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 25, 2006

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 7 are not applicable and therefore omitted.

Item 2.02      Results Of Operations And Financial Condition.

The Company hereby furnishes a press release issued on January 25, 2006 disclosing material non-public information regarding its results of operations for the quarter ended December 31, 2005. A copy of the press release is attached hereto as Exhibit 99.1.

Item 8.01      Other Events

On January 24, 2006, the Company issued a press release, attached hereto as Exhibit 99.2, announcing a six-cent per share quarterly dividend payable March 3, 2006 to shareholders of record as of February 17, 2006.

Item 9.01      Financial Statements And Exhibits

Exhibit No. Description

99.1 Press Release issued on January 25, 2006.

99.2 Press Release issued on January 24, 2006.

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 25, 2006

EX-99.1

Exhibit 99.1

NEWS RELEASE

FOR 3:00 P.M. CT RELEASE
January 25, 2006

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 Fiscal 2006 Third Quarter Results

• Third quarter net sales of $30.9 million rose 8 percent driven by strong Breathe Right^® international and FiberChoice^® growth

• Third quarter operating income of $5.9 million grew 10 percent, excluding a prior year benefit related to a refund of European import duties

• Company continues to estimate $1.05 to $1.12 fully diluted earnings per share for full year fiscal 2006

        MINNEAPOLIS, January 25 — CNS, Inc. (Nasdaq: CNXS), the Breathe Right^® company, today announced results for its fiscal 2006 third quarter ended December 31, 2005.

        Net sales for the quarter were $30.9 million, up 8 percent from $28.7 million in the prior year period. Net income for the quarter ended December 31, 2005, totaled $4.0 million, or $0.26 per fully diluted share. Net income for the prior year quarter was $4.4 million, or $0.30 per fully diluted share, which included the benefit related to a duty refund of $0.05 per fully diluted share.

        For the first nine months of fiscal 2006, CNS reported net sales of $80.5 million, up 23 percent compared to $65.3 million in the same period last year. Net income for the first nine months of fiscal 2006 was $12.5 million, or $0.83 per share, compared to $9.6 million, or $0.65 per fully diluted share for the first nine months of fiscal 2005. Excluding the non-recurring European import duty refund, fully diluted earnings per share for the first nine months of fiscal 2006 grew 37 percent compared to the prior year.

        “Overall, revenue growth in the third quarter moderated as anticipated, compared to last year’s high sales volumes that resulted from the successful relaunch of domestic Breathe Right clear strips,” said Marti Morfitt, CNS’ president and CEO. “During the third quarter, we saw continued strong revenue growth in our Breathe Right international and FiberChoice product lines. Our domestic Breathe Right sales were slightly below expectations as our promotions were not as effective as planned. However, we expect domestic Breathe Right revenues to return to growth in the fourth quarter.

CNS, Inc. Reports Fiscal 2006 Third Quarter Results
Page 2

        CNS continues to focus on a number of key initiatives to grow the Breathe Right and FiberChoice brands including:

• Growing nasal strip sales with tested, proven marketing tactics, including an effective “How it Works” advertising demonstration to attract new nasal strip users;

• Increasing FiberChoice sales with the expansion of advertising and the introduction of two new FiberChoice products which will begin shipping in February 2006 — FiberChoice with Calcium^TM and FiberChoice Weight Management^TM;

• Conducting market testing designed to create a robust pipeline of growth tactics for Breathe Right nasal strips, both domestically and internationally; and

• Building a pipeline of potential new products for both the Breathe Right and FiberChoice brands.

        On January 5, 2006, CNS announced the purchase, from Onesta Nutrition, Inc., of a portfolio of domestic and international patents and patents pending related to the FiberChoice^® brand for approximately $8 million. The purchase, which was completed January 4, 2006, reflects CNS’ commitment to further develop and grow this important brand within the company’s portfolio. The purchase was funded by CNS’ existing cash balances, and is expected to be earnings neutral in the fiscal year ending March 31, 2007.

        The gross profit rate for the fiscal 2006 third quarter was 69.6 percent, down 5.7 percentage points compared to the prior year period’s gross profit rate of 75.3 percent, which included the benefit of the European import duty refund. Advertising and promotion expense for the 2006 third quarter of $11.4 million rose 6 percent compared to $10.7 million in the year earlier period, primarily due to increased advertising for FiberChoice in the U.S. and Breathe Right in several international markets.

        CNS generated $9.6 million in cash from operations through the third quarter of fiscal 2006 and ended the period with $59.7 million in cash and marketable securities. During the first nine months of fiscal 2006, CNS repurchased 435,105 shares of its common stock for $9.2 million.

        Yesterday, the company announced a quarterly dividend of $0.06 per share, payable on March 3, 2006 to shareholders of record as of February 17, 2006.

Third Quarter Product Results
        Domestic Breathe Right sales in the 2006 third quarter were $21.5 million, down 1 percent compared to strong prior year period sales of $21.8 million which benefited from the clear nasal strip relaunch, including the “How it Works” component of our advertising message. For the first nine months of fiscal 2006, Breathe Right domestic revenues increased 12 percent to $54.7 million.

CNS, Inc. Reports Fiscal 2006 Third Quarter Results
Page 3

        International sales of Breathe Right products in the fiscal 2006 third quarter rose 35 percent to $5.3 million, up from international sales in the prior year period of $3.9 million. Sales growth resulted from continued strong shipments to Canada, as well as normal shipments to Japan. In the first eight months of fiscal 2005, no revenues were recorded in Japan due to high inventory levels in that market. For the first nine months of fiscal 2006, international sales of Breathe Right products grew 48 percent to $11.9 million.

        Sales of FiberChoice during the fiscal third quarter were $4.1 million, up 38 percent from the prior year period sales of $3.0 million. Sales growth resulted from continued increases in consumer demand for the expanded range of FiberChoice products. For the two FiberChoice items launched February 2005, the assorted fruit flavored tablet has exceeded expectations and is currently the fastest selling item in the FiberChoice product line, while the hard candy fiber drop has fallen short of our expectations. FiberChoice also continues to benefit from the expansion of advertising coverage to 100 percent of the United States. For the first nine months of fiscal 2006, FiberChoice revenues increased 69 percent to $13.8 million.

Outlook for Fiscal 2006 and Fiscal 2007
        For the year ending March 31, 2006, CNS has updated its estimate for record sales in the range of $109 million to $112 million, up 16 percent to 19 percent versus the 2005 fiscal year. Sales growth in the first three quarters of fiscal 2006 rose 23 percent as the company benefited from the launch of the two new FiberChoice products, strong consumer demand for domestic nasal strips and the resumption of a normal shipping pattern to Japan. CNS continues to anticipate record fully diluted earnings per share for fiscal 2006 to be in the range of $1.05 to $1.12. This estimated range represents 19 percent to 27 percent growth, excluding the $0.05 earnings per share benefit of the one-time duty refund recorded in the third quarter of fiscal 2005.

        For the fiscal year ending March 31, 2007, the company’s preliminary estimates for revenue growth are in line with its long-term planning guidelines of 10 percent to 15 percent, with earnings growth expected to be slightly higher than revenue growth. The company will provide further estimates for fiscal 2007 revenues and earnings with its earnings release for the fourth quarter of fiscal 2006 in May.

CNS, Inc. Reports Fiscal 2006 Third Quarter Results
Page 4

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 accessed by dialing toll-free 1-800-405-2236, conference call ID 11050570, between 6 p.m. CT on Wednesday, January 25, and 6 p.m. CT on Wednesday, February 1.

About CNS, Inc.
CNS, based in Minneapolis, designs and markets consumer health care products, including Breathe Right^® nasal strips and FiberChoice^® dietary fiber supplements. 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 statements contained in this news release contain forward-looking statements that are subject to certain business risks, including those risks described in the Company’s Annual Report on Form 10-K for the year ended March 31, 2005, as well as other filings with the Securities and Exchange Commission. The Company undertakes no duty or obligation to update any of the forward-looking statements after the date of this release.

CNS, Inc. Reports Fiscal 2006 Third Quarter Results
Page 5

CNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts) (unaudited)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2005		2004		2005		2004
Net sales	$	30,929	$	28,737	$	80,525	$	65,310
Cost of goods sold		9,401		7,099		23,991		18,208
Gross profit		21,528		21,638		56,534		47,102
Operating expenses:
Advertising and promotion		11,403		10,721		25,070		21,520
Selling, general and administrative		4,203		4,506		12,969		11,605
Total operating expenses		15,606		15,227		38,039		33,125
Operating income		5,922		6,411		18,495		13,977
Investment income		330		256		964		670
Income before income taxes		6,252		6,667		19,459		14,647
Income tax expense		2,284		2,262		6,916		5,084
Net income	$	3,968	$	4,405	$	12,543	$	9,563
Diluted net income per share	$	.26	$	.30	$	.83	$	.65
Weighted average number of common and
potential common shares outstanding		15,023		14,740		15,057		14,648

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

	December 31, 2005		March 31, 2005
Current assets:
Cash and marketable securities	$	59,702	$	60,750
Accounts receivable, net		17,181		15,030
Inventories		7,211		4,531
Other current assets		4,669		3,403
Total current assets		88,763		83,714
Long-term assets		3,259		3,501
Total assets	$	92,022	$	87,215
Current liabilities		18,332		16,064
Stockholders’ equity		73,690		71,151
Total liabilities and stockholders’ equity	$	92,022	$	87,215

CNS, Inc. Reports Fiscal 2006 Third Quarter Results
Page 6

CNS, INC.
RECONCILIATION OF GAAP TO NON GAAP DISCLOSURES
(in thousands) (unaudited)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2005		2004		2005		2004
Operating income, as reported	$	5,922	$	6,411	$	18,495	$	13,977
Proforma Adjustment (1)		—		1,050		—		1,050
Operating income, excluding favorable impact
of European import duty refund	$	5,922	$	5,361	$	18,495	$	12,927

(1)     The Company received a $1.1 million refund of previously paid European Community import duties on Breathe Right nasal strips relating to an import duty appeal. The Company recorded this non-recurring item as a reduction in cost of goods sold during the quarter ended December 31, 2004.

EX-99.2

Exhibit 99.2

NEWS RELEASE

January 24, 2006

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

CNS, Inc. Declares Quarterly Dividend

        MINNEAPOLIS, January 24, 2006 – CNS, Inc. (Nasdaq: CNXS), the Breathe Right^® company, today announced that its board of directors has declared a quarterly cash dividend of six cents per share of common stock. The dividend is payable on March 3, 2006, to shareholders of record as of February 17, 2006.

        “We are pleased to announce another quarterly dividend for our shareholders which reflects the board’s confidence in our financial performance and the long term-prospects of CNS,” said Marti Morfitt, president and chief executive officer of CNS.

        CNS declared its first quarterly dividend in August 2003 and then raised the dividend payment in June 2004 and June 2005. The company has approximately 14.2 million shares outstanding.

About CNS, Inc.
CNS, based in Minneapolis, designs and markets consumer health care products, including Breathe Right^® nasal strips and FiberChoice^® dietary fiber supplements. 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, 2005. This news release contains forward-looking statements, which involve risks and uncertainties.

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