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
========= =========