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 December 29, 2001

                                       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.)

                 297 Billerica Road, Chelmsford,  MA                 01824
--------------------------------------------------------------------------------
               (Address of principal executive offices)            (Zip Code)

                                 (978) 250-9800
--------------------------------------------------------------------------------
              (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 26, 2002, 19,835,644 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 December 29, 2001 and December 30, 2000                  1

         Condensed Consolidated Balance Sheets at December 29, 2001
            and September 30, 2001                                             2

         Condensed Consolidated Statements of Cash Flows for the Three
            Months Ended December 29, 2001 and December 30, 2000               3

         Notes to Condensed Consolidated Financial Statements                  4

Item 2.  Management's Discussion and Analysis of Financial Condition and
            Results of Operations                                             10

PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K                                     17

Signatures

<PAGE>


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
<TABLE>
<CAPTION>

                                                                Three Months Ended
                                                           ----------------------------
                                                            December 29,   December 30,
                                                                2001           2000
                                                           -------------   ------------
<S>                                                        <C>             <C>
Net revenues:
      Product ..........................................   $     35,214    $     33,974
      Service ..........................................         40,647          31,031
                                                           ------------    ------------
                                                                 75,861          65,005
Cost of sales:
      Product ..........................................          8,454           7,772
      Service ..........................................         20,546          17,945
                                                           ------------    ------------
                                                                 29,000          25,717
                                                           ------------    ------------
           Gross profit ................................         46,861          39,288
Operating expenses and other income:
      Sales and marketing ..............................         25,191          22,357
      Engineering, research and development ............          7,936           7,920
      General and administrative .......................          4,532           4,140
      Amortization of intangible assets ................            643           1,734
      Other income, net ................................           (975)         (1,153)
                                                           ------------    ------------
                                                                 37,327          34,998

           Income before income taxes ..................          9,534           4,290
Income tax provision ...................................          3,337           1,501
                                                           ------------    ------------
           Net income ..................................   $      6,197    $      2,789
                                                           ============    ============

Net income per common share:
           Basic .......................................   $       0.32    $       0.15
                                                           ============    ============
           Diluted .....................................   $       0.31    $       0.15
                                                           ============    ============

Average common and common equivalent shares outstanding:
           Basic .......................................     19,404,923      18,553,073
                                                           ============    ============
           Diluted .....................................     20,197,089      19,217,544
                                                           ============    ============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

<PAGE>


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

                                                                                        December 29,    September 30,
                                                                                            2001             2001
                                                                                        ------------    -------------

                                        ASSETS
<S>                                                                                        <C>          <C>
Current assets:
   Cash and equivalents ................................................................   $  13,715    $  36,561
   Marketable securities ...............................................................      20,251       13,812
   Accounts receivable, less allowances  of $8,070
      at December 29, 2001 and $7,151 at September 30, 2001 ............................      75,253       75,295
   Deferred income taxes ...............................................................       7,298        6,655
   Other current assets ................................................................      20,461       15,819
                                                                                           ---------    ---------
          Total current assets .........................................................     136,978      148,142

Property, plant and equipment, net .....................................................      36,026       36,016
Marketable securities ..................................................................      24,410       18,400
Intangible assets ......................................................................      23,078       17,027
Goodwill ...............................................................................      49,269       34,142
Deferred software development costs, net ...............................................      17,195       17,144
Other assets ...........................................................................      11,228       13,943
                                                                                           ---------    ---------
         Total assets ..................................................................   $ 298,184    $ 284,814
                                                                                           =========    =========

                         LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable ....................................................................   $   4,980    $   7,272
   Accrued compensation ................................................................      22,377       26,932
   Accrued expenses and other current liabilities ......................................      11,334       16,073
   Deferred professional service revenues ..............................................      30,235       29,740
   Deferred maintenance revenues .......................................................      63,280       57,053
                                                                                           ---------    ---------
         Total current liabilities .....................................................     132,206      137,070
Deferred maintenance revenues ..........................................................      10,842       12,054
Other liabilities ......................................................................       4,398        4,674
Shareholders' equity:
   Preferred Stock, par value $1.00 per share:  authorized 1,000,000 shares,
      no shares issued and outstanding .................................................        --           --
   Common Stock, par value $.01 per share:  authorized 50,000,000 shares, 19,700,501 and
     19,154,138 shares issued at December 29, 2001 and  September 30, 2001, respectively         197          192
   Additional paid-in capital ..........................................................      31,441       20,548
   Retained earnings ...................................................................     120,545      114,348
   Cost of Treasury Stock (296 shares and 95,787 shares
     at December 29, 2001 and September 30, 2001) ......................................         (13)      (2,588)
   Accumulated other comprehensive income (loss):
     Foreign currency translation ......................................................      (1,593)      (1,796)
     Net unrealized gain on available-for-sale investments .............................         161          312
                                                                                           ---------    ---------
                                                                                              (1,432)      (1,484)
         Total shareholders' equity ....................................................     150,738      131,016
                                                                                           ---------    ---------
         Total liabilities and shareholders' equity ....................................   $ 298,184    $ 284,814
                                                                                           =========    =========
</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
                                                                             ---------------------------
                                                                             December 29,   December 30,
                                                                                 2001           2000
                                                                             ------------   ------------
<S>                                                                              <C>         <C>
Operating activities:
     Net income ..............................................................   $  6,197    $  2,789
     Adjustments to reconcile net income to net cash and equivalents
         provided by operating activities:
             Depreciation ....................................................      2,166       2,016
             Amortization of intangible assets ...............................        643       1,734
             Amortization of deferred software development costs .............      2,095       1,919
             Provision for deferred income taxes .............................       (206)       (264)
             Changes in certain operating assets and liabilities:
                 Accounts receivable, net ....................................      8,164       6,711
                 Deferred maintenance revenue ................................       (626)       (522)
                 Deferred professional service revenue .......................       (826)        (24)
                 Accounts payable, accrued compensation
                     and other liabilities ...................................     (9,506)       (950)
                 Taxes payable ...............................................     (6,634)     (1,748)
                 Other .......................................................      2,806       1,854
             Tax benefit from exercise of stock options ......................      7,144       1,670
                                                                                 --------    --------
                     Net cash and equivalents provided by operating activities     11,417      15,185

Investing activities:
     Purchase of property, plant and equipment ...............................     (2,095)     (1,677)
     Capitalization of software development costs ............................     (2,783)     (2,813)
     Increase in marketable securities .......................................    (12,449)     (9,993)
     Acquisitions of businesses, net of cash acquired ........................    (23,264)     (2,056)
                                                                                 --------    --------
                     Net cash and equivalents used in investing activities ...    (40,591)    (16,539)

Financing activities:
     Net proceeds from exercise of stock option and employee stock
         purchase plans ......................................................     10,955       3,055
     Purchase of treasury stock ..............................................     (2,623)     (3,800)
     Investment in call option ...............................................     (2,000)       --
                                                                                 --------    --------
                     Net cash and equivalents used in  financing activities ..      6,332        (745)

Effect of exchange rate changes on cash and equivalents ......................         (4)         95
                                                                                 --------    --------
Decrease in cash and equivalents .............................................    (22,846)     (2,004)
Cash and equivalents at the beginning of the period ..........................     36,561      23,201
                                                                                 --------    --------
Cash and equivalents at the end of the period ................................   $ 13,715    $ 21,197
                                                                                 ========    ========

</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 of
Kronos Incorporated (the "Company")  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, 2001. The results of operations for the three months ended December 29, 2001
are not  necessarily  indicative of the results for a full fiscal year.  Certain
reclassifications  have been  made in the  accompanying  consolidated  financial
statements in order to conform to the fiscal 2002 presentation.

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  (90 days in fiscal 2002 and 91 days in
fiscal  2001) and fourth  quarter  (93 days in fiscal 2002 and 92 days in fiscal
2001) 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 - Goodwill and Other Intangible Assets - Adoption of Statements 141 and
         142

In June 2001,  the Financial  Accounting  Standards  Board issued  Statements of
Financial  Accounting Standards No. 141, "Business  Combinations",  and No. 142,
"Goodwill and Other Intangible Assets" (the "Statements").  Under the new rules,
goodwill (and intangible  assets deemed to have indefinite lives) will no longer
be amortized but will be subject to annual  impairment  tests in accordance with
the Statements. Other intangible assets will continue to be amortized over their
useful lives.

For  acquisitions  completed prior to June 30, 2001, the Company has applied the
new  rules on  accounting  for  business  combinations  and  goodwill  and other
intangible   assets   beginning  in  the  first  quarter  of  fiscal  2002.  For
acquisitions  completed  after June 30,  2001,  the  Company has applied the new
rules  beginning in the fourth  quarter of fiscal 2001. The Company will perform
the first of the  required  impairment  tests of  goodwill as of October 1, 2001

<PAGE>

prior to March 30,  2002,  and has not yet  determined  what the effect of these
tests will be on earnings and financial position of the Company.

The following table presents the impact of the new standards related to goodwill
amortization  (and related tax effects) on net income and earnings per share, as
if they had been in effect for the three months ended December 30, 2000.

                                        (in thousands, except per share data)
                                                 Three Months Ended
                                      ----------------------------------------
                                      December 29, 2001      December 30, 2000
                                      -----------------      -----------------
Reported net income                       $ 6,197                    $2,789
  Add back: Goodwill amortization               -                       825
                                          -------                    ------
  Adjusted net income                     $ 6,197                    $3,614
                                          =======                    ======

Basic earnings-per-share:
  Reported net income                       $0.32                     $0.15
  Goodwill amortization                         -                      0.04
                                            -----                     -----
  Adjusted net income                       $0.32                     $0.19
                                            =====                     =====

Diluted earnings-per-share:
  Reported net income                       $0.31                     $0.15
  Goodwill amortization                         -                      0.04
                                            -----                     -----
  Adjusted net income                       $0.31                     $0.19
                                            =====                     =====

Acquired  intangible  assets  subject  to  amortization  are  presented  in  the
following  table.  During the  quarter  ended  December  29,  2001,  the Company
completed various acquisitions as described in Note D. The following tables have
been  prepared  on the  basis  of  assumptions  relating  to the  allocation  of
consideration paid for the assets and liabilities of the Company's  acquisitions
(see Note D) based on preliminary estimates. The actual allocation of the amount
of consideration  may differ from that reflected in this table after a valuation
and other procedures have been completed:

                                                    (in thousands)
                                               As of December 29, 2001
                                      ---------------------------------------
                                      Gross Carrying             Accumulated
                                         Amount                  Amortization
                                      --------------             ------------
Customer related                         $21,154                     $5,207
Maintenance relationships                  5,792                         84
Non-compete agreements and other           2,691                      1,268
                                         -------                     ------
                                         $29,637                     $6,559
                                         =======                     ======

<PAGE>

For  the  three  months  ended  December  29,  2001,  amortization  expense  for
intangible assets was $0.6 million.  The estimated annual  amortization  expense
for  intangible  assets for the current and next five fiscal years is as follows
(in thousands):

         Fiscal Year Ending                     Estimated annual
           September 30,                       amortization expense
         ------------------                    --------------------
                 2002                                   $2,978
                 2003                                    3,018
                 2004                                    2,641
                 2005                                    2,200
                 2006                                    2,167
                 2007                                    2,152


NOTE D - Acquisitions

On November 29, 2001,  the Company  completed the  acquisition of certain assets
and the ongoing business operations of NW Micro-Technics, Inc. (NWM), the former
Oregon-based Kronos dealer. The aggregate purchase price was not material to the
Company's  financial  position.  The results of NWM's operations,  which are not
material  to the  Company's  results of  operations,  have been  included in the
consolidated  financial  statements since that date. NWM was engaged in the sale
and  service  of  employee  time  and  attendance,   employee  scheduling,  data
collection and labor  management  hardware and software  systems,  including the
resale of the Company's products through a dealer  relationship.  As a result of
the acquisition,  the Company gains access to existing and prospective customers
in the  northwestern  United States region  through its direct sales and service
organizations, as well as access to the existing maintenance revenue stream from
NWM customers.

On December 28, 2001,  the Company  completed the  acquisition of certain assets
and the ongoing  business  operations  of the  Integrated  Software  Business of
SimplexGrinnell's Workforce Solutions Division (SimplexGrinnell).  The aggregate
purchase  price was $21.7  million in cash.  The  results  of  SimplexGrinnell's
operations have been included in the  consolidated  financial  statements  since
that date and were  immaterial  to the  Company's  results of  operations in the
current  quarter.  SimplexGrinnell  was  engaged in the  development,  sales and
support of integrated  workforce  management software solutions.  As a result of
the acquisition,  the Company expects to increase its presence in the mid-market
sector, which includes companies with between 100 and 1,000 employees.

The  transaction  was accounted for under the purchase  method of accounting and
accordingly,  the  assets  and  liabilities  acquired  were  recorded  at  their
estimated  fair values at the effective date of the  acquisition.  The following
table   summarizes  the  estimated  fair  values  of  the  assets  acquired  and
liabilities  assumed at the date of the  acquisition.  The following tables have
been  prepared  on the  basis  of  assumptions  relating  to the  allocation  of
consideration  paid for the assets and liabilities of  SimplexGrinnell  based on

<PAGE>

preliminary estimates.  The actual allocation of the amount of consideration may
differ from that reflected in this table after a valuation and other  procedures
have been completed.

                                               (in thousands)
                                            At December 28, 2001
                                            --------------------

Accounts receivable                                   $7,563
Intangible assets                                      6,151
Goodwill                                              13,690
Other assets                                             842
                                                         ---
    Total assets acquired                             28,246

Deferred professional services
revenue                                              (1,195)
Deferred maintenance revenue                         (5,401)
                                                     -------
    Total liabilities assumed                        (6,596)
                                                     -------

Net assets acquired                                  $21,650
                                                     =======


Due to the  timing  of the  SimplexGrinnell  acquisition,  the  Company  has not
finalized the allocation of the purchase price.

The  following  table  presents the  consolidated  results of  operations  on an
unaudited pro forma basis as if the  acquisition  of  SimplexGrinnell  had taken
place at the beginning of the periods  presented.  The following  table has been
prepared on the basis of estimates and assumptions available at the time of this
filing that the Company and  SimplexGrinnell  believe are  reasonable  under the
circumstances.

                                     (in thousands, except per share data)
                                               Three Months Ended
                                 ----------------------------------------------
                                 December 29, 2001            December 30, 2000
                                 -----------------            -----------------

Total revenues                          $82,431                    $71,381
Net income                                5,034                        781
Earnings per share - basic                 0.26                       0.04
Earnings per share - diluted               0.25                       0.04


The unaudited pro forma results of operations are for comparative  purposes only
and do not  necessarily  reflect the results  that would have  occurred  had the
acquisitions  occurred at the beginning of the periods  presented or the results
which may occur in the future.

<PAGE>

NOTE E - Comprehensive Income

For the three months ended December 29, 2001 and December 30, 2000 comprehensive
income consisted of the following (in thousands):


                                                 Three Months Ended
                                          -------------------------------
                                          December 29,       December 30,
                                              2001               2000
                                          ------------       ------------
Comprehensive income:
    Net income                               $6,197              $2,789
    Cumulative translation adjustment           203                 125
    Unrealized (loss) gain on
    available-for-sale securities              (151)                206
                                             -------             ------
Total comprehensive income                   $6,249              $3,120
                                             =======             ======


NOTE F - Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per
share (in thousands, except share and per share data):

                                                   Three Months Ended
                                            -------------------------------
                                            December 29,       December 30,
                                                2001               2000
                                            ------------       ------------

  Net income (in thousands)                  $     6,197        $     2,789
                                             ===========        ===========


       Weighted-average shares                19,404,923         18,553,073

       Effect of dilutive securities:
       Employee stock options                    792,166            664,471
                                             -----------        -----------

  Adjusted weighted-average shares
    and assumed conversions                   20,197,089         19,217,544
                                             ===========        ===========

  Basic earnings per share                   $      0.32        $      0.15
                                             ===========        ===========

  Diluted earnings per share                 $      0.31        $      0.15
                                             ===========        ===========


NOTE G - Stock Split

On October 25, 2001, the Company's  Board of Directors  approved a three-for-two
stock split  effected in the form of a 50% stock  dividend.  This stock dividend

<PAGE>

was paid on November 15, 2001 to  stockholders of record as of November 5, 2001.
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.

NOTE H - New Accounting Pronouncements

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement  addresses  financial  accounting
and reporting for the impairment of long-lived  assets and for long-lived assets
to be disposed of. This statement  supercedes SFAS No. 121,  "Accounting for the
Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be Disposed Of,"
and APB Opinion No. 30,  "Reporting  the Results of  Operations - Reporting  the
Effects of Disposal of a Segment of a Business,  and Extraordinary,  Unusual and
Infrequently  Occurring Events and Transactions."  SFAS No. 144 is effective for
the Company October 1, 2002, and early adoption is allowed.  The Company has not
currently  determined what effect, if any, the requirements of SFAS No. 144 will
have on its earnings and financial position.

<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 Kronos'
business and its expectations, including statements relating to revenues derived
from  prior  acquisitions,  revenue  growth  rates and gross  margin,  operating
expenses, management of dealer channels, future acquisitions and available cash,
investments  and operating  cash flow.  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  Kronos'  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 2002 were $75.9 million
as compared to $65.0  million for the first  quarter of the prior year.  Revenue
growth in the first  quarter  of fiscal  2002 was 17% as  compared  to 1% in the
first quarter of fiscal 2001. The revenue  growth rate  experienced in the first
quarter of fiscal 2002 was primarily  attributable to the continued  increase in
demand  for  Kronos'  services.  In  addition,  revenues,  particularly  service
revenues,  were  favorably  impacted  by  acquisition  of  businesses  over  the
preceding four quarters. The revenue growth rate experienced in first quarter of
fiscal 2001 was nominal.  On December 28, 2001,  Kronos acquired  certain assets
and the ongoing  business  operations  of the  Integrated  Software  Business of
SimplexGrinnell's Workforce Solutions Division  (SimplexGrinnell).  The revenues
and results of  operations  related to the  acquisition  are  immaterial  to the
current quarter. Kronos anticipates the acquisition to generate between $12.0 to
$15.0 million in incremental  revenue and have a neutral effect on earnings over
the remainder of the year.

     Product revenues for the quarter  increased 4% to $35.2 million as compared
to $34.0  million and a product  revenue  decline of 6% in the first  quarter of
fiscal 2001.  The product  revenue  growth  experienced  in the first quarter of
fiscal  2002 was  principally  due to the  growth in sales of  Kronos'  software
solutions,  which was  partially  offset by a  decline  in the sales of  Kronos'
hardware products.  The overall product revenue growth is attributable to demand
for platform and capacity  upgrades from  existing  customers as well as product
demand from new customers and customers obtained from acquisition of businesses.
Product revenues declined in the first quarter of fiscal 2001 principally due to
lower than anticipated  revenues from Kronos'  independent  dealer channel.  The
decline was attributable to the increased sophistication of Kronos' products and
the related heightened need for pre-sales  technological support and other sales
support.  During the past year Kronos has expended  resources  to provide  sales
support to the dealer  channel and has acquired some  under-performing  dealers.
Kronos  anticipates  continuing to expend resources to assist the dealer channel
in the short term and to increase Kronos' emphasis on direct sales in the longer
term.

<PAGE>

     Service  revenues for the first  quarter of fiscal 2002  increased to $40.6
million  as  compared  to $31.0  million in the first  quarter  of fiscal  2001.
Service  revenues  increased 31% in the first quarter of fiscal 2002 as compared
to 9% in the first quarter of fiscal 2001.  Excluding the effect of  incremental
service  revenues from acquisition of businesses in the preceding four quarters,
service  revenues would have  increased  21%. In addition to the  acquisition of
businesses,  the growth in service  revenues in the first quarter of fiscal 2002
reflects an increase in the level of professional  services accompanying new and
upgrade sales as well as an increase in  maintenance  revenue from the expansion
of the installed base and the level of services sold to the installed  base. The
growth in  service  revenues  in the first  quarter of fiscal  2001  principally
reflects an increase in maintenance revenue from expansion of the installed base
and, to a lesser extent, incremental maintenance revenues resulting from Kronos'
acquisitions of various dealer territories.


     Gross Profit. Gross profit as a percentage of revenues was 62% in the first
quarter of fiscal  2002,  increasing  from 60% in the  comparable  period of the
prior year. The  improvement in gross profit in the first quarter of fiscal 2002
was  attributable  to an increase in service gross  profit,  which was partially
offset  by a  decrease  in  product  gross  profit.  Product  gross  profit as a
percentage  of product  revenues  was 76% in the first  quarter  of fiscal  2002
compared to 77% in the first quarter of the prior year. This decrease in product
gross profit is primarily  related to higher royalty costs and higher production
costs due to lower  hardware sales volume,  but is partially  offset by a higher
proportion of software sales that typically carry a higher gross profit. Service
gross profit as a percentage of service revenues was 49% in the first quarter of
fiscal  2002,  compared  to 42% in the  first  quarter  of the prior  year.  The
improvement in service gross profit is attributable to increased productivity in
the service  organization.  The  improvement  in  productivity  is the result of
leveraging  investments  in  service  systems  to more  effectively  manage  the
resources  required  to deliver  professional  services  and  customer  support.
Although  over the remainder of the year gross profit as a percentage of revenue
is  expected  to  increase  above the gross  profit  percentage  achieved in the
current quarter,  management anticipates some near term deterioration of margins
as Kronos integrates the SimplexGrinnell operations.

     Net Operating Expenses.  Net operating expenses as a percentage of revenues
were 49% and 54% in the first quarter of fiscal 2002 and 2001, respectively. The
increase in operating expenses was primarily due to incremental costs to support
higher  sales volume and the  conversion  of dealer  operations  to direct sales
operations.  Sales and  marketing  expenses as a percentage of revenues were 33%
and 34% in the first quarter of fiscal 2002 and 2001, respectively. The decrease
in sales and marketing  expense as a percent of revenue was  attributable to our
leveraging our investment in  infrastructure  to generate  higher sales volumes.
Engineering,  research  and  development  expenses as a  percentage  of revenues
declined  to 10% in the first  quarter of fiscal  2002 as compared to 12% in the
first quarter of the prior year due to higher sales volume. Engineering expenses
of $7.9 million in the first quarter of fiscal 2002 and 2001, respectively,  are
net of capitalized  software  development  costs of $2.6 million in each period.

<PAGE>

General and  administrative  expenses as a percentage of revenues were 6% in the
first quarter of fiscal 2002 and 2001.  Amortization  of intangible  assets as a
percentage  of  revenues  was 1% and 3% in the first  quarter of fiscal 2002 and
2001,  respectively.   The  decrease  in  amortization  is  the  result  of  the
elimination of goodwill  amortization  due to Kronos'  adoption of Statements of
Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations" and
No. 142 ("SFAS 142") "Goodwill and Other Intangible Assets" effective October 1,
2001.  Other income,  net is principally  attributable to interest income earned
from Kronos' cash as well as investments in its marketable  securities and lease
portfolio.  Management  anticipates  that  operating  expenses  as a percent  of
revenues   will   increase   in  the  near   term  as  Kronos   integrates   the
SimplexGrinnell operations.

     Income  Taxes.  The  provision  for income taxes as a percentage  of pretax
income was 35% in the first quarter of fiscal 2002 and 2001.  Kronos'  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.

     Newly Issued Accounting  Standards.  In June 2001, the Financial Accounting
Standards  Board (the "FASB") issued SFAS 141 and SFAS 142. Under the new rules,
goodwill (and intangible  assets deemed to have indefinite lives) will no longer
be amortized but will be subject to annual  impairment  tests in accordance with
the Statements. Other intangible assets will continue to be amortized over their
useful lives.

     For acquisitions  completed prior to June 30, 2001, the Company applied the
new  rules on  accounting  for  business  combinations  and  goodwill  and other
intangible  assets  beginning  in the first  quarter of fiscal  year  2002.  For
acquisitions  completed  after  June 30,  2001,  Kronos  applied  the new  rules
beginning in the fourth  quarter of fiscal  2001.  On a proforma  basis,  Kronos
would have  realized  an increase  in net income of $0.8  million,  or $0.04 per
diluted  share,  if these new standards had been applied to the first quarter of
fiscal 2001.  During the second quarter of fiscal 2002,  Kronos will perform the
first of the required impairment tests of goodwill as of October 1, 2001 and has
not yet  determined  what the  effect of these  tests  will be on  earnings  and
financial position.

     In  October  2001,  the FASB  issued  Statements  of  Financial  Accounting
Standards No. 144 ("SFAS 144"),  "Accounting  for the  Impairment or Disposal of
Long-Lived Assets." This statement addresses financial  accounting and reporting
for the impairment of long-lived assets and for long-lived assets to be disposed
of. This statement  supercedes  SFAS No. 121,  "Accounting for the Impairment of
Long-Lived  Assets and for Long-Lived Assets to be Disposed Of," and APB Opinion
No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal
of  a  Segment  of a  Business,  and  Extraordinary,  Unusual  and  Infrequently
Occurring Events and  Transactions."  SFAS No. 144 is effective for fiscal years
beginning  after  December 15,  2001,  and interim  periods  within those fiscal
years, with early application  encouraged.  Kronos has not currently  determined
what effect,  if any, the requirements of SFAS 144 will have on its earnings and
financial position.

<PAGE>

Liquidity and Capital Resources

     Working  capital as of  December  29,  2001,  amounted  to $4.8  million as
compared to $11.1  million at September  30, 2001.  During the first  quarter of
fiscal 2002,  working capital was reduced as Kronos used available cash of $23.3
million  to  complete   acquisitions  of  businesses  with  working  capital  of
approximately  $1.9 million.  Cash, cash  equivalents and marketable  securities
amounted  to $58.4  million  as of  December  29,  2001 and $68.8  million as of
September  30,  2001.  The  decline in cash,  cash  equivalents  and  marketable
securities in the first quarter of fiscal 2002 is primarily attributable to cash
used in the Company's acquisitions in that quarter.

     Cash  generated  from  operations  amounted  to $11.4  million in the first
quarter of fiscal  2002 as  compared  to $15.2  million in the first  quarter of
fiscal  2001.  The  decrease in cash  generated  from  operations  is  primarily
attributable to the payment of bonuses and commissions,  the payment of accounts
payable  as well as the  payments  of  liabilities  associated  with a  previous
acquisition,  partially  offset by an  increase in net income and a decrease  in
accounts  receivable.  Cash  used for  property,  plant and  equipment  was $2.1
million in the first quarter of fiscal 2002 compared to $1.7 million in the same
period of fiscal 2001.  Kronos' use of cash for the acquisition of businesses in
the  first  quarter  of  fiscal  year  2002  was  principally   related  to  the
acquisitions  of specified  assets and/or  businesses of Kronos'  dealers and/or
other providers of labor management solutions. These acquisitions did not have a
material  impact on revenues or results of  operations in the three months ended
December 29, 2001. Kronos is assessing several  acquisition  opportunities  that
may be completed over the next twelve months, although there can be no assurance
that these acquisitions will be completed. Excess cash reserves not required for
operations,  investments in property,  plant and equipment or  acquisitions  are
invested in  marketable  securities.  Marketable  securities  increased by $12.5
million in the first  quarter of fiscal  2002  compared  to an increase of $10.0
million in the first quarter of fiscal 2001.

     Under Kronos' stock repurchase  program,  Kronos  repurchased 22,500 common
shares in the first quarter of fiscal 2002 at a cost of $0.6 million compared to
91,500  common shares at a cost of $2.3 million for the same period in the prior
year.  The common  shares  repurchased  under the  program  are used for Kronos'
employee stock option plans and employee  stock purchase plan.  Cash provided by
operations   was  sufficient  to  fund   investments  in  capitalized   software
development costs, property,  plant and equipment and stock repurchases.  Kronos
believes it has adequate cash and  investments  and operating  cash flow to fund
its investments in property,  plant and equipment,  software  development costs,
cash  payments  related  to  acquisitions,  if  any,  and any  additional  stock
repurchases for the foreseeable future.

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"). Kronos desires to
take  advantage of the safe harbor  provisions of the Act and is including  this

<PAGE>

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.

     Kronos' 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 Kronos and its  competitors,  the  ability to
attract and retain sufficient technical personnel, competitive pricing pressure,
the dependence on Kronos' time and  attendance  product line, and the dependence
on alternate  distribution  channels and on key  vendors,  as further  described
below  and in  Kronos'  Annual  Report on Form 10-K for the  fiscal  year  ended
September 30, 2001, which are specifically incorporated by reference herein.

     Potential  Fluctuations in Quarterly Results.  Kronos' quarterly  operating
results  may  fluctuate  as a result  of a variety  of  factors,  including  the
purchasing  patterns of its  customers,  mix of products and services  sold, the
ability of Kronos to  effectively  integrate  acquired  businesses  into Kronos'
operations,  the  timing  of  the  introduction  of  new  products  and  product
enhancements by Kronos and its competitors,  the strategy  employed by Kronos to
enter the Human Resource (HR)/Payroll market, market acceptance of new products,
competitive   pricing   pressure  and  general   economic   conditions.   Kronos
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 Kronos has contracts to supply systems
to certain  customers  over an  extended  period of time,  substantially  all of
Kronos'  product revenue and profits in each quarter result from orders received
in that  quarter.  If  near-term  demand  for  Kronos'  products  weakens  or if
significant anticipated sales in any quarter do not close when expected, Kronos'
revenues for that quarter will be adversely  affected.  Kronos 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.  Kronos'  future success will
depend  largely on its  ability to enhance the  capabilities  and  increase  the
performance of its existing  products and to develop new products and interfaces
to third party products on a timely basis to meet the increasingly sophisticated
needs of its  customers.  Although  Kronos is  continually  seeking  to  further
enhance  its  product  offerings  and to develop new  products  and  interfaces,
including  products for the  HR/Payroll  market  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  Kronos'
competitors  will not develop and market  products which are superior to Kronos'
products or achieve greater market acceptance.

     Dependence on Time and Attendance  Product Line. To date,  more than 90% of
Kronos' revenues have been attributable to sales of time and attendance  systems

<PAGE>

and related  services.  Although Kronos has announced its intention to enter the
licensed  HR/Payroll market this fiscal year, Kronos expects that its dependence
on the time and  attendance  product  line for  revenues  will  continue for the
foreseeable future.  Competitive  pressures or other factors could cause Kronos'
time and attendance products to lose market acceptance or experience significant
price erosion, adversely affecting the results of Kronos' operations.

     Dependence on Alternate Distribution Channels. Kronos markets and sells its
products through its direct sales organization,  independent dealers and its OEM
partner,  ADP, Inc ("ADP").  In the first quarter of fiscal 2002,  approximately
15% of  Kronos'  revenue  was  generated  through  sales  to  dealers  and  ADP.
Management does not anticipate that its intention to enter the HR/Payroll market
will have a negative impact on its relationship with ADP.  However,  a reduction
in the sales  efforts of Kronos'  major dealers  and/or ADP, or  termination  or
changes in their relationships with Kronos, could have a material adverse affect
on the results of Kronos' operations.

     Competition.  The frontline  labor  management  industry and the HR/Payroll
market are highly  competitive.  The number of competitors is also increasing as
applications and systems providers such as human resources  management,  payroll
processing  and  enterprise   resource  planning  (ERP),  enter  these  markets.
Technological  changes such as those  allowing for increased use of the Internet
have also resulted in new entrants into the markets. Although Kronos believes it
has core competencies that are not easily obtainable by competitors, maintaining
Kronos'  technological  and  other  advantages  over  competitors  will  require
continued  investment  by Kronos in research and  development  and marketing and
sales  programs.  There can be no  assurance  that Kronos  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 Kronos' operating results through price reductions and/or
loss of market share.

     Events of September 11, 2001. No Kronos employees were lost or injured, and
no Kronos  properties  or records  were  damaged,  as a result of the  terrorist
attacks that occurred in the United States on September  11, 2001.  However,  at
this time, it is not possible to predict the  long-term  impact of these events,
or the  domestic and foreign  response,  on either our industry as a whole or on
our operations and financial condition in particular.

     Attracting  and  Retaining   Sufficient  Technical  Personnel  for  Product
Development,  Support and Sales.  Kronos has encountered intense competition for
experienced  technical personnel for product development,  technical support and
sales and expects such  competition to continue in the future.  Any inability to
attract and retain a sufficient  number of qualified  technical  personnel could
adversely  affect  Kronos'  ability to produce,  support and sell  products in a
timely manner.

     Protection of Intellectual Property.  Kronos has developed, and through its
acquisitions of businesses,  acquired,  proprietary  technology and intellectual

<PAGE>

property  rights.  Kronos'  success  is  dependent  upon its  ability to further
develop and protect its proprietary technology and intellectual property rights.
Kronos seeks to protect  products,  software,  documentation  and other  written
materials primarily through a combination of trade secret, patent, trademark and
copyright laws,  confidentiality  procedures and contractual  provisions.  While
Kronos has attempted to safeguard  and maintain its  proprietary  rights,  it is
unknown whether Kronos has been or will be successful in doing so.

     Despite  Kronos' efforts to protect its  proprietary  rights,  unauthorized
parties  may  attempt  to  copy  aspects  of its  products  or  obtain  and  use
information  that is  regarded  as  proprietary.  Policing  unauthorized  use of
Kronos' products is difficult. While Kronos is unable to determine the extent to
which piracy of its software products exists, software piracy can be expected to
be a persistent  problem,  particularly in foreign  countries where the laws may
not  protect  proprietary  rights as fully as in the United  States.  Kronos can
offer no assurance that it can adequately protect its proprietary rights or that
its  competitors  will not reverse  engineer or  independently  develop  similar
technology.

     Infringement  of  Intellectual   Property  Rights.  Kronos  cannot  provide
assurance  that  others  will  not  claim  that  Kronos  developed  or  acquired
intellectual  property  rights are  infringing  on their  intellectual  property
rights or that Kronos does not in fact infringe on those  intellectual  property
rights.

     Any litigation regarding  intellectual  property rights could be costly and
time-consuming  and divert the attention of Kronos' management and key personnel
from business  operations.  The  complexity of the  technology  involved and the
uncertainty of intellectual  property litigation increase these risks. Claims of
intellectual  property  infringement  might  also  require  Kronos to enter into
costly royalty or license agreements,  and in this event, Kronos may not be able
to obtain royalty or license  agreements on acceptable  terms, if at all. Kronos
may also be subject to significant  damages or an injunction  against the use of
its  products.  A  successful  claim of  patent or other  intellectual  property
infringement  against Kronos could cause immediate and substantial damage to its
business and financial condition.

<PAGE>


PART II.  OTHER INFORMATION


Item 6.   Exhibits and Reports on Form 8-K

(a)  Exhibits

     10.1(1) Asset  Purchase  Agreement,  dated as of  December  28, 2001 by and
          among the  Registrant and  SimplexGrinnell  L.P.,  Tyco  International
          Canada Ltd., Simplex International Pty. Ltd., and ADT Services A.G.

(b)  Reports on Form 8-K

     The Company  filed a report on Form 8-K on October 25,  2001  announcing  a
     3-for-2 stock split of the  Registrants  common stock,  par value $0.01 per
     share, in the form of a 50% common stock dividend.


(1)  Confidential treatment requested as to certain portions thereof.

<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, 2002


<PAGE>


                               KRONOS INCORPORATED

                                  EXHIBIT INDEX



Exhibit
Number    Description

10.1(1)   Asset  Purchase  Agreement,  dated as of  December  28, 2001 by and
          among the  Registrant and  SimplexGrinnell  L.P.,  Tyco  International
          Canada Ltd., Simplex International Pty. Ltd., and ADT Services A.G.


(1)  Confidential treatment requested as to certain portions thereof.