Kronos(R) Reports Third Quarter Fiscal 2005 Results; Extends Track Record of Growth and Innovation.
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 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 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, 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- top-
Variant of topo-. and bottom-line bot·tom-line
1. Concerned exclusively with costs and profits: bottom-line issues.
2. Ruthlessly realistic; pragmatic: a bottom-line political strategy. . 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 (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. 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 Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent"
above all, most especially , 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 (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. , and product revenue at the end of the quarter was $146 million. In addition to this deferred revenue, Kronos has a growing backlog Backlog
The total value of sales orders waiting to be fulfilled.
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 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.
--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 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. solutions provider. Built on a state-of-the-art, web-based J2EE (Java 2 Platform, Enterprise Edition) A platform from Sun for building distributed enterprise applications. J2EE services are performed in the middle tier between the user's machine and the enterprise's databases and legacy information systems. architecture, Workforce Central delivers major enhancements and new applications across its comprehensive suite of human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. , 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 Operating systems can be categorized by technology, ownership, licensing, working state, usage, and by many other characteristics. In practice, many of these groupings may overlap. , 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 (Secure Sockets Layer) The leading security protocol on the Internet. Developed by Netscape, SSL is widely used to do two things: to validate the identity of a Web site and to create an encrypted connection for sending credit card and other personal data. data encryption data encryption, the process of scrambling stored or transmitted information so that it is unintelligible until it is unscrambled by the intended recipient. Historically, data encryption has been used primarily to protect diplomatic and military secrets from foreign technology into its line of data collection terminals.
--Momentum of specialized spe·cial·ize
v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es
1. To pursue a special activity, occupation, or field of study.
2. 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 CCHS Cleveland Clinic Health System
CCHS Canadian Community Health Survey
CCHS Central Catholic High School (Canton, Ohio)
CCHS Congenital Central Hypoventilation Syndrome
CCHS Catholic Central High School ), 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 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. , centralized cen·tral·ize
v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es
1. To draw into or toward a center; consolidate.
2. , 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 BROS Brothers
BROS Benefits and Retirement Operations Section (King County, Washington)
BROS Barnes and Richmond Operatic Society (London, UK) . 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 Hannaford may refer to more than one thing.
--Newark Public Schools (NPS NPS National Park Service
NPS Naval Postgraduate School
NPS Net Promoter Score (customer management)
NPS Non-Point Source pollution
NPS Native Plant Society
NPS Norfolk Public Schools (Virginia) ), 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 bi·o·met·rics
n. (used with a sing. verb)
The statistical study of biological phenomena.
bi terminals in 85 locations to automate To turn a set of manual steps into an operation that goes by itself. See automation. 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 The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. . 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 Connecticut, state, United States
Connecticut (kənĕt`ĭkət), southernmost of the New England states of the NE United States. It is bordered by Massachusetts (N), Rhode Island (E), Long Island Sound (S), and New York (W). , New Jersey, and New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , 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 au·to·mate
v. au·to·mat·ed, au·to·mat·ing, au·to·mates
1. To convert to automatic operation: automate a factory.
2. process, and enable them to improve operational efficiency, reduce labor costs, and better manage the workforce to deliver superior quality care. Westchester Westchester is the name of some places in the United States of America:
"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 Financial Accounting Standards Board (FASB)
Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). 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 June: see month. 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 decision-making,
n the process of coming to a conclusion or making a judgment.
n a type of informal decision-making that combines clinical expertise, patient concerns, and evidence gathered from , 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 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 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.
See 10-K. filed with the SEC on December 14, 2004 and its quarterly report on Form 10-Q Form 10-Q
See 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 ======== ========