CNXS ==> The Back to School Winner

[mrmarket]

This guy loves CNXS

Dueling Fools: CNS Bull
By Nathan Parmelee
November 17, 2005

Quick! Name a consumer products company trading with a P/E in the low 20's that's actually growing its profits by more than 20% a year for the past couple of years, as well.


Procter & Gamble (NYSE: PG), Pfizer (NYSE: PFE), and Schering-Plough (NYSE: SGP) are all great companies with brands that have experienced tremendous growth over the years. Still, none of them can compete with the solid 20% plus growth that Motley Fool Hidden Gems selection CNS (Nasdaq: CNXS) has posted of late.


Very strong growth
For the last few years, the maker of Breathe Right strips and Fiber Choice tablets has been all about growth. While it may seem odd that the little strips football players and other athletes wear across their noses are a growth business, it makes a bit more sense when you consider that they also help snorers to snore less and help folks who are congested from a head cold or the flu to breathe better. I must admit that I was skeptical about the product at one point as well. But after my snoring caused my wife to struggle to get to sleep one night, she insisted I give the strips a try, and she can attest that the improvement was noticeable.


So where were we? That's right. Growth. Rather than me blathering on about how strong the numbers have been, I opted to put them into a chart instead. As you can see, it's not just sales growth that has been strong but also operating profits, net income, and diluted earnings per share.


Y-o-Y Growth


2005 2004 2003
Sales 7.7% 10.0% 15.8%
Oper. Income 73.3% 20.8% 118%
Net Income 61.2% 30.8% -53%*
Diluted EPS 22.6% 57.6% NM**
*Due to tax gain. Adjusted estimate is 97%.
** Not meaningful due to tax gain.


There are a couple of things to take away from the above chart. The decreasing sales growth is initially concerning, but the numbers were soft last year because of weak shipments of the company's Breathe Right products to Japan. Through the first half of this year, sales are up 35% versus last year, and diluted EPS is up 63%. The other takeaway is that the company has some fairly substantial operating leverage, which means that as sales increase, operating expenses increase at a slower rate. This leads to profit growth that exceeds sales.


There is more to CNS than sales and earnings growth. The company also boasts free cash flow in line with its net income performance and a very clean balance sheet flush with $59 million in cash and no debt.


And the future looks bright, too
All of the past growth is wonderful, but we don't buy stocks for their past performances. We buy them for what they can deliver in the future. It looks like the company's continual improvements in marketing and innovative new products will continue to deliver growth in sales and profits.


Let's tackle the marketing issue first. Quite simply, the company needs to increase the awareness of its products, and it has been doing so. Last year, the company ran a targeted multimedia marketing campaign toward snorers like yours truly and increased sales of its nasal strips by 21%. The same marketing program is being expanded this year, and additional marketing on television will be run, as well.


The other aspect to the company's growth plans is the expansion of its current product lines. In the last year, the company launched clear (as opposed to beige) Breathe Right strips, and this new product, along with new mixed fruit chewable Fiber Choice tablets, was responsible for much of the company's growth. To keep the growth going, the company recently expanded its line of Fiber Choice tablets further by adding a product that includes Calcium and another product to the line up for dieters that includes Chromax.


Foolish final thoughts
A large part of the reason CNS shares have advanced 121% since being selected in Hidden Gems two years ago is because the company's shares didn't reflect the strong profitability of the business or its growth prospects. Today, I estimate that the shares fully reflect the profitability of the business and an assumption of 8% to 10% growth over the next five years. However, if you expect growth to be in the 12% to 16% range, then a price of $30 to $35 per share looks very reasonable. Considering the 20%-30% growth of the last few years it looks like CNS still has some room to run.

[jiesen]

Someone doesn't like CNXS:

http://www.nasdaqtrader.com/asp/short_interest_resp.asp?symbol=cnxs&SettlementDate=11%2F15%2F2005&View.x=0&View.y=0

A 65% increase in the short interest goes a long way to explain the 15% haircut in the share price earlier this month. Do these jokers shorting CNXS know something, or are they just trying to pull a fast one?

[billyjoe]

Jiesen,
It makes you wonder is there something behind this or is bad word of mouth getting people carried away. Sort of the opposite of irrational exuberance.

billyjoe

[ricofrans]

CNXS Support

Dear all,

I am looking at a support for CNXS at 23 and plan to enter when I see some buy signals. Any thoughts?

[ricofrans]

CNXS bounced?

Dear all,

I am looking at a support for CNXS at 23 and plan to enter when I see some buy signals. Any thoughts?

Did we see a real CNXS bounce or it's just a sympathy move due to the overall positive market move?

Not sure, if it is wise but I am still holding it and planning to put some more if this is a real bounce. Any view is appreciated.

[jiesen]

CNXS reports 0.26 EPS vs 0.28 expected for 3Q06

As much as FRGB's results were fantastic, these results are disappointing. Wish I could have seen this coming- it probably would have been wise to exit today... oh well, they did reaffirm 2006 guidance of $1.05 to $1.12.

http://biz.yahoo.com/bw/060125/20060125005781.html?.v=1

CNS, Inc. Reports Fiscal 2006 Third Quarter Results
Wednesday January 25, 4:05 pm ET

MINNEAPOLIS--(BUSINESS WIRE)--Jan. 25, 2006--CNS, Inc. (Nasdaq:CNXS - News):

• 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

CNS, Inc. (Nasdaq:CNXS - News), 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 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.

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.

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.

[mrmarket]

rut ro time to eat more fiber, this one's gonna hurt

[jiesen]

wow. $5 hit for a 0.02 miss. I guess beating expectations was so expected that falling short really freaked out the CNXS holders. No way I'm selling here though. I considered selling early today, but thought that even $3/shr was too much to give up. They're still making $1+ per year and growing like crazy (>15%). It'll come around one of these days.

[jimbocobb]

Who told ya so ????

BOOYA ! Maybe you should've listened to Jimbo !!

[spikefader]

BOOYA ! Maybe you should've listened to Jimbo !!

Flame bait alert!

[New-born baby]

buy it here

wow. $5 hit for a 0.02 miss. I guess beating expectations was so expected that falling short really freaked out the CNXS holders. No way I'm selling here though. I considered selling early today, but thought that even $3/shr was too much to give up. They're still making $1+ per year and growing like crazy (>15%). It'll come around one of these days.

I am going to look into buying this one.

[mrmarket]

Press Release Source: CNS, Inc.


CNS, Inc. Introduces Breathe Right(R) Snore Relief Throat Rinse(TM)
Tuesday March 7, 7:30 am ET


MINNEAPOLIS--(BUSINESS WIRE)--March 7, 2006--Everyone needs a good night's sleep. But for the 50 million American households containing a snorer, a restful night of sleep can be an elusive dream. Today, CNS, Inc. (NasdaqNM:CNXS - News), makers of the widely recognized Breathe Right® brand of products, unveiled an exciting new solution, Breathe Right Snore Relief(TM) Throat Rinse, a drug-free over-the-counter liquid that lubricates throat tissues to minimize vibrations and control snoring.
ADVERTISEMENT


Breathe Right Nasal Strips are the number one over-the-counter solution for snoring. Nasal strips help to control snoring by gently opening nasal passages so you can breathe comfortably through your nose and not through your mouth. Snore Relief Throat Rinse addresses a different cause of snoring which occurs when throat muscles relax, making it harder for air to pass through the narrowed breathing passage and causing the relaxed muscle tissue to vibrate.

Marti Morfitt, president and chief executive officer of CNS, Inc., commented, "Snorers need our help. Consumers do not understand that snoring can occur in both the nose and throat, and relief from snoring may require addressing both problems. The addition of Breathe Right Snore Relief Throat Rinse provides snorers an additional drug-free option in managing their snoring."

Breathe Right Snore Relief Throat Rinse, to be used nightly much like mouthwash, is a pleasant tasting liquid that can be used as part of a snorer's normal bedtime routine. Clinical studies have shown that 85 percent of people with common snoring problems experience a reduction or elimination of their symptoms by using Snore Relief Throat Rinse in combination with Breathe Right Nasal Strips.

Ms. Morfitt continued, "We believe that our new Breathe Right Snore Relief Throat Rinse will be a strong and complimentary addition to our existing portfolio of snoring products, including Breathe Right Nasal Strips and Breathe Right Snore Relief Throat Spray. Snore Relief Throat Rinse will ship to retailers nationwide beginning in July 2006 and will be available in the fall at mass merchandise retailers, drugstores and supermarkets. Additionally, this autumn, CNS will launch a substantial advertising and promotional campaign with the goal of educating consumers on the 'Physiology of Snoring' and how Breathe Right products can play an important role in providing relief to those affected. We are pleased to be able to offer a range of drug-free solutions that can provide substantial relief for such a common condition."

[mrmarket]

That's my monkey

Press Release Source: CNS, Inc.

CNS, Inc. Reports Record Fiscal 2006 Results
Thursday May 4, 4:00 pm ET


MINNEAPOLIS--(BUSINESS WIRE)--May 4, 2006--CNS, Inc. (Nasdaq:CNXS - News):
Full year net sales increased 20%; net income up 26%;
Full year diluted earnings per share increased 24% to $1.15;
Breathe Right® domestic sales grew 9%; Breathe Right international sales increased 32%; and Fiber Choice® sales rose 70% for the full year;
Fourth quarter sales rose 13%; diluted earnings per share grew 15% to $0.32;
Company provides fiscal 2007 estimates for sales growth of 11% - 16% and diluted earnings per share growth of 12% - 20%, compared to proforma fiscal 2006 diluted earnings per share.
CNS, Inc. (Nasdaq:CNXS - News), the Breathe Right Company, today announced results for fiscal year 2006 and the fourth quarter ended March 31, 2006.

For the fiscal year, net sales grew to a record $112.6 million, up 20% from $93.7 million in fiscal 2005. Net income rose 26% to $17.2 million, or $1.15 per diluted share, compared to fiscal 2005 net income of $13.7 million, or $0.93 per diluted share. Included in fiscal 2005 was a pre-tax benefit of $1.1 million, or $0.05 per diluted share related to a non-recurring European import duty refund. Excluding the duty refund in fiscal 2005, diluted earnings per share for fiscal 2006 grew 31% compared to the prior year.

Net sales for the fourth quarter of fiscal 2006 were $32.1 million, up 13% compared to $28.4 million in the same period last year. Net income for the fourth quarter grew 14% to $4.7 million, or $0.32 per diluted share, compared to $4.1 million, or $0.28 per diluted share, for the fourth quarter of fiscal 2005.

"We are very pleased to report 20% consolidated revenue growth and a 26% increase in net income for fiscal 2006. All of our product lines turned in strong results with our Breathe Right domestic, Breathe Right international and FiberChoice brands growing 9%, 32% and 70%, respectively," said Marti Morfitt, President and Chief Executive Officer of CNS, Inc. "In addition to solid consumer demand trends for our existing items, we are encouraged by strong retail customer acceptance of our new FiberChoice items launched in February 2006."

Ms. Morfitt continued, "We were pleased with the 32% annual increase in international sales. We are still at an early stage of building brand awareness and loyalty for the Breathe Right brand overseas, and are encouraged by this year's progress."

During fiscal 2006, CNS focused on a number of key initiatives to further develop the Breathe Right and FiberChoice brands. Key accomplishments in fiscal 2006 include:

Growing consumer demand for domestic nasal strips by 9% using the proven "How it Works" advertising demonstration to attract new nasal strip users, and the launch of a 28-count mentholated nasal strip item;
Increasing FiberChoice sales 70% with the expansion of advertising and the February 2006 introduction of two new innovative FiberChoice products - FiberChoice® plus Calcium and FiberChoice® Weight Management;
Development of Breathe Right® Snore Relief(TM) throat rinse, a drug-free, over-the-counter liquid that lubricates throat tissues to minimize vibrations and control snoring, with initial shipments scheduled for July 2006.
Annual and Fourth Quarter Product Sales and Operating Results

Domestic Breathe Right sales for the 2006 fiscal year were $74.6 million, up 9% versus $68.4 million in fiscal year 2005, due to continued strong consumer demand for nasal strips. Fourth quarter domestic Breathe Right sales grew 2% to $20.0 million, compared to $19.5 million in the fourth quarter of fiscal 2005. Domestic nasal strips revenues grew 5% during the fourth quarter, but overall revenue growth was moderated by the declining sales trends on Vapor Shot!(TM) and saline spray.

Full year international Breathe Right sales totaled $17.0 million, up 32% versus fiscal 2005 sales of $12.9 million. Sales growth resulted from strong shipments to Canada and the UK, as well as the resumption of 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. International sales of Breathe Right products in the fiscal 2006 fourth quarter grew 5% to $5.1 million, up from international sales in the prior year period of $4.8 million.

FiberChoice sales for fiscal 2006 totaled $20.8 million, up 70% compared to $12.2 million in fiscal 2005. Sales growth resulted from continued growth in consumer demand for the existing tablets as well as the strong initial shipments for the two new FiberChoice products launched in February 2006. Sales of FiberChoice products in the 2006 fourth quarter were $7.1 million, up 73% compared to sales of $4.1 million in last year's fourth quarter.

The gross profit rate for the fourth quarter of fiscal 2006 was 71%, up one percentage point compared to the prior year period, attributable to lower product costs and higher average pricing on the FiberChoice brand. Advertising and promotion expense for the 2006 fourth quarter of $10.7 million rose 23% compared to $8.7 million in the year earlier period, primarily due to increased advertising levels for both the FiberChoice and Breathe Right brands.

CNS generated $15.8 million in cash from operations in fiscal 2006, up from $14.7 million in fiscal 2005. As of March 31, 2006, the company had $52.6 million in cash and marketable securities. During fiscal 2006, CNS repurchased 655,105 shares of its common stock for $13.9 million.

In January 2006, CNS purchased from Onesta Nutrition, Inc. a portfolio of domestic and international patents and patents pending related to the FiberChoice brand for approximately $8 million. The purchase reflects CNS' commitment to further develop and grow the FiberChoice brand. The purchase was funded by CNS' existing cash balances, and is expected to be earnings neutral in the fiscal year ending March 31, 2007.

Yesterday, the company announced a 17% increase in its quarterly cash dividend from $0.06 per share to $0.07 per share, payable on June 9, 2006 to shareholders of record as of May 26, 2006.

Company Provides Fiscal 2007 Outlook

For the year ending March 31, 2007, CNS expects sales of $125 million to $131 million, up 11% to 16% versus the 2006 fiscal year.

As of April 1, 2006, CNS adopted Statement of Financial Accounting Standards SFAS No. 123R, which requires the expensing of all stock based compensation. CNS anticipates diluted earnings per share for fiscal 2007 to be in the range of $1.19 to $1.27, including the impact of adopting SFAS No. 123R. Total stock based compensation expense for fiscal 2007 is expected to be approximately $.08 to $.10 per share. Fiscal 2006 diluted earnings per share would have been reduced by $.09 per share as a result of stock based compensation expense, resulting in proforma diluted earning per share of $1.06. The estimated range of diluted earnings per share for fiscal 2007 represents 12% to 20% growth compared to proforma fiscal 2006 diluted earnings per share (see attached reconciliation of GAAP to Non-GAAP disclosures).

During fiscal 2007, CNS plans to spread its Breathe Right advertising and promotional spending more evenly throughout the year as part of the company's strategy to promote year-round usage of nasal strips to address consumers' chronic nasal breathing problems. As a result, operating profit in the first quarter of fiscal 2007 is expected to decline slightly compared to the prior year, but increase nicely for the remainder of the year.

"We are energized by our plans to continue strong revenue and profit growth in fiscal 2007. Our team will leverage our pipeline of proven growth tactics to maintain momentum as we enter fiscal 2007," concluded Ms. Morfitt.

[Lyehopper]

Hey Ernie!

Quasi Ernie played CNXS in the POTW this week and won the silver. Did you catch that dude?

"Q" is HUUUUGE!!!!

[mrmarket]

Wow!

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Press Release Source: CNS, Inc.


CNS, Inc. Reports Strong First-Quarter Revenue Growth
Wednesday August 2, 4:00 pm ET


MINNEAPOLIS--(BUSINESS WIRE)--Aug. 2, 2006--CNS, Inc. (NASDAQ:CNXS - News):
Domestic Breathe Right® nasal strip sales increased 32% driven by new advertising campaign.
Q1 sales increased by 25% versus the prior year quarter.
FiberChoice® sales increased 45% driven by strong consumer demand and two new products.
Company increases estimates for fiscal 2007 revenue and diluted earnings per share.
CNS, Inc. (NASDAQ:CNXS - News), the Breathe Right® company, today announced results for the first quarter of fiscal year 2007 ended June 30, 2006.

Net sales for the quarter were $29.3 million, an increase of 25 % compared to $23.5 million in the prior year period. Net income was $3.5 million, or $0.24 per fully diluted share compared to net income of $4.0 million, or $.27 in the first quarter of fiscal 2006. After adjusting for the impact of stock-based compensation expense, proforma net income in the first quarter of fiscal 2006 was $3.8 million or $0.25 per fully diluted share (see attached reconciliation of GAAP to non-GAAP disclosures).

"We are very pleased with our first quarter results. We are excited to report that nasal strip sales grew 32% during the quarter in response to our new 60-second Breathe Right commercial, featuring Bruce Johnson, the inventor of the Breathe Right nasal strip. Strong nasal strip sales growth drove overall Breathe Right sales up 28%," said Marti Morfitt, CNS' president and CEO. "We are particularly pleased to report that FiberChoice sales grew 45% versus last year due to solid programming and the introduction of new FiberChoice® with Calcium and FiberChoice® Weight Management.

"From a strategic standpoint, first quarter results reflected planned increases in advertising spending during the quarter as we work to spread our Breathe Right brand advertising and promotional expense more evenly throughout the year. We are pleased with the results that were produced during the quarter and look forward to sales and earnings momentum in the remaining three quarters of the year."

CNS will focus on a number of key initiatives to grow the Breathe Right® and FiberChoice® brands in fiscal 2007, including:

Continued expansion of Breathe Right® nasal strips, both domestically and in overseas markets, using tested, proven growth strategies;
Continued year round advertising of Breathe Right nasal strips as a solution for consumers' chronic nasal breathing conditions outside of the cough/cold season;
Increasing FiberChoice sales with strong support for our new fortified fiber products;
Further development of the Breathe Right brand's leadership in the snore relief segment, including the launch of Breathe Right® Snore Relief(TM) throat rinse which began shipping in July;
Continuing to develop our pipeline of new products; and
Continued development and testing of new marketing tactics for both the Breathe Right and FiberChoice brands.
The gross margin rate for the 2007 first quarter was 71.7%, up from the prior year period's gross margin rate of 70.4%, primarily due to lower product costs and increased pricing on FiberChoice products effective February 2006. Advertising and promotion expense for the fiscal 2007 first quarter was $10.5 million compared to $6.0 million in the first quarter of fiscal 2006. The planned increase of 76% was primarily due to our strategy to position Breathe Right nasal strips as a year-round treatment for consumers' chronic nasal breathing conditions.

CNS generated $7.4 million in cash from operations and ended the first quarter of 2007 with $59 million in cash and marketable securities and no debt. Earlier today, CNS announced a quarterly dividend of $0.07 per share, payable on September 8, 2006 to shareholders of record as of August 25, 2006.

First-Quarter Product Results

Domestic Breathe Right sales in the fiscal 2007 first quarter grew 28% to $18.8 million, compared to prior year sales of $14.7 million. The growth is attributable to our successful strategy to promote year-round Breathe Right nasal strip usage with a new advertising campaign featuring Bruce Johnson, the inventor of the Breathe Right nasal strip.

International sales of Breathe Right products in the fiscal 2007 first quarter totaled $3.0 million, down 18% versus year-ago sales of $3.6 million. Lower consumer demand for nasal strips in Japan, where the 2006 spring allergy season was significantly less severe than the 2005 record-setting allergy season, resulted in a 75% decrease in Japanese sales. Consumer demand for Breathe Right® nasal strips fiscal year to date increased 27% in Europe and 25% in Canada.

FiberChoice® sales grew 45% to $7.5 million in the first quarter compared to $5.2 million in the prior year period. Sales growth resulted from strong initial pipeline sales and consumer demand for our two new fortified fiber products - FiberChoice® plus Calcium and Fiber Choice® Weight Management which were launched in February 2006, as well as continued strong consumer demand for the existing chewable tablets.

Company Increases Estimates for Fiscal 2007

With the first quarter completed, CNS is increasing its estimates for fiscal 2007 sales and diluted earnings per share. For the year ending March 31, 2007, CNS expects sales of $126 million to $132 million, up 12% to 17% versus the 2006 fiscal year.

As of April 1, 2006, CNS adopted Statement of Financial Accounting Standards SFAS No. 123R, which requires the expensing of all stock-based compensation. CNS anticipates diluted earnings per share for fiscal 2007 to be in the range of $1.22 to $1.30, including the impact of adopting SFAS No. 123R. The estimated range of diluted earnings per share for fiscal 2007 represents 15% to 23% growth compared to proforma fiscal 2006 diluted earnings per share (see attached reconciliation of GAAP to Non-GAAP disclosures). Fiscal 2006 diluted earnings per share would have been reduced by $.09 per share as a result of stock based compensation expense, resulting in proforma diluted earning per share of $1.06.

Ms. Morfitt concluded, "We are thrilled with the strong revenue growth of both of our brands during the quarter. As we continue to reposition Breathe Right nasal strips to address chronic nasal breathing conditions and develop products that are intended for year-round use, we will more evenly distribute our advertising and promotion spending throughout our fiscal year. We have experienced great momentum on the Breathe Right and FiberChoice businesses in the first quarter and believe that fiscal year 2007 will be another year of strong growth."

CNXS Included in the NASDAQ Global Select Market

CNS has been included in the new NASDAQ Global Select Market. The NASDAQ Global Select Market has the highest initial listing standards of any exchange in the world based on financial and liquidity requirements. Prior to the change, the company had been listed on the NASDAQ National Market.

Beginning on July 3, 2006, NASDAQ commenced classifying listed companies under three listing tiers -- NASDAQ Global Select Market, NASDAQ Global Market, and NASDAQ Capital Market. NASDAQ also plans to launch indexes based on these new tiers.

"CNS, Inc. is an example of an industry leader that has achieved superior listing standards, which clearly defines the essence of the NASDAQ Global Select Market," said Bruce Aust, Executive Vice President of NASDAQ's Corporate Client Group. "NASDAQ is focused on leading a race to the top in terms of listing qualifications. In recognizing these companies, we are highlighting their achievement in meeting the requirements to be included in the market with the highest listing standards in the world," added Mr. Aust.