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 July 3, 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 August 1, 1999,  12,605,995 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 and  Nine Months Ended July 3, 1999 and July 4, 1998     1

           Condensed Consolidated Balance Sheets at July 3, 1999
              and September 30, 1998                                          2

           Condensed Consolidated Statements of Cash Flows for the Nine
              Months Ended July 3, 1999 and  July 4, 1998                     3

           Notes to Condensed Consolidated Financial Statements             4-5

 Item 2.   Management's Discussion and Analysis of Financial Condition and
              Results of Operations                                        6-12

 PART II.  OTHER INFORMATION

 Item 6.   Exhibits and Reports on Form 8-K                                  13

 Signatures

 Exhibit Index
<PAGE>
<TABLE>
<CAPTION>

PART I.  FINANCIAL INFORMATION

Item 1.     Condensed Consolidated Financial Statements (Unaudited)

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

                                                                Three Months Ended            Nine Months Ended
                                                           ---------------------------   ---------------------------
                                                              July 3,         July 4,       July 3,         July 4,
                                                               1999            1998          1999            1998
                                                           -----------     -----------   -----------     -----------
<S>                                                        <C>            <C>            <C>            <C>
Net revenues:
     Product ...........................................   $     43,965   $     35,080   $    117,788   $     94,952
     Service ...........................................         23,252         17,599         64,230         48,772
                                                           ------------   ------------   ------------   ------------
                                                                 67,217         52,679        182,018        143,724
Cost of sales:
     Product ...........................................          9,883          8,636         27,196         23,419
     Service ...........................................         13,664         11,440         38,521         32,063
                                                           ------------   ------------   ------------   ------------
                                                                 23,547         20,076         65,717         55,482
                                                           ------------   ------------   ------------   ------------
          Gross profit .................................         43,670         32,603        116,301         88,242
Expenses:
     Sales and marketing ...............................         23,094         17,670         63,458         49,599
     Engineering, research and development .............          6,988          5,334         19,616         14,215
     General and administrative ........................          4,030          3,526         11,246          9,938
     Other (income) expense, net .......................            106            159            571            (27)
                                                           ------------   ------------   ------------   ------------
                                                                 34,218         26,689         94,891         73,725
                                                           ------------   ------------   ------------   ------------
          Income before income taxes ...................          9,452          5,914         21,410         14,517
Provision for income taxes .............................          3,318          2,259          7,515          5,546
                                                           ------------   ------------   ------------   ------------
          Net income ...................................   $      6,134   $      3,655   $     13,895   $      8,971
                                                           ============   ============   ============   ============


Net income per common share:
          Basic ........................................   $       0.49   $       0.29   $       1.11   $       0.72
                                                           ============   ============   ============   ============

          Diluted ......................................   $       0.47   $       0.28   $       1.06   $       0.70
                                                           ============   ============   ============   ============

Average common and common equivalent shares outstanding:
          Basic ........................................     12,528,865     12,443,505     12,537,394     12,380,344
                                                           ============   ============   ============   ============
          Diluted ......................................     13,115,132     12,848,900     13,051,479     12,767,452
                                                           ============   ============   ============   ============
</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>

                                                                                July 3,   September 30,
                                                                                 1999          1998
                                                                               ---------  ------------
                                   ASSETS
<S>                                                                            <C>          <C>
Current assets:
   Cash and equivalents ....................................................   $  19,250    $  29,888
   Marketable securities ...................................................      17,483       17,501
   Accounts receivable, less allowances for doubtful accounts of $1,569
      at July 3, 1999 and $1,268 at September 30, 1998 .....................      56,059       50,904
   Deferred income taxes ...................................................       5,188        5,188
   Other current assets ....................................................      11,573        8,171
                                                                               ---------    ---------
          Total current assets .............................................     109,553      111,652
Property, plant and equipment, net .........................................      19,648       15,816
Marketable securities ......................................................      24,350        4,445
Excess of cost over net assets of businesses acquired ......................      31,629       13,731
Deferred software development costs, net ...................................      11,590        9,541
Other assets ...............................................................      12,905        8,676
                                                                               ---------    ---------
         Total assets ......................................................   $ 209,675    $ 163,861
                                                                               =========    =========

                    LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable ........................................................   $   7,005    $   6,427
   Accrued compensation ....................................................      17,013       14,503
   Accrued expenses and other current liabilities ..........................      29,339       18,570
   Deferred maintenance revenues ...........................................      39,434       27,065
                                                                               ---------    ---------
         Total current liabilities .........................................      92,791       66,565
Deferred income taxes ......................................................         911          911
Deferred maintenance revenues ..............................................      14,490        8,830
Other liabilities ..........................................................         192          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,
    12,634,728 shares and 12,465,719 shares issued at July 3, 1999 and
      September 30, 1998, respectively .....................................         126          125
   Additional paid-in capital ..............................................      29,328       29,575
   Retained earnings .......................................................      73,660       59,765
   Equity adjustment from translation ......................................        (347)      (1,162)
   Cost of Treasury Stock  (54,987 shares and 45,861
      shares at July 3, 1999 and September 30, 1998, respectively) .........      (1,476)      (1,100)
                                                                               ---------    ---------
         Total shareholders' equity ........................................     101,291       87,203
                                                                               ---------    ---------
         Total liabilities and shareholders' equity ........................   $ 209,675    $ 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>

                                                                                              Nine Months Ended
                                                                                          ------------------------
                                                                                             July 3,     July 4,
                                                                                              1999        1998
                                                                                           ----------   ---------
<S>                                                                                         <C>            <C>
Operating activities:
     Net income .........................................................................   $ 13,895    $  8,971
     Adjustments to reconcile net income to net cash and equivalents provided by
         operating activities:
              Depreciation ..............................................................      5,938       5,448
              Amortization of excess of cost over net assets of businesses acquired .....      2,952       1,680
              Amortization of deferred software development costs .......................      4,340       3,263
              Changes in certain operating assets and liabilities:
                  Accounts receivable, net ..............................................     (4,830)     (2,399)
                  Deferred maintenance revenues .........................................     14,374       6,862
                  Accounts payable, accrued compensation
                      and other liabilities .............................................      7,049         746
              Other .....................................................................     (7,721)     (1,359)
                                                                                            --------    --------
                      Net cash and equivalents provided by operating activities .........     35,997      23,212

Investing activities:
     Property, plant and equipment ......................................................     (9,900)     (4,936)
     Capitalization of software development costs .......................................     (6,389)     (4,857)
     Increase in marketable securities ..................................................    (19,887)     (8,163)
     Acquisitions of businesses .........................................................     (9,771)     (6,296)
                                                                                            --------    --------
                      Net cash and equivalents used in investing activities .............    (45,947)    (24,252)

Financing activities:
     Net proceeds from exercise of stock option and employee stock
         purchase plans .................................................................      3,835       2,343
     Purchase of treasury stock .........................................................     (4,457)     (1,361)
                                                                                            --------    --------
                      Net cash and equivalents (used in) provided by financing activities       (622)        982

Effect of exchange rate changes on cash and equivalents .................................        (66)       (137)

                                                                                            --------    --------
Decrease  in cash and equivalents .......................................................    (10,638)       (195)
Cash and equivalents at the beginning of the period .....................................     29,888      20,698
                                                                                            --------    --------
Cash and equivalents at the end of the period ...........................................   $ 19,250    $ 20,503
                                                                                            ========    ========
</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 and nine  month  periods  ended  July 3, 1999 are 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 Standards 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  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 and nine months ended July 3, 1999 and July 4, 1998, the Company's
comprehensive income was as follows (in thousands):

                                     Three Months Ended       Nine Months Ended
                                     ------------------       -----------------
                                     July 3,     July 4,    July 3,     July 4,
                                      1999        1998       1999        1998
                                    --------    --------   --------    --------
Comprehensive income:
 Net income                         $  6,134    $  3,655  $ 13,895    $  8,971
 Cumulative translation adjustment       217       (571)       815      (1,006)
                                    ---------   --------  --------    ---------
Total comprehensive income          $  6,351    $  3,084   $14,710    $  7,965
                                    ========    ========  ========    =========

NOTE E - Stock Split

The Company's Board of Directors  approved a three-for-two  stock split effected
in the  form  of a 50%  stock  dividend  that  was  paid  on  March  9,  1999 to
stockholders of record on February 23, 1999.  Accordingly,  the  presentation of
shares  outstanding  and  amounts per share have been  restated  for all periods
presented  to reflect  the  split.  The par value of the  additional  shares was
transferred from additional paid-in capital to Common Stock.

On  November  17,  1995,  the  Company's  Board of  Directors  adopted  a Rights
Agreement.  Under the  Agreement,  the Company  distributed  to  stockholders  a
dividend of one Right for each outstanding share of Common Stock. As a result of
the stock split,  each  stockholder has forty  four-hundreds of a Right for each
share of Common Stock held as of the Record Date.


<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 third quarter of fiscal 1999 amounted to $67.2
million as compared to $52.7 million for the third quarter of the previous year.
Revenues  for the first  nine  months of fiscal  1999  were  $182.0  million  as
compared to $143.7 million for the first nine months of the prior year.  Revenue
growth was 28% and 27% in the three and nine month  periods  ended July 3, 1999,
respectively,  as compared to 22% and 19% for each of the comparable  periods of
the prior year.  The revenue  growth in the three and nine month  periods  ended
July 3, 1999 was  principally  driven  by  customer  demand in all  distribution
channels.

       Product  revenues for the third  quarter of fiscal 1999 amounted to $44.0
million as  compared to $35.1  million for the third  quarter of the prior year.
Product revenues for the first nine months of fiscal 1999 were $117.8 million as
compared to $95.0  million for the first nine months of the prior year.  Product
revenue  growth of 25% and 24% in the three and nine month periods ended July 3,
1999, respectively, increased from 21% and 17% in each of the comparable periods
of the prior year.  Product  revenue  growth in the three and nine month periods
ended July 3, 1999 was principally  driven by sales of the Company's products to
new customers as well as sales into the Company's existing customer base.

       Service  revenues for the third  quarter of fiscal 1999 amounted to $23.3
million as  compared to $17.6  million for the third  quarter of the prior year.
Service  revenues for the first nine months of fiscal 1999 were $64.2 million as
compared with $48.8 million for the first nine months of the prior year. Service
revenue  growth of 32% in both the three and nine  month  periods  ended July 3,
1999,  increased from 24% and 25% for comparable  periods of the prior year. The
growth in service  revenues in the three and nine month  periods  ending July 3,
1999  reflects an increase in  maintenance  revenue  from the  expansion  of the
installed  base and an  increase  in the  level  of  maintenance  contracts  and
professional  services  accompanying  sales to new customers as well as sales to
the Company's existing customer base.


<PAGE>



       Gross Profit.  Gross profit as a percentage of revenues  increased to 65%
and 64% in the three and nine month periods ended July 3, 1999, respectively, as
compared with 62% and 61%,  respectively,  for  comparable  periods of the prior
year.
The  improvement in gross profit was evidenced in both product and service gross
profit.

       Product gross profit as a percentage of product  revenues was 78% and 77%
in the three and nine month periods ended July 3, 1999, respectively, increasing
from 75% for the  comparable  periods  of the prior  year.  The  improvement  in
product gross profit in both periods is partially  attributable  to an increased
proportion of product revenues generated by software,  which typically generates
higher gross profit than other products. The software component of product sales
was 46% and  47% in the  three  and  nine  month  periods  ended  July 3,  1999,
respectively, as compared to 45% for each of the comparable periods of the prior
year. In addition, the Company has also realized cost reductions in manufactured
hardware components due to higher production volumes.  Service gross profit as a
percentage  of  service  revenues  was 41% and 40% in the three  and nine  month
periods  ended  July  3,  1999,  respectively,  increasing  from  35%  and  34%,
respectively,  for comparable periods of the prior year. The increase in service
gross profit in both periods was 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  improving  the
efficiency in the delivery of services.

       Expenses.  Total operating  expenses as a percentage of revenues were 51%
and 52% in the three and nine month periods ended July 3, 1999, respectively, as
compared to 51% in the comparable periods of the prior year. Sales and marketing
expenses  as a  percentage  of  revenues  were 34% and 35% in the three and nine
month periods ended July 3, 1999,  respectively,  consistent with the respective
comparable  periods of the prior year.  Engineering  expenses as a percentage of
revenues  were 10% and 11% in the three and nine  month  periods  ended  July 3,
1999,  respectively,  as compared to 10% in the respective comparable periods of
the prior year.  Engineering  expenses of $7.0  million and $5.3  million in the
third  quarter of fiscal  1999 and 1998,  respectively,  are net of  capitalized
software  development  costs of $2.2  million  and $1.8  million,  respectively.
Engineering expenses of $19.6 million and $14.2 million in the first nine months
of  fiscal  1999  and  1998,  respectively,  are  net  of  capitalized  software
development costs of $6.4 million and $4.9 million,  respectively. The growth in
engineering,  research  and  development  expenses  resulted primarily  from the
development of new products for the client/server and Windows environments.

       General and  administrative  expenses as a percentage of revenues were 6%
in the three and nine month  periods ended July 3, 1999 as compared to 7% in the
comparable  periods 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  amortization  of  intangible   assets  related  to
acquisitions  made by the Company  which is offset by interest  income earned on
its investments.
<PAGE>

       Income  Taxes.  The  provision for income taxes as a percentage of pretax
income  was 35% in the  three  and  nine  month  periods  ended  July  3,  1999,
respectively,  as compared to 38% in each of the comparable periods of the prior
year. The reduction in the Company's  effective  income tax rate in both periods
is primarily  attributable to tax benefits  resulting from the Company's sale of
its South  African  subsidiary  in the second  quarter of fiscal 1999 as well as
utilization of foreign net operating loss carryforwards. The Company anticipates
the effective income tax rate should be  approximately  35% for the remainder of
the fiscal year.

Liquidity and Capital Resources

         Working  capital  as of July 3,  1999,  amounted  to $16.8  million  as
compared  with $45.1  million at  September  30,  1998.  The  decline in working
capital is  attributable  to the  Company's  investment of  approximately  $20.0
million in both long term marketable  securities and  acquisitions of businesses
as well as investments  of  approximately  $10.0 million in property,  plant and
equipment  in the nine month  period  ending  July 3, 1999.  In the three  month
period ended July 3, 1999,  the Company  completed the  acquisition  of a dealer
territory and a labor-tracking  software application company. Under the terms of
these acquisition  agreements,  the Company agreed to an initial cash payment, a
guaranteed payment within one year and assumed certain maintenance contracts and
other professional service obligations.

         Cash and  equivalents  and  marketable  securities  increased  to $61.1
million as of July 3, 1999 as compared to $51.8  million at September  30, 1998.
Cash  generated  from  operations  increased to $36.0  million in the first nine
months of fiscal  1999 from $23.2  million in the first nine months of the prior
year,  principally due to increased earnings and deferred maintenance  revenues.
It is the Company's policy to bill  maintenance  contracts at the contract start
date. The Company has experienced a growth in deferred  maintenance  revenues as
the result of the expansion of the installed  base and, to a lesser  extent,  an
increase in the sale of extended maintenance  contracts.  The Company's increase
of approximately $5.0 million in its investment in property, plant and equipment
in the first nine  months of the fiscal  year as  compared to the same period of
the prior year is principally  due to costs related to the  construction  of the
Company's new world headquarters facility. The Company anticipates it will spend
approximately $14.0 million in the construction of the facility over the next 12
months.  Cash  generated  from  operations  was  more  than  sufficient  to fund
investments  in property,  plant and equipment,  acquisitions  of businesses and
capitalized  software  development  costs.  The  Company  expects  to  fund  its
investments in software  development costs and costs related to the construction
of the new facility  over the remainder of its fiscal year with  available  cash
and investments and operating cash flow.


<PAGE>



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 of 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.

         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.
<PAGE>

         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 the end of  October  1999.  The  Company  is
currently  performing an assessment and  remediation,  as necessary,  of certain
non-IT systems and expects that  assessment to be completed  prior to the end of
1999. Any such systems determined not to be Year 2000 compliant will be remedied
or replaced, if necessary. The Company will replace, prior to the end of October
1999,  certain  stand  alone  shop  floor test  equipment,  to ensure  Year 2000
compliance.  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.
<PAGE>

         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 98% completed and is expected to be finished by the end of October
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.  One of the
Company's  products,  which was sold in low volumes,  has a Year 2000 deficiency
for which there is no upgrade/new version currently  available,  but the Company
intends to correct that  deficiency in the product's next  maintenance  release.
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. It is possible that the
Company may experience  increased  expenses in addressing  migration  issues for
these  customers.  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 the end of October 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.
<PAGE>

         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 is in the process of formulating a contingency plan on Year
2000 readiness.  The Company anticipates completing that contingency plan by the
end of October 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  $1.0  million  of  incremental  costs and
expects,  on a cumulative basis, total costs to be approximately $1.2 million to
address its internal IT and non-IT  systems and to address Year 2000  compliance
problems in its own products and in third party  products  distributed  with its
products.  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 6.    Exhibits and Report on Form 8-K


   (a)     Exhibit


                  27        Financial Data Schedule



   (b)     Reports of Form 8-K

           There were no  reports on Form 8-K filed  during  the fiscal  quarter
            ended July 3, 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)





August 13,  1999

<PAGE>



                               KRONOS INCORPORATED
                                  EXHIBIT INDEX




               Exhibit
               Number      Description



               27        Financial Data Schedule