8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (date of earliest event reported):   January 19, 2005

CNS, Inc.

(Exact name of Registrant as Specified in its Charter)

Delaware

(State Or Other Jurisdiction Of Incorporation)

0-16612	41-1580270
(Commission File Number)	(I.R.S. Employer Identification No.)
7615 Smetana Lane Eden Prairie, MN	55344
(Address Of Principal Executive Offices)	(Zip Code)

(952) 229-1500

Registrant’s Telephone Number, Including Area Code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Items under Sections 1 and 3 through 8 are not applicable and therefore omitted.

ITEM 2.02    RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Pursuant to Item 2.02 of Form 8-K, Disclosure of Results of Operations and Financial Condition, CNS, Inc. (the “Company”) hereby furnishes a press release, issued on January 20, 2005, disclosing material non-public information regarding its results of operations for the quarter ended December 31, 2004.

ITEM 8.01    OTHER EVENTS

On January 19, 2005, the Company issued a press release, attached hereto as Exhibit 99.1, announcing a five cent per share quarterly dividend payable March 4, 2005 to shareholders of record as of February 18, 2005.

ITEM 9.01    FINANCIAL STATEMENTS AND EXHIBITS

Exhibit Number	Description
99.1	Press Release issued on January 19, 2005.
99.2	Press Release issued on January 20, 2005.

SIGNATURE

        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.

CNS, INC.

By:   /s/ Marti Morfitt                               

Marti Morfitt

President and Chief Executive Officer

Date: January 20, 2005

EX-99.1

EXHIBIT 99.1

NEWS RELEASE

January 19, 2005

CONTACT:
Sam Reinkensmeyer	Shawn Brumbaugh/Marian Briggs
Chief Financial Officer	Padilla Speer Beardsley Inc.
CNS, Inc.	(612) 455-1700
(952) 229-1500	sbrumbaugh@psbpr.com
sreinkensmeyer@cns.com	mbriggs@psbpr.com
Nasdaq: CNXS

FOR IMMEDIATE RELEASE

CNS, INC. DECLARES QUARTERLY DIVIDEND

        MINNEAPOLIS, January 19, 2005 – CNS, Inc. (Nasdaq: CNXS), the Breathe Right^® company, today announced that its board of directors has declared a quarterly cash dividend of $0.05 per share of common stock. The dividend is payable on March 4, 2005, to shareholders of record as of February 18, 2005. The company has approximately 14.0 million shares outstanding.

About CNS, Inc.
CNS, based in Minneapolis, designs and markets consumer health care products, including Breathe Right^® nasal strips, Breathe Right Snore Relief™ throat spray, Breathe Right Vapor Shot!™ personal vaporizer and FiberChoice^® chewable fiber tablets. The company focuses on better breathing and digestive health products that address important consumer needs within the aging well/self care market. Its common stock is listed on the Nasdaq National Market under the ticker symbol “CNXS.” More information about CNS and its products is available at www.cns.com.

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EX-99.2

EXHIBIT 99.2

NEWS RELEASE

FOR 3:00 P.M. CT RELEASE
January 20, 2005

Contact:
Sam Reinkensmeyer	Shawn Brumbaugh/Marian Briggs
Chief Financial Officer	Padilla Speer Beardsley Inc.
CNS, Inc.	(612) 455-1700
(952) 229-1500	sbrumbaugh@psbpr.com
sreinkensmeyer@cns.com	mbriggs@psbpr.com
Nasdaq Symbol: CNXS

CNS, Inc. Reports Strong Fiscal 2005 Third-Quarter Results

• Third-quarter net sales of $28.7 million and fully diluted earnings per share of $0.30 exceed expectations

• Revenue growth of 9% driven by strong Breathe Right nasal strip sales

• Company increases its estimate for fiscal 2005 earnings to $0.74 to $0.79 per fully diluted share versus $0.59 in the prior-year

        MINNEAPOLIS, January 20 — CNS, Inc. (Nasdaq: CNXS), the Breathe Right^® company, today announced results for the fiscal 2005 third quarter ended December 31, 2004.

        Net sales for the fiscal third quarter were $28.7 million, up 9 percent from $26.4 million in the prior-year period. Net income totaled $4.4 million, or $0.30 per fully diluted share, exceeding the company’s estimate of $0.13 to $0.16 per fully diluted share. For the same period in the prior year, net income was $1.2 million, or $0.08 per fully diluted share.

        For the first nine months of fiscal 2005, CNS reported net sales of $65.3 million versus $64.5 million in the same period last year. Net income year-to-date grew 17 percent to $9.6 million, or $0.65 per fully diluted share, versus $8.2 million, or $0.57 per fully diluted share, in the first nine months of the prior year.

        “Third-quarter profitability well exceeded our expectations on sales that were stronger than anticipated across all business units,” said Marti Morfitt, CNS’ president and CEO. “Growth efforts initiated in the first six months of this fiscal year are beginning to deliver sales and profit growth. Our team remains focused on generating continued strong consumer demand for our growing range of products.”

        CNS initiatives to expand the market penetration of Breathe Right nasal strips in the U.S. and abroad, and further grow the FiberChoice^® brand, include:

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CNS, Inc. Reports Fiscal 2005 Third-Quarter Results
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• The successful relaunch of clear nasal strips, which began late in the September 2004 quarter, targeting consumers with sensitive skin types;

• Marketing testing designed to drive significant long-term growth in household penetration and consumer demand for Breathe Right nasal strips;

• Preparation of two new products for launch under the FiberChoice brand, and the possible launch of new products under the Breathe Right brand. CNS is continuing to evaluate the benefit of launching new Breathe Right products in fiscal 2006, and may decide based on the positive current trends and market testing results achieved this year, to forego a new product introduction in favor of continued focus on Breathe Right nasal strips. The company expects to announce its final decision with the fourth quarter earnings release; and,

• Continued efforts in key international markets to build a foundation for strong growth in fiscal 2006, most significantly Japan, where CNS is dramatically reducing inventories and has reached a new distribution agreement to more closely align CNS revenues with consumer demand.

        The gross margin rate for the third fiscal quarter was 75 percent, including a one-time benefit related to receipt of an import duty refund of $1.1 million. Excluding the one-time import duty refund, fiscal year-to-date gross margin was approximately 70 percent, up one percentage point versus the prior year, due primarily to lower product costs.

        Advertising and promotion for the quarter ended December 31, 2004, was $10.7 million, down 14 percent compared to the same period in the prior year. Consistent with the company’s earlier communications, advertising and promotion expense for fiscal 2005 was phased more evenly and earlier in the fiscal year to support the increased allergy usage of nasal strips in the first half of the fiscal year and the relaunch of clear nasal strips in the second quarter.

        CNS generated $11.2 million in cash from operations during the nine months ending December 31, 2004, and ended the period with $58.2 million in cash and marketable securities. Yesterday, the company announced a quarterly dividend of $0.05 per share, payable on March 4, 2005, to shareholders of record as of February 18, 2005.

Third-Quarter Product Results

        Domestic Breathe Right sales in the 2005 third quarter totaled $21.8 million, up 12 percent versus $19.5 million in the year-ago period. Strong growth in Breathe Right nasal strips resulted from the relaunch of clear nasal strips, underpinned by a strong new advertising message.

        International sales of Breathe Right products in the 2005 third quarter totaled $3.9 million compared to $4.6 million in the same period last year. Growth in several European markets offset limited product

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CNS, Inc. Reports Fiscal 2005 Third-Quarter Results
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shipments to the company’s distributor in Japan, which continues to work through excess inventory. CNS expects stronger sales volumes in Japan during the fiscal fourth quarter and in fiscal 2006.

        Sales of FiberChoice chewable fiber tablets grew 28 percent to $3.0 million in the third quarter versus $2.3 million in the prior-year period, continuing a strong growth trend behind its proven advertising message and growing consumer loyalty.

CNS Introduces Two New FiberChoice Fiber Products

        In November 2004, CNS announced the introduction of two new, innovative products under its FiberChoice^® brand. The products, which will begin shipping to retailers in March 2005, are:

• FiberChoice tropical orange Fiber Drops – a low-sugar, hard candy fiber drop; and

• FiberChoice sugar-free chewable fiber tablets in Assorted Fruit Flavors.

        “We are pleased to further extend our successful FiberChoice brand with these two new product offerings,” said Morfitt. “Both are expected to add incremental sales to our rapidly growing FiberChoice brand.”

Company Raises Outlook for Remainder of Fiscal 2005

        CNS has raised its estimated range of sales and earnings per share for the current fiscal year. For the 2005 fiscal year ending March 31, 2005, CNS anticipates that sales will be between $88 million and $91 million, a 1 percent to 5 percent increase versus the prior year. CNS estimates fully diluted earnings per share to be between $0.74 and $0.79, an increase of 25 percent to 34 percent over fiscal 2004.

        CNS anticipates net sales in the range of $23 million to $25.5 million for the fiscal fourth quarter ending March 31, 2005, compared to net sales of $22.5 million in the fourth quarter of last year. Fourth-quarter earnings are estimated to grow to between $0.09 and $0.14 per fully diluted share, versus earnings of $0.02 per fully diluted share in the prior-year period.

Conference Call Webcast

        A conference call to review the third-quarter results is scheduled today at 4 p.m. CT (5 p.m. ET). Interested participants may listen to the live conference call or replay over the Internet by logging onto CNS’ Web site at www.cns.com. A replay of the third-quarter conference call may also be

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CNS, Inc. Reports Fiscal 2005 Third-Quarter Results
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accessed by dialing toll-free 800-405-2236, conference call ID 11021014, between 6 p.m. CT on Thursday, January 20, until 6 p.m. CT on Thursday, January 27.

About CNS, Inc.

        CNS, based in Minneapolis, designs and markets consumer health care products, including Breathe Right^® nasal strips, Breathe Right Snore Relief™ throat spray, Breathe Right Vapor Shot!™ personal vaporizer and FiberChoice^® chewable fiber tablets. The Company focuses on products that address important consumer needs within the aging well/self care market, including better breathing and digestive health. Its common stock is listed on the Nasdaq National Market under the ticker symbol “CNXS.” More information about CNS and its products is available at www.cns.com.

        Some of the information contained in this news release is forward-looking and subject to certain business risks as described in the Company’s filings with the Securities and Exchange Commission, including those referred to in its Annual Report on Form 10-K for the year ended March 31, 2004. This news release contains forward-looking statements, which involve risks and uncertainties.

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CNS, Inc. Reports Fiscal 2005 Third-Quarter Results
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CNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts) (unaudtied)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2004		2003		2004		2003
Net sales	$	28,737	$	26,395	$	65,310	$	64,514
Cost of goods sold		7,099		8,396		18,208		20,321
Gross profit		21,638		17,999		47,102		44,193
Operating expenses:
Advertising and promotion		10,721		12,516		21,520		21,190
Selling, general and administrative		4,506		3,737		11,605		10,499
Total operating expenses		15,227		16,253		33,125		31,689
Operating income		6,411		1,746		13,977		12,504
Investment income		256		160		670		538
Income before income taxes		6,667		1,906		14,647		13,042
Income tax expense		2,262		716		5,084		4,836
Net income	$	4,405	$	1,190	$	9,563	$	8,206
Diluted net income per share	$	.30	$	.08	$	.65	$	.57
Weighted average number of common and
potential common shares outstanding		14,740		14,773		14,648		14,493

CNS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) (unaudited)

	December 31, 2004		March 31, 2004
Current assets:
Cash and marketable securities	$	58,233	$	49,421
Accounts receivable, net		14,187		11,394
Inventories		4,365		4,132
Other current assets		4,032		4,843
Total current assets		80,817		69,790
Long-term assets		3,430		3,744
Total assets	$	84,247	$	73,534
Current liabilities		17,974		14,890
Stockholders' equity		66,273		58,644
Total liabilities and stockholders' equity	$	84,247	$	73,534

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