##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended July 27, 2007 or
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the transition period from  to
 Commission File Number:            0-19806
 CYBERONICS, INC.
  Delaware
    
    76-0236465(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)100 Cyberonics Boulevard 
Houston, Texas
    
    77058(Address of principal executive offices)
    
    (Zip Code)
 (281) 228-7200
 þ o
  o þ o
 o þ
  Class 
Common Stock  $0.01 par value
    
    Outstanding At August 24, 2007
26,922,590




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##### Table of Contents



CYBERONICS, INC.
 INDEX
 PAGE NO.PART I. FINANCIAL INFORMATIONItem 1 Financial Statements:Consolidated Balance Sheets
July 27, 2007 (Unaudited) and April 27, 2007
    
    3Consolidated Statements of Operations (Unaudited)
Thirteen weeks ended July 27, 2007 and
July 28, 2006
    
    4Consolidated Statements of Cash Flows (Unaudited)
Thirteen weeks ended July 27, 2007 and
July 28, 2006
    
    5Notes to Consolidated Financial Statements (Unaudited)
    
    6Item 2 Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    16Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    22Item 4 Controls and Procedures
    
    23PART II. OTHER INFORMATIONItem 1A Risk Factors
    
    23Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    24Item 4 Submission of Matters to a Vote of Security Holders
    
    24Item 6 Exhibits
    
    24Form of Executive Restricted Stock AgreementForm of Director Restricted Stock Agreement - Three Year VestingForm of Director Restricted Stock Agreement - Four Year VestingForm of Employee Restricted Stock AgreementCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO and CFO Pursuant to Section 906
 2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 CYBERONICS, INC. AND SUBSIDIARY
 
 CONSOLIDATED BALANCE SHEETS
 July 27, 2007
    
    
    April 27, 2007(Unaudited)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    86,311,542
    
    
    $
    84,804,876Restricted cash
    
    
    1,000,000
    
    
    
    1,000,000Accounts receivable, net of allowances of $257,946 and $308,083, respectively
    
    
    16,908,770
    
    
    
    18,914,206Inventories
    
    
    15,927,585
    
    
    
    17,580,830Other current assets
    
    
    3,226,645
    
    
    
    3,127,345Total Current Assets
    
    
    123,374,542
    
    
    
    125,427,257Property and equipment, net of accumulated depreciation of $20,496,232 and
$19,606,513, respectively
    
    
    7,427,173
    
    
    
    8,028,037Other assets
    
    
    3,980,896
    
    
    
    4,189,589Total Assets
    
    $
    134,782,611
    
    
    $
    137,644,883LIABILITIES AND STOCKHOLDERS DEFICITCurrent Liabilities:Line of credit
    
    $
    7,500,000
    
    
    $
    7,500,000Accounts payable
    
    
    4,380,000
    
    
    
    5,951,931Accrued liabilities
    
    
    14,764,643
    
    
    
    14,844,266Convertible notes
    
    
    125,000,000
    
    
    
    125,000,000Other
    
    
    57,110
    
    
    
    115,731Total Current Liabilities
    
    
    151,701,753
    
    
    
    153,411,928Long-Term Liabilities:Other
    
    
    280,906
    
    
    
    295,184Total Long-Term Liabilities
    
    
    280,906
    
    
    
    295,184Total Liabilities
    
    
    151,982,659
    
    
    
    153,707,112Commitments and ContingenciesStockholders Deficit:Preferred Stock, $.01 par value per share; 2,500,000 shares authorized;
no shares issued and outstanding
    
    
    
    
    
    
    Common Stock, $.01 par value per share; 50,000,000 shares authorized;
27,265,619 shares issued and 26,958,007 shares outstanding at
July 27, 2007; and 26,701,054 shares issued and 26,400,054 shares
outstanding at April 27, 2007, respectively
    
    
    272,656
    
    
    
    267,011Additional paid-in capital
    
    
    272,970,415
    
    
    
    265,608,804Common stock warrants
    
    
    25,200,000
    
    
    
    25,200,000Hedges on convertible notes
    
    
    (38,200,000
    )
    
    
    (38,200,000
    )Treasury stock, 307,612 and 301,000 common shares at July 27, 2007 and
April 27, 2007, respectively, at cost
    
    
    (10,108,513
    )
    
    
    (9,993,200
    )Accumulated other comprehensive loss
    
    
    (264,471
    )
    
    
    (298,588
    )Accumulated deficit
    
    
    (267,070,135
    )
    
    
    (258,646,256
    )Total Stockholders Deficit
    
    
    (17,200,048
    )
    
    
    (16,062,229
    )Total Liabilities and Stockholders Deficit
    
    $
    134,782,611
    
    
    $
    137,644,883
  3




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CYBERONICS, INC. AND SUBSIDIARY
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 For the Thirteen Weeks EndedJuly 27, 2007
    
    
    July 28, 2006Net sales
    
    $
    29,075,469
    
    
    $
    33,731,520Cost of sales
    
    
    5,551,767
    
    
    
    3,801,328Gross Profit
    
    
    23,523,702
    
    
    
    29,930,192Operating Expenses:Selling, general and administrative
    
    
    25,125,093
    
    
    
    31,385,905Research and development
    
    
    6,307,723
    
    
    
    6,953,557Total Operating Expenses
    
    
    31,432,816
    
    
    
    38,339,462Loss From Operations
    
    
    (7,909,114
    )
    
    
    (8,409,270
    )Interest income
    
    
    1,117,231
    
    
    
    1,177,958Interest expense
    
    
    (1,397,207
    )
    
    
    (1,351,623
    )Other income, net
    
    
    42,566
    
    
    
    69,200Loss before income taxes
    
    
    (8,146,524
    )
    
    
    (8,513,735
    )Income tax expense
    
    
    16,939
    
    
    
    19,652Net Loss
    
    $
    (8,163,463
    )
    
    $
    (8,533,387
    )Basic loss per share
    
    $
    (0.31
    )
    
    $
    (0.34
    )Diluted loss per share
    
    $
    (0.31
    )
    
    $
    (0.34
    )Shares used in computing basic loss per share
    
    
    26,353,718
    
    
    
    25,314,450Shares used in computing diluted loss per
share
    
    
    26,353,718
    
    
    
    25,314,450
  4




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CYBERONICS, INC. AND SUBSIDIARY
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 For the Thirteen Weeks EndedJuly 27, 2007
    
    
    July 28, 2006Cash Flow From Operating Activities:Net loss
    
    $
    (8,163,463
    )
    
    $
    (8,533,387
    )Non-cash items included in net loss:Depreciation and amortization
    
    
    868,602
    
    
    
    928,736Loss on disposal of assets
    
    
    876
    
    
    
    10,270Unrealized gain in foreign currency transactions
    
    
    (95,721
    )
    
    
    (2,990
    )Stock-based compensation
    
    
    3,282,265
    
    
    
    4,811,384Amortization of financing costs
    
    
    195,334
    
    
    
    195,637Other non-cash items
    
    
    9,108
    
    
    
    9,108Changes in operating assets and liabilities:Accounts receivable, net
    
    
    2,059,984
    
    
    
    1,193,439Inventories
    
    
    1,646,114
    
    
    
    (1,118,035
    )Other current assets
    
    
    (144,980
    )
    
    
    1,870,626Other assets, net
    
    
    46,888
    
    
    
    64,036Accounts payable and accrued liabilities
    
    
    (2,036,939
    )
    
    
    (477,228
    )Other
    
    
    1,034
    
    
    
    (155,447
    )Net cash used in operating activities
    
    
    (2,330,898
    )
    
    
    (1,203,851
    )Cash Flow From Investing Activities:Purchases of property and equipment
    
    
    (281,816
    )
    
    
    (605,552
    )Net cash used in investing activities
    
    
    (281,816
    )
    
    
    (605,552
    )Cash Flow From Financing Activities:Increase in borrowing against line of credit
    
    
    
    
    
    
    2,500,000Payments on financing obligations
    
    
    (58,620
    )
    
    
    (65,802
    )Additional costs related to convertible notes
    
    
    
    
    
    
    (3,557
    )Proceeds from issuance of common stock
    
    
    4,389,022
    
    
    
    2,062,865Purchase of treasury stock
    
    
    (115,313
    )
    
    
    Net cash provided by financing activities
    
    
    4,215,089
    
    
    
    4,493,506Effect of exchange rate changes on cash and cash equivalents
    
    
    (95,709
    )
    
    
    (90,763
    )Net increase in cash and cash equivalents
    
    
    1,506,666
    
    
    
    2,593,340Cash and cash equivalents at beginning of period
    
    
    84,804,876
    
    
    
    92,355,071Cash and cash equivalents at end of period
    
    $
    86,311,542
    
    
    $
    94,948,411Supplementary Disclosures of Cash Flow Information:Cash paid for interest
    
    $
    254,832
    
    
    $
    173,035Cash paid for income taxes
    
    $
    14,472
    
    
    $
    20,969
  5




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CYBERONICS, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 July 27, 2007
 Note 1. Basis of Presentation
  Note 2. Going Concern
  6




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Note 3. Stock Incentive and Purchase Plan
 Stock Options Share-Based Payment
  Restricted Stock, Restricted Stock Units and Other Share-Based Awards.
  7




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Employee Stock Purchase Plan
 Note 4. Inventories
  July 27, 2007
    
    
    April 27, 2007(Unaudited)Raw materials and components
    
    $
    8,977,234
    
    
    $
    9,205,449Finished goods
    
    
    5,220,106
    
    
    
    6,702,196Work-in-process
    
    
    1,730,245
    
    
    
    1,673,185$
    15,927,585
    
    
    $
    17,580,830
 Note 5. Line of Credit
     8




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Note 6. Accrued Liabilities:
  July 27, 2007
    
    
    April 27, 2007(Unaudited)Payroll and other compensation
    
    $
    6,307,316
    
    
    $
    7,279,726Clinical costs
    
    
    2,999,764
    
    
    
    2,746,677Accrued interest
    
    
    1,608,508
    
    
    
    410,592Tax accruals
    
    
    892,183
    
    
    
    807,909Royalties
    
    
    853,175
    
    
    
    922,221Professional services
    
    
    587,738
    
    
    
    1,214,821Other
    
    
    1,515,959
    
    
    
    1,462,320$
    14,764,643
    
    
    $
    14,844,266
 Note 7. Warranties
   For the Thirteen Weeks EndedJuly 27, 2007
    
    
    July 28, 2006(Unaudited)
    
    
    (Unaudited)Balance at the beginning of the period
    
    $
    68,822
    
    
    $
    46,991Warranty expense recognized
    
    
    21,537
    
    
    
    28,205Warranty settled
    
    
    (650
    )
    
    
    (2,025
    )Balance at the end of the period
    
    $
    89,709
    
    
    $
    73,171
 Note 8. Convertible Notes
  9




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Convertible Notes Indenture Default Notice
   Registration Rights Agreement
 Accounting for Registration
Payment Arrangements,
 Note 9. Convertible Note Hedge and Warrants
  10




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Note 10. Comprehensive Loss
 Reporting Comprehensive Income,
 Note 11. Income Taxes
   Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement No. 109,
    Note 12. Loss Per Share
 Earnings Per Share,
 11




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For the Thirteen Weeks EndedJuly 27, 2007
    
    
    July 28, 2006(Unaudited)
    
    
    (Unaudited)Numerator:Net loss
    
    $
    (8,163,463
    )
    
    $
    (8,533,387
    )Denominator:Basic weighted average shares outstanding
    
    
    26,353,718
    
    
    
    25,314,450Effect of dilutive securities
    
    
    
    
    
    
    Diluted weighted average
shares outstanding
    
    
    26,353,718
    
    
    
    25,314,450Basic loss per share
    
    $
    (0.31
    )
    
    $
    (0.34
    )Diluted loss per share
    
    $
    (0.31
    )
    
    $
    (0.34
    )
   Note 13. Litigation
  Indenture Default Litigation
   12




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Stockholder Derivative Litigation
 Rudolph v. Cummins, et al
 Smith v. Cummins, Adel v. Cummins, McKeehan
v. Cummins, Nussbaum v. Cummins, Wunschel v. Cummins, In re Cyberonics, Inc.
 Rudolph Rudolph
 Securities Class Action Lawsuit
 Richard Darquea v.
Cyberonics Inc., et al. Stanley Sved v. Cyberonics, Inc., et al., In re Cyberonics, Inc. Securities Litigation,
  13




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Senate Finance Committee Investigation
   14




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Note 14. Use of Accounting Estimates
  Note 15. New Accounting Pronouncements
 Accounting for Contingencies  Accounting for Derivative Instruments and Hedging Activities, Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and Equity, Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115 .
 Accounting for Income Taxes.
 15




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Note 16. Subsequent Events
    
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
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. Actual results could differ materially from those projected in the forward-looking
statements as a result of a number of important factors.
 For a discussion of important factors that could affect our results, please refer to the
financial statement line item discussions set forth in this section and to the section entitled
Factors Affecting Future Operating Results included in our Annual Report on Form 10-K for the
fiscal year ended April 27, 2007 (our 2007 Form 10-K ). Readers are encouraged to refer to our
2007 Form 10-K for a further discussion of our business and its risks and opportunities.
 Business Overview
   16




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Foreign Exchange.
 Accounts Receivable.
 Inventories.
 Property and Equipment.
 Revenue Recognition.
 17




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Research and Development.
 Stock Options. Share-Based Payment
 Income Taxes.
 Results of Operations
 Net Sales
       18




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Gross Profit
   Operating Expenses
 Selling, General and Administrative (SG&A) Expenses.
 Research and Development (R&D) Expenses.
 Interest Income and Expense
  Other Income, Net
  Income Taxes
  19




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Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement No. 109
 Liquidity and Capital Resources
 Overview
  Cash Flows
  Thirteen Weeks EndedJuly 27, 2007
    
    July 28, 2006(Unaudited)
    
    (Unaudited)Operating activities
    
    $
    (2,330,898
    )
    
    $
    (1,203,851
    )Investing activities
    
    
    (281,816
    )
    
    
    (605,552
    )Financing activities
    
    
    4,215,089
    
    
    
    4,493,506
 Operating Activities
  Investing Activities
  Financing Activities
  20




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Debt Instruments and Related Covenants
 Line of Credit
     Convertible Notes
   21




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Contractual Obligations
   TotalOperating
    
    
    
    
    
    
    ContractualLine of Credit (1)
    
    
    Notes Issuance (2)
    
    
    Leases (3)
    
    
    Other (4)
    
    
    ObligationsContractual obligations:Less Than One Year
    
    $
    10,824,222
    
    
    $
    128,854,167
    
    
    $
    3,276,587
    
    
    $
    464,652
    
    
    $
    143,419,6281-3 Years
    
    
    412,111
    
    
    
    
    
    
    
    4,579,115
    
    
    
    
    
    
    
    4,991,2263-5 Years
    
    
    
    
    
    
    
    
    
    
    23,798
    
    
    
    
    
    
    
    23,798Over 5 Years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Contractual Obligations
    
    $
    11,236,333
    
    
    $
    128,854,167
    
    
    $
    7,879,500
    
    
    $
    464,652
    
    
    $
    148,434,652
 
 (1)
    
    Consists of $10 million minimum loan balance requirement and related interest. See Note 5.
Line of Credit in the Notes to Consolidated Financial Statements for further discussion.(2)
    
    Consists of principal and interest obligations related to the Notes issuance presented as if
the Notes were to become due and payable within twelve months from the issuance of this
quarterly report. Although the Notes mature in 2012, we have classified them as current due
to our receipt of the Notice of Default from the Trustee.(3)
    
    Consists of operating lease obligations related to facilities and office equipment.(4)
    
    Reflects amounts we expect to expend in connection with sales, marketing and training events,
debt applicable to acquisition of computer hardware and software and employee relocation
expenses.  Impact of New Accounting Pronouncements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   22




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ITEM 4. CONTROLS AND PROCEDURES
   Changes in Internal Control over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
  Risk Factors
 23




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Changes in key officers could adversely affect our operations.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  MaximumNumber (orApproximateTotal number of
    
    
    Dollar Value) ofShares (or Units)
    
    
    Shares (or Units)Purchased as Part
    
    
    that may yet beTotal Number of
    
    
    Average Price
    
    
    of Publicly
    
    
    Purchased underShares (or Units)
    
    
    Paid per Share
    
    
    Announced Plans or
    
    
    the Plans orPeriod
    
    Purchased (1)
    
    
    (or Unit) (2)
    
    
    Programs
    
    
    Programs (3)April 28 - June 1, 2007
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    3,000,000June 2 - June 29, 2007
    
    
    6,612
    
    
    $
    17.44
    
    
    
    
    
    
    
    3,000,000June 30 - July 27, 2007
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    3,000,000Total
    
    
    6,612
    
    
    $
    17.44
    
    
    
    
    
    
    
    3,000,000
 
 (1)
    
    The shares were purchased from our CEO in connection with the grant of restricted shares and
were made in connection with satisfying tax withholding obligations related to those shares.(2)
    
    The price paid for the shares was the closing price of our stock on the day before issuance per
our equity incentive plans.(3)
    
    Our Board of Directors has approved a program to purchase up to 3,000,000 common shares on the
open market. As of July 27, 2007, no shares had been purchased under the plan. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 6. EXHIBITS
  Exhibit
    
    
    
    
    
    SEC File or
    
    ExhibitNumber
    
    Document Description
    
    Report or Registration Statement
    
    Registration Number
    
    Reference10.1
    
    Employment
Agreement dated
April 26, 2007 by
and between
Cyberonics, Inc.,
and Daniel Jeffrey
Moore
    
    Cyberonics, Inc.s Current
Report on Form 8-K filed on May
1, 2007
    
    000-19806
    
    
    10.110.2
    
    First Amendment to
Employment
Agreement dated
April 26, 2007 by
and between
Cyberonics, Inc.
and Daniel Jeffrey
Moore
    
    Cyberonics, Inc.s Current
Report on Form 8-K filed on
July 13, 2007
    
    000-19806
    
    
    10.1
 24




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##### Table of Contents



Exhibit
    
    
    
    
    
    SEC File or
    
    ExhibitNumber
    
    Document Description
    
    Report or Registration Statement
    
    Registration Number
    
    Reference10.3
    
    Executive
Restricted Stock
Agreement dated
June 18, 2007 by
and between
Cyberonics, Inc.
and Daniel Jeffrey
Moore
    
    Cyberonics, Inc.s Annual
Report on Form 10-K for the
fiscal period ended April 27,
2007
    
    000-19806
    
    
    10.6610.4
    
    Release Agreement
effective May 4,
2007 between
Cyberonics, Inc.
and John A.
Riccardi
    
    Cyberonics, Inc.s Current
Report on Form 8-K filed on May
10, 2007
    
    000-19806
    
    
    10.110.5*
    
    Form of Executive
Restricted Stock
Agreement under the
Cyberonics, Inc.
Amended and
Restated 1997 Stock
Plan between
Cyberonics, Inc.
and the executive
officers listed on
the schedule
attached thereto10.6*
    
    Form of Director
Restricted Stock
Agreement under the
Cyberonics, Inc.
Amended and
Restated 1997 Stock
Plan between
Cyberonics, Inc.
and the directors
listed on the
schedule attached
thereto (three-year
vesting)10.7*
    
    Form of Director
Restricted Stock
Agreement under the
Cyberonics, Inc.
Amended and
Restated 1997 Stock
Plan between
Cyberonics, Inc.
and the directors
listed on the
schedule attached
thereto (four-year
vesting)10.8*
    
    Form of Employee
Restricted Stock
Agreement under the
Cyberonics, Inc.
Amended and
Restated 1997 Stock
Plan10.9
    
    Employment
Agreement dated
July 9, 2007 by and
between Cyberonics,
Inc., and Gregory
H. Browne
    
    Cyberonics, Inc.s Current
Report on Form 8-K filed on
July 13, 2007
    
    000-19806
    
    
    10.110.10
    
    Severance Agreement
dated July 9, 2007
by and between
Cyberonics, Inc.,
and Gregory H.
Browne
    
    Cyberonics, Inc.s Current
Report on Form 8-K filed on
July 13, 2007
    
    000-19806
    
    
    10.210.11
    
    Consent and
Amendment Agreement
dated July 27, 2006
between Cyberonics,
Inc., Merrill Lynch
Capital and the
Lenders party to
the Credit
Agreement (as
defined therein)
    
    Cyberonics, Inc.s Annual
Report on Form 10-K for the
fiscal period ended April 27,
2007
    
    000-19806
    
    
    10.810.12
    
    Consent and
Amendment Agreement
dated October 31,
2006 between
Cyberonics, Inc.,
Merrill Lynch
Capital and the
Lenders party to
the Credit
Agreement (as
defined therein)
    
    Cyberonics, Inc.s Annual
Report on Form 10-K for the
fiscal period ended April 27,
2007
    
    000-19806
    
    
    10.710.13
    
    Consent and
Amendment Agreement
dated December 29,
2006 between
Cyberonics, Inc.,
Merrill Lynch
Capital and the
Lenders party to
the Credit
Agreement (as
defined therein)
    
    Cyberonics, Inc.s Annual
Report on Form 10-K for the
fiscal period ended April 27,
2007
    
    000-19806
    
    
    10.58
 25




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##### Table of Contents



Exhibit
    
    
    
    
    
    SEC File or
    
    ExhibitNumber
    
    Document Description
    
    Report or Registration Statement
    
    Registration Number
    
    Reference10.14
    
    Registration Rights
Agreement dated
September 27, 2005
between Cyberonics,
Inc. and Merrill
Lynch, Pierce,
Fenner & Smith
Incorporated, as
the Initial
Purchaser
    
    Cyberonics, Inc.s Current
Report on Form 8-K filed on
October 3, 2005
    
    000-19806
    
    
    10.231.1*
    
    Certification of
the Chief Executive
Officer of
Cyberonics, Inc.
pursuant to Section
302 of the
Sarbanes-Oxley Act
of 200231.2*
    
    Certification of
the Chief Financial
Officer of
Cyberonics, Inc.
pursuant to Section
302 of the
Sarbanes-Oxley Act
of 200232.1*
    
    Certification of
the Chief Executive
Officer and Chief
Financial Officer
of Cyberonics, Inc.
pursuant to Section
906 of the
Sarbanes-Oxley Act
of 2002
 26




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##### Table of Contents



SIGNATURE
  CYBERONICS, INC.By:
    /s/ GREGORY H. BROWNEGregory H. BrowneVice President, Finance
and Chief Financial Officer(Duly Authorized Officer and Principal Financial Officer)  27




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##### Table of Contents



INDEX TO EXHIBITS
  Exhibit
    
    
    
    
    
    SEC File or
    
    ExhibitNumber
    
    Document Description
    
    Report or Registration Statement
    
    Registration Number
    
    Reference10.1
    
    Employment
Agreement dated
April 26, 2007 by
and between
Cyberonics, Inc.,
and Daniel Jeffrey
Moore
    
    Cyberonics, Inc.s Current
Report on Form 8-K filed on May
1, 2007
    
    000-19806
    
    
    10.110.2
    
    First Amendment to
Employment
Agreement dated
April 26, 2007 by
and between
Cyberonics, Inc.
and Daniel Jeffrey
Moore
    
    Cyberonics, Inc.s Current
Report on Form 8-K filed on
July 13, 2007
    
    000-19806
    
    
    10.110.3
    
    Executive
Restricted Stock
Agreement dated
June 18, 2007 by
and between
Cyberonics, Inc.
and Daniel Jeffrey
Moore
    
    Cyberonics, Inc.s Annual
Report on Form 10-K for the
fiscal period ended April 27,
2007
    
    000-19806
    
    
    10.6610.4
    
    Release Agreement
effective May 4,
2007 between
Cyberonics, Inc.
and John A.
Riccardi
    
    Cyberonics, Inc.s Current
Report on Form 8-K filed on May
10, 2007
    
    000-19806
    
    
    10.110.5*
    
    Form of Executive
Restricted Stock
Agreement under the
Cyberonics, Inc.
Amended and
Restated 1997 Stock
Plan between
Cyberonics, Inc.
and the executive
officers listed on
the schedule
attached thereto10.6*
    
    Form of Director
Restricted Stock
Agreement under the
Cyberonics, Inc.
Amended and
Restated 1997 Stock
Plan between
Cyberonics, Inc.
and the directors
listed on the
schedule attached
thereto (three-year
vesting)10.7*
    
    Form of Director
Restricted Stock
Agreement under the
Cyberonics, Inc.
Amended and
Restated 1997 Stock
Plan between
Cyberonics, Inc.
and the directors
listed on the
schedule attached
thereto (four-year
vesting)10.8*
    
    Form of Employee
Restricted Stock
Agreement under the
Cyberonics, Inc.
Amended and
Restated 1997 Stock
Plan10.9
    
    Employment
Agreement dated
July 9, 2007 by and
between Cyberonics,
Inc., and Gregory
H. Browne
    
    Cyberonics, Inc.s Current
Report on Form 8-K filed on
July 13, 2007
    
    000-19806
    
    
    10.110.10
    
    Severance Agreement
dated July 9, 2007
by and between
Cyberonics, Inc.,
and Gregory H.
Browne
    
    Cyberonics, Inc.s Current
Report on Form 8-K filed on
July 13, 2007
    
    000-19806
    
    
    10.210.11
    
    Consent and
Amendment Agreement
dated July 27, 2006
between Cyberonics,
Inc., Merrill Lynch
Capital and the
Lenders party to
the Credit
Agreement (as
defined therein)
    
    Cyberonics, Inc.s Annual
Report on Form 10-K for the
fiscal period ended April 27,
2007
    
    000-19806
    
    
    10.8
 28




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##### Table of Contents



Exhibit
    
    
    
    
    
    SEC File or
    
    ExhibitNumber
    
    Document Description
    
    Report or Registration Statement
    
    Registration Number
    
    Reference10.12
    
    Consent and
Amendment Agreement
dated October 31,
2006 between
Cyberonics, Inc.,
Merrill Lynch
Capital and the
Lenders party to
the Credit
Agreement (as
defined therein)
    
    Cyberonics, Inc.s Annual
Report on Form 10-K for the
fiscal period ended April 27,
2007
    
    000-19806
    
    
    10.710.13
    
    Consent and
Amendment Agreement
dated December 29,
2006 between
Cyberonics, Inc.,
Merrill Lynch
Capital and the
Lenders party to
the Credit
Agreement (as
defined therein)
    
    Cyberonics, Inc.s Annual
Report on Form 10-K for the
fiscal period ended April 27,
2007
    
    000-19806
    
    
    10.5810.14
    
    Registration Rights
Agreement dated
September 27, 2005
between Cyberonics,
Inc. and Merrill
Lynch, Pierce,
Fenner & Smith
Incorporated, as
the Initial
Purchaser
    
    Cyberonics, Inc.s Current
Report on Form 8-K filed on
October 3, 2005
    
    000-19806
    
    
    10.231.1*
    
    Certification of
the Chief Executive
Officer of
Cyberonics, Inc.
pursuant to Section
302 of the
Sarbanes-Oxley Act
of 200231.2*
    
    Certification of
the Chief Financial
Officer of
Cyberonics, Inc.
pursuant to Section
302 of the
Sarbanes-Oxley Act
of 200232.1*
    
    Certification of
the Chief Executive
Officer and Chief
Financial Officer
of Cyberonics, Inc.
pursuant to Section
906 of the
Sarbanes-Oxley Act
of 2002
 29