 | 8,050 | ||||||||||
Net income | $ | 9,620 | $ | 7,262 | $ | 17,032 | $ | 14,311 | ||||||
Net income per common share: | ||||||||||||||
Basic | $ | 0.31 | $ | 0.24 | $ | 0.55 | $ | 0.48 | ||||||
Diluted | $ | 0.30 | $ | 0.24 | $ | 0.53 | $ | 0.47 | ||||||
Weighted-average common shares outstanding: | ||||||||||||||
Basic | 30,992,982 | 29,780,302 | 30,841,312 | 29,620,022 | ||||||||||
Diluted | 32,025,582 | 30,833,413 | 31,954,350 | 30,724,022 | ||||||||||
KRONOS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
UNAUDITED
April 3, 2004 | September 30, 2003 | |||||||
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ASSETS | ||||||||
Current assets: | ||||||||
Cash, equivalents and marketable securities | $ | 103,924 | $ | 86,940 | ||||
Accounts receivable, less allowances of $7,845 | 83,111 | 84,275 | ||||||
at April 3, 2004 and $7,833 at September 30, 2003 | ||||||||
Deferred income taxes | 10,086 | 8,427 | ||||||
Other current assets | 18,605 | 18,649 | ||||||
Total current assets | 215,726 | 198,291 | ||||||
Marketable securities | 46,566 | 44,065 | ||||||
Property, plant and equipment, net | 39,593 | 39,263 | ||||||
Intangible assets | 21,729 | 22,938 | ||||||
Goodwill | 72,807 | 70,446 | ||||||
Capitalized software, net | 23,036 | 23,012 | ||||||
Other assets | 16,340 | 14,791 | ||||||
Total assets | $ | 435,797 | $ | 412,806 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 7,450 | $ | 6,584 | ||||
Accrued compensation | 28,079 | 35,655 | ||||||
Accrued expenses and other current liabilities | 9,715 | 16,169 | ||||||
Deferred product revenues | 5,486 | 3,387 | ||||||
Deferred professional service revenues | 36,613 | 39,745 | ||||||
Deferred maintenance revenues | 81,202 | 75,505 | ||||||
Total current liabilities | 168,545 | 177,045 | ||||||
Deferred maintenance revenues | 6,679 | 7,319 | ||||||
Deferred income taxes | 8,665 | 8,190 | ||||||
Other liabilities | 3,650 | 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, 31,127,455 and 30,439,778 shares | ||||||||
issued at April 3, 2004 and September 30, 2003, respectively | 311 | 304 | ||||||
Additional paid-in capital | 53,484 | 38,110 | ||||||
Retained earnings | 194,873 | 177,841 | ||||||
Cost of Treasury Stock (45,158 shares and 260 shares at | ||||||||
April 3, 2004 and September 30, 2003, respectively) | (1,503 | ) | (6 | ) | ||||
Accumulated other comprehensive income: | ||||||||
Foreign currency translation | 983 | (8 | ) | |||||
Net unrealized gain on available-for-sale investments | 110 | 356 | ||||||
1,093 | 348 | |||||||
Total shareholders' equity | 248,258 | 216,597 | ||||||
Total liabilities and shareholders' equity | $ | 435,797 | $ | 412,806 | ||||