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 3, 1998

                                       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                                  02154
--------------------------------------------------------------------------------
(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, 1998,  8,264,902 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 3, 1998 and December 28, 1996                  1

     Condensed Consolidated  Balance Sheets at January 3, 1998
          and September 30, 1997                                               2

     Condensed Consolidated  Statements of Cash Flows for the
          Three Months Ended January 3, 1998 and December 28, 1996             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 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 3,    December 28,
                                                              1998           1996
                                                          -----------    -----------
<S>                                                        <C>            <C>
Net revenues:
      Product ..........................................   $    29,761    $    25,718
      Service ..........................................        14,812         11,392
                                                           -----------    -----------
                                                                44,573         37,110
                                                           -----------    -----------
Cost of sales:
      Product ..........................................         7,040          6,415
      Service ..........................................        10,129          7,972
                                                           -----------    -----------
                                                                17,169         14,387
                                                           -----------    -----------
            Gross profit ...............................        27,404         22,723
Expenses:
      Sales and marketing ..............................        16,051         12,744
      Engineering, research and development ............         4,324          3,972
      General and administrative .......................         3,095          2,508
      Other (income) expense, net ......................            (2)           (37)
                                                           -----------    -----------
                                                                23,468         19,187
                                                           -----------    -----------
            Income before income taxes .................         3,936          3,536
Provision for income taxes .............................         1,504          1,350
                                                           -----------    -----------
            Net income .................................   $     2,432    $     2,186
                                                           ===========    ===========


Net income per common share:
            Basic ......................................   $      0.30    $      0.27
                                                           ===========    ===========
            Diluted ....................................   $      0.29    $      0.26
                                                           ===========    ===========

Average common and common equivalent shares outstanding:
            Basic ......................................     8,190,075      8,131,153
                                                           ===========    ===========
            Diluted ....................................     8,441,075      8,397,349
                                                           ===========    ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

<PAGE>
<TABLE>
<CAPTION>

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

                                                                                                         January 3,  September 30,
                                                                                                            1998         1997
                                                                                                         ---------    ---------
                                         ASSETS
<S>                                                                                                      <C>          <C>
Current assets:
   Cash and equivalents ..............................................................................   $  16,601    $  20,698
   Marketable securities .............................................................................      20,545       15,530
   Accounts receivable, less allowances for doubtful accounts of $996
      at January 3, 1998 and $1,091 at September 30, 1997 ............................................      38,021       38,817
   Inventories .......................................................................................       4,624        4,322
   Deferred income taxes .............................................................................       4,277        4,277
   Other current assets ..............................................................................       7,222        6,539
                                                                                                         ---------    ---------
          Total current assets .......................................................................      91,290       90,183
Equipment, net .......................................................................................      16,132       17,038
Net investment in sales-type leases ..................................................................       5,396        5,312
Excess of cost over net assets of businesses acquired ................................................       7,572        7,855
Other assets .........................................................................................       8,235        7,726
                                                                                                         ---------    ---------
          Total assets ...............................................................................   $ 128,625    $ 128,114
                                                                                                         =========    =========

                          LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued expenses .............................................................   $  12,559    $  13,217
   Accrued compensation ..............................................................................       8,070       10,105
   Federal and state income taxes payable ............................................................       1,977        3,497
   Unearned service revenue ..........................................................................      23,419       22,209
                                                                                                         ---------    ---------
          Total current liabilities ..................................................................      46,025       49,028
Deferred income taxes ................................................................................       2,587        2,587
Unearned service revenue .............................................................................       3,974        3,523
Other liabilities ....................................................................................         460          503
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 12,000,000 shares,
   8,254,154 shares and 8,246,453 shares issued at January 3, 1998 and
      September 30, 1997, respectively ...............................................................          83           82
   Additional paid-in capital ........................................................................      28,642       29,770
   Retained earnings .................................................................................      47,478       45,045
   Equity adjustment from translation ................................................................        (624)        (262)
   Cost of Treasury Stock  (0 shares and 86,493
      shares at January 3, 1998 and September 30, 1997, respectively) ................................        --         (2,162)
                                                                                                         ---------    ---------
          Total shareholders' equity .................................................................      75,579       72,473
                                                                                                         ---------    ---------
          Total liabilities and shareholders' equity .................................................   $ 128,625    $ 128,114
                                                                                                         =========    =========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


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

                                                                                                         Three Months Ended
                                                                                                        ---------------------
                                                                                                       January 3,  December 28,
                                                                                                          1998        1996
                                                                                                        --------    --------

<S>                                                                                                     <C>         <C>
Operating activities:
     Net income .....................................................................................   $  2,432    $  2,186
     Adjustments to reconcile net income to net cash and equivalents
        provided by operating activities:
             Depreciation ...........................................................................      1,788       1,462
             Amortization of deferred software development costs and
                excess of cost over net assets of businesses acquired ...............................      1,443       1,024
             Changes in certain operating assets and liabilities:
                Accounts receivable, net ............................................................        634       1,584
                Inventories .........................................................................       (322)       (387)
                Unearned service revenue ............................................................      1,707         972
                Accounts payable, accrued compensation
                    and other liabilities ...........................................................     (3,850)        (57)
                Net investment in sales-type leases .................................................       (291)     (1,810)
             Other ..................................................................................       (517)       (445)
                                                                                                        --------    --------
                    Net cash and equivalents provided by operating activities .......................      3,024       4,529

Investing activities:
     Purchase of equipment ..........................................................................       (920)     (2,218)
     Capitalization of software development costs ...................................................     (1,444)     (1,163)
     (Increase) decrease in marketable securities ...................................................     (5,015)      1,795
     Acquisitions of businsesses ....................................................................       (726)       (178)
                                                                                                        --------    --------
                    Net cash and equivalents used in investing activities ...........................     (8,105)     (1,764)

Financing activities:
     Net proceeds from exercise of stock option and employee stock
        purchase plans ..............................................................................      1,062          53
     Purchase of treasury stock .....................................................................        (27)        (27)
                                                                                                        --------    --------
                    Net cash and equivalents provided by financing activities .......................      1,035          26

Effect of exchange rate changes on cash and equivalents .............................................        (51)          1
                                                                                                        --------    --------
Increase (decrease) in cash and equivalents .........................................................     (4,097)      2,792
Cash and equivalents at the beginning of the period .................................................     20,698      10,795
                                                                                                        --------    --------
Cash and equivalents at the end of the period .......................................................   $ 16,601    $ 13,587
                                                                                                        ========    ========
</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,  1997.  The  results of
operations  for the three month period ended January 3, 1998 is not  necessarily
indicative  of the results for a full fiscal  year.  Certain  amounts  have been
reclassified in fiscal 1997 to permit comparison with fiscal 1998.

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  (95 days in fiscal 1998 and 89 days in
fiscal  1997) and fourth  quarter  (88 days in fiscal 1998 and 94 days in fiscal
1997) 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 - Earnings Per Share

In February 1997, the Financial  Accounting  Standards  Board (FASB) issued SFAS
No. 128,  "Earnings  per Share." SFAS No. 128 replaced the  previously  reported
primary and fully diluted earnings per share with basic and diluted earnings per
share.  Unlike primary earnings per share, basic earnings per share excludes any
dilutive  effects of options,  warrants,  and  convertible  securities.  Diluted
earnings  per share is very similar to the  previously  reported  fully  diluted
earnings per share. All earnings per share amounts  presented have been restated
to conform to SFAS No. 128 requirements.



<PAGE>


The following table sets forth the computation of basic and diluted earnings per
share:

                                           January 3, 1998    December 28, 1996
                                        ------------------ --------------------

   Net income (in thousands)                      $2,432              $2,186
                                        ================== ====================


   Weighted average shares                     8,190,075           8,131,153

Effect of dilutive securities:
   Employee stock options                        251,000             266,196
                                        ------------------ --------------------

   Adjusted weighted average shares 
      and assumed conversions                  8,441,075           8,397,349
                                        ================== ====================

Basic earnings per share                           $0.30               $0.27
                                        ================== ====================

Diluted earnings per share                         $0.29               $0.26
                                        ================== ====================


NOTE D - Subsequent Events

On January 30, 1998, the stockholders of the Company approved an increase in the
number of authorized shares of common stock from 12,000,000 to 20,000,000 at the
1998 Annual Meeting of Stockholders.


<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 1998 amounted to $44.6
million as compared  with $37.1 million for the first quarter of the prior year.
Revenue growth  amounted to 20% and 18% in the first quarters of fiscal 1998 and
1997,  respectively.  Product  revenues for the quarter  increased  16% to $29.8
million  from $25.7  million  in the same  period of fiscal  1997.  In the first
quarter of fiscal 1997,  product revenues  increased 14% over the same period in
fiscal 1996.  Product revenue growth was principally  driven by customer demand.
Demand for the Company's  Windows and  client/server  based  products  increased
substantially  in the first  quarter  of fiscal  1998 as  compared  to the first
quarter of fiscal 1997.  Revenues  generated  by  client/server  based  products
included several major account sales. Service revenues for the quarter increased
30% to $14.8  million from $11.4  million in the same period of fiscal 1997.  In
the first quarter of fiscal 1997,  service revenues  increased 28% over the same
period in fiscal 1996.  The growth in service  revenues  reflects an increase in
the level of professional services accompanying new sales as well as an increase
in maintenance revenue from expansion of the installed base.

     Gross Profit. Gross profit as a percentage of revenues was 62% in the first
quarter of fiscal  1998 as compared  with 61% in the first  quarter of the prior
year. The  improvement in gross profit was evidenced in both product and service
gross profit.  Product gross profit  increased to 76% in the quarter from 75% in
the first quarter of the prior year. The  improvement in product gross profit in
the first  quarter of fiscal  1998 is  primarily  attributable  to an  increased
proportion of product revenues generated by software,  which typically generates
higher gross profit.  The unusually high level of software  revenue  realized in
the first quarter of fiscal 1998 was impacted by several  major  account  sales.
Service  gross profit  increased to 32% in the first quarter of fiscal 1998 from
30% 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 the
implementation  of programs  which  focus on revenue  enhancement  for  services
provided, as well as improved efficiency in the delivery of such services.

     Expenses.  Expenses  as a  percentage  of  revenues  were 53% in the  first
quarter of fiscal  1998 as compared  with 52% in the first  quarter of the prior
year. Sales and marketing  expenses as a percentage of revenues increased to 36%
in the first  quarter of fiscal 1998 from 34% in the first  quarter of the prior
year.  The increase in sales and marketing  expenses as a percentage of revenues
is  primarily  driven  by less  than  anticipated  revenues  from the  Company's
international  and OEM  distribution  channels.  Sales costs  supporting the OEM
channel  are  relatively   fixed.   Sales  costs  supporting  the  international
operations are growing as the Company focuses on expanding these markets.

     Engineering,  research and development expenses as a percentage of revenues
were 10% in the first  quarter of fiscal 1998 as compared  with 11% in the first
quarter of the prior  year.  Expenses of $4.3  million  and $4.0  million in the
first  quarter of fiscal  1998 and 1997,  respectively,  are net of  capitalized
software development costs of $1.4 million and $1.2 million,  respectively.  The
growth in engineering,  research and development expenses results primarily from
efforts to  standardize  products  and the  development  of new  products in the
Windows and client/server environments.

     General and administrative expenses as a percentage of revenues amounted to
7% for all periods presented.  Other (income) expense, net amounted to less than
1% of  revenues  for all  periods  presented.  Other  (income)  expense,  net is
composed  primarily of amortization of intangible assets related to acquisitions
made by the Company which is partially  offset by interest  income earned on its
investments.

     Income  Taxes.  The  provision  for income taxes as a percentage  of pretax
income was 38% in the first quarters of both fiscal 1998 and 1997. 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 aggregate, to the
consolidated results of operations.


<PAGE>

Liquidity and Capital Resources

     Working  capital  as of  January  3,  1998,  amounted  to $45.3  million as
compared with $41.2  million at September 30, 1997. As of those dates,  cash and
equivalents  and  marketable  securities  amounted  to $37.1  million  and $36.2
million, respectively.  Cash generated from operations decreased to $3.0 million
in the first  quarter of fiscal 1998 from $4.5  million in the first  quarter of
the prior year,  principally due to a reduction in accruals for compensation and
income tax related obligations offset by an increase in unearned service revenue
and a decrease in the net investment in sales-type leases in the current period.
The  Company's  investment  in equipment in the first quarter of the fiscal year
decreased  from its investment in the first quarter of the prior year due to the
timing of capital projects. The Company anticipates that investment in equipment
in fiscal 1998 will be comparable to fiscal 1997.

     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  and  software  development  costs over the
remainder  of its  fiscal  year  with  available  cash and  operating  cash flow
generated in fiscal 1998.

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 of new
product  announcements  or  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, 1997,  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.

     Product  Development  and  Technological  Change.  The markets for time and
attendance,  labor management,  and data collection systems are characterized by
continual change and improvement in computer  software and hardware  technology.
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.
Although management believes the Company has substantially completed the product
transition  from  DOS  and  UNIX  platforms  to the  Windows  and  client/server
environments,  the Company's  revenue growth and results of operations in fiscal
1998 will  depend in part on the  continuing  growth of sales of its Windows and
client/server products.

     Competition. The time and attendance, labor management, and data collection
industries are highly  competitive.  Competition is increasing as competitors in
related  industries,  such as human  resources  and  payroll,  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, 1997, approximately 22% 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.

<PAGE>

PART II.           OTHER INFORMATION

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 3, 1998.




<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 12, 1998



<PAGE>



                               KRONOS INCORPORATED

                                  EXHIBIT INDEX



     Exhibit
      Number          Description

      27           Financial Data Schedule