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): April 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
April 24, 2003
ITEM 9. REGULATION FD DISCLOSURE
ITEM 9. Regulation FD Disclosure (Information furnished pursuant to Item 12,
"Disclosure of Results of Operations and Financial Condition").
On April 24, 2003, Kronos Incorporated announced its financial results for
the second quarter ended March 29, 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: April 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 April 24, 2003
-------------------------------------------------------------------------------
Exhibit 99.1
For Immediate Release Kronos Contact: Paul Lacy
(978) 947-4944
placy@kronos.com
Kronos(R) REPORTS RESULTS FOR SECOND QUARTER OF FISCAL 2003
CHELMSFORD, Mass., April 24, 2003 - Kronos(R) Incorporated (Nasdaq: KRON), today
reported that net income for the second quarter of Fiscal 2003 rose 26 percent
to $7.3 million, or $.35 per diluted share, as compared to $5.8 million, or $.28
per diluted share, for the same period a year ago. Revenue for the second
quarter rose 21 percent to $96.5 million as compared to $79.9 million for the
same period a year ago.
For the six-month period, net income rose 20 percent to $14.3 million, as
compared to $12.0 million for the same period last year. For the six-month
period, revenue rose 19 percent to $186.2 million as compared to $156.1 million
for the first six months of the prior year.
"We are thrilled to report very strong second quarter profits and revenue
growth," said Mark S. Ain, Kronos' chief executive officer. "Despite the weak
economy, leaders across a broad spectrum of industries continue to look to
Kronos' Employee Relationship Management solutions to reduce costs and boost
productivity. We experienced strength across the board as organizations realize
that we can help them better address their employee-centric business
challenges."
This marks Kronos' 93rd consecutive quarter of revenue growth compared to the
same period in the previous year, and 64th consecutive quarter of profitability
(Note 1). Kronos' balance sheet remains strong, with $94.0 million in cash and
investments and no debt. Total deferred maintenance, professional services and
product revenue at the end of the quarter was $118.4 million. Cash flow from
operations was $26.4 million for the quarter compared to $22.4 million for the
same period last year. For the six-month period, cash flow from operations was
$40.1 million compared to $34.5 million for the same period last year. Days
sales outstanding (DSO) for accounts receivable was 62 days at the end of the
quarter.
(more)
With regard to Kronos' financial results, Ain remarked, "Kronos is still growing
while others have seen their revenues decline. Of our 21 percent top line
growth, 19 percentage points represented organic growth while two percentage
points came from acquisitions. We recorded an impressive 30 percent growth in
product revenue and 14 percent growth in service revenue despite the challenging
economic environment."
"Kronos' year-ago decision to broaden our capabilities beyond time and labor to
include HR and payroll applications has enabled us to leverage our brand and
established market position," continued Ain. "Contracts for our HR and payroll
solutions are ramping up. We're pleased to announce that 19 more companies
purchased our HR and payroll applications during the quarter. Our HRMS prospect
base has been growing each quarter, and we believe we now have sufficient
accounts in our pipeline to realize our HRMS target for the fiscal year. We
never doubted that our solutions would take hold in the market."
Customer Wins
"We have done much more than retain our title as the leader in time and labor
solutions," continued Ain. "By offering a more comprehensive suite of Employee
Relationship Management solutions, we are rewriting the notions of how
organizations gain control of their employee-centric business challenges."
New customers that turned to Kronos during the quarter included Bally's Total
Fitness, Beringer Blass Wine Estates, DHL Worldwide Express, Fairview Health
Services, Inn of the Mountain Gods Resort and Casino, Orange County Corrections,
Riverside Medical Center, See's Candies, Varco-Pruden Buildings Inc., Wild Oats
Markets, and others.
Existing customers that purchased upgrades or continued to invest in their
product rollout during the quarter included Alegent Health, Dean Foods, DST
Systems, Elmhurst Memorial Hospital, Ergon Incorporated, Foster Farms, Goodyear
Tire & Rubber, Greater Lafayette Health Services Inc., Landis Plastics, Shaw
Industries, State of Colorado, Unisys - the Transportation Security
Administration's prime contractor for information technology, Walgreens, Wishard
Health Services, and others.
Outlook
"We are thrilled with our performance during the first half of the year and
confident that we are on track to achieve our goals for Fiscal 2003,"Ain added,
"Assuming that the economic malaise continues but does not worsen, we expect to
report third quarter revenue in the range of $97-100 million and earnings in the
range of $.36-.42 per share. We expect to report Fiscal 2003 revenue in the
range of $381-387 million and earnings in the range of $1.60-1.66 per share."
(more)
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 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 boost
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 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
------------------------------- -------------------------------
March 29, March 30, March 29, March 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Net revenues:
Product ...................................... $ 44,143 $ 33,979 $ 83,030 $ 69,193
Maintenance .................................. 29,666 26,953 58,651 50,374
Professional services ........................ 22,672 19,002 44,509 36,496
------------ ------------ ------------ ------------
96,481 79,934 186,190 156,063
Cost of sales:
Costs of product ............................. 10,929 8,396 20,356 16,850
Costs of maintenance and professional services 27,627 22,930 53,500 43,744
------------ ------------ ------------ ------------
38,556 31,326 73,856 60,594
------------ ------------ ------------ ------------
Gross profit ............................. 57,925 48,608 112,334 95,469
Operating expenses and other income:
Sales and marketing .......................... 31,369 26,058 60,422 51,249
Engineering, research and development ........ 9,552 9,251 18,035 17,187
General and administrative ................... 6,390 5,075 12,435 9,607
Amortization of intangible assets ............ 789 724 1,508 1,367
Other income, net ............................ (1,522) (1,314) (2,427) (2,289)
------------ ------------ ------------ ------------
46,578 39,794 89,973 77,121
Income before income taxes ............... 11,347 8,814 22,361 18,348
Provision for income taxes ....................... 4,085 3,041 8,050 6,378
------------ ------------ ------------ ------------
Net income ............................... $ 7,262 $ 5,773 $ 14,311 $ 11,970
============ ============ ============ ============
Net income per common share:
Basic .................................... $ 0.37 $ 0.29 $ 0.72 $ 0.61
============ ============ ============ ============
Diluted .................................. $ 0.35 $ 0.28 $ 0.70 $ 0.58
============ ============ ============ ============
Weighted-average common shares outstanding:
Basic .................................... 19,853,535 19,760,008 19,746,681 19,582,466
============ ============ ============ ============
Diluted .................................. 20,555,609 20,765,450 20,482,681 20,576,827
============ ============ ============ ============
KRONOS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
UNAUDITED
March 29, September 30,
2003 2002
--------- -------------
ASSETS
Current assets:
Cash and equivalents ................................................... $ 56,466 $ 34,117
Marketable securities .................................................. 12,207 16,096
Accounts receivable, less allowances of $8,014 ......................... 71,716 84,128
at March 29, 2003 and $9,697 at September 30, 2002
Deferred income taxes .................................................. 7,397 6,893
Other current assets ................................................... 18,960 17,835
--------- ---------
Total current assets ............................................. 166,746 159,069
Property, plant and equipment, net .......................................... 39,537 38,635
Marketable securities ....................................................... 25,347 24,534
Intangible assets ........................................................... 25,202 20,545
Goodwill .................................................................... 65,758 56,167
Capitalized software, net ................................................... 22,434 22,237
Other assets ................................................................ 10,905 11,837
--------- ---------
Total assets ..................................................... $ 355,929 $ 333,024
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ....................................................... $ 7,692 $ 6,212
Accrued compensation ................................................... 28,546 32,674
Accrued expenses and other current liabilities ......................... 12,105 10,831
Deferred professional service revenues ................................. 33,953 33,551
Deferred maintenance revenues .......................................... 71,555 66,550
Deferred product revenues .............................................. 5,620 6,853
--------- ---------
Total current liabilities ........................................ 159,471 156,671
Deferred maintenance revenues ............................................... 7,317 8,588
Other liabilities ........................................................... 9,889 8,096
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,
19,919,288 and 19,911,952 shares issued at March 29, 2003 and
September 30, 2002, respectively .................................... 199 199
Additional paid-in capital ............................................. 26,743 31,494
Retained earnings ...................................................... 157,486 143,175
Cost of Treasury Stock (113,709 shares and 366,062 shares at
March 29, 2003 and September 30, 2002, respectively) ................ (4,187) (14,020)
Accumulated other comprehensive loss:
Foreign currency translation ........................................ (912) (1,372)
Net unrealized gain/(loss) on available-for-sale investments ........ (77) 193
--------- ---------
(989) (1,179)
Total shareholders' equity ....................................... 179,252 159,669
--------- ---------
Total liabilities and shareholders' equity ....................... $ 355,929 $ 333,024
========= =========