SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q

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

                             For the quarterly period ended July 4, 1998

                                                      OR

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

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

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

                       400 Fifth Avenue, Waltham, MA 02154
                      -------------------------------------
               (Address of principal executive offices) (Zip Code)

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


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

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

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

As of August 3,1998, 8,282,811 shares of the registrant's Common Stock, $.01 par
                            value, were outstanding.


<PAGE>


                               KRONOS INCORPORATED

                                      INDEX



PART I.  FINANCIAL INFORMATION                                             Page

 Item 1.  Condensed Consolidated Financial Statements (Unaudited)

          Condensed Consolidated Statements of Income for the Three
           Months and Nine Months Ended July 4, 1998 and June 28, 1997       1

          Condensed Consolidated Balance Sheets at  July 4, 1998
           and September 30, 1997                                            2

          Condensed Consolidated Statements of Cash Flows for the Three
           Months and Nine Months Ended July 4, 1998 and June 28, 1997       3

          Notes to Condensed Consolidated Financial Statements               4

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

      PART II.        OTHER INFORMATION

      Item 5.         Other Information

      Signatures

      Exhibit Index
<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             Nine Months Ended
                                                         -----------------------------    ---------------------
                                                             July 4,       June 28,      July 4,       June 28,
                                                              1998           1997         1998          1997
<S>                                                        <C>          <C>          <C>            <C>        
Net revenues:

     Product ...........................................   $   35,080   $   29,106   $    94,952    $    80,945
     Service ...........................................       17,599       14,193        48,772         38,867
                                                           ----------   ----------   -----------    -----------
                                                               52,679       43,299       143,724        119,812
Cost of sales:
     Product ...........................................        8,636        7,964        23,419         21,420
     Service ...........................................       11,440        9,318        32,063         26,103
                                                           ----------   ----------   -----------    -----------
                                                               20,076       17,282        55,482         47,523
                                                           ----------   ----------   -----------    -----------
        Gross profit ...................................       32,603       26,017        88,242         72,289
Expenses:
     Sales and marketing ...............................       17,670       15,015        49,599         41,594
     Engineering, research and development .............        5,334        3,987        14,215         12,125
     General and administrative ........................        3,526        2,905         9,938          8,158
     Other (income) expense, net .......................          159           10           (27)          (102)
                                                           ----------   ----------   -----------    -----------
                                                               26,689       21,917        73,725         61,775
                                                           ----------   ----------   -----------    -----------
        Income before income taxes .....................        5,914        4,100        14,517         10,514
Provision for income taxes .............................        2,259        1,567         5,546          4,016
                                                           ----------   ----------   -----------    -----------
        Net income .....................................   $    3,655   $    2,533   $     8,971    $     6,498
                                                           ==========   ==========   ===========    ===========


Net income per common share:
        Basic ..........................................   $     0.44   $     0.31   $      1.09    $      0.79
                                                           ==========   ==========   ===========    ===========
        Diluted ........................................   $     0.43   $     0.30   $      1.05    $      0.77
                                                           ==========   ==========   ===========    ===========

Average common and common equivalent shares outstanding:
        Basic ..........................................    8,295,670    8,211,414     8,253,562      8,175,900
                                                           ==========   ==========   ===========    ===========
        Diluted ........................................    8,565,933    8,400,787     8,511,634      8,412,587
                                                           ==========   ==========   ===========    ===========
</TABLE>

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

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

                                                                                 July 4,    September 30,
                                                                                  1998          1997
                                                                                ---------    ---------    
ASSETS
<S>                                                                            <C>          <C>  
Curren Assets:

   Cash and equivalents ....................................................   $  20,503    $  20,698
   Marketable securities ...................................................      23,693       15,530
   Accounts receivable, less allowances for doubtful accounts of $1,052
      at July 4, 1998 and $1,091 at September 30, 1997 .....................      39,155       38,817
   Inventories .............................................................       4,095        4,322
   Deferred income taxes ...................................................       4,277        4,277
   Other current assets ....................................................       8,237        6,539
                                                                               ---------    ---------
          Total current assets .............................................      99,960       90,183
Equipment, net .............................................................      16,405       17,038
Net investment in sales-type leases ........................................       5,464        5,312
Excess of cost over net assets of businesses acquired ......................       9,683        7,855
Other assets ...............................................................      12,069        7,726
                                                                               ---------    ---------
         Total assets ......................................................   $ 143,581    $ 128,114
                                                                               =========    =========

                            LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued expenses ...................................   $  15,577    $  13,217
   Accrued compensation ....................................................       9,337       10,105
   Federal and state income taxes payable ..................................       1,779        3,497
   Unearned service revenue ................................................      25,206       22,209
                                                                               ---------    ---------
         Total current liabilities .........................................      51,899       49,028
Deferred income taxes ......................................................       2,587        2,587
Unearned service revenue ...................................................       7,282        3,523
Other liabilities ..........................................................         393          503
Shareholders' equity:
   Preferred Stock, par value $1.00 per share:  authorized 1,000,000 shares,
      no shares issued and outstanding
   Common Stock, par value $.01 per share:  authorized 20,000,000 shares,
      8,310,479 shares and 8,246,453 shares issued at July 4, 1998 and
      September 30, 1997, respectively .....................................          83           82
   Additional paid-in capital ..............................................      28,985       29,770
   Retained earnings .......................................................      54,016       45,045
   Equity adjustment from translation ......................................      (1,268)        (262)
   Cost of Treasury Stock  (11,309 shares and 86,493
      shares at July 4, 1998 and September 30, 1997, respectively) .........        (396)      (2,162)
                                                                               ---------    ---------
         Total shareholders' equity ........................................      81,420       72,473
                                                                               ---------    ---------
         Total liabilities and shareholders' equity ........................   $ 143,581    $ 128,114
                                                                               =========    =========
</TABLE>

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

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

                                                                                  Nine Months Ended
                                                                                 -------------------
                                                                                 July 4,     June 28,
                                                                                  1998         1997
                                                                                 --------    --------
<S>                                                                             <C>         <C>
Operating activities:
     
     Net income .............................................................   $  8,971    $  6,498
     Adjustments to reconcile net income to net cash and equivalents
        provided by operating activities:
             Depreciation ...................................................      5,448       4,618
             Amortization of deferred software development costs and
                excess of cost over net assets of businesses acquired .......      4,943       3,402
             Changes in certain operating assets and liabilities:
                Accounts receivable, net ....................................     (1,018)     (1,924)
                Inventories .................................................        218      (1,222)
                Unearned service revenue ....................................      6,862       3,311
                Accounts payable, accrued compensation
                    and other liabilities ...................................       (185)      2,827
                Net investment in sales-type leases .........................       (602)     (3,000)
             Other ..........................................................     (1,425)       (415)
                                                                                --------    --------  
                    Net cash and equivalents provided by operating activities     23,212      14,095

Investing activities:
     Purchase of equipment ..................................................     (4,936)     (7,485)
     Capitalization of software development costs ...........................     (4,857)     (3,877)
     (Increase) decrease in marketable securities ...........................     (8,163)      1,970
     Acquisitions of businesses .............................................     (6,296)     (1,255)
                                                                                --------    --------
                    Net cash and equivalents used in investing activities ...    (24,252)    (10,647)

Financing activities:
     Net proceeds from exercise of stock option and employee stock
        purchase plans ......................................................      2,343       1,023
     Purchase of treasury stock .............................................     (1,361)        (27)
                                                                                --------    --------
                    Net cash and equivalents provided by financing activities        982         996

Effect of exchange rate changes on cash and equivalents .....................       (137)         (4)
                                                                                 -------    --------
Increase (decrease) in cash and equivalents .................................       (195)      4,440
Cash and equivalents at the beginning of the period .........................     20,698      10,795
                                                                                --------    --------
Cash and equivalents at the end of the period ...............................   $ 20,503    $ 15,235
                                                                                ========    ========
</TABLE>

        See accompanying notes to condensed consolidated financial statements.

<PAGE>

                               KRONOS INCORPORATED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE A - General

The accompanying  unaudited condensed  consolidated financial statements include
all  adjustments,  consisting  of normal  recurring  accruals,  that  management
considers  necessary for a fair presentation of the Company's financial position
and results of operations as of and for the interim periods  presented  pursuant
to the rules and regulations of the Securities and Exchange Commission.  Certain
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted  pursuant to such rules and  regulations,  although the Company believes
the  disclosures  in  these  financial  statements  are  adequate  to  make  the
information  presented not misleading.  These condensed  consolidated  financial
statements  should be read in conjunction with the Company's  audited  financial
statements  for the  fiscal  year  ended  September  30,  1997.  The  results of
operations  for the  three and nine  month  periods  ended  July 4, 1998 are not
necessarily  indicative of the results for a full fiscal year.  Certain  amounts
have been reclassified in fiscal 1997 to permit comparison with fiscal 1998.

NOTE B  -  Fiscal Quarters

The Company utilizes a system of fiscal quarters.  Under this system,  the first
three  quarters  of each  fiscal  year end on a  Saturday.  However,  the fourth
quarter of each fiscal year will always end on  September  30.  Because of this,
the number of days in the first  quarter  (95 days in fiscal 1998 and 89 days in
fiscal  1997) and fourth  quarter  (88 days in fiscal 1998 and 94 days in fiscal
1997) of each  fiscal  year  varies  from  year to year.  The  second  and third
quarters of each fiscal year will be exactly  thirteen  weeks long.  This policy
does not have a material  effect on the  comparability  of results of operations
between quarters.

NOTE C - Earnings Per Share

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



<PAGE>


The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>

                                         Three Months Ended        Nine Months Ended
                                      -----------------------   -----------------------

                                        July 4,     June 28,      July 4,      June 28, 
                                        1998          1997         1998         1997
                                      ----------   ----------   ----------   ----------
<S>                                   <C>          <C>          <C>          <C>       
   Net income (in thousands) ......   $    3,655   $    2,533   $    8,971   $    6,498
                                      ==========   ==========   ==========   ==========


   Weighted average shares ........    8,295,670    8,211,414    8,253,562    8,175,900

Effect of dilutive securities:
   Employee stock options .........      270,263      189,373      258,072      236,687
                                      ----------   ----------   ----------   ----------

   Adjusted weighted average shares
     and assumed conversions ......    8,565,933    8,400,787    8,511,634    8,412,587
                                      ==========   ==========   ==========   ==========

Basic earnings per share ..........   $     0.44   $     0.31   $     1.09   $     0.79
                                      ==========   ==========   ==========   ==========

Diluted earnings per share ........   $     0.43   $     0.30   $     1.05   $     0.77
                                      ==========   ==========   ==========   ==========
</TABLE>


                                                         6

<PAGE>
ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS FORWARD LOOKING STATEMENTS

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

RESULTS OF OPERATIONS

       REVENUES. Revenues for the third quarter of fiscal 1998 amounted to $52.7
million as compared  with $43.3 million for the third quarter of the prior year.
Revenues  for the first  nine  months of fiscal  1998  were  $143.7  million  as
compared  with  $119.8  million  for the first  nine  months of the prior  year.
Revenue growth was 22% and 20% in the three and nine month periods ended July 4,
1998, respectively, as compared to 19% for each of the comparable periods of the
prior year. The revenue growth in the three and nine month periods ended July 4,
1998 was  principally  driven by customer  demand in the domestic  market.  Also
contributing  to the revenue growth in the three month period ended July 4, 1998
were  revenues of  approximately  $1.2  million  from the  Company's  Visionware
Division  that  was  established  in  conjunction  with the  acquisition  of the
Visionware labor productivity technology in March of Fiscal 1998.

       Product  revenues for the third  quarter of fiscal 1998 amounted to $35.1
million as compared  with $29.1 million for the third quarter of the prior year.
Product  revenues for the first nine months of fiscal 1998 were $95.0 million as
compared with $80.9 million for the first nine months of the prior year. Product
revenue  growth of 21% and 17% in the three and nine month periods ended July 4,
1998,  respectively,  increased from 16% and 14% for  comparable  periods of the
prior year.  Product  revenue  growth in the three and nine month  periods ended
July 4, 1998,  was  principally  driven by  customer  demand  for the  Company's
Windows  and  client/server   products.   Incremental  revenues  resulting  from
Visionware  product sales also favorably  impacted product revenue growth in the
three month period ended July 4, 1998. Service revenues for the third quarter of
fiscal 1998  amounted to $17.6  million as compared  with $14.2  million for the
third quarter of the prior year.  Service  revenues for the first nine months of
fiscal 1998 were $48.8 million as compared with $38.9 million for the first nine
months of the prior year. Service revenue growth of 24% and 25% in the three and
nine month periods ended July 4, 1998, respectively,  decreased from 26% and 29%
for  comparable  periods  of the prior  year.  The  growth in  service  revenues
reflects an  increase in the level of  professional  services  accompanying  new
sales as well as an  increase  in  maintenance  revenue  from  expansion  of the
installed  base. As the customer  installed base  continues to grow,  management
anticipates  that  service  revenue  growth  rates will  gradually  become  more
consistent with product  revenue growth rates.  Incremental  revenues  resulting
from services  accompanying  Visionware  product sales also  favorably  impacted
service revenue growth in the three month period ended July 4, 1998.

       GROSS PROFIT. Gross profit as a percentage of revenues was 62% and 61% in
the three and nine month periods ended July 4, 1998,  respectively,  as compared
with 60% in the comparable  periods of the prior year. The  improvement in gross
profit was evidenced in both product and service gross profit.

       Product gross profit as a percentage  of product  revenues of 75% in each
of the three and nine month periods ended July 4, 1998,  increased  from 73% and
74%, respectively,  for comparable periods of the prior year. The improvement in
product gross profit in both periods is primarily  attributable  to an increased
proportion of product revenues generated by software,  which typically generates
higher gross profit than other product.  Service gross profit as a percentage of
service  revenues of 35% and 34% in the three and nine month  periods ended July
4, 1998, respectively,  increased from 34% and 33%, respectively, for comparable
periods of the prior  year.  The  improvement  in service  gross  profit in both
periods is primarily  attributable to the growth in service  revenues  without a
proportionate  increase in service expenses.  This has been accomplished by more
fully  leveraging  service  resources and improving the efficiency of the system
implementation process.
<PAGE>

       EXPENSES.  Total operating  expenses as a percentage of revenues were 51%
in each of the three and nine month  periods  ended July 4, 1998, as compared to
51% and 52%,  respectively,  in the comparable  periods of the prior year. Sales
and marketing expenses as a percentage of revenues were 34% and 35% in the three
and nine month periods ended July 4, 1998,  respectively,  as compared to 35% in
the comparable periods of the prior year.  Engineering  expenses as a percentage
of revenues  were 10% in each of the three and nine month  periods ended July 4,
1998, as compared to 9% and 10%, respectively,  in the comparable periods of the
prior year.  Engineering  expenses of $5.3 million and $4.0 million in the third
quarter of fiscal 1998 and 1997,  respectively,  are net of capitalized software
development  costs of $1.8 million and $1.3 million,  respectively.  Engineering
expenses of $14.2  million and $12.1  million in the first nine months of fiscal
1998 and 1997,  respectively,  are net of capitalized software development costs
of $4.9  million  and $3.9  million,  respectively.  The growth in  engineering,
research and development  expenses results primarily from efforts to standardize
products and the development of new products in the client/server environment.

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

       INCOME  TAXES.  The  provision for income taxes as a percentage of pretax
income was 38% for all periods  presented.  The Company's  effective  income tax
rate may fluctuate between periods as a result of various factors, none of which
is material, either individually or in aggregate, to the consolidated results of
operations.

LIQUIDITY AND CAPITAL RESOURCES

         Working  capital  as of July 4,  1998,  amounted  to $48.1  million  as
compared with $41.2  million at September 30, 1997. As of those dates,  cash and
equivalents  and  marketable  securities  amounted  to $44.2  million  and $36.2
million, respectively. Cash generated from operations increased to $23.2 million
in the first nine  months of fiscal  1998 from  $14.1  million in the first nine
months of the prior year,  principally  due to  increased  earnings and unearned
service revenues as well as increases in depreciation and amortization  charges.
Cash provided  from those sources was partially  offset by cash used for payment
of income tax  obligations  and  compensation  accruals.  During fiscal 1998 the
Company  used $6.3 million of cash for payments  related to the  acquisition  of
businesses  including an  investment  of  approximately  $4.4 million to acquire
labor productivity technology and distribution rights in a dealer territory. The
Company's  investment  in  equipment in the first nine months of the fiscal year
decreased  from its investment in the first nine months of the prior year due to
the timing of capital  projects.  Management  expects the lower level of capital
spending as  compared  to the prior year to  continue  in the fourth  quarter of
fiscal 1998.

       Cash  generated  from   operations  was  more  than  sufficient  to  fund
investments in equipment and capitalized software development costs. The Company
expects to fund its investments in equipment and software development costs over
the remainder of its fiscal year with  available  cash and  operating  cash flow
generated in fiscal 1998.

YEAR 2000

       Many currently  installed computer systems and software products will not
function  properly in the year 2000 and beyond.  As a result,  computer  systems
and/or  software  used by many  companies may need to be upgraded to comply with
such "year 2000"  requirements.  Significant  uncertainty exists in the software
industry  concerning the potential  effects  associated with the century change.
Although the Company  currently  offers  software  products that are designed to
work  properly in the year 2000 and beyond,  there can be no assurance  that the
Company's software products contain all necessary date code changes. The Company
has  warranted,  and may in the future  warrant,  to certain  customers that its
products  will work in the year 2000 and beyond.  In  addition,  the Company has
initiated a program to assess the products offered by it, its internal operating
systems,  and third  party  products  incorporated  into or used to develop  its
products and to develop a timetable for correcting any issues, if necessary. The
Company is currently developing a complete cost estimate but does not anticipate
that costs  associated  with this  program  will be  material.  However,  if the
Company's  program is not completed on a timely basis,  if there is a failure of
the products or systems of other  companies on which the Company  relies for use
internally or in its products,  if customer  demand is reduced due to customers'
concerns  about year 2000 issues,  or if the  Company's own products fail in the
year 2000 and beyond,  there could be a material adverse effect on the Company's
business, financial condition or results of operations.
<PAGE>

CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

         Except for historical matters,  the matters discussed in this Quarterly
Report on Form 10-Q are  "forward-looking  statements" within the meaning of the
Private  Securities  Litigation  Reform  Act of 1995 (the  "Act").  The  Company
desires  to take  advantage  of the  safe  harbor  provisions  of the Act and is
including  this  statement  for the express  purpose of  availing  itself of the
protection  of the safe harbor with  respect to all forward  looking  statements
that involve risks and uncertainties.
         The Company's actual operating  results may differ from those indicated
by forward  looking  statements  made in this Quarterly  Report on Form 10-Q and
presented  elsewhere  by  management  from time to time  because  of a number of
factors including the potential  fluctuations in quarterly  results,  timing and
market  acceptance  of  new  product   introductions  by  the  Company  and  its
competitors,  competitive  pricing pressures,  rapid  technological  change, new
competitors  entering  the market,  the  dependence  on  alternate  distribution
channels,  potential effects  associated with the century change, the ability to
attract and retain  sufficient  technical  personnel,  and the dependence on the
Company's  time and  attendance  product  line and on key  vendors,  as  further
described  below and in the Company's  Annual Report on Form 10-K for the fiscal
year ended September 30, 1997,  which factors are  specifically  incorporated by
reference herein.

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

         PRODUCT DEVELOPMENT AND TECHNOLOGICAL  CHANGE. The markets for time and
attendance,  labor management,  and data collection systems are characterized by
continual change and improvement in computer  software and hardware  technology.
The Company's  future  success will depend largely on its ability to enhance its
existing product lines and to develop new products and interfaces to third party
products  on a timely  basis  for the  increasingly  sophisticated  needs of its
customers.  Although the Company is continually  seeking to further  enhance its
product  offerings and to develop new products and  interfaces,  there can be no
assurance that these efforts will succeed, or that, if successful,  such product
enhancements or new products will achieve widespread market acceptance,  or that
the  Company's  competitors  will not  develop  and  market  products  which are
superior  to the  Company's  products  or  achieve  greater  market  acceptance.
Although management believes the Company has substantially completed the product
transition  from  DOS  and  UNIX  platforms  to the  Windows  and  client/server
environments,  the Company's  revenue growth and results of operations in fiscal
1998 will  depend in part on the  continuing  growth of sales of its Windows and
client/server products.

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

       DEPENDENCE ON ALTERNATE  DISTRIBUTION  CHANNELS.  The Company markets and
sells its products through its direct sales  organization,  independent  dealers
and OEMs. For the fiscal year ended September 30, 1997, approximately 22% of the
Company's  revenues were generated through sales to dealers and OEMs.  Reduction
in the sales efforts of the Company's  major dealers and/or OEMs, or termination
or  changes  in their  relationships  with the  Company,  could  have a material
adverse effect on the results of the Company's operations.

       YEAR  2000.  Many  currently  installed  computer  systems  and  software
products  will not function  properly in the year 2000 and beyond.  As a result,
computer  systems and/or software used by many companies may need to be upgraded
to comply with such "year 2000" requirements.  Significant uncertainty exists in
the software  industry  concerning  the potential  effects  associated  with the
century change. Although the Company currently offers software products that are
designed to work properly in the year 2000 and beyond, there can be no assurance
that the Company's  software  products  contain all necessary date code changes.
The Company has warranted,  and may in the future warrant,  to certain customers
that its  products  will  work in the year 2000 and  beyond.  In  addition,  the
Company  has  initiated  a program  to assess  the  products  offered by it, its
internal operating systems,  and third party products  incorporated into or used
to develop its products and to develop a timetable for correcting any issues, if
necessary. The Company is currently developing a complete cost estimate but does
not  anticipate  that  costs  associated  with this  program  will be  material.
However,  if the Company's  program is not completed on a timely basis, if there
is a failure of the products or systems of other  companies on which the Company
relies for use internally or in its products,  if customer demand is reduced due
to customers'  concerns about year 2000 issues, or if the Company's own products
fail in the year 2000 and beyond,  there could be a material  adverse  effect on
the Company's business, financial condition or results of operations.


<PAGE>

Part II.       OTHER INFORMATION

Item 5.   Other Information

               Stockholder  proposals submitted pursuant to Rule 14a-8 under the
               Securities Exchange Act of 1934, as amended (the "Exchange Act"),
               and intended to be presented at the Company's 1999 Annual Meeting
               of  Stockholders  must be  received by the Company not later than
               August  14,1998 in order to be  considered  for  inclusion in the
               Company's proxy materials for that meeting.

               The  Company's  Amended and Restated  By-Laws  also  establish an
               advance notice  procedure with respect to stockholder  nomination
               of  candidates  for  election as  Directors.  A Notice  regarding
               stockholder  nominations  for  Director  must be  received by the
               Company  not less than 60 days nor more than 90 days prior to the
               applicable  stockholder meeting,  provided,  however, that in the
               event the date of the meeting is not  publicly  announced  by the
               Company by mail,  press  release or  otherwise  more than 70 days
               prior to the meeting,  the notice must be received by the Company
               not  later  than the tenth day  following  the day on which  such
               announcement  of the date of the meeting is made. Any such notice
               must contain certain specified information concerning the persons
               to be nominated and the  stockholder  submitting the  nomination,
               all as set forth in the  By-Laws.  The  presiding  officer of the
               meeting may refuse to  acknowledge  any Director  nomination  not
               made in compliance  with such advance  notice  requirements.  The
               Company  has not yet  publicly  announced  the  date of the  1999
               Annual Meeting.

               Stockholder  proposals  intended to be presented at the Company's
               1999 Annual  Meeting that are not submitted  pursuant to Exchange
               Act Rule 14-8 or are not  stockholder  nominations  of candidates
               for  election  as  Directors  must be  received by the Company no
               later than October 28, 1998.

               Stockholder   proposals   should  be  mailed  to  Clerk,   Kronos
               Incorporated, 400 Fifth Avenue, Waltham, Massachusetts 02451.
<PAGE>

                                   SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the
    registrant has duly caused this report to be signed on its behalf by the
    undersigned thereunto duly authorized.

                                                KRONOS INCORPORATED




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





August 14, 1998

<PAGE>


                               KRONOS INCORPORATED

                                  EXHIBIT INDEX



    Exhibit
     Number        Description

      27.1       Financial Data Schedule