Kronos(R) Reports Third-Quarter Fiscal 2006 Results; Revenue and Earnings In Line With Updated Guidance.CHELMSFORD Chelmsford, city, England Chelmsford, city (1991 pop. 91,109), county seat of Essex, SE England. It is a market center (especially for cattle) for the surrounding agricultural district. , Mass. -- Kronos Kronos or Cronus (both: krō`nəs), in Greek religion and mythology, the youngest Titan, son of Uranus and Gaea. With the help of his mother, he led the Titans in the revolt against Uranus and ruled the world. (R) Incorporated (Nasdaq: KRON KRON Knowledge Representation Oriented Nets ) today reported total revenue for the third quarter of Fiscal 2006 of $141.4 million compared to $130.0 million for the same period a year ago. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income for the third quarter of Fiscal 2006 was $10.3 million, or $0.32 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share compared to $12.6 million, or $0.39 per diluted share, for the same period a year ago. Third-quarter Fiscal 2006 earnings include a charge of $0.09 per diluted share for stock-based compensation, which is not reflected in the previous year's third-quarter earnings. Third-quarter Fiscal 2006 earnings also include a charge for amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. of $0.04 per diluted share. The charge for amortization of intangible assets was $0.03 per diluted share for the same period a year ago. For the nine-month period, total revenue was $412.8 million as compared to $368.9 million for the first nine months of the prior year. For the nine-month period, GAAP net income was $26.4 million, or $0.82 per diluted share, compared to $34.5 million, or $1.06 per diluted share, for the same period last year. Earnings for the first nine months of Fiscal 2006 include a charge of $0.27 per diluted share for stock-based compensation, which is not reflected in earnings for the first nine months of Fiscal 2005. Earnings for the first nine months of Fiscal 2006 also include a charge for amortization of intangible assets of $0.11 per diluted share. The charge for amortization of intangible assets was $0.07 per diluted share for the first nine months of Fiscal 2005. Kronos' third-quarter results mark the company's 106th consecutive quarter of year-over-year revenue growth and 77th consecutive quarter of profitability, continuing one of the longest records of growth and profitability in the software industry (Note 1). Total deferred maintenance, professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. , and product revenue on the balance sheet at the end of the third quarter of Fiscal 2006 was $152.2 million. In addition to this deferred revenue, Kronos has a backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of uncommitted professional services engagements of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $57.0 million. Kronos exited the third quarter of Fiscal 2006 with $178.2 million in cash and investments and no debt. Days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). for the quarter was 66 days. During Q3 Fiscal 2006, Kronos repurchased 164,607 shares of common stock for $6.5 million, and made payments on acquisitions of $4.5 million. For the nine-month period, the company has repurchased 503,857 shares of common stock for $20.6 million, and made payments on acquisitions of $13.1 million. "For both Q3 and the nine months of Fiscal 2006, we continued to grow revenue and earnings, excluding charges related to stock option expense and amortization of intangible assets," said Kronos Chief Executive Officer Aron Aron may refer to:
intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue stream and highly complementary solution, marks an important step in delivering on these objectives. Acquiring Unicru expands our value proposition, offering customers of both organizations the benefits of a combined talent management and workforce management Workforce Management (WFM) encompasses all the responsibilities for maintaining a productive and happy workforce. Sometimes referred to as HRMS systems, or even the larger ERP systems (Oracle, PeopleSoft, SAP). There are many software vendors within this space. solution to optimize optimize - optimisation workforce performance. Ultimately, we believe that the Kronos-Unicru combination is not only a natural one, but one which fundamentally changes the game in our industry, carries forward our commitment to solving customers' greatest workforce management challenges, and positions us to continue to expand our business." Third-Quarter Highlights --Technology and market leadership further extended with the newest release of the Workforce Central(R) suite -- With the launch of Workforce Central 5.2 in Q3, Kronos further extended its position as the leading workforce management solutions provider. Kronos' innovative and comprehensive suite of applications enables organizations to create a Demand-Driven Workforce Management environment by aligning a·lign v. a·ligned, a·lign·ing, a·ligns v.tr. 1. To arrange in a line or so as to be parallel: align the tops of a row of pictures; aligned the car with the curb. complex workforces with business drivers, regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. , and employee needs to optimize organizational performance Organizational performance comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives). Specialists in many fields are concerned with organizational performance including strategic planners, operations, . The new release features dozens of significant enhancements to all products, as well as the introduction of new modules such as Workforce Operations Planner(TM), a collaborative col·lab·o·rate intr.v. col·lab·o·rat·ed, col·lab·o·rat·ing, col·lab·o·rates 1. To work together, especially in a joint intellectual effort. 2. , enterprise budgeting solution for long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. labor forecasting and demand driven workforce management for the retail sector. --ClarityMatters acquisition delivers on Workforce Analytics vision -- Recognizing the growing role of business intelligence in managing the workforce, Kronos acquired privately held ClarityMatters, a workforce analytics solution provider and business analytics consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a . The ClarityMatters solution is being offered as Workforce Analytics(TM), a best-in-class See best-of-class. business intelligence tool optimized for workforce management that is fully integrated with the other powerful applications in the Workforce Central suite. --Healthcare industry leadership -- Highlighting the company's continued growth, sustained profitability, and focus on the healthcare industry, leading analyst firm Gartner (Gartner, Inc., Stamford, CT, www.gartner.com) The largest information technology consulting firm that specializes in research and analysis. Founded in 1979 by Gideon Gartner, it has grown through acquisitions, including Dataquest in 1995 and Techrepublic in 2000. , Inc. positioned Kronos in the "Market Forces" category in "The U.S. Healthcare U.S. Healthcare is a now-defunct healthcare company. The logo had an apple. The merger with Aetna In 1996, the company merged with Aetna, calling it Aetna U.S. Healthcare. The U.S. Healthcare apple logo was next to the Aetna name, and U.S. Healthcare under it. U.S. ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. Market Looks for Innovation" written by John-David Lovelock love·lock n. A lock of hair hanging separately from the rest of the hair, as one tied with ribbon and worn by courtiers during the 17th and 18th centuries. , Chad Chad (chăd, chäd), Fr. Tchad, officially Republic of Chad, republic (2005 est. pop. 9,826,000), 495,752 sq mi (1,284,000 sq km), N central Africa. Eschinger, and Vi Shaffer Shaffer is a wholly owned subsidiary of National Oilwell Varco and is involved in the manufacturing and distribution of pressure control devices for the petroleum industry. and published on April 18, 2006. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Gartner, "Market force vendors are typically companies that have more than 10 percent of market share. Vendors in this space have an established healthcare reputation and market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" ." --Notable customer wins -- Organizations across a wide range of industries continue to choose Kronos solutions to staff, develop, deploy, track, and reward their workforce. Notable wins during the quarter included:
-- The State of Colorado Department of Human Services
purchased Kronos' time and labor and absence management
applications for thousands of employees at hundreds of
locations. This customer selected Kronos because of its
superior product and service capabilities, and its
longstanding relationship with the company.
-- Somerfield, a leading UK grocer, has selected Kronos for
Retail to optimize the deployment of 50,000 colleagues
across its 1,100 store chain. Somerfield's deployment of
Kronos for Retail will enable an integrated demand-driven
approach to workforce management, including budgeting,
forecasting, scheduling, and time and attendance. This
will allow the organization to increase productivity, and
improve customer and employee satisfaction.
-- Carilion Health System, a physician clinic and hospital
network, signed an agreement for 12,000 employee licenses
of Workforce Central, including absence management, which
will be deployed across multiple locations. Carilion will
utilize Kronos' attendance and leave applications to
streamline the process and reduce costs associated with
their compliance to the Family Medical Leave Act (FMLA).
Outlook In anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, of the closure of the planned acquisition of Unicru, Inc. on July July: see month. 31, 2006, Kronos management offers the following guidance for the fourth quarter of Fiscal 2006 and Fiscal Year 2006: Fourth-Quarter Fiscal 2006: --Total revenue is expected to be in the range of $157.0-$165.0 million. --Net income per diluted share is expected to be in the range of $0.41-$0.47. --The charge for stock-based compensation, which is included in the above-mentioned A`bove´-men`tioned a. 1. Mentioned or named before; aforesaid; mentioned or named earlier in the same text (in written documents). Adj. 1. range of earnings expectations, is expected to be approximately $0.09 per diluted share. --The charge for amortization of intangible assets, which is included in the above-mentioned range of earnings expectations, is expected to be approximately $0.07 per diluted share. --Earnings guidance for the fourth quarter of Fiscal 2006 includes a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charge of $0.01 per diluted share for the repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of earnings from foreign subsidiaries, under Internal Revenue Code The Internal Revenue Code is the body of law that codifies all federal tax laws, including income, estate, gift, excise, alcohol, tobacco, and employment taxes. These laws constitute title 26 of the U.S. Code (26 U.S.C.A. § 1 et seq. section 965. Fiscal Year 2006: --Total revenue is expected to be in the range of $570.0-$578.0 million. --Net income per diluted share is expected to be in the range of $1.23-$1.29. --The charge for stock-based compensation, which is included in the above-mentioned range of earnings expectations, is expected to be approximately $0.36 per diluted share. --The charge for amortization of intangible assets, which is included in the above-mentioned range of earnings expectations, is expected to be approximately $0.18 per diluted share. --Earnings guidance for Fiscal Year 2006 includes a one-time charge of $0.01 per diluted share for the repatriation of earnings from foreign subsidiaries, under Internal Revenue Code section 965. Conference Call Webcast Kronos senior management plans to review its third-quarter Fiscal 2006 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 empowers organizations around the world to effectively manage their workforce. At Kronos, we are experts who are solely focused on delivering software and services that enable organizations to reduce costs, increase productivity, improve employee satisfaction, and ultimately enhance the level of service they provide. Kronos serves customers in more than 50 countries through its network of offices, subsidiaries, and distributors. Widely recognized as a market and thought leader in managing the workforce, Kronos has unrivaled reach with more than 30 million people using a Kronos solution every day. Learn more about Kronos at www.kronos.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This press release contains statements about the business prospects and estimates of Kronos' financial results for future periods that are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve a number of risks and uncertainties, including the performance estimates and statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc earnings and revenue growth and profitability, the ability to close potential product sales transactions, the ability to realize revenues from the sales pipeline and backlog, market acceptance of our new products and enhancements, including those formerly offered by AD OPT Technologies, our ability to monitor and manage discretionary costs, growth in the market for our products and within the economy generally, and potential acquisitions. These statements are based on management's expectations of future events as of the date of this press release, and Kronos assumes no obligation to update any forward-looking statements as a result of new information or future events or developments. Actual results could differ materially from management's expectations. 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 disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. in commercial activities caused by terrorist activity and armed conflict, such as changes in logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. and security arrangement and the risk factors detailed in the company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the SEC on December December: see month. 9, 2005 and its quarterly report on Form 10-Q Form 10-Q See 10-Q. filed with the SEC on May 11, 2006. 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) 2006 Kronos Incorporated, Kronos, Workforce Central, and the Kronos logo are registered trademarks and Workforce Operations Planner and Workforce Analytics are 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
----------------------- -----------------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Net revenues:
Product $53,639 $53,366 $160,664 $152,949
Maintenance 49,103 43,780 142,582 124,899
Professional
services 38,636 32,845 109,598 91,040
----------- ----------- ----------- -----------
141,378 129,991 412,844 368,888
Cost of sales:
Costs of product 10,900 11,988 36,369 35,012
Costs of
maintenance 14,889 11,293 43,655 33,416
Costs of
professional
services 31,024 26,920 91,534 76,591
----------- ----------- ----------- -----------
56,813 50,201 171,558 145,019
----------- ----------- ----------- -----------
Gross profit 84,565 79,790 241,286 223,869
Operating expenses and
other income:
Sales and marketing 42,631 36,547 123,798 107,025
Engineering,
research and
development 14,841 12,707 41,764 37,523
General and
administrative 11,571 11,590 35,653 28,582
Amortization of
intangible assets 1,479 1,160 4,686 3,450
Other income, net (1,653) (1,119) (5,018) (4,432)
----------- ----------- ----------- -----------
68,869 60,885 200,883 172,148
Income before
income taxes 15,696 18,905 40,403 51,721
Provision for income
taxes 5,363 6,276 13,992 17,211
----------- ----------- ----------- -----------
Net income $10,333 $12,629 $26,411 $34,510
=========== =========== =========== ===========
Net income per common
share:
Basic $0.32 $0.39 $0.83 $1.08
=========== =========== =========== ===========
Diluted $0.32 $0.39 $0.82 $1.06
=========== =========== =========== ===========
Weighted-average
common shares
outstanding:
Basic 32,030,501 31,985,327 31,913,196 31,822,612
=========== =========== =========== ===========
Diluted 32,294,587 32,583,532 32,272,370 32,672,326
=========== =========== =========== ===========
Stock-based
compensation expense:
Costs of product $98 $- 277 $-
Costs of
maintenance 313 - 902 -
Costs of
professional
services 651 - 1,847 -
Sales and marketing 1,393 - 4,049 -
Engineering,
research and
development 677 - 2,347 -
General and
administrative 1,066 - 3,215 -
----------- ----------- ----------- -----------
$4,198 $- $12,637 $-
=========== =========== =========== ===========
KRONOS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
UNAUDITED
July September
1, 30,
2006 2005
--------- ---------
ASSETS
Current assets:
Cash and equivalents $80,965 $43,492
Marketable securities 74,182 37,078
Accounts receivable, less allowances of $9,734
at July 1, 2006 and $11,156 at September 30,
2005 107,524 120,746
Deferred income taxes 7,281 10,937
Other current assets 23,168 20,142
--------- ---------
Total current assets 293,120 232,395
Marketable securities 23,064 59,865
Property, plant and equipment, net 59,735 56,158
Customer related intangible assets 30,952 31,085
Other intangible assets 15,242 15,818
Goodwill 157,760 142,665
Capitalized software, net 22,792 23,092
Other
assets 20,927 18,348
--------- ---------
Total assets $623,592 $579,426
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $10,320 $9,013
Accrued compensation 45,764 43,379
Accrued expenses and other current liabilities 24,316 27,877
Deferred product revenues 2,739 3,938
Deferred professional service revenues 21,506 36,530
Deferred maintenance revenues 120,712 102,038
--------- ---------
Total current liabilities 225,357 222,775
Deferred maintenance revenues 7,215 4,921
Deferred income taxes 13,036 15,261
Other liabilities 5,052 4,435
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, 31,970,308 and
31,724,460 shares issued at July 1, 2006 and
September 30, 2005, respectively 320 317
Additional paid-in capital 65,848 52,802
Retained earnings 304,406 277,995
Accumulated other comprehensive income:
Foreign currency translation 2,771 1,307
Net unrealized (loss) on available-for-
sale investments (413) (387)
--------- ---------
2,358 920
Total shareholders' equity 372,932 332,034
--------- ---------
Total liabilities and shareholders'
equity $623,592 $579,426
========= =========
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