Cyberonics Inc. Announces Organizational Changes: Reduction in Employee Headcount by Approximately 12%

HOUSTON, Aug. 22 /PRNewswire-FirstCall/ -- Cyberonics, Inc. today announced a restructuring designed to enhance efficiency and reduce the cost of ongoing operations, resulting in a reduction in employee headcount by approximately 12%. The approximate $2.5 million in costs associated with the reductions will be expensed in the second quarter of fiscal 2008, which will end on Friday, October 26, 2007. The workforce reductions are expected to result in significant cost savings beginning in the third quarter of the current fiscal year.

"The recent non-coverage determination by the Centers for Medicare and Medicaid Services has resulted in reduced sales of VNS Therapy(TM) Systems for treatment-resistant depression (TRD) patients," commented Dan Moore, Cyberonics' President and Chief Executive Officer. "We are fully committed to creating shareholder value by returning the company to positive cash flow generation and profitability as quickly as possible."

Further details will be made available in the Company's scheduled first quarter earnings release and conference call with investors on August 29, 2007.

FIRST QUARTER RESULTS CONFERENCE CALL INSTRUCTIONS

A conference call to discuss first quarter results will be held at 9:00 AM EDT on Wednesday, August 29, 2007. To listen to the conference call live by telephone dial 877-313-8035 (if dialing from within the U.S.) or 706-679-4838 (if dialing from outside the U.S.). The conference ID is 12661231; the leader is Dan Moore. Presentation slides will be available on-line at http://www.cyberonics.com no later than 8:00 AM EDT on Wednesday, August 29, 2007. A replay of the conference call will be available approximately two hours after the completion of the conference call by dialing 800-642-1687 (if dialing from within the U.S.) or 706-645-9291 (if dialing outside the U.S.). The replay conference ID access code is 12661231.

ABOUT VNS THERAPY AND CYBERONICS

Information on Cyberonics, Inc. and VNS Therapy(TM) is available at http://www.cyberonics.com and http://www.vnstherapy.com.

SAFE HARBOR STATEMENT

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the use of forward-looking terminology, including "may," "believe," "will," "expect," "anticipate," "estimate," "plan," "intend," and "forecast," or other similar words. Statements contained in this press release are based upon information presently available to us and assumptions that we believe to be reasonable. We are not assuming any duty to update this information should those facts change or should we no longer believe the assumptions to be reasonable. Investors are cautioned that all such statements involve risks and uncertainties, including without limitation, statements concerning returning the company to positive cash flow generation and profitability. Our actual results may differ materially. Important factors that may cause actual results to differ include, but are not limited to: continued market acceptance of VNS Therapy and sales of our product; the development and satisfactory completion of clinical trials and/or market test and/or regulatory approval of VNS Therapy for the treatment of other indications; satisfactory completion of post-market studies required by the U.S. Food and Drug Administration as a condition of approval for the treatment-resistant depression indication; adverse changes in coverage or reimbursement amounts by third-parties; intellectual property protection and potential infringement claims; maintaining compliance with government regulations and obtaining necessary government approvals for new indications; product liability claims and potential litigation; reliance on single suppliers and manufacturers for certain components; the accuracy of management's estimates of future expenses and sales; the results of the previously disclosed governmental inquiries; the impact of the restatement of our consolidated financial statements or other actions that might be taken or required as a result of such inquiries or the review by the Audit Committee of our Board of Directors of our stock option grants, procedures, and practices, including a default under credit facilities or debt instruments; the potential identification of new material weaknesses in our internal controls over financial reporting; risks and costs associated with such inquiries or review and any litigation relating thereto or to our stock option grants, procedures, and practices (including the previously disclosed private litigation); uncertainties associated with stockholder litigation; and other risks detailed from time to time in our filings with the Securities and Exchange Commission (SEC). For a detailed discussion of these and other cautionary statements, please refer to our most recent filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended April 27, 2007.

CONTACT INFORMATION: Greg Browne, CFO Cyberonics, Inc. 100 Cyberonics Blvd. Houston, TX 77058 Main: (281) 228-7262/Fax: (281) 218-9332 ir@cyberonics.com

CONTACT: Greg Browne, CFO of Cyberonics, Inc., +1-281-228-7262,ir@cyberonics.com

Web site: http://www.cyberonics.com/