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DynaVox Reports First Quarter Fiscal Year 2013 Results



DynaVox Reports First Quarter Fiscal Year 2013 Results

PITTSBURGH, Nov. 13, 2012 (GLOBE NEWSWIRE) -- DynaVox (Nasdaq:DVOX), the
world's leading provider of communication and education products for
individuals with significant speech, language and learning disabilities, today
announced results for the first quarter ended September 28, 2012.

Net sales were $18.6 million, a decrease of 29%, compared to net sales of
$26.2 million for the first quarter ended September 30, 2011. Sales for the
Company's speech generating devices decreased 24% to $15.3 million and sales
from its special education software declined 45% to $3.3 million from the
prior year.

Gross profit for the first quarter of fiscal year 2013 decreased 29% to $13.4
million, compared to gross profit of $19.0 million in the first quarter of the
prior year. The Company's gross margin for the first quarter decreased 40
basis points to 72.2%, compared to a gross margin of 72.6% in the first
quarter of the prior year. The decrease in margin is the result of the lower
volume of sales and product mix, slightly offset by lower royalty costs.

Operating expenses in the first quarter of fiscal year 2013 decreased 19% to
$13.2 million, compared to $16.2 million in the prior year. The decrease was a
result of lower variable sales expenses and reduced headcount. Operating
income for the first quarter was $0.3 million, compared to $2.8 million in the
same period a year ago.

GAAP net loss for the first quarter of fiscal year 2013 was $0.3 million, or a
loss of $0.02 per share, compared to GAAP net income of $0.4 million, or $0.04
per share, for the same quarter a year ago.

Adjusted pro forma net income, as defined below, was $0.3 million, or $0.01
per share, compared to adjusted pro forma net income of $1.4 million, or $0.05
per share, in the prior year.

Adjusted EBITDA, as defined below, decreased 63% to $1.7 million, compared to
$4.5 million in the previous year.

"As expected, during the first quarter the difficult economic conditions
prevailed, making it a challenging start to the new fiscal year. To mitigate
these impacts, we continued to focus our efforts in those areas of the market
where reimbursement is available to meet the needs of our customers," said
Michelle Heying Wilver, DynaVox's Chief Executive Officer.

"Looking forward to the remainder of the fiscal year, we do not anticipate any
significant improvements in our operating environment. As we continue to
navigate through these challenging times, we remain focused on maximizing our
opportunity in markets where funding is available, developing important new
products, controlling costs and managing cash flow. We believe we have
sufficient resources and a dedicated team to maximize the current and future
market opportunity, to drive operating efficiencies and to support innovation
in both of our businesses."

Conference Call

The conference call is scheduled to begin at 4:45 p.m. EST on November 13,
2012. The call will be broadcast live over the Internet, hosted at the
Investor Relations section of DynaVox's website at
http://ir.dynavoxtech.com/index.cfm, and will be archived online through
November 27, 2012. In addition, listeners may dial (877) 312-5529 in North
America, and international listeners may dial (253) 237-1147. Participants
from the Company will be Michelle Heying Wilver, Chief Executive Officer, and
Ken Misch, Chief Financial Officer.

A telephonic playback will be available from 7:45 p.m. EST, November 13, 2012
through November 27, 2012. To hear the playback participants may dial (855)
859-2056 and international listeners may dial (404) 537-3406. The conference
ID number is 45230541.

Explanatory Note and Non-GAAP Financial Measures

DynaVox Inc. completed an initial public offering (IPO) on April 27, 2010. As
a result of the IPO and certain other recapitalization transactions, DynaVox
Inc. became the sole managing member of and has a controlling interest in
DynaVox Systems Holdings LLC and its subsidiaries ("DynaVox Holdings").

This release presents adjusted pro forma net income (loss), which as defined
by the Company represents net income (loss) before non-controlling interest
and impairment loss and after pro forma corporate income tax expense applied
at an assumed 38.0% rate, which includes a provision for U.S. federal income
taxes, assumes the highest statutory rates apportioned to each state, local
and/or foreign jurisdiction and assumes the full exchange of Holdings Units of
DynaVox Holdings into Class A Common Stock. Adjusted pro forma net income
(loss) per share consists of adjusted pro forma net income (loss) divided by
the weighted-average number of the Company's Class A Common Stock outstanding,
assuming full exchange of Holdings Units of DynaVox Holdings into Class A
Common Stock of DynaVox Inc. and giving effect to the dilutive impact, if any,
of stock options and restricted stock awards. The Company believes that
adjusted pro forma net income (loss), when presented together with the
comparable measure presented in accordance with GAAP, is useful to investors
to assist in their understanding of the effect of the Company's organizational
structure on its reported results and also in comparing the Company's results
across different periods.

This release also presents Adjusted EBITDA, as defined by the Company as the
income (loss) before income taxes, interest income, interest expense,
impairment loss, depreciation, amortization and other adjustments noted in the
table below.

Adjusted EBITDA, adjusted pro forma net income (loss) and adjusted pro forma
net income (loss) per share, however, do not represent and should not be
considered as an alternative to net income (loss), net income (loss) per share
or cash flow from operating activities, as determined in accordance with GAAP,
and our calculations thereof may not be comparable to similarly entitled
measures reported by other companies.

Forward-Looking Statements

This press release contains forward-looking statements which reflect our
current views with respect to, among other things, our operations and
financial performance. You can identify these forward-looking statements by
the use of words such as "outlook," "believes," "expects," "projects",
"potential," "continues," "may," "will," "should," "seeks," "approximately,"
"predicts," "intends," "plans," "estimates," "anticipates" or the negative
version of these words or other comparable words. Such forward-looking
statements are subject to various risks and uncertainties. Accordingly, there
are or will be important factors that could cause actual outcomes or results
to differ materially from those indicated in these statements. We believe
these factors include but are not limited to those described under "Risk
Factors" in our Annual Report on Form 10-K, as such factors may be updated
from time to time in our periodic filings with the Securities and Exchange
Commission (SEC), which are accessible on the SEC's website at www.sec.gov.
These factors should not be construed as exhaustive and should be read in
conjunction with the other cautionary statements that are included in this
release and in the Annual Report on Form 10-K and other filings. We undertake
no obligation to publicly update or review any forward-looking statement,
whether as a result of new information, future developments or otherwise.

About DynaVox Inc.

DynaVox Inc. (Nasdaq:DVOX) is a publicly traded holding Company with its
headquarters in Pittsburgh, Pennsylvania, whose primary operating entities are
DynaVox Systems LLC and Mayer-Johnson LLC. DynaVox is the leading provider of
speech generating devices and symbol-adapted special education software used
to assist individuals in overcoming their speech, language and learning
challenges. These solutions are designed to help individuals who have complex
communication and learning needs participate in the home, classroom and
community. Our mission is to enable our customers to realize their full
communication and education potential by developing industry-leading devices,
software and content and by providing the services to support them. We assist
individuals, families, and professionals with an extensive field support
organization, as well as centralized technical and reimbursement support. For
more information, visit www.dynavoxtech.com.

 
 
DYNAVOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
                                                           
                                                           
                                     Thirteen Weeks Ended Thirteen Weeks Ended
                                     September 28, 2012   September 30, 2011
                                                           
NET SALES                             $ 18,632             $ 26,182
COST OF SALES                         5,188                7,186
                                                           
GROSS PROFIT                          13,444               18,996
                                                           
OPERATING EXPENSES:                                        
Selling and marketing                 7,122                9,563
Research and development              1,734                2,191
General and administrative            4,135                4,376
Amortization of certain intangibles   192                  110
                                                           
Total operating expenses              13,183               16,240
                                                           
INCOME FROM OPERATIONS                261                  2,756
                                                           
OTHER INCOME (EXPENSE):                                    
Interest income                       7                    6
Interest expense                      (517)                (569)
Other income (expense) — net          767                  (9)
                                                           
Total other income (expense) — net    257                  (572)
                                                           
INCOME BEFORE INCOME TAXES            518                  2,184
INCOME TAX EXPENSE                    1,027                359
                                                           
NET INCOME (LOSS) ATTRIBUTABLE TO
THE CONTROLLING AND NON-CONTROLLING   $ (509)              $ 1,825
INTERESTS
                                                           
Less: net (income) loss attributable  239                  (1,385)
to the non-controlling interests
                                                           
NET INCOME (LOSS) ATTRIBUTABLE TO     $ (270)              $ 440
DYNAVOX INC.
                                                           
Weighted-average shares of Class A                         
common stock outstanding:
Basic                                 11,080,884           10,069,306
                                                           
Diluted                               11,080,884           10,069,306
                                                           
Net income (loss) available to Class                       
A common stock per share:
Basic                                 $ (0.02)             $ 0.04
                                                           
Diluted                               $ (0.02)             $ 0.04

 
 
 
DYNAVOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
                                                          
                                                          
                                           September 28, June 29,
                                           2012          2012
ASSETS                                                    
CURRENT ASSETS:                                           
Cash and cash equivalents                   $ 12,868      $ 17,944
Trade receivables - net                     12,943        14,864
Other receivables                           236           253
Inventories - net                           4,842         5,401
Prepaid expenses and other current assets   1,296         1,055
Deferred taxes                              689           685
                                                          
Total current assets                        32,874        40,202
                                                          
PROPERTY AND EQUIPMENT - Net                2,328         2,890
GOODWILL AND INTANGIBLES - Net              22,642        22,941
DEFERRED TAXES                              47,849        48,709
OTHER ASSETS                                1,330         1,499
                                                          
TOTAL ASSETS                                $ 107,023     $ 116,241
                                                          
LIABILITIES AND STOCKHOLDERS' EQUITY                      
                                                          
CURRENT LIABILITIES:                                      
Trade accounts payable                      3,620         4,900
Other liabilities                           9,318         9,688
                                                          
Total current liabilities                   12,938        14,588
                                                          
LONG-TERM DEBT                              25,200        31,200
OTHER LONG-TERM LIABILITIES                 45,631        46,388
                                                          
Total liabilities                           83,769        92,176
                                                          
STOCKHOLDERS' EQUITY                        23,254        24,065
                                                          
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $ 107,023     $ 116,241

 
 
 
DYNAVOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
                                                                  
                                                                  
                                                   Thirteen Weeks Ended
                                                   September 28, September 30,
                                                   2012          2011
                                                                  
CASH FLOWS FROM OPERATING ACTIVITIES:                             
Net cash provided by operating activities           $ 1,611       $ 3,487
                                                                  
CASH FLOWS FROM INVESTING ACTIVITIES:                             
Cash used in investing activities                   (19)          (182)
                                                                  
CASH FLOWS FROM FINANCING ACTIVITIES:                             
Cash used in financing activities                   (6,706)       (935)
                                                                  
EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH    38            (91)
AND CASH EQUIVALENTS
                                                                  
NET INCREASE (DECREASE) IN CASH AND CASH            (5,076)       2,279
EQUIVALENTS
CASH AND CASH EQUIVALENTS:                                        
Beginning of period                                 17,944        12,171
End of period                                       $ 12,868      $ 14,450

 
 
 
DYNAVOX INC. AND SUBSIDIARIES
ADJUSTED EBITDA
(Unaudited)
(Dollars in thousands)
                                                          
                                                          
                                                          
                                   Thirteen Weeks Ended
                                   September 28, 2012    September 30, 2011
Other Financial Data                                      
                                                          
Adjusted EBITDA (1)                 $ 1,669               $ 4,497
                                                          
(1) Adjusted EBITDA represents income before income taxes, interest income,
interest expense, impairment loss, depreciation and amortization and the other
adjustments noted in the table below.
 
                                                          
                                   Adjusted EBITDA Reconciliation
                                                          
                                                          
                                                          
                                   Thirteen Weeks Ended
                                   September 28, 2012    September 30, 2011
                                                          
Income before income taxes          $ 518                 $ 2,184
Depreciation                        594                   814
Amortization of certain             299                   227
intangibles
Interest income                     (7)                   (6)
Interest expense                    517                   569
Other (income) expense, net (a)     (805)                 2
Equity-based compensation           310                   542
Employee severance and other costs  171                   88
Other adjustments(b)                72                    77
Adjusted EBITDA                     $ 1,669               $ 4,497
                                                          
(a) Includes other income recognized as a result of a decrease in an
obligation related to a state tax rate. Excludes realized foreign currency
gains and losses.
(b) Includes certain amounts related to other taxes.

 
 
 
DYNAVOX INC. AND SUBSIDIARIES
ADJUSTED PRO FORMA NET INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)
                                                          
                                                          
                                   Thirteen              Thirteen
                                   Weeks Ended           Weeks Ended
                                   September 28, 2012    September 30, 2011
                                                          
Net income (loss) attributable to   $ (270)               $ 440
DynaVox Inc.
                                                          
Adjustments:                                              
Net income (loss) attributable to   (239)                 1,385
the non-controlling interest
Income tax (expense) benefit        830                   (471)
Total adjustments                   591                   914
                                                          
Adjusted pro forma net income       $ 321                 $ 1,354
                                                          
Pro forma weighted-average shares   29,860,167            29,804,396
outstanding - diluted
                                                          
Adjusted pro forma net income per   $ 0.01                $ 0.05
share - diluted
                                                          
Adjusted pro forma net income, as defined by DynaVox, represents net income
(loss) before non-controlling interests and after pro forma corporate income
tax (expense) benefit applied at an assumed 38.0% rate, which includes a
provision for U.S. federal income taxes, assumes the highest statutory rates
apportioned to each state, local and/or foreign jurisdiction and assumes the
full exchange of Holdings Units into Class A Common Stock as described below.
Adjusted pro forma net income per share consists of adjusted pro forma net
income, divided by the weighted-average number of the Company's Class A Common
Stock outstanding, assuming full exchange of Holdings Units of DynaVox
Holdings into Class A Common Stock of DynaVox Inc. and giving effect to the
dilutive impact, if any, of stock options and restricted stock awards.
                                                          
The table above provides a reconciliation of net income (loss) to adjusted pro
forma net income and adjusted pro forma net income per share.

CONTACT: News Media Contact:
         DynaVox
         Dave Colson
         Communications Director
         (412) 995-4090
        
         Investor Contact:
         ICR, LLC
         Sherry Bertner
         Managing Director
         (646) 277-1247
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