Exhibit 99.1
For Immediate Release Kronos Contact: Paul Lacy
(978) 947-4944
placy@kronos.com
Kronos(R) REPORTS FIRST QUARTER FISCAL 2004 RESULTS
CHELMSFORD, Mass., Jan. 29, 2004 -- Kronos(R) Incorporated (Nasdaq: KRON) today
reported financial results for the first quarter of Fiscal 2004. Net income for
the first quarter of Fiscal 2004 increased 5.1 percent to $7.4 million, or $.23
per diluted share, as compared to $7.0 million, or $.23 per diluted share, for
the same period a year ago. Revenue for the first quarter totaled $99.7 million
as compared to $89.7 million for the same period a year ago.
"Kronos has performed well over the past year, consistently meeting or exceeding
our guidance in what has been a very challenging software environment," said
Mark S. Ain, Kronos' chief executive officer. "We continued this impressive
track record in our first quarter even with the investments that we're making to
execute our product delivery schedule and enhance our infrastructure. Demand for
our human resources, payroll, scheduling, and time and labor solutions remains
strong as organizations strive to reduce costs and improve labor productivity.
We are particularly pleased with the level of interest in our HR and payroll
solutions."
This marks Kronos' 96th straight quarter of revenue growth compared to the same
period in the previous year, and 67th consecutive quarter of profitability (Note
1). Kronos' balance sheet remains strong with $145.0 million in cash and
investments and no debt. Total deferred maintenance, professional services, and
product revenue at the end of the quarter was $124.0 million. Cash flow from
operations was $14.8 million for the quarter compared to $13.8 million for the
same period last year. Days sales outstanding for accounts receivable was 66
days at the end of the quarter.
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Quarterly Wins
In addition to gaining market share through strong customer acceptance of HR and
payroll solutions, Kronos continues to experience enthusiastic customer adoption
of its time and labor solutions from large employers around the world. Kronos
has hundreds of large-scale, enterprise-wide, centralized deployments of its
entirely Web-based solution. Many large-scale, enterprise customers are
broadening their use of a Kronos solution, including Cendant, which expanded its
enterprise license from 60,000 to 100,000 employees during the quarter, and
Cargill, which expanded its enterprise license from 15,000 to 32,000 employees.
In both cases, the organizations expanded their use of a Kronos solution to
accommodate additional business units and achieve an even broader
enterprise-wide view of their entire workforce.
"We believe that dynamics such as the nursing shortage in healthcare, the desire
to deploy the workforce more effectively in retail, and budget and funding cuts
in government and education are all driving organizations to seek help from
Kronos. While these are prevalent business drivers for Kronos today, the
overarching benefits achieved through the use of a Kronos solution remain the
same. Organizations turn to Kronos in an effort to boost worker productivity,"
continued Ain.
In addition to Cargill and Cendant, notable wins from new and existing customers
during the quarter for enterprise-wide deployments of Kronos solutions included
Auburn University, Centegra Health System, The Gymboree Corporation,
McGraw-Hill, Montefiore Medical Center, Nokia, North American Manufacturing,
Orange County Public Schools in Florida, Pacific Choice, Potlatch Corp., See's
Candies, Sunrise Growers, and many others.
Outlook
"We expect to report second quarter revenue in the range of $106-110 million and
earnings in the range of $.22-.28 per share," concluded Ain. "Our guidance for
Fiscal 2004 as a whole remains unchanged. We expect to report Fiscal 2004
revenue of $446-459 million, with earnings per share in the range of
$1.27-1.35."
Conference Call Webcast
Kronos senior management plans to review its first-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.
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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) 2004 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
---------------------------
January 3, December 28,
2004 2002
---------- ------------
Net revenues:
Product ...................................... $ 39,140 $ 38,887
Maintenance .................................. 34,147 28,985
Professional services ........................ 26,386 21,837
------------ ------------
99,673 89,709
Cost of sales:
Costs of product ............................. 9,700 9,427
Costs of maintenance and professional services 32,045 26,237
------------ ------------
41,745 35,664
------------ ------------
Gross profit ........................... 57,928 54,045
Operating expenses and other income:
Sales and marketing .......................... 31,020 28,689
Engineering, research and development ........ 9,675 8,483
General and administrative ................... 6,359 6,045
Amortization of intangible assets ............ 1,007 719
Other income, net ............................ (1,518) (905)
------------ ------------
46,543 43,031
Income before income taxes ............. 11,385 11,014
Provision for income taxes ....................... 3,973 3,965
------------ ------------
Net income ............................. $ 7,412 $ 7,049
============ ============
Net income per common share:
Basic .................................. $ 0.24 $ 0.24
============ ============
Diluted ................................ $ 0.23 $ 0.23
============ ============
Weighted-average common shares outstanding:
Basic .................................. 30,689,641 29,459,739
============ ============
Diluted ................................ 31,883,117 30,614,628
============ ============
KRONOS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
UNAUDITED
January 3, September 30,
2004 2003
---------- -------------
ASSETS
Current assets:
Cash and equivalents ................................................................ $ 49,733 $ 69,884
Marketable securities ............................................................... 46,474 17,056
Accounts receivable, less allowances of $7,551 ...................................... 73,480 84,275
at January 3, 2004 and $7,833 at September 30, 2003
Deferred income taxes ............................................................... 8,818 8,427
Other current assets ................................................................ 19,076 18,649
--------- ---------
Total current assets ........................................................ 197,581 198,291
Property, plant and equipment, net ....................................................... 39,491 39,263
Marketable securities .................................................................... 48,771 44,065
Intangible assets ........................................................................ 22,723 22,938
Goodwill ................................................................................. 72,591 70,446
Capitalized software, net ................................................................ 23,061 23,012
Other assets ............................................................................. 14,811 14,791
--------- ---------
Total assets ................................................................ $ 419,029 $ 412,806
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................................................... $ 6,275 $ 6,584
Accrued compensation ................................................................ 30,356 35,655
Accrued expenses and other current liabilities ...................................... 10,834 16,169
Deferred product revenues ........................................................... 3,312 3,387
Deferred professional service revenues .............................................. 36,856 39,745
Deferred maintenance revenues ....................................................... 76,944 75,505
--------- ---------
Total current liabilities ................................................... 164,577 177,045
Deferred maintenance revenues ............................................................ 6,925 7,319
Deferred income taxes .................................................................... 8,715 8,190
Other liabilities ........................................................................ 3,792 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, 30,887,026 and
30,439,778 shares issued at January 3, 2004 and September 30, 2003, respectively 309 304
Additional paid-in capital .......................................................... 48,335 38,110
Retained earnings ................................................................... 185,253 177,841
Cost of Treasury Stock (132 shares and 260 shares at
January 3, 2004 and September 30, 2003, respectively) ........................... (5) (6)
Accumulated other comprehensive income:
Foreign currency translation .................................................... 991 (8)
Net unrealized gain on available-for-sale investments ........................... 137 356
--------- ---------
1,128 348
Total shareholders' equity .................................................. 235,020 216,597
--------- ---------
Total liabilities and shareholders' equity .................................. $ 419,029 $ 412,806
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