CNS, Inc. Reports Record Fiscal 2005 Results.MINNEAPOLIS Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. -- CNS See Continuous net settlement. CNS See continuous net settlement (CNS). , Inc. (Nasdaq:CNXS): --Fourth-quarter sales of $28.4 million and fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.28 exceed expectations --Full-year net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increase 8%, driven by strong domestic Breathe Right Breathe Right™ Sports medicine A proprietary Band-Aid™-like nasal strip worn on the nasal bridge, said to improve breathing by opening the nasal passages Indications Temporary relief of breathing difficulties due to deviated nasal nasal nasal /na·sal/ (na´zil) pertaining to the nose. na·sal adj. Of, in, or relating to the nose. nasal pertaining to the nose. strip sales --Full-year earnings per share of $0.93, up 58% versus prior year --Company expects another year of record growth in fiscal 2006 CNS, Inc. (Nasdaq:CNXS), the Breathe Right(R) company, today announced results for the fiscal year and fourth quarter ended March 31, 2005. For the 2005 fiscal year, CNS' net sales grew 8 percent to a record $93.7 million versus $87.0 million in fiscal 2004. Net income in fiscal 2005 rose 60 percent to $13.7 million, or $0.93 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to prior-year net income of $8.5 million, or $0.59 per fully diluted share. Net sales for the fiscal fourth quarter were $28.4 million, up 27 percent compared to $22.5 million in the prior-year period. Net income for the fourth quarter grew to $4.1 million, or $0.28 per fully diluted share, versus net income of $0.3 million, or $0.02 per fully diluted share, in the year-ago quarter. "Fourth-quarter sales and profits exceeded our expectations with strong performances by Breathe Right nasal strips both in the U.S. and internationally, as well as FiberChoice," said Marti Morfitt, CNS' president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Our results benefited from the effectiveness of several important initiatives, combined with a longer U.S. cold and flu season
During fiscal 2005, CNS focused on several key initiatives designed to expand market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" of Breathe Right nasal strips in the U.S. and abroad, and further develop the FiberChoice brand. Milestones achieved in the 2005 fiscal year included: --The successful domestic relaunch Relaunch can refer to several things:
--Marketing testing designed to drive significant long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth in household penetration and consumer demand for Breathe Right nasal strips; --The launch of two new innovative products under the FiberChoice brand; and, --Continued efforts in key international markets to build a foundation for strong growth in fiscal 2006. During the December December: see month. 2004 quarter, the company began sales of Breathe Right nasal strips in Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. . In Japan, CNS dramatically reduced trade inventories and reached a new distribution agreement to more closely align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. CNS revenues with consumer demand. The gross margin rate for the 2005 fourth quarter was 70 percent, down slightly from the prior-year period's gross margin rate. The gross margin rate for the fiscal 2005 year was 72 percent, including a one-time benefit related to receipt of an import duty refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies of $1.1 million, which was recorded during the December 2004 quarter. Excluding this one-time item, the fiscal 2005 gross margin rate was 70 percent, up slightly more than 1 percentage point versus the previous year, due primarily to lower product costs. Advertising and promotion expense for the 2005 fourth quarter of $9.0 million declined 25 percent versus the prior-year period, consistent with the company's previous communications that advertising and promotion expense would be spent earlier and phased more evenly in fiscal 2005 compared to the previous fiscal year. For the 2005 fiscal year, advertising and promotion expense was $30.5 million, down 8 percent compared to the year-ago period, with lower spending and improved efficiencies across each of the company's business units. During fiscal 2005, CNS generated $14.5 million in cash from operations, up from $8.6 million in fiscal 2004. As of March 31, 2005, the company had $60.8 million in cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has . Yesterday, the company announced a 20 percent increase in its quarterly dividend to $0.06 per share, payable on June 3, 2005, to shareholders of record as of May 20, 2005. Fourth-Quarter and Full-Year Product Results Fourth-quarter sales of domestic Breathe Right products grew 22 percent to $19.5 million. This was the result of strong consumer demand for nasal strips caused by the relaunch of clear nasal strips. The relaunch included a new advertising message and also benefited from a longer cold and flu season compared to the prior year. Domestic Breathe Right sales for the 2005 fiscal year were $68.4 million, up 7 percent versus the 2004 fiscal year. "Given the momentum of Breathe Right strips, we will continue to focus Breathe Right advertising and promotion on nasal strips and will introduce a 28-count mentholated men·thol n. A white crystalline organic compound, CH3C6H9(C3H7)OH, obtained from peppermint oil or synthesized. strip item in fiscal 2006," said Morfitt. International sales of Breathe Right products strengthened during the 2005 fourth quarter, increasing 38 percent versus the prior year to $4.8 million, as the company resumed shipments to Japan, which is currently experiencing a stronger allergy allergy, hypersensitive reaction of the body tissues of certain individuals to certain substances that, in similar amounts and circumstances, are innocuous to other persons. Allergens, or allergy-causing substances, can be airborne substances (e.g. season compared to a year ago. Full-year international sales totaled $12.9 million, down 1 percent from fiscal 2004 sales of $13.0 million. Despite growth in several European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. markets, Canada and Mexico, CNS shipped limited supplies to its distributor in Japan, which worked through high inventory levels during the first three quarters of fiscal 2005. Sales of FiberChoice dietary fiber dietary fiber n. Coarse, indigestible plant matter, consisting primarily of polysaccharides, that when eaten stimulates intestinal peristalsis. supplements in the 2005 fourth quarter were $4.1 million, a 58 percent increase versus the year-ago quarter. CNS began shipping two new FiberChoice products to retailers in March 2005: the FiberChoice tropical orange Fiber Drops, which are a low-sugar, hard candy candy: see confectionery. candy Sweet sugar- or chocolate-based confection. The Egyptians made candy from honey (combined with figs, dates, nuts, and spices), sugar being unknown. fiber drop; and FiberChoice sugar-free chewable chew v. chewed, chew·ing, chews v.tr. 1. To bite and grind with the teeth; masticate. 2. To meditate on; ponder: chew a problem over. v. fiber tablets in Assorted Fruit Flavors. FiberChoice sales for fiscal 2005 totaled $12.2 million, up 32 percent versus $9.3 million in the prior fiscal year. "We are very pleased with the rising consumer demand for our existing FiberChoice products, as well as retailers' acceptance and initial shipments of our two new FiberChoice offerings," said Morfitt. "With its rapid growth, FiberChoice sales now nearly equal our international sales." Company Provides Fiscal 2006 Outlook For the year ending March 31, 2006, CNS expects record sales in the range of $104 million to $110 million, up 11 percent to 17 percent versus the 2005 fiscal year. The company expects sales growth in the first half of fiscal 2006 to be stronger than in the second half of the fiscal year. Sales growth in the first half of fiscal 2006 is expected to be in the range of 20 percent to 25 percent, as the company benefits from the launch of the two new FiberChoice items; increasing consumer demand trends for domestic nasal strips; and resumption RESUMPTION. To reassume; to promise again; as, the resumption of payment of specie by the banks is general. It also signifies to take things back; as the government has resumed the possession of all the lands which have not been paid for according to the requisitions of the law, and the of a normal shipping pattern to Japan. Growth in the second half of fiscal 2006 is expected to moderate to 5 percent to 12 percent, as results compare against the high sales volumes resulting from the domestic Breathe Right clear strips relaunch during the third and fourth quarters of fiscal 2005. Management anticipates fully diluted earnings per share for fiscal 2006 to be in the range of $0.97 to $1.01. This estimated range represents 10 percent to 15 percent growth, excluding the $0.05 earnings per share benefit of the one-time import duty refund recorded in fiscal 2005. Earnings per share growth for fiscal 2006 is expected to be concentrated in the first half of the fiscal year, based on the estimated phasing of revenue growth. "We are excited about our prospects to achieve a stronger revenue growth rate in 2006, made possible by the focus that our team placed on this year's key growth initiatives," said Morfitt. "In particular, we believe there are opportunities to further extend the household penetration of our flagship domestic nasal strips business." Conference Call Webcast A conference call to review the fourth-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 Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by logging onto CNS' Web site at www.cns.com. A replay of the fourth-quarter conference call may also be accessed by dialing toll-free 1-800-405-2236, conference call ID 11028941, between 6 p.m. CT on Thursday, April 28, and 6 p.m. CT on Thursday, May 5. About CNS, Inc. CNS, based in Minneapolis, designs and markets consumer health care products, including Breathe Right(R) nasal strips and FiberChoice(R) 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 Ulcers (Digestive) Definition In general, an ulcer is any eroded area of skin or a mucous membrane, marked by tissue disintegration. In common usage, however, ulcer usually is used to refer to disorders in the upper digestive tract. health. Its common stock is listed on the Nasdaq National Market under the ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors "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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended March 31, 2004. This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , which involve risks and uncertainties.
CNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts) (unaudited)
Three Months Twelve Months
Ended Ended
March 31, March 31,
--------------- ---------------
2005 2004 2005 2004
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Net sales $28,421 $22,466 $93,732 $86,980
Cost of goods sold 8,496 6,581 26,704 26,904
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Gross profit 19,925 15,885 67,028 60,076
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Operating expenses:
Advertising and promotion 8,994 11,911 30,515 33,101
Selling, general and administrative 4,857 3,730 16,462 14,227
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Total operating expenses 13,851 15,641 46,977 47,328
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Operating income 6,074 244 20,051 12,748
Investment income 265 187 935 725
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Income before income taxes 6,339 431 20,986 13,473
Income tax expense 2,200 90 7,284 4,926
------- ------- ------- -------
Net income $ 4,139 $ 341 $13,702 $ 8,547
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Diluted net income per share $ .28 $ .02 $ .93 $ .59
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Weighted average number of common and
potential common shares outstanding 15,021 14,774 14,758 14,488
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CNS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) (unaudited)
March 31, March 31,
2005 2004
--------- ---------
Current assets:
Cash and marketable securities $ 60,750 $ 49,421
Accounts receivable, net 15,030 11,394
Inventories 4,531 4,132
Other current assets 3,403 4,843
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Total current assets 83,714 69,790
Long-term assets 3,501 3,744
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Total assets $ 87,215 $ 73,534
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Current liabilities 16,064 14,890
Stockholders' equity 71,151 58,644
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Total liabilities and stockholders' equity $ 87,215 $ 73,534
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