SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q

          (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended January 2, 1999

                                       OR

          ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to
                              -----------------  ---------------------
Commission file number                      0-20109
                        ----------------------------------------------
                               Kronos Incorporated
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

 Massachusetts                                                    04-2640942
-----------------------------                     ------------------------------
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                            Identification No.)

         400 Fifth Avenue, Waltham, MA                    02451
--------------------------------------------------------------------------------
    (Address of principal executive offices)            (Zip Code)

                                 (781) 890-3232
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


--------------------------------------------------------------------------------
(Former name,former address and former fiscal year,if changed since last report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                              Yes    X                     No
                                  --------                    --------

     As of January 30, 1999,  8,418,969 shares of the registrant's Common Stock,
$.01 par value, were outstanding.

<PAGE>


                               KRONOS INCORPORATED

                                      INDEX



 PART I. FINANCIAL INFORMATION                                             Page

 Item 1.  Condensed Consolidated Financial Statements (Unaudited)

          Condensed Consolidated Statements of Income for the Three
             Months Ended January 2, 1999 and January 3, 1998                1

          Condensed Consolidated Balance Sheets at January 2, 1999
             and September 30, 1998                                          2

          Condensed Consolidated Statements of Cash Flows for the Three
             Months Ended January 2, 1999 and January 3, 1998                3

          Notes to Condensed Consolidated Financial Statements               4

 Item 2.  Management's Discussion and Analysis of Financial Condition and
              Results of Operations                                          6

 PART II. OTHER INFORMATION

 Item 5.  Other Information

 Item 6.  Exhibits and Reports on Form 8-K                                   

 Signatures                                                                   

 Exhibit Index                                                                 

<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.     Condensed Consolidated Financial Statements (Unaudited)
<TABLE>
<CAPTION>

                               KRONOS INCORPORATED
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
               (In thousands, except share and per share amounts)
                                    UNAUDITED

                                                                Three Months Ended
                                                             -----------------------
                                                            January 2,     January 3,
                                                              1999           1998
                                                          ------------   ------------
<S>                                                        <C>           <C>   
Net revenues:
      Product ..........................................   $    33,180    $    29,761
      Service ..........................................        19,935         14,812
                                                           -----------    -----------
                                                                53,115         44,573
                                                           -----------    -----------
Cost of sales:
      Product ..........................................         7,840          7,040
      Service ..........................................        12,112         10,129
                                                           -----------    -----------
                                                                19,952         17,169
                                                           -----------    -----------
           Gross profit ................................        33,163         27,404
Expenses:
      Sales and marketing ..............................        18,688         16,051
      Engineering, research and development ............         6,003          4,324
      General and administrative .......................         3,374          3,095
      Other (income) expense, net ......................           (95)            (2)
                                                           -----------    -----------
                                                                27,970         23,468
                                                           -----------    -----------
           Income before income taxes ..................         5,193          3,936
Provision for income taxes .............................         1,984          1,504
                                                           -----------    -----------
           Net income ..................................   $     3,209    $     2,432
                                                           ===========    ===========


Net income per common share:
           Basic .......................................   $      0.39    $      0.30
                                                           ===========    ===========
           Diluted .....................................   $      0.37    $      0.29
                                                           ===========    ===========

Average common and common equivalent shares outstanding:
           Basic .......................................     8,325,006      8,190,075
                                                           ===========    ===========
           Diluted .....................................     8,646,444      8,441,075
                                                           ===========    ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.
<PAGE>


                      CONDENSED CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)
                                    UNAUDITED
<TABLE>
<CAPTION>

                                                                               January 2,  September 30,
                                                                                  1999         1998
                                                                               ----------  ------------
                                     ASSETS
<S>                                                                            <C>          <C>    
Current assets:
   Cash and equivalents ....................................................   $  36,133    $  29,888
   Marketable securities ...................................................      10,540       17,501
   Accounts receivable, less allowances for doubtful accounts of $1,380
      at January 2, 1999 and $1,268 at September 30, 1998 ..................      49,477       50,904
   Deferred income taxes ...................................................       5,188        5,188
   Other current assets ....................................................       8,992        8,171
                                                                               ---------    ---------
          Total current assets .............................................     110,330      111,652
Equipment, net .............................................................      15,580       15,816
Investments ................................................................       7,901        4,445
Excess of cost over net assets of businesses acquired ......................      12,718       13,731
Deferred software development costs, net ...................................      10,225        9,541
Other assets ...............................................................       8,426        8,676
                                                                               ---------    ---------
          Total assets .....................................................   $ 165,180    $ 163,861
                                                                               =========    =========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable ........................................................   $   5,864    $   6,427
   Accrued compensation ....................................................      10,720       14,503
   Accrued expenses and other current liabilities ..........................      15,854       18,570
   Deferred maintenance revenues ...........................................      29,758       27,065
                                                                               ---------    ---------
          Total current liabilities ........................................      62,196       66,565
Deferred income taxes ......................................................         911          911
Deferred maintenance revenues ..............................................       9,579        8,830
Other liabilities ..........................................................         311          352
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 20,000,000 shares,
      8,401,193 shares and 8,310,479 shares issued at January 2, 1999 and
      September 30, 1998, respectively .....................................          84           83
   Additional paid-in capital ..............................................      30,240       29,617
   Retained earnings .......................................................      62,975       59,765
   Equity adjustment from translation ......................................      (1,063)      (1,162)
   Cost of Treasury Stock  (1,210 shares and 30,574
      shares at January 2, 1999 and September 30, 1998, respectively) ......         (53)      (1,100)
                                                                               ---------    ---------
          Total shareholders' equity .......................................      92,183       87,203
                                                                               ---------    ---------
          Total liabilities and shareholders' equity .......................   $ 165,180    $ 163,861
                                                                               =========    =========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.
<PAGE>


                               KRONOS INCORPORATED
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                    UNAUDITED
<TABLE>
<CAPTION>

                                                                                      Three Months Ended
                                                                                   ------------------------
                                                                                   January 2,    January 3,
                                                                                      1999          1998
                                                                                  ------------  -----------

<S>                                                                                 <C>         <C>            
Operating activities:
     Net income .................................................................   $  3,209    $  2,432
     Adjustments to reconcile net income to net cash and equivalents
        provided by operating activities:
            Depreciation ........................................................      1,916       1,788
            Amortization of deferred software development costs and
               excess of cost over net assets of businesses acquired ............      2,328       1,443
            Changes in certain operating assets and liabilities:
               Accounts receivable, net .........................................      1,453         427
               Deferred maintenance revenue .....................................      3,434       1,707
               Accounts payable, accrued compensation
                  and other liabilities .........................................     (6,466)     (3,850)
            Other ...............................................................       (538)       (923)
                                                                                    --------    --------
                  Net cash and equivalents provided by operating activities             5,336      3,024

Investing activities:
     Purchase of equipment ......................................................     (1,672)       (920)
     Capitalization of software development costs ...............................     (2,002)     (1,444)
     (Increase) decrease in marketable securities ...............................      3,505      (5,015)
     Acquisitions of businesses .................................................       (582)       (726)
                                                                                    --------    --------
                  Net cash and equivalents used in investing activities .........       (751)     (8,105)

Financing activities:
     Net proceeds from exercise of stock option and employee stock
        purchase plans ..........................................................      1,845       1,062
     Purchase of treasury stock .................................................       (175)        (27)
                                                                                    --------    --------
                  Net cash and equivalents provided by financing activities             1,670      1,035

Effect of exchange rate changes on cash and equivalents .........................        (10)        (51)
                                                                                    --------    --------
Increase (decrease) in cash and equivalents .....................................      6,245      (4,097)
Cash and equivalents at the beginning of the period .............................     29,888      20,698
                                                                                    --------    --------
Cash and equivalents at the end of the period ...................................   $ 36,133    $ 16,601
                                                                                    ========    ========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

<PAGE>

                               KRONOS INCORPORATED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE A - General

The accompanying  unaudited condensed  consolidated financial statements include
all  adjustments,  consisting  of normal  recurring  accruals,  that  management
considers  necessary for a fair presentation of the Company's financial position
and results of operations as of and for the interim periods  presented  pursuant
to the rules and regulations of the Securities and Exchange Commission.  Certain
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted  pursuant to such rules and  regulations,  although the Company believes
the  disclosures  in  these  financial  statements  are  adequate  to  make  the
information  presented not misleading.  These condensed  consolidated  financial
statements  should be read in conjunction with the Company's  audited  financial
statements  for the  fiscal  year  ended  September  30,  1998.  The  results of
operations  for the three month period ended January 2, 1999 is not  necessarily
indicative  of the results for a full fiscal  year.  Certain  amounts  have been
reclassified in fiscal 1998 to permit comparison with fiscal 1999.

NOTE B  -  Fiscal Quarters

The Company utilizes a system of fiscal quarters.  Under this system,  the first
three  quarters  of each  fiscal  year end on a  Saturday.  However,  the fourth
quarter of each fiscal year will always end on  September  30.  Because of this,
the number of days in the first  quarter  (94 days in fiscal 1999 and 95 days in
fiscal  1998) and fourth  quarter  (89 days in fiscal 1999 and 88 days in fiscal
1998) of each  fiscal  year  varies  from  year to year.  The  second  and third
quarters of each fiscal year will be exactly  thirteen  weeks long.  This policy
does not have a material  effect on the  comparability  of results of operations
between quarters.

NOTE C - Software Revenue Recognition

In November 1997, the Accounting  Standards  Executive  Committee (AcSEC) issued
Statement of Position  (SOP) 97-2,  "Software  Revenue  Recognition",  which the
Company  adopted in the first  quarter of fiscal 1999.  The adoption of SOP 97-2
did not have a material effect on the Company's financial statements.



<PAGE>



NOTE D - Comprehensive Income

In September 1997, the Financial  Accounting  Standard Board issued Statement of
Financial Accounting Standards No. 130, "Reporting  Comprehensive Income" ("SFAS
No. 130),  which the Company  adopted in the first quarter of fiscal 1999.  SFAS
No. 130 establishes  standards for reporting and  presentation of  comprehensive
income  and its  components.  Comprehensive  income is  defined as the change in
equity of a business  enterprise  during a period  from  transactions  and other
events and  circumstances  from  non-owner  sources and  includes all changes in
equity during a period except those  resulting  from  investments  by owners and
distributions to owners.


For the three months ended  January 2, 1999 and January 3, 1998,  the  Company's
comprehensive income was as follows (in thousands):

                                                   Three Months Ended

                                         January 2, 1999         January 3, 1998
                                          -------------           --------------
Comprehensive income:
    Net income                               $  3,209               $  2,432
    Cumulative translation adjustment              99                   (362)
                                          -------------           --------------
Total comprehensive income                   $  3,308               $  2,070
                                          =============           ==============


NOTE E - Stock Split

On February 8, 1999, the Company  announced a  three-for-two  stock split in the
form of a 50%  stock  dividend  to be paid on March 9, 1999 to  stockholders  of
record on February 23, 1999.




                                                        


<PAGE>

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

Forward Looking Statements

         This discussion includes certain  forward-looking  statements about the
Company's business and its expectations. Any such statements are subject to risk
that could cause the actual results to vary materially from expectations.  For a
further  discussion of the various risks that may affect the Company's  business
and expectations, see "Certain Factors That May Affect Future Operating Results"
at the end of  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations.

Results of Operations

       Revenues. Revenues for the first quarter of fiscal 1999 amounted to $53.1
million as compared  with $44.6 million for the first quarter of the prior year.
Revenue  growth  amounted to 19% and 20% in the first quarter of fiscal 1999 and
1998,  respectively.  Product  revenues for the quarter  increased  12% to $33.2
million  from $29.8  million  in the same  period of fiscal  1998.  In the first
quarter of fiscal 1998,  product revenues  increased 16% over the same period in
fiscal 1997. Product revenue growth in the first quarter of fiscal 1999 and 1998
was  principally  driven by  customer  demand.  Service  revenues  for the first
quarter of fiscal 1999  increased 35% to $19.9 million from $14.8 million in the
same  period of  fiscal  1998.  In the first  quarter  of fiscal  1998,  service
revenues  increased  30% over the same  period in  fiscal  1997.  The  growth in
service  revenues  in the first  quarter  of fiscal  1999 and 1998  reflects  an
increase in maintenance revenue from the expansion of the installed base as well
as an increase in the level of maintenance  contracts and professional  services
accompanying sales to new customers and upgrade sales to existing customers.

       Gross  Profit.  Gross profit as a  percentage  of revenues was 62% in the
first  quarter of fiscal 1999 and 1998.  Product gross profit as a percentage of
product  revenues was 76% in the first quarter of fiscal 1999 and 1998.  Service
gross profit as a percentage of service  revenues  increased to 39% in the first
quarter  of fiscal  1999 from 32% in the first  quarter of the prior  year.  The
increase in service  gross  profit is  primarily  attributable  to the growth in
service revenues without a proportionate increase in service expenses.  This has
been  accomplished by more fully leveraging  service resources and continuing to
improve  efficiency in the delivery of services.  The Company  anticipates  that
service gross profit as a percentage of service revenues should be approximately
36% to 39% over the remainder of fiscal 1999.

       Expenses.  Expenses as a  percentage  of  revenues  were 53% in the first
quarter of fiscal 1999 and 1998. Sales and marketing expenses as a percentage of
revenues  were 35% in the first quarter of fiscal 1999 as compared to 36% in the
first quarter of the prior year. Sales and marketing expenses as a percentage of
revenues  were  higher in the  first  quarter  of  fiscal  1998 due to less than
anticipated  revenues  from the  Company's  international  and OEM  distribution
channels.  Management  anticipates  that over the remainder of fiscal 1999 sales
and marketing  expenses as a percentage of revenues will be comparable to fiscal
1998.

       Engineering,  research  and  development  expenses  as  a  percentage  of
revenues  were 11% in the first  quarter of fiscal 1999 as compared  with 10% in
the first  quarter of the prior year.  Expenses of $6.0 million and $4.3 million
in the  first  quarter  of  fiscal  1999  and  1998,  respectively,  are  net of
capitalized  software  development  costs  of $2.0  million  and  $1.4  million,
respectively.  The growth in  engineering,  research  and  development  expenses
resulted  principally from the development of new products in the  client/server
and Windows environments.

       General and  administrative  expenses as a percentage of revenues were 6%
in the first  quarter of fiscal 1999 as compared with 7% in the first quarter of
the prior year. Other (income) expense, net amounted to less than 1% of revenues
for all periods presented.  Other (income) expense, net is composed primarily of
interest  income  earned  on  the  Company's  investments  partially  offset  by
amortization of intangible assets related to acquisitions made by the Company.

       Income  Taxes.  The  provision for income taxes as a percentage of pretax
income  was 38% in the first  quarter  of fiscal  1999 and 1998.  The  Company's
effective  income tax rate may fluctuate  between periods as a result of various
factors, none of which is material,  either individually or in the aggregate, to
the consolidated results of operations.

Liquidity and Capital Resources

         Working  capital as of January 2, 1999,  amounted  to $48.1  million as
compared with $45.0  million at September 30, 1998. As of those dates,  cash and
equivalents, marketable securities and investments amounted to $54.6 million and
$51.8 million,  respectively.  Cash generated from operations  increased to $5.3
million  in the first  quarter  of fiscal  1999 from $3.0  million  in the first
quarter of the prior year. This was  principally  attributable to an increase in
earnings  and  deferred  maintenance  revenues as well as better  management  of
accounts  receivable from trade customers,  partially offset by the reduction of
compensation  accruals and income tax obligations.  The Company's  investment in
equipment  in the first  quarter of fiscal  1999  increased  approximately  $1.0
million as compared to the first  quarter of the prior year due to the timing of
various  capital  projects.   Cash  generated  from  operations  was  more  than
sufficient to fund investments in equipment and capitalized software development
costs.  The Company  expects to fund its  investments  in  equipment  as well as
software  development costs over the remainder of its fiscal year with available
cash and operating cash flow generated in fiscal 1999.





Certain Factors That May Affect Future Operating Results

         Except for historical matters,  the matters discussed in this Quarterly
Report on Form 10-Q are  "forward-looking  statements" within the meaning of the
Private  Securities  Litigation  Reform  Act of 1995 (the  "Act").  The  Company
desires  to take  advantage  of the  safe  harbor  provisions  of the Act and is
including  this  statement  for the express  purpose of  availing  itself of the
protection  of the safe harbor with  respect to all forward  looking  statements
that involve risks and uncertainties.

         The Company's actual operating  results may differ from those indicated
by forward  looking  statements  made in this Quarterly  Report on Form 10-Q and
presented  elsewhere  by  management  from time to time  because  of a number of
factors including the potential  fluctuations in quarterly  results,  timing and
acceptance  of new product  introductions  by the  Company and its  competitors,
competitive  pricing  pressures,   the  dependence  on  alternate   distribution
channels,  potential effects  associated with the century change, the ability to
attract and retain  sufficient  technical  personnel,  and the dependence on the
Company's  time and  attendance  product  line and on key  vendors,  as  further
described  below and in the Company's  Annual Report on Form 10-K for the fiscal
year ended September 30, 1998,  which factors are  specifically  incorporated by
reference herein.

         Potential  Fluctuations in Quarterly Results.  The Company's  quarterly
operating  results may fluctuate as a result of a variety of factors,  including
the timing of the  introduction of new products and product  enhancements by the
Company and its competitors,  market acceptance of new products, mix of products
sold, the purchasing patterns of its customers, competitive pricing pressure and
general economic conditions.  The Company historically has realized a relatively
larger percentage of its annual revenues and profits in the fourth quarter and a
relatively smaller percentage in the first quarter of each fiscal year, although
there can be no assurance  that this pattern will continue.  In addition,  while
the  Company  has  contracts  to supply  systems  to certain  customers  over an
extended period of time,  substantially all of the Company's product revenue and
profits  in each  quarter  result  from  orders  received  in that  quarter.  If
near-term   demand  for  the  Company's   products  weakens  or  if  significant
anticipated  sales in any  quarter do not close  when  expected,  the  Company's
revenues for that quarter will be adversely affected.  The Company believes that
its  operating  results  for any one period are not  necessarily  indicative  of
results for any future period.


<PAGE>



         Product  Development and  Technological  Change.  Continual  change and
improvement  in computer  software  and  hardware  technology  characterize  the
markets for frontline labor  management  systems.  The Company's  future success
will depend largely on its ability to enhance its existing  product lines and to
develop new products and  interfaces  to third party  products on a timely basis
for the increasingly sophisticated needs of its customers.  Although the Company
is continually  seeking to further enhance its product  offerings and to develop
new products and  interfaces,  there can be no assurance that these efforts will
succeed, or that, if successful,  such product enhancements or new products will
achieve widespread market acceptance, or that the Company's competitors will not
develop and market  products  which are  superior to the  Company's  products or
achieve greater market acceptance.

         Competition.   The  frontline  labor  management   industry  is  highly
competitive.  Competition is increasing as  competitors  in related  industries,
such as human resources  management,  payroll processing and enterprise resource
planning  (ERP) enter the market.  Advances in software  development  tools have
accelerated  the  software   development  process  and,  therefore,   can  allow
competitors  to penetrate  certain of the  Company's  markets.  Maintaining  the
Company's  technological  and other  advantages  over  competitors  will require
continued  investment by the Company in research and  development  and marketing
and  sales  programs.  There  can be no  assurance  that the  Company  will have
sufficient  resources  to  make  such  investments  or be able  to  achieve  the
technological  advances  necessary  to  maintain  its  competitive   advantages.
Increased  competition  could adversely affect the Company's  operating  results
through price reductions and/or loss of market share.

         Dependence on Alternate  Distribution Channels. The Company markets and
sells its products through its direct sales  organization,  independent  dealers
and OEMs. For the fiscal year ended September 30, 1998, approximately 20% of the
Company's revenue was generated through sales to dealers and OEMs.  Reduction in
the sales efforts of the Company's  major dealers and/or OEMs, or termination or
changes in their  relationships with the Company,  could have a material adverse
effect on the results of the Company's operations.

         Year 2000.  The Company has an executive  level  steering  committee to
identify and resolve Year 2000 issues  associated  with the  Company's  internal
systems  (both  information  technology  ("IT") and non-IT),  the  Company's own
products and services,  the status of third party  products  distributed  by the
Company to its  customers as well as the Year 2000  readiness  of the  Company's
suppliers.  The Company has  completed an  assessment of all of its principal IT
systems,  which  include  manufacturing,   distribution,  customer  service  and
financial  systems.   The  Company  has,  with  the  assistance  of  an  outside
consultant,  tested its principal  internal  enterprise  resource planning (ERP)
system and believes it to be year 2000 compliant. This ERP system includes order
entry,  material resource planning,  master production  scheduling,  purchasing,
shipping and financial  systems.  The Company has identified Year 2000 issues in
other less  significant  IT systems,  and expects to resolve  those  issues,  by
replacements and/or upgrades,  by mid-1999.  The Company is currently performing
an  assessment  of certain  non-IT  systems and expects  that  assessment  to be
completed  by  mid-1999.  Examples of these  non-IT  systems  include  telephone
systems and stand alone shop-floor test equipment.  The Company does not plan to
assess specifically its facility management systems, or the external forces such
as utility or transportation  Year 2000 compliance failures that might generally
affect industry and commerce. Although the Company is not currently aware of any
material  operational  issues or costs associated with preparing its internal IT
and non-IT  systems  for the Year 2000,  the  Company  may  experience  material
unanticipated problems and costs caused by undetected errors or defects in these
internal systems.

         The Company's Year 2000 compliance plan includes  designing its current
products to meet the Company's  definition of "Year 2000  Compliant" and testing
the most recent versions of its current products to determine  whether they meet
that definition.  Testing of products  currently  manufactured by the Company is
approximately  95%  completed and is expected to be finished by the end of June,
1999.  The  Company  has  warranted,  and may in the  future  warrant to certain
customers  that its products  will work in the Year 2000 and beyond.  Generally,
for products that have been identified to date as needing upgrades/new  versions
to  address  Year 2000  issues,  the  Company  has those  upgrades/new  versions
available to customers for purchase or under maintenance agreements. Some of the
Company's  customers are using products and/or product versions that the Company
has not tested, and does not support,  for Year 2000 compliance.  The Company is
encouraging  these customers to migrate to current  products/versions  that meet
the Company's Year 2000  compliance  definition.  In addition,  the Company
does not  intend  to test any of its  custom  software  products  for Year  2000
compliance.

         For  third  party  products  that  the  Company  distributes  with  its
products,   the  Company  has  sought   information   and  assurances  from  the
manufacturers  concerning  those  products' Year 2000  compliance  status.  As a
result,  the Company has  identified  certain  third  party  products  that will
require an upgrade to be Year 2000 compliant and is currently notifying affected
customers and encouraging  them to upgrade.  The Company expects to complete its
assessment of those third party products by mid-1999.

         Despite  the  testing  of  its  own  products  and  efforts  to  obtain
assurances on third party  products,  errors or defects in such  products  could
result in delay or loss of revenue,  diversion of development resources,  damage
to the Company's  reputation,  or increased  service and warranty costs,  any of
which could materially affect the Company's business,  results of operations, or
financial  condition.   In  addition,  the  unprecedented  nature  of  potential
litigation  regarding Year 2000 compliance issues makes it uncertain whether the
Company will be affected by such litigation.

         The Company has  completed its  systematic  inquiry of key suppliers to
assess their Year 2000 readiness.  The Company is not aware of any problems that
would  materially  affect its  business,  results  of  operations  or  financial
condition,  but the Company has no means of ensuring  that  assurances  received
from such  suppliers are accurate.  The inability of such suppliers to meet Year
2000 requirements  could materially impact the ability of the Company to procure
material from these  suppliers and to meet its obligations to supply products to
its customers.

         The Company does not currently have any information concerning the Year
2000  compliance  status of its  customers.  As with  other  similarly  situated
companies,  if the Company's  current or future  customers  fail to achieve Year
2000  compliance or if they divert  expenditures to address Year 2000 compliance
problems, the Company's business,  results of operations, or financial condition
could be materially affected.

         The  Company  has not yet  developed  a  contingency  plan on Year 2000
readiness.  The  Company  is  currently  assessing  the need for such a plan and
anticipates completing that assessment by mid-1999.

         The costs associated with the Company's Year 2000 plan have been funded
from  operating  cash flows and have been charged to  operations.  To date,  the
Company has incurred approximately $.3 million of incremental costs and expects,
on a cumulative  basis,  total costs to be approximately  $.5 million to address
its internal IT and non-IT  systems.  The Company does not separately  track the
internal  costs  associated  with its Year 2000 plan,  which are  primarily
payroll  costs for its  information  systems  employees,  support and  technical
personnel and the Year 2000 steering committee.  The costs described herein, and
the costs to accomplish the other elements of the Company's Year 2000 plan, have
not  been  and  are not  expected  to be  material  to the  Company's  financial
position,  results of operations or cash flows.  The cost of completing the Year
2000 plan and the date on which the Company  believes  the plan will be complete
are based upon management's best estimates derived by using numerous assumptions
of future events,  including the continued  availability  of certain  resources.
There can be no guarantee  that these  estimates will be achieved and the actual
results may differ  materially  from those  anticipated.  Specific  factors that
might cause these differences include without  limitation,  the availability and
cost of  personnel  trained  in this  area,  the  ability  to  make  timely  and
appropriate   adjustments   to  all   relevant   computer   codes  and   similar
uncertainties.

<PAGE>

PART II.          OTHER INFORMATION

Item 5.           Other Information

                  On February 8, 1999,  the  Company  announced a  three-for-two
                  stock split in the form of a 50% stock  dividend to be paid on
                  March 9, 1999 to stockholders of record on February 23, 1999.

Item 6.           Exhibits and Reports on Form 8-K

                  (a)          Exhibits

                  27           Financial Data Schedule

                  (b)          Reports on Form 8-K

                               There were no  reports  on Form 8-K filed  during
                               the fiscal quarter ended January 2, 1999.



<PAGE>

                                   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 thereunto duly authorized.

                                            KRONOS INCORPORATED



                                            By   /s/      Paul A. Lacy         
                                                          Paul A. Lacy
                                                 Vice President of Finance
                                                   and Administration
                                               (Duly Authorized Officer and
                                                Principal Financial Officer)





February 11, 1999


<PAGE>


                               KRONOS INCORPORATED

                                  EXHIBIT INDEX



     Exhibit
     Number         Description

      27          Financial Data Schedule