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 March 30, 2002

                                       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 April 27, 2002, 19,678,776 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 Operations for the Three
        and Six Months Ended March 30, 2002 and March 31, 2001            1

        Condensed Consolidated Balance Sheets at March 30, 2002
        and September 30, 2001                                            2

        Condensed Consolidated Statements of Cash Flows for the Six
        Months Ended March 30, 2002 and March 31, 2001                    3

        Notes to Condensed Consolidated Financial Statements              4

Item 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations                                            11

PART II.OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders              21

Item 6. Exhibits and Reports on Form 8-K                                 21

Signatures

<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.     Condensed Consolidated Financial Statements (Unaudited)

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

<TABLE>
<CAPTION>

                                                                 Three Months Ended               Six Months Ended
                                                            ---------------------------      --------------------------
                                                             March 30,       March 31,       March 30,       March 31,
                                                               2002             2001            2002            2001
                                                            -----------    ------------     ----------     ------------
<S>                                                        <C>             <C>             <C>             <C>
Net revenues:
      Product ..........................................   $     33,979    $     32,607    $     69,193    $     66,581
      Service ..........................................         45,955          35,026          86,870          66,233
                                                           ------------    ------------    ------------    ------------
                                                                 79,934          67,633         156,063         132,814
                                                           ------------    ------------    ------------    ------------
Cost of sales:
      Product ..........................................          8,396           7,939          16,850          15,711
      Service ..........................................         22,930          20,342          43,744          38,463
                                                           ------------    ------------    ------------    ------------
                                                                 31,326          28,281          60,594          54,174
                                                           ------------    ------------    ------------    ------------
          Gross profit .................................         48,608          39,352          95,469          78,640
Operating expenses and other income:
      Sales and marketing ..............................         26,058          24,609          51,249          46,967
      Engineering, research and development ............          9,251           8,416          17,187          16,336
      General and administrative .......................          5,075           4,476           9,607           8,616
      Amortization of intangible assets ................            724           1,853           1,367           3,587
      Other income, net ................................         (1,314)         (1,559)         (2,289)         (2,712)
      Special charge ...................................           --             2,991            --             2,991
                                                           ------------    ------------    ------------    ------------
                                                                 39,794          40,786          77,121          75,785

          Income before income taxes ...................          8,814          (1,434)         18,348           2,855
Income tax provision (benefit) .........................          3,041            (502)          6,378             999
                                                           ------------    ------------    ------------    ------------
          Net income (loss) ............................   $      5,773    $       (932)   $     11,970    $      1,856
                                                           ============    ============    ============    ============

Net income (loss) per common share:
          Basic ........................................   $       0.29    $      (0.05)   $       0.61    $       0.10
                                                           ============    ============    ============    ============
          Diluted ......................................   $       0.28    $      (0.05)   $       0.58    $       0.10
                                                           ============    ============    ============    ============

Average common and common equivalent shares outstanding:
          Basic ........................................     19,760,008      18,747,669      19,582,466      18,650,372
                                                           ============    ============    ============    ============
          Diluted ......................................     20,765,450      18,747,669      20,576,827      19,254,740
                                                           ============    ============    ============    ============

</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>


                                                                                           March 30,     September 30,
                                                                                             2002            2001
                                                                                        --------------   -------------
                                        ASSETS
<S>                                                                                        <C>          <C>
Current assets:
   Cash and equivalents ................................................................   $  14,250    $  36,561
   Marketable securities ...............................................................      25,516       13,812
   Accounts receivable, less allowances  of $9,525
      at March 30, 2002 and $7,151 at September 30, 2001 ...............................      62,025       75,295
   Deferred income taxes ...............................................................       6,917        6,655
   Other current assets ................................................................      22,247       15,819
                                                                                           ---------    ---------
         Total current assets .........................................................      130,955      148,142

Property, plant and equipment, net .....................................................      36,563       36,016
Marketable securities ..................................................................      23,400       18,400
Intangible assets ......................................................................      20,188       17,027
Goodwill ...............................................................................      56,103       34,142
Deferred software development costs, net ...............................................      17,725       17,144
Other assets ...........................................................................      16,684       13,943
                                                                                           ---------    ---------
         Total assets ..................................................................   $ 301,618    $ 284,814
                                                                                           =========    =========

                         LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable ....................................................................   $   7,470    $   7,272
   Accrued compensation ................................................................      24,397       26,932
   Accrued expenses and other current liabilities ......................................      14,625       16,073
   Deferred professional service revenues ..............................................      28,020       29,740
   Deferred maintenance revenues .......................................................      63,213       57,053
                                                                                           ---------    ---------
         Total current liabilities .....................................................     137,725      137,070
Deferred maintenance revenues ..........................................................       9,039       12,054
Other liabilities ......................................................................       4,310        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, 19,911,952 and
     19,154,138 shares issued at March 30, 2002 and  September 30, 2001, respectively ..         199          192
   Additional paid-in capital ..........................................................      35,502       20,548
   Retained earnings ...................................................................     126,318      114,348
   Cost of Treasury Stock (205,685 shares and 95,787 shares
     at March 30, 2002 and September 30, 2001) .........................................      (9,894)      (2,588)
   Accumulated other comprehensive income (loss):
     Foreign currency translation ......................................................      (1,468)      (1,796)
     Net unrealized (loss) gain on available-for-sale investments ......................        (113)         312
                                                                                           ---------    ---------
                                                                                              (1,581)      (1,484)
         Total shareholders' equity ....................................................     150,544      131,016
                                                                                           ---------    ---------
         Total liabilities and shareholders' equity ....................................   $ 301,618    $ 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>

                                                                                   Six Months Ended
                                                                                 ---------------------
                                                                                 March 30,   March 31,
                                                                                   2002        2001
                                                                                 ---------   ---------
<S>                                                                              <C>         <C>
Operating activities:
     Net income ..............................................................   $ 11,970    $  1,856
     Adjustments to reconcile net income to net cash and equivalents
         provided by operating activities:
             Depreciation ....................................................      4,405       3,862
             Amortization of intangible assets ...............................      1,369       3,587
             Amortization of deferred software development costs .............      4,629       4,071
             Provision for deferred income taxes .............................         45      (1,051)
             Changes in certain operating assets and liabilities:
                 Accounts receivable, net ....................................     21,497      13,077
                 Deferred maintenance revenue ................................     (3,718)     (1,540)
                 Deferred professional service revenue .......................     (3,625)        654
                 Accounts payable, accrued compensation
                     and other liabilities ...................................     (6,717)        687
                 Taxes payable ...............................................     (7,054)     (2,729)
                 Non cash portion of special charge ..........................       --         1,253
                 Other .......................................................      1,928         480
             Tax benefit from exercise of stock options ......................      9,654       2,304
                                                                                 --------    --------
                     Net cash and equivalents provided by operating activities     34,383      26,511

Investing activities:
     Purchase of property, plant and equipment ...............................     (4,673)     (3,045)
     Capitalization of software development costs ............................     (5,958)     (5,838)
     Increase in marketable securities .......................................    (16,704)    (25,838)
     Acquisitions of businesses and technology, net of cash acquired .........    (27,311)     (2,056)
                                                                                 --------    --------
                     Net cash and equivalents used in investing activities ...    (54,646)    (36,777)

Financing activities:
     Net proceeds from exercise of stock option and employee stock
         purchase plans ......................................................     15,006       5,964
     Purchase of treasury stock ..............................................    (14,217)     (6,453)
     Net investment in call option ...........................................     (2,810)       --
                                                                                 --------    --------
                     Net cash and equivalents used in financing activities ...     (2,021)       (489)

Effect of exchange rate changes on cash and equivalents ......................        (27)       (457)
                                                                                 --------    --------
Decrease in cash and equivalents .............................................    (22,311)    (11,212)
Cash and equivalents at the beginning of the period ..........................     36,561      23,201
                                                                                 --------    --------
Cash and equivalents at the end of the period ................................   $ 14,250    $ 11,989
                                                                                 ========    ========
</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 and six months ended March 30,
2002 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 - Other Current Assets

Other current assets consists of the following (in thousands):


                                       March 30, 2002       September 30, 2001
                                       --------------       ------------------
Inventory                               $5,823                    $5,076
Prepaid income and other taxes           5,483                       903
Prepaid commissions                      4,163                     4,633
Prepaid royalties                        2,329                     2,251
Prepaid expenses - other                 4,449                     2,956
                                         -----                     -----
    Total                              $22,247                   $15,819
                                       =======                   =======

<PAGE>




NOTE D - 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.

During the  three-month  period ended March 30, 2002, the Company  completed the
initial  testing of the  impairment  of  goodwill,  as of October 1, 2001.  As a
result of the test,  the Company has  concluded  that no  impairment of goodwill
exists as of October 1, 2001.

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 and six months ended March 31, 2001 (in
thousands, except per share data).

<TABLE>
<CAPTION>

                                                 Three Months Ended        Six Months Ended
                                                ---------------------   ----------------------
                                                March 30,   March 31,     March 30,  March 31,
                                                   2002       2001          2002       2001
                                                ----------  ---------   ----------  ----------

<S>                                              <C>         <C>        <C>          <C>
Reported net income ..........................   $   5,773   $  (932)   $   11,970   $   1,856
    Add back:  Goodwill amortization .........        --         875          --         1,700
                                                 ---------   -------    ----------   ---------
    Adjusted net income ......................   $   5,773   $   (57)   $   11,970   $   3,556
                                                 =========   =======    ==========   =========

Basic earnings-per-share:
    Reported net income ......................   $   0.29    $ (0.05)   $     0.61   $    0.10
    Goodwill amortization ....................        --        0.05           --         0.09
                                                 ---------   -------    ----------   ---------
    Adjusted net income ......................   $   0.29    $  0.00    $     0.61   $    0.19
                                                 =========   =======    ==========   =========

Diluted earnings-per-share:
    Reported net income ......................   $   0.28    $ (0.05)    $    0.58   $    0.10
    Goodwill amortization ....................       --         0.05           --         0.09
                                                 ---------   -------    ----------   ---------
    Adjusted net income ......................   $   0.28    $  0.00     $    0.58   $    0.18
                                                 =========   =======    ==========   =========

</TABLE>
<PAGE>

Acquired intangible assets subject to amortization are presented in the
following table.

                                              (in thousands)
                                           As of March 30, 2002
                                  ----------------------------------------
                                  Gross Carrying              Accumulated
                                     Amount                   Amortization
                                  --------------              ------------
Customer related                    $18,875                        $5,757
Maintenance relationships             6,004                           287
Non-compete agreements and other      2,618                         1,265
                                    -------                        ------
                                    $27,497                        $7,309
                                    =======                        ======


For the three and six months  ended  March 30,  2002,  amortization  expense for
intangible assets was $0.7 million and $1.4 million, respectively. 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                                   $2,843
                 2003                                    2,853
                 2004                                    2,476
                 2005                                    2,029
                 2006                                    1,989
                 2007                                    1,974


NOTE E - 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.

<PAGE>

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  $22.1   million  in  cash.   The  results  of
SimplexGrinnell's  operations have been included in the  consolidated  financial
statements  since that date.  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 (in thousands).

                                            At December 28, 2001
                                            --------------------

Accounts receivable                                   $6,773
Intangible assets                                      3,600
Goodwill                                              17,783
Other assets                                             743
                                                     --------
    Total assets acquired                             28,899

Deferred professional services revenue                (1,564)
Deferred maintenance revenue                          (5,161)
Other liabilities                                       (124)
                                                     --------
    Total liabilities assumed                         (6,849)
                                                     --------

Net assets acquired                                  $22,050
                                                     ========


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).

<TABLE>
<CAPTION>
                                   Three Months Ended            Six Months Ended
                               -------------------------    -------------------------
                                 March 30,    March 31,       March 30,     March 31,
                                   2002         2001            2002          2001
                               ------------  -----------    ----------- -------------
<S>                            <C>           <C>            <C>           <C>
Total revenues .............   $   79,934   $    72,829     $   162,632   $   144,386
Net income .................        5,773        (2,056)         10,807        (1,275)
Earnings per share - basic .   $     0.29   $     (0.11)    $      0.55   $     (0.07)
Earnings per share - diluted   $     0.28   $     (0.11)    $      0.53   $     (0.07)

</TABLE>
<PAGE>

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.

On February 20, 2002,  the Company  completed the  acquisition of certain assets
and  the  ongoing  business   operations  of  Packard  Business  Systems,   Inc.
("Packard"),  the  former  West  Virginia-based  Kronos  dealer.  The  aggregate
purchase price was not material to the Company's financial position. The results
of  Packard's  operations,  which are not material to the  Company's  results of
operations,  have been included in the consolidated  financial  statements since
that date.  Packard 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 West Virginia area through its direct
sales and service  organizations,  as well as access to the existing maintenance
revenue stream from Packard customers.

On March 18, 2002,  the Company  completed the  acquisition  of the  outstanding
stock of Data Collection Systems Ltd. ("DCS"), a provider of time and attendance
applications  headquartered  in the U.K. The  aggregate  purchase  price was not
material to the Company's financial  position.  The results of DCS's operations,
which  are not  material  to the  Company's  results  of  operations,  have been
included in the consolidated  financial  statements since that date. As a result
of the  acquisition,  the  Company  gains  access to  existing  and  prospective
customers in the U.K.  through its subsidiary in the U.K.,  Kronos Systems Ltd.,
as well as access to the existing maintenance revenue stream from DCS customers.

NOTE F - Source Code License Agreement

On March 15, 2002, the Company entered into an agreement with Best Software Inc.
("Best")  to acquire a limited  license to the source  code and object  code for
Best's human resources and payroll  software (Abra Enterprise  (TM)).  Under the
terms of the agreement, Best will provide the Abra Enterprise source code to the
Company and give the Company the right to reproduce,  market and  sublicense the
software.  The  Company  will  integrate  Abra  Enterprise  into  its  Workforce
Central(TM)  suite and will market and sublicense the integrated  product suite.
Per the  terms  of the  agreement,  the  Company  shall  pay to Best a  one-time
technology  delivery fee, a portion of which is being  amortized over a five (5)
year period and is included in other assets on the balance sheet.  The agreement
also requires the Company to pay minimum  royalties for the first five (5) years
of the agreement with royalty payments based on the number of licensed employees
continuing for an aggregate period of ten (10) years.

<PAGE>

NOTE G - Comprehensive Income

For the three and six months ended March 30, 2002 and March 31, 2001,
comprehensive income (loss) consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                    Three Months Ended        Six Months Ended
                                 ------------------------  ---------------------
                                  March 30,     March 31,   March 30,  March 31,
                                     2002         2001        2002       2001
                                 ----------   -----------  ----------  ---------
<S>                                 <C>          <C>        <C>         <C>
Comprehensive income (loss):
Net income (loss) ...............   $  5,773    $   (932)   $ 11,970    $  1,856
Cumulative translation adjustment        125        (666)        328        (540)
Unrealized (loss) gain on
available-for-sale securities ...       (274)        200        (425)        405
                                    --------    --------    --------    --------
Total comprehensive income (loss)   $  5,624    $ (1,398)   $ 11,873    $  1,721
                                    ========    ========    ========    ========
</TABLE>

NOTE H - 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):

<TABLE>
<CAPTION>
                                   Three Months Ended           Six Months Ended
                                 ------------------------    ------------------------
                                  March 30,    March 31,      March 30,     March 31,
                                    2002        2001            2002           2001
                                -----------  -----------     -----------   ----------

<S>                              <C>           <C>            <C>           <C>
Net income (loss) ............   $     5,773   $      (932)   $    11,970   $     1,856
                                 ===========   ===========    ===========   ===========
Weighted-average shares ......    19,760,008    18,747,669     19,582,466    18,650,372
Effect of dilutive securities:
    Employee stock options ...     1,005,442          --          994,361       604,368
                                 -----------   -----------    -----------   -----------
Adjusted weighted-average
shares and assumed conversions    20,765,450    18,747,669     20,576,827    19,254,740
                                 ===========   ===========    ===========   ===========
Basic earnings per share .....   $      0.29   $     (0.05)   $      0.61   $      0.10
                                 ===========   ===========    ===========   ===========
Diluted earnings per share ...   $      0.28   $     (0.05)   $      0.58   $      0.10
                                 ===========   ===========    ===========   ===========
</TABLE>


NOTE I - 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
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.

<PAGE>

NOTE J - 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 does not
expect  SFAS No.  144 to have a material  effect on its  earnings  or  financial
position.

In January  2002,  the Emerging  Issues Task Force (EITF) issued EITF No. 01-14,
"Income   Statement    Characterization    of   Reimbursements    Received   for
'Out-of-Pocket'  Expenses Incurred" (formerly EITF Abstracts,  Topic No. D-103).
This EITF  requires  that  reimbursements  received for  out-of-pocket  expenses
incurred should be  characterized  as revenue in the income statement as opposed
to a reduction  of expenses  incurred.  Out-of-pocket  expenses  include  travel
expenses  such as  airfare,  hotel,  mileage  and meals that the  customer  will
reimburse the service  vendor.  The EITF is effective  for  financial  reporting
periods  beginning  after  December 15, 2001. As a result of the adoption of the
EITF,  service  revenues and the  corresponding  cost of sales increased by $0.3
million for the three month periods ended March 30, 2002 and March 31, 2001, and
by $0.6 million and $0.5 million for the six month  periods ended March 30, 2002
and March 31, 2001, respectively.

<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  profit,  operating
expenses, 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.

Critical Accounting Policies

     Management's  discussion and analysis of financial condition and results of
operations are based upon Kronos' consolidated financial statements,  which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
Kronos to make  estimates and  assumptions  that affect the reported  amounts of
assets and  liabilities,  revenue  and  expenses,  and  related  disclosures  of
contingent  assets and  liabilities.  Kronos bases its  estimates on  historical
experience  and various  other  assumptions  that are believed to be  reasonable
under the circumstances.  Actual results could differ from these estimates under
different assumptions or conditions.

     Kronos has  identified  the  following  critical  accounting  policies that
affect the more  significant  judgments and estimates used in the preparation of
consolidated  financial statements.  This listing is not a comprehensive list of
all of  Kronos'  accounting  policies.  Please  refer to Note A in the  Notes to
Consolidated  Financial  Statements in Item 14 of Kronos'  Annual Report on Form
10-K for the year ended September 30, 2001 for further information.

     Revenue  Recognition - Kronos  recognizes  revenues in accordance  with the
provisions of the American Institute of Certified Public  Accountants  Statement
of Position (SOP) 97-2, "Software Revenue  Recognition," as amended by SOP 98-9,
"Modification  of SOP 97-2,  With  Respect  to  Certain  Transactions."  Product
revenue from sales and  sales-type  leases is  recognized  upon  shipment when a
noncancelable agreement has been signed, there are no uncertainties  surrounding
product  acceptance,  the fees are  fixed and  determinable  and  collection  is
probable.  Revenue earned on software  arrangements  involving multiple elements
which qualify for separate element  treatment is allocated to each element based
on the relative fair values of those elements based on vendor specific objective
evidence.  In instances where vendor specific  objective evidence does not exist
for delivered elements, typically software products, the residual method is used
to recognize revenue.  Typically software fees are due within one year from date
of  contract  signing.  If the  fee  due  from  the  customer  is not  fixed  or
determinable,  including  payment  terms  greater  than one year  from  contract
signing,  revenue is recognized as payments become due and all other  conditions
for  revenue   recognition  have  been  satisfied.   Revenues  from  maintenance
agreements  are  recognized  ratably over the  contractual  period and all other
service revenues are recognized as the services are performed.
<PAGE>

     Allowance  for  Doubtful  Accounts  and Sales  Returns  Allowance  - Kronos
maintains  an  allowance  for  doubtful  accounts  to reflect  estimated  losses
resulting  from the  inability  of  customers to make  required  payments.  This
allowance is based on estimates  made by Kronos after  consideration  of factors
such as the composition of the accounts receivable aging, bad debt history,  and
customer  creditworthiness.  If the  financial  condition of  customers  were to
deteriorate,  resulting  in an  impairment  of their  ability to make  payments,
additional allowances and bad debt expense may be required. In addition,  Kronos
maintains  a sales  returns  allowance  to  reflect  estimated  losses for sales
returns and adjustments. This allowance is established by Kronos using estimates
based on  historical  experience.  If Kronos  experiences  an  increase in sales
returns and adjustments,  additional  allowances and charges against revenue may
be required.

     Valuation  of   Intangible   Assets  and   Goodwill  -  In  assessing   the
recoverability  of  goodwill  and  other  intangible  assets,  Kronos  must make
assumptions  regarding  the  estimated  future  cash flows and other  factors to
determine the fair value of the respective  assets.  If these estimates or their
related  assumptions  change in the  future,  Kronos may be  required  to record
impairment  charges  against these assets in the  reporting  period in which the
impairment is determined.  For intangible  assets,  this evaluation  includes an
analysis  of  estimated  future  undiscounted  net  cash  flows  expected  to be
generated by the assets over their  estimated  useful  lives.  If the  estimated
future  undiscounted  net cash flows are  insufficient  to recover the  carrying
value of the assets over their  estimated  useful  lives,  Kronos will record an
impairment  charge  in the  amount  by which the  carrying  value of the  assets
exceeds their fair value.  For goodwill,  the impairment  evaluation  includes a
comparison of the carrying value of the reporting unit which houses  goodwill to
that reporting  unit's fair value. The fair value of the reporting unit is based
upon the net  present  value of future cash  flows,  including a terminal  value
calculation.  If the reporting unit's estimated fair value exceeds the reporting
unit's carrying value,  no impairment of goodwill  exists.  If the fair value of
the reporting  unit does not exceed its carrying  value,  then further  analysis
would be required to  determine  the amount of the  impairment,  if any. For the
first six months of fiscal 2002, no impairment was recorded.

     Capitalization  of  Software  Development  Costs  - Costs  incurred  in the
research,  design and  development of software for sale to others are charged to
expense until  technological  feasibility is established.  Thereafter,  software
development  costs are  capitalized  and amortized to product cost of sales on a
straight-line  basis over the lesser of three  years or the  estimated  economic
lives of the  respective  products,  beginning when the products are offered for
sale. Costs incurred in the development of software for internal use are charged
to expense  until it becomes  probable  that future  economic  benefits  will be
realized.  Thereafter,  certain costs are capitalized and amortized to operating
expense on a straight-line basis over the lesser of three years or the estimated
economic life of the software.
<PAGE>

Results of Operations

     Revenues. Revenues for the three and six month periods ended March 30, 2002
were $79.9  million  and $156.1  million,  respectively,  as  compared  to $67.6
million and $132.8 million for the comparable periods in the prior year. Revenue
growth was 18% for both the three and six month periods ended March 30, 2002, as
compared to 9% and 5% in the  comparable  periods in the prior year. The revenue
growth rates experienced in the three and six month periods ended March 30, 2002
were  primarily  attributable  to the  continued  increase in demand for Kronos'
services.  In addition,  revenues  were  favorably  impacted by  acquisition  of
businesses over the preceding four quarters. The revenue growth rate experienced
in the second  quarter of fiscal 2001 was  principally  due to the unusually low
growth rate experienced in the second quarter of fiscal 2000.

     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 included in the three and six month
periods ended March 30, 2002. Kronos presently  anticipates that revenue growth,
including  revenues from  customers  obtained in the  acquisition of businesses,
will  range  between  12% - 17% in the third  quarter  of fiscal  2002 and range
between 14% - 17% for all of fiscal 2002.

     Product revenues for the quarter  increased 4% to $34.0 million as compared
to $32.6 million and a product  revenue  increase of 2% in the second quarter of
fiscal 2001.  Product  revenue for the first six months of fiscal 2002 increased
4% to $69.2 million as compared to $66.6 million and a product  revenue  decline
of 2% in the  first six  months  of fiscal  2001.  The  product  revenue  growth
experienced  in the  three  and six  month  periods  ended  March  30,  2002 was
attributable to revenues related to the conversion to Kronos products and add-on
sales to customers acquired from other providers of labor management  solutions.
Product  revenue  derived  from  acquired  customers  was $2.7  million and $3.4
million in the three and six month periods  ended March 30, 2002,  respectively.
Management  believes  that, as a result of various  factors  including the broad
economic slowdown,  many transactions,  particularly those of larger transaction
value, have been deferred.  The deferral of various  transactions has negatively
impacted the organic  revenue  growth  rates in the three and six month  periods
ended March 30, 2002.

     Service  revenues for the second  quarter of fiscal 2002 increased to $46.0
million as  compared  to $35.0  million in the  second  quarter of fiscal  2001.
Service  revenues for the first six months of fiscal 2002 were $86.9  million as
compared to $66.2  million  for the first six months of the prior year.  Service
revenues  increased  31% in both the three and six months  ended March 30, 2002.
Excluding  the  effect of  incremental  service  revenues  from  acquisition  of
businesses in the preceding four quarters,  service  revenues  increased 14% and
18% in the three and six month  periods ended March 30, 2002,  respectively.  In
addition to the acquisition of businesses, the growth in service revenues in the
three and six month  periods  ended March 30,  2002  reflects an increase in the
level of  professional  services  accompanying  new and upgrade  sales and, to a
lesser  extent,  an increase in  maintenance  revenue from the  expansion of the
installed  base and the level of services  sold to the installed  base.  Service
revenues  grew at a rate of 18% and 14% during  the three and six month  periods
ended  March 31,  2001,  respectively.  The growth in service  revenues in these
prior periods  reflect an increase in maintenance  revenue from expansion of the
installed base, increased level of services sold to the installed base and, to a
lesser  extent,   incremental   maintenance   revenues  resulting  from  Kronos'
acquisitions of various dealer territories.
<PAGE>

     Gross  Profit.  Gross  profit as a  percentage  of revenues was 61% for the
three and six month periods ended March 30, 2002, as compared to 58% and 59% for
the same periods of the prior year. The improvement in gross profit in the three
and six month  periods ended March 30, 2002 was  attributable  to an increase in
service gross profit,  which was partially offset by a decrease in product gross
profit in these periods.  Management  anticipates gross profit to be between 61%
and 63% over the  remainder  of the  fiscal  year.  Product  gross  profit  as a
percentage  of  product  revenues  was 75% and 76% in the  three  and six  month
periods ended March 30, 2002, respectively,  compared to 76% in the same periods
of the prior year.  The  decrease  in product  gross  profit in this  quarter is
primarily related to higher royalty costs,  higher production costs attributable
to  a  newly  released   terminal,   and  higher  costs   associated   with  the
SimplexGrinnell  product  line.  This  decrease is partially  offset by a higher
proportion  of software  sales that  typically  carry a higher gross profit than
hardware sales.

     Service  gross profit as a percentage  of service  revenues was 50% for the
three and six month  periods  ended March 30, 2002,  compared to 42% in the same
periods  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.

     Net Operating Expenses.  Net operating expenses as a percentage of revenues
were 50% and 49% for the three  and six  month  periods  ended  March 30,  2002,
respectively, as compared to 60% and 57% for the same periods in the prior year.
The decrease in operating expenses as a percentage of revenues was primarily due
to the  special  charge  recorded  in the second  quarter of fiscal 2001 and 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 (see Note D in the Notes to Condensed  Consolidated  Financial Statements).
On a pro forma basis, excluding the special charge and amortization expense, net
operating  expenses  as a  percentage  of  revenues  for the three and six month
periods ended March 31, 2001 were 54% and 53%, respectively.
<PAGE>

     Sales and  marketing  expenses as a percentage of revenues were 33% for the
three and six month periods ended March 30, 2002, as compared to 36% and 35% for
the  comparable  periods in the prior year.  The decrease in sales and marketing
expense as a percent of revenue was attributable to leveraging our investment in
infrastructure  to generate  higher  sales  volumes.  Engineering,  research and
development  expenses as a percentage of revenues were 12% and 11% for the three
and six month periods ended March 30, 2002 as compared to 12% for the comparable
periods in the prior year.  The decrease as a percentage of revenues for the six
month  period  ended  March 30, 2002 as compared to the same period in the prior
fiscal year was due to higher sales volume. Engineering expenses of $9.3 million
and $8.4  million in the second  quarter of fiscal 2002 and 2001,  respectively,
are net of  capitalized  software  development  costs of $3.0  million  and $2.8
million,  respectively.  Engineering expenses of $17.2 million and $16.3 million
in the first  six  months of  fiscal  2002 and  2001,  respectively,  are net of
capitalized  software  development  costs  of $5.6  million  and  $5.5  million,
respectively.  General and  administrative  expenses as a percentage of revenues
were 6% in the three and six month  periods  ended March 30, 2002 as compared to
7% in three month  period  ended  March 31, 2001 and 6% in the six month  period
ended March 31, 2001.  Amortization  of  intangible  assets as a  percentage  of
revenues  was 1% in the three  and six month  periods  ended  March 30,  2002 as
compared  to 3% in the  comparable  periods of the prior year.  The  decrease in
amortization is the result of the elimination of goodwill amortization described
above. 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  in the  final  six  months  of  fiscal  2002  will be less  than  that
experienced in the first six months of fiscal 2002.

     Prior Year Special  Charge.  A special charge in the amount of $3.0 million
related to the  termination  of Kronos'  Crosswinds  Technology  operations  was
recorded in the second quarter of fiscal 2001. The Crosswinds  Technology Group,
which was purchased in May 1999, was  responsible  for the product  development,
marketing and sales support of time and attendance applications that operated as
a Microsoft  Outlook  plug-in  product.  Lower than  anticipated  sales of these
applications, redundant infrastructure and ongoing operating losses has resulted
in the termination of the stand-alone  operating unit. Revenues in the first six
months of fiscal 2001 generated by the Crosswinds  Technology Group approximated
$0.5 million.  The $3.0 million  charge  consists of $1.6 million in termination
costs,  $1.3 million for the write off of intangible  assets and $0.1 million in
other costs.

     Income Taxes. For the three and six month periods ended March 30, 2002, the
income tax  provisions  as a percentage  of pretax  income were 34.5% and 34.8%,
respectively.  As a percentage  of pretax  income,  the three month period ended
March 31, 2001 had a tax benefit of 35.0% and the six month  period  ended March
31, 2001 had a tax  provision of 35.0%.  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.
<PAGE>

     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 pro forma basis,  Kronos
would have  realized  an increase  in net income of $0.9  million,  or $0.05 per
diluted  share for the three  months ended March 31, 2001 and $1.7  million,  or
$0.09 per diluted  share for the six months ended March 31,  2001,  if these new
standards  had been applied to the first six months of fiscal  2001.  During the
second  quarter of fiscal  2002,  Kronos  completed  the initial  testing of the
impairment of goodwill,  as of October 1, 2001. As a result of the test,  Kronos
has concluded that no impairment of goodwill exists as of October 1, 2001.

     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 144 is  effective  for fiscal  years
beginning  after  December 15,  2001,  and interim  periods  within those fiscal
years, with early application  encouraged.  Kronos does not expect SFAS No. 144
to have a material effect on its earnings or financial position.

     In January  2002,  the Emerging  Issues Task Force  (EITF)  issued EITF No.
01-14,  "Income  Statement   Characterization  of  Reimbursements  Received  for
'Out-of-Pocket'  Expenses Incurred" (formerly EITF Abstracts,  Topic No. D-103).
This EITF  requires  that  reimbursements  received for  out-of-pocket  expenses
incurred should be  characterized  as revenue in the income statement as opposed
to a reduction  of expenses  incurred.  Out-of-pocket  expenses  include  travel
expenses  such as  airfare,  hotel,  mileage  and meals that the  customer  will
reimburse the service  vendor.  The EITF is effective  for  financial  reporting
periods  beginning  after  December 15, 2001. As a result of the adoption of the
EITF,  service  revenues and the  corresponding  cost of sales increased by $0.3
million for the three month periods ended March 30, 2002 and March 31, 2001, and
by $0.6 million and $0.5 million for the six month  periods ended March 30, 2002
and March 31, 2001, respectively.

<PAGE>

Liquidity and Capital Resources

     As of March 30, 2002,  Kronos had negative  working capital of $6.8 million
as compared to working  capital of $11.1 million at September  30, 2001.  Kronos
believes that this decrease in working  capital is principally due to cash spent
on the  acquisition  of businesses  and  technology and the purchase of treasury
stock during the first six months of fiscal 2002. During the first six months of
fiscal 2002,  working capital was reduced as Kronos used available cash of $27.3
million to complete  acquisitions  of businesses  with a net working  capital of
$0.5 million and an  acquisition of technology.  In addition,  Kronos  completed
purchases of common shares of  approximately  $14.2 million during the first six
months of fiscal 2002 for share repurchases pursuant to Kronos' stock repurchase
program as well as the  purchase of mature stock from  employees  related to the
exercise of stock options.  Cash,  cash  equivalents  and marketable  securities
amounted  to $63.2  million  as of March  30,  2002,  and  $68.8  million  as of
September  30,  2001.  The  decline in cash,  cash  equivalents  and  marketable
securities in the first six months of fiscal 2002 is primarily  attributable  to
cash used in the Company's acquisitions and stock repurchases.

     Cash generated from  operations  amounted to $34.4 million in the first six
months of fiscal 2002 as  compared  to $26.5  million in the first six months of
fiscal  2001.  The  increase in cash  generated  from  operations  is  primarily
attributable  to  collections  of  accounts  receivable  and an  increase in net
income,  partially  offset by a decrease in deferred  revenues  and  payments of
bonuses and  commissions.  Also  contributing  to the increase in cash generated
from  operations  is an  increase  in the tax  benefit  from  exercise  of stock
options, however, this is substantially offset by the corresponding reduction in
income taxes  payable.  Cash used for  property,  plant and  equipment  was $4.7
million in the first six months of fiscal 2002  compared to $3.0  million in the
same  period  of  fiscal  2001.  Kronos'  use of  cash  for the  acquisition  of
businesses and technology in the first six months of fiscal 2002 was principally
related to the  acquisitions  of specified  assets and/or  businesses of Kronos'
dealers  and/or  other  providers of labor  management  solutions as well as the
acquisition of the source code license for the Abra  Enterprise  human resources
and payroll software. 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 $16.7
million in the first six months of fiscal 2002  compared to an increase of $25.8
million in the first six months of fiscal 2001.

     Under Kronos' stock repurchase  program,  Kronos repurchased 230,500 common
shares  in the  first  six  months  of  fiscal  2002 at a cost of $10.4  million
compared to 202,500  common shares at a cost of $4.9 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 that with cash generated from ongoing operations 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. If the need arose, Kronos believes that based on its current
debt-free  balance  sheet  and  its  financial  position,  it  would  be
successful in securing financing from the capital markets.
<PAGE>

During the quarter ended March 30, 2002, Kronos did not engage in:

o        material off-balance sheet activities, including the use of structured
         finance or special purpose entities,

o        trading activities in non-exchange traded contracts, or

o        transactions with persons or entities that benefit from their
         non-independent relationship with Kronos.

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
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 dependence on
Kronos'  time and  attendance  product  line,  the ability to attract and retain
sufficient technical personnel, competitive pricing pressure, 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.
<PAGE>

     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
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 six months of fiscal 2002, approximately
13% 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.
<PAGE>

     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
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 4.   Submission of Matters to a Vote of Security Holders

(a)       The 2002 Annual Meeting of Stockholders of Kronos Incorporated was
          held on February 7, 2002.

(b)       At the Annual Meeting, Messrs. D. Bradley McWilliams and Lawrence
          Portner were elected as Class I Directors for three-year terms
          expiring in 2005.  In addition, the Directors whose terms of office
          continue after the meeting are two Class II Directors:  Messrs. Mark
          S. Ain and W. Patrick Decker and two Class III Directors: Messrs.
          Richard J. Dumler and Samuel Rubinovitz.  The tabulation was as
          follows:
                                                   FOR                WITHHELD
                                                   ---                --------
                  D. Bradley McWilliams         17,273,846             247,480
                  Lawrence Portner              17,273,003             248,323

(c)       Adoption of the Company's 2002 Stock Incentive Plan was approved as
          follows:
                                                                     BROKER
             FOR           AGAINST               ABSTAIN            NON VOTES
             ---           -------               -------            ---------
          12,856,775       2,392,134              154,793            2,117,624

(d)       Amendments to the Company's 1992 Employee Stock Purchase Plan and an
          increase in the number of shares available under the Plan from
          1,378,125 to 1,678,125, were approved as follows:
                                                                     BROKER
             FOR            AGAINST               ABSTAIN            NON VOTES
             ---            -------               -------            ---------
          14,984,008        260,232               159,462            2,117,624

(e)       The other item voted upon at the meeting was the ratification of the
          selection of Ernst & Young LLP as the Company's independent auditors
          for the 2002 fiscal year.

             FOR            AGAINST               ABSTAIN
             ---            -------               -------
          17,437,064         77,195                7,067

Item 6.   Exhibits and Reports on Form 8-K

(a)       Exhibits

          10.1(1) Best Software Inc./Kronos Incorporated Agreement, dated as of
                  March 15, 2002 by and between Kronos Incorporated and Best
                  Software, Inc.

(b)       Reports on Form 8-K

          There were no reports on Form 8-K filed during the fiscal quarter
          ended March 30, 2002.

(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
                                                    Executive Vice President,
                                                    Chief Financial and
                                                    Administrative Officer
                                                  (Duly Authorized Officer and
                                                   Principal Financial Officer)


May 13, 2002

<PAGE>



                               KRONOS INCORPORATED

                                  EXHIBIT INDEX



    Exhibit
    Number       Description

    10.1(1)     Best Software Inc./Kronos Incorporated Agreement, dated as of
                March 15, 2002 by and between Kronos Incorporated and Best
                Software, Inc.



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