Kronos(R) Reports Third Quarter Fiscal 2005 Results; Extends Track Record of Growth and Innovation.

CHELMSFORD, Mass. -- Kronos(R) Incorporated (Nasdaq: KRON) today reported financial results for the third quarter of Fiscal 2005. Net income for the quarter increased 13 percent to $12.6 million, or $0.39 per diluted share, as compared to $11.2 million, or $0.35 per diluted share, for the same period a year ago. Revenue for the third quarter increased 13 percent to $130 million as compared to $114.7 million for the same period a year ago.

For the nine-month period, net income increased 22 percent to $34.5 million, or $1.06 per diluted share, as compared to $28.2 million, or $0.88 per diluted share, for the same period last year. For the nine-month period, revenue increased 14 percent to $368.9 million as compared to $322.4 million for the first nine months of the prior year.

"During the quarter, Kronos continued to execute well across the board, delivering strong results on both the top- and bottom-line. We are particularly pleased that we are able to report earnings for the third quarter, which exceed our previous guidance despite significant costs associated with our new ERP implementation, and Sarbanes-Oxley-related audit and consulting fees," said Kronos Chief Executive Officer Mark S. Ain. "We ended Q3 on a very high note with the release of Workforce Central(R) 5.1, featuring leading-edge technology that sets a new standard for excellence in our market. Our strength in innovation, and robust product and services portfolio are instrumental to the company's success, and most importantly, to the success of our customers who use Kronos solutions to drive value from their workforce into all areas of their business."

Kronos' third-quarter results mark the company's 102nd consecutive quarter of year-over-year revenue growth and 73rd consecutive quarter of profitability, continuing one of the longest records of growth in the software industry (Note 1).

Total deferred maintenance, professional services, and product revenue at the end of the quarter was $146 million. In addition to this deferred revenue, Kronos has a growing backlog of professional services engagements not reflected on its balance sheet. The backlog of uncommitted professional services engagements is approximately $40 million. Kronos exited the third quarter with $155 million in cash and investments and no debt. During the quarter, Kronos repurchased 394,802 shares of common stock for $17 million. Through the end of the third quarter, the company has repurchased 606,396 shares of common stock for $27.4 million.

Third-Quarter Highlights

--Technology and market leadership further extended with the newest release of Workforce Central --With the launch of Workforce Central 5.1 in Q3, Kronos further extended its position as the leading workforce management solutions provider. Built on a state-of-the-art, web-based J2EE architecture, Workforce Central delivers major enhancements and new applications across its comprehensive suite of human resources, payroll, scheduling, and time and labor solutions -- including the only total absence management solution available today. Supporting a wide variety of databases, application servers, web servers, and operating systems, Workforce Central is designed to seamlessly fit into virtually any IT environment. The solution scales to more than one million employees and is successfully deployed in many of the world's largest organizations. Its easily configurable rules engine, comprehensive library of SOAP-based integration tools, and innovative record retention and auditing capabilities provide customers with the agility to rapidly adapt to changing business needs. Furthermore, as privacy concerns become a growing issue for organizations, Kronos is once again leading the industry by incorporating advanced security capabilities into its solution, including the extension of SSL data encryption technology into its line of data collection terminals.

--Momentum of specialized industry solutions -- Kronos continued its advances with integrated product and services solutions focused on the business issues and unique workforce management needs of companies in its target markets. In the third quarter, the company announced Kronos for Healthcare, an integrated suite of workforce management solutions that helps healthcare providers control costs and better manage their workforce to deliver superior patient care. This solution enables organizations to benefit from the expertise Kronos has gained as a leading provider to the healthcare industry for many years, serving a customer base that includes thousands of hospitals and integrated healthcare delivery systems. Kronos for Retail, rolled out earlier this year, continued to gain momentum as enterprise retailers selected Kronos' products and services to help them control labor costs, make better decisions, and improve employee satisfaction. To date, approximately half of the world's top 100 retailers have purchased Kronos' workforce management solutions. In addition, Workforce Central 5.1 features key enhancements that benefit organizations in all the major markets served by Kronos -- government, education, healthcare, manufacturing, retail, services, transportation, and distribution.

--Notable customer wins across target vertical markets -- In Q3, leading organizations across multiple industries chose Kronos solutions to staff, develop, deploy, track, and reward their workforce. Notable wins from new and existing customers included:

--Cleveland Clinic Health System (CCHS), one of the world's largest and busiest health centers, signed an agreement for 35,000 licenses of Workforce Central, including the new absence management solution. CCHS wanted a real-time, centralized, web-based workforce management system with strong reporting capabilities to enable them to better manage labor costs. Kronos' breadth of products and services as well as its experience with enterprise healthcare accounts were cited as reasons for their decision.

--Hannaford Bros. Co. purchased Kronos for Retail to run multiple supermarket banners on a single workforce management platform. This enterprise retailer will deploy 30,000 Workforce Central licenses across 240 stores under the Hannaford, Kash n' Karry, and Sweetbay banners. They will use Kronos' workforce management solution to leverage the stores' rich data to produce optimized schedules that balance the needs of customers and employees.

--Newark Public Schools (NPS), one of the largest school districts in the U.S., purchased the Workforce Central suite for 10,000 employees. They plan to use Kronos' software and biometric terminals in 85 locations to automate processes for managing its large workforce, with the goal of reducing costs and increasing employee accountability. In addition, they expect to increase operational efficiency as a result of being able to seamlessly integrate the Kronos solution with the district's existing application for substitute teacher procurement. NPS expects to achieve a full return on its Kronos investment in less than one year.

--Westchester Medical Center, a leading healthcare provider serving more than 3.5 million people in Connecticut, New Jersey, and New York, purchased the entire Workforce Central suite, including HR, payroll, scheduling, and time and labor, as well as biometric terminals. This solution is designed to take the customer from a manual to a fully automated process, and enable them to improve operational efficiency, reduce labor costs, and better manage the workforce to deliver superior quality care. Westchester Medical Center selected Kronos because they wanted to work with a single vendor who could provide them with a fully integrated solution that addresses all their workforce management priorities.

Outlook

"With respect to guidance, we expect to report net income per diluted share in the range of $0.54-0.59 for our fourth quarter and $1.60-1.65 for the fiscal year," concluded Ain. "We expect to report revenue in the range of $144-149 million for our fourth quarter and $513-518 million for the fiscal year."

The SEC recently concluded that the Financial Accounting Standards Board Statement 123R, Share-Based Payment, which will require all companies to measure compensation cost for all share-based payments (including employee stock options) at fair value, is effective for public companies for annual periods beginning after June 15, 2005. The new accounting pronouncement will be effective for Kronos in the first quarter of Fiscal 2006. The impact of adopting Statement 123R will reduce Kronos' net income. Kronos has not yet determined the magnitude of the impact of adopting Statement 123R.

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 the most trusted name in workforce management. Kronos helps organizations staff, develop, deploy, track, and reward their workforce, resulting in reduced costs, increased productivity, better decision-making, improved employee satisfaction, and alignment with organizational objectives. More than 20 million people use a Kronos solution every day. Learn more about Kronos' high-impact enterprise solutions at www.kronos.com.

Safe Harbor Statement

This press release contains statements about the business prospects and estimates of Kronos' financial results for future periods that are 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 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 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 Annual Report on Form 10-K filed with the SEC on December 14, 2004 and its quarterly report on Form 10-Q filed with the SEC on May 12, 2005. 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) 2005 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
                   ------------------------- -------------------------
                     July 2,      July 3,      July 2,      July 3,
                       2005         2004         2005         2004
                    -----------  -----------  -----------  -----------
Net revenues:
  Product          $    53,366  $    50,941  $   152,949  $   135,047
  Maintenance           43,780       36,630      124,899      107,778
  Professional
   services             32,845       27,129       91,040       79,527
                    -----------  -----------  -----------  -----------
                       129,991      114,700      368,888      322,352
Cost of sales:
  Costs of
   product              11,988       10,802       35,012       31,014
  Costs of
   maintenance
   and
   professional
   services             38,213       34,157      110,007       99,505
                    -----------  -----------  -----------  -----------
                        50,201       44,959      145,019      130,519
                    -----------  -----------  -----------  -----------
         Gross
          profit        79,790       69,741      223,869      191,833
Operating expenses and other income:
  Sales and
   marketing            36,547       33,627      107,025       96,991
  Engineering,
   research and
   development          12,707       11,028       37,523       31,476
  General and
   administrative       11,590        7,943       28,582       22,355
  Amortization of
   intangible
   assets                1,160        1,003        3,450        3,011
  Other income,
   net                  (1,119)        (973)      (4,432)      (4,344)
                    -----------  -----------  -----------  -----------
                        60,885       52,628      172,148      149,489

         Income
          before
          income
          taxes         18,905       17,113       51,721       42,344
Provision for
 income taxes            6,276        5,958       17,211       14,157
                    -----------  -----------  -----------  -----------
         Net
          income   $    12,629  $    11,155  $    34,510  $    28,187
                    ===========  ===========  ===========  ===========

Net income per common share:
         Basic     $      0.39  $      0.36  $      1.08  $      0.91
                    ===========  ===========  ===========  ===========
         Diluted   $      0.39  $      0.35  $      1.06  $      0.88
                    ===========  ===========  ===========  ===========

Weighted-average common shares outstanding:
         Basic      31,985,327   31,109,965   31,822,612   30,930,863
                    ===========  ===========  ===========  ===========
         Diluted    32,583,532   32,050,336   32,672,326   31,986,345
                    ===========  ===========  ===========  ===========


                         KRONOS INCORPORATED
                CONDENSED CONSOLIDATED BALANCE SHEETS
          (In thousands, except share and per share amounts)
                              UNAUDITED

                                                    July 2,  Sept. 30,
                                                       2005      2004
                                                    --------  --------

                      ASSETS
Current assets:
    Cash and equivalents                           $ 41,570  $ 45,877
    Marketable securities                            48,105    45,260
    Accounts receivable, less allowances of $9,453
     at July 2, 2005 and $9,143 at September 30,
     2004                                           110,911    91,973
    Deferred income taxes                             9,047     8,951
    Other current assets                             26,248    22,778
                                                    --------  --------
                   Total current assets             235,881   214,839

Marketable securities                                65,818    98,005
Property, plant and equipment, net                   55,688    43,832
Intangible assets                                    35,616    20,697
Goodwill                                            122,191    81,154
Capitalized software, net                            23,406    22,871
Other assets                                         19,694    24,432
                                                    --------  --------
                   Total assets                    $558,294  $505,830
                                                    ========  ========

       LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Accounts payable                               $ 10,260  $  9,988
    Accrued compensation                             42,309    39,962
    Accrued expenses and other current liabilities   20,734    17,376
    Deferred product revenues                         4,186     9,844
    Deferred professional service revenues           34,974    40,525
    Deferred maintenance revenues                   101,231    87,000
                                                    --------  --------
                   Total current liabilities        213,694   204,695

Deferred maintenance revenues                         5,755     7,251
Deferred income taxes                                17,664    12,000
Other liabilities                                     5,616     2,824

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, 31,787,297 and
     31,335,340 shares issued at July 2, 2005 and
     September 30, 2004, respectively                   318       312
    Additional paid-in capital                       57,240    54,113
    Retained earnings                               258,601   224,091
    Accumulated other comprehensive income:
       Foreign currency translation                     (71)      653
       Net unrealized (loss) on available-for-sale
        investments                                    (523)     (109)
                                                    --------  --------
                                                       (594)      544

                   Total shareholders' equity       315,565   279,060
                                                    --------  --------
                   Total liabilities and
                    shareholders' equity           $558,294  $505,830
                                                    ========  ========