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 24, 2003 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 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Businesses Acquired Not Applicable (b) Pro Forma Financial Information Not Applicable (c) Exhibits Exhibit No. Description ----------- ----------- 99.1 Press release of Kronos Incorporated dated July 24, 2003 ITEM 9. Regulation FD Disclosure (Information furnished pursuant to Item 12, "Disclosure of Results of Operations and Financial Condition"). On July 24, 2003, Kronos Incorporated announced its financial results for the third quarter ended June 28, 2003. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K. In accordance with the procedural guidance in SEC Release No. 33-8216, the information in this Form 8-K and the Exhibit attached hereto is being furnished under "Item 9. Regulation FD Disclosure" rather than under "Item 12. Disclosure of Results of Operations and Financial Condition." The information 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. 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 hereunto duly authorized. Date: July 24, 2003 KRONOS INCORPORATED By: /s/ Paul A. Lacy ----------------------------------------- Paul A. Lacy Executive Vice President, Chief Financial and Administrative Officer (Duly Authorized Officer and Principal Financial Officer) EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Press release of Kronos Incorporated dated July 24, 2003 - -------------------------------------------------------------------------------- Exhibit 99.1 For Immediate Release Kronos Contact: Paul Lacy (978) 947-4944 placy@kronos.com Kronos(R)REPORTS RESULTS FOR THIRD QUARTER OF FISCAL 2003 CHELMSFORD, Mass., July 24, 2003 -- Kronos(R) Incorporated (Nasdaq: KRON), today reported that net income for the third quarter of Fiscal 2003 rose 29 percent to $8.4 million, or $.41 per diluted share, as compared to $6.5 million, or $.32 per diluted share, for the same period a year ago. Revenue for the third quarter rose 13 percent to $98.2 million as compared to $87.1 million for the same period a year ago. For the nine-month period, net income rose 23 percent to $22.7 million, as compared to $18.5 million for the same period last year. For the nine-month period, revenue rose 17 percent to $284.4 million as compared to $243.1 million for the first nine months of the prior year. "The bottom line is that Kronos is growing by delivering what customers need today: low-cost, high-impact applications that have been demonstrated to improve productivity and reduce costs in the workplace," said Mark S. Ain, Kronos' chief executive officer. "Our company remains financially strong, and our people remain focused on delivering a broad range of employee relationship management solutions and superb customer service." This marks Kronos' 94th consecutive quarter of revenue growth compared to the same period in the previous year, and 65th consecutive quarter of profitability (Note 1). Kronos' balance sheet remains strong, with $103.1 million in cash and investments and no debt. Total deferred maintenance, professional services and product revenue at the end of the quarter was $119.3 million. Cash flow from operations was $13.1 million for the quarter compared to $8.2 million for the same period last year. For the nine-month period, cash flow from operations was $53.2 million compared to $42.7 million for the same period last year. Days sales outstanding (DSO) for accounts receivable was 65 days at the end of the quarter. (more) During the quarter, Kronos acquired the Abra Enterprise customer base from Best Software in a move which broadened its presence in the ERM market. Kronos has assumed responsibility for providing frontline support and fulfilling maintenance obligations for these customers. "This was a very strategic, well-timed move for Kronos and another investment in our future," stated Ain. The acquisition firmly planted Kronos' stake in the market for human resources and payroll applications, while giving these customers a fresh outlook on how ERM solutions can drive cost reductions and increased productivity into their operations. Half of the customers have already given a verbal commitment to migrate to Kronos' ERM suite and many conversions are already underway. "The overwhelming response indicates that these customers see tremendous value in what we've done with our HR and payroll products and take comfort in forming a long-term relationship." Quarterly Wins "A record number of new customers signed contracts that were greater than $100,000 during the quarter, and our upgrade cycle continues to build momentum as existing customers seize the value of our Workforce Central suite," continued Ain. "We remain the vendor of choice for both the largest organizations in the world, as well as mid-size businesses who are looking for an affordable ERM solution from a trusted industry expert." During the quarter, Kronos closed contracts with Black & Decker Distribution, Comerica Bank, DHL Worldwide Express, Interstate Brands Corporation, Lutheran Medical Center, Manhattan Public Schools, Owens Corning, Salvation Army, Sarasota County in Florida, Tenet Healthcare, Trader Joe's, and many others. Outlook "It's great to be entering our fourth quarter with sustained momentum. We will continue to make sensible acquisitions, hire the best and brightest talent, and build out our ERM suite -- all wise strategies in support of our long-term growth plans," concluded Ain. "Assuming that the current economic environment continues but does not worsen, we expect to report fourth quarter revenue in the range of $106-110 million and earnings in the range of $.52-.57 per share. That guidance translates into anticipated revenue of $390-394 million for Fiscal 2003 as a whole, with earnings per share in the range of $1.62-1.67." (more) 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 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, improve employee satisfaction, align employee performance with organizational objectives, and put real-time information in the hands of decision makers. 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, the ability to close potential product sales transactions, the ability to realize revenues from the sales pipeline, the market acceptance of our new products, 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, 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 Nine Months Ended -------------------------------- ------------------------------- June 28, June 29, June 28, June 29, 2003 2002 2003 2002 ------------ ------------- ------------- ------------ Net revenues: Product ...................................... $ 42,185 $ 40,458 $ 125,215 $ 109,651 Maintenance .................................. 32,826 27,104 91,477 77,478 Professional services ........................ 23,205 19,508 67,714 56,004 ------------ ------------ ------------ ------------ 98,216 87,070 284,406 243,133 Cost of sales: Costs of product ............................. 10,097 10,106 30,453 26,956 Costs of maintenance and professional services 28,156 24,770 81,656 68,514 ------------ ------------ ------------ ------------ 38,253 34,876 112,109 95,470 ------------ ------------ ------------ ------------ Gross profit ............................. 59,963 52,194 172,297 147,663 Operating expenses and other income: Sales and marketing .......................... 31,052 28,337 91,474 79,586 Engineering, research and development ........ 9,894 9,023 27,929 26,210 General and administrative ................... 6,063 5,507 18,498 15,114 Amortization of intangible assets ............ 985 746 2,493 2,113 Other income, net ............................ (1,384) (1,378) (3,811) (3,667) ------------ ------------ ------------ ------------ 46,610 42,235 136,583 119,356 Income before income taxes ............... 13,353 9,959 35,714 28,307 Provision for income taxes ...................... 4,969 3,462 13,019 9,840 ------------ ------------ ------------ ------------ Net income ............................... $ 8,384 $ 6,497 $ 22,695 $ 18,467 ============ ============ ============ ============ Net income per common share: Basic .................................... $ 0.42 $ 0.33 $ 1.15 $ 0.94 ============ ============ ============ ============ Diluted .................................. $ 0.41 $ 0.32 $ 1.10 $ 0.90 ============ ============ ============ ============ Weighted-average common shares outstanding: Basic .................................... 19,885,619 19,658,011 19,792,994 19,607,647 ============ ============ ============ ============ Diluted .................................. 20,655,010 20,349,674 20,540,124 20,501,109 ============ ============ ============ ============ KRONOS INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) UNAUDITED June 28, September 30, 2003 2002 ---------- ------------- ASSETS Current assets: Cash and equivalents ........................................................ $ 44,558 $ 34,117 Marketable securities ....................................................... 22,118 16,096 Accounts receivable, less allowances of $7,831 .............................. 75,084 84,128 at June 28, 2003 and $9,697 at September 30, 2002 Deferred income taxes ....................................................... 8,327 6,893 Other current assets ........................................................ 19,165 17,835 --------- --------- Total current assets ................................................ 169,252 159,069 Property, plant and equipment, net ............................................. 39,261 38,635 Marketable securities .......................................................... 36,401 24,534 Intangible assets .............................................................. 25,012 20,545 Goodwill ....................................................................... 68,427 56,167 Capitalized software, net ...................................................... 22,644 22,237 Other assets ................................................................... 11,287 11,837 --------- --------- Total assets ........................................................ $ 372,284 $ 333,024 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable ............................................................ $ 6,550 $ 6,212 Accrued compensation ........................................................ 27,465 32,674 Accrued expenses and other current liabilities .............................. 13,571 10,831 Deferred product revenues ................................................... 4,029 6,853 Deferred professional service revenues ...................................... 34,413 33,551 Deferred maintenance revenues ............................................... 73,943 66,550 --------- --------- Total current liabilities ........................................... 159,971 156,671 Deferred maintenance revenues .................................................. 6,916 8,588 Deferred income taxes .......................................................... 6,577 4,565 Other liabilities .............................................................. 3,808 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, 20,032,082 and 19,911,952 shares issued at June 28, 2003 and September 30, 2002, respectively ....................................................... 200 199 Additional paid-in capital .................................................. 29,084 31,494 Retained earnings ........................................................... 165,870 143,175 Cost of Treasury Stock (173 shares and 366,062 shares at June 28, 2003 and September 30, 2002, respectively) ...................... (6) (14,020) Accumulated other comprehensive loss: Foreign currency translation ............................................. 11 (1,372) Net unrealized (loss)/gain on available-for-sale investments ............. (147) 193 --------- --------- (136) (1,179) Total shareholders' equity .......................................... 195,012 159,669 --------- --------- Total liabilities and shareholders' equity .......................... $ 372,284 $ 333,024 ========= =========