HOUSTON, Jan. 12 /PRNewswire-FirstCall/ -- Cyberonics, Inc. (Nasdaq: CYBX - News; "Company") noted today that its financial statements for the fiscal year ended April 28, 2006, included in the Company's Annual Report on Form 10-K ("Form 10-K") filed on January 5, 2007, contain a going concern modification to the audit opinion from its independent accounting firm, KPMG LLP. As previously disclosed and discussed in Note 3 to the consolidated financial statements in the Form 10-K, the going concern modification is based on the Company's recurring losses from operations, a notice of alleged acceleration of its $125 million senior subordinated convertible notes, and a potential default of its $40 million line of credit based on the alleged acceleration.

This announcement is being made in compliance with Nasdaq Marketplace Rule 4350(b)(1)(B), which requires separate disclosure of receipt of an audit opinion that contains a going concern qualification.

ABOUT VNS THERAPY AND CYBERONICS

Cyberonics, Inc. was founded in 1987 to design, develop and market medical devices for the long-term treatment of epilepsy, depression and other chronic treatment-resistant disorders using a unique therapy, vagus nerve stimulation (VNS). Stimulation is delivered by the VNS Therapy System(TM), an implantable generator similar to a cardiac pacemaker. Information on Cyberonics, Inc. and VNS Therapy(TM) is available at http://www.cyberonics.com and http://www.vnstherapy.com .

Additional Informational and Forward-Looking Statements

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 the Company and assumptions that the Company believes to be reasonable. The Company is 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 regarding financial performance and the alleged default under our indenture. The Company's actual performance and 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 the Company's product; the development and satisfactory completion of clinical trials and/or market test and/or regulatory approval of VNS Therapy for the treatment of Alzheimer's disease, anxiety, or other indications; 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 applications; 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 previously announced restatement of the Company's financial statements or other actions that might be taken or required as a result of the review by the Audit Committee of the Company's Board of Directors of the Company's stock option grants, procedures, and practices, including a default under credit facilities or debt instruments; any litigation relating thereto or to the Company's stock option grants, procedures, and practices (including the previously disclosed private litigation); uncertainties associated with compliance with the requirements of the NASDAQ Panel to avoid possible delisting of the Company's stock from NASDAQ for failure to file timely periodic reports with the SEC; uncertainties associated with any appeal concerning any possible delisting by NASDAQ; uncertainties associated with stockholder litigation and other risks detailed from time to time in the Company's filings with the SEC. For a detailed discussion of these and other cautionary statements, please refer to the Company's most recent filings with the SEC, including its Form 10-K for the fiscal year ended April 28, 2006.