DynaVox Reports Second Quarter Fiscal Year 2013 Results

DynaVox Reports Second Quarter Fiscal Year 2013 Results

PITTSBURGH, Feb. 11, 2013 (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 second quarter ended December 28, 2012.

Net sales were $17.6 million, a decrease of 24%, compared to net sales of
$23.2 million for the second quarter ended December 30, 2011. Sales for the
Company's speech generating devices decreased 26% to $14.9 million and sales
from its special education software declined 16% to $2.7 million from the
prior year.

Gross profit for the second quarter of fiscal year 2013 decreased 23% to $12.8
million, compared to gross profit of $16.6 million in the second quarter of
the prior year. The Company's gross margin for the second quarter increased
100 basis points to 72.7%, compared to a gross margin of 71.7% in the second
quarter of the prior year. The increase in margin is mainly the result of
decreased costs offset to some degree by lower sales volume.

Operating expenses in the second quarter of fiscal year 2013 decreased 19% to
$11.4 million, compared to $14.1 million in the prior year. Operating income
for the second quarter was $1.4 million, compared to $2.5 million in the same
period a year ago.

GAAP net income for the second quarter of fiscal year 2013 was $0.1 million,
or $0.01 per share, compared to GAAP net income of $0.3 million, or $0.03 per
share, for the same quarter a year ago.

Adjusted pro forma net income, as defined below, was $0.4 million, or $0.01
per share, compared to adjusted pro forma net income of $1.2 million, or $0.04
per share, in the prior year.

Adjusted EBITDA, as defined below, decreased 34% to $2.8 million, compared to
$4.2 million in the previous year.

"The continuation of difficult economic conditions, together with technology
advances such as tablet computers, adversely impacted our net sales during the
second quarter. To overcome these challenges, we are continuing our research
and development on new product innovations aimed at providing greater value to
our customers," said Michelle Wilver, DynaVox's Chief Executive Officer.

"We expected a tough environment in fiscal 2013 and as such our action plans
are well underway to properly address, both our speech generating device and
special education software markets, for the long term."

Results for the Twenty-Six Weeks Ended December 28, 2012

For the first twenty-six weeks of fiscal 2013, net sales decreased 27% to
$36.2 million from $49.4 million in the same period last year.

Gross profit for the first twenty-six weeks of fiscal 2013 decreased 27% to
$26.2 million. The Company's gross profit margin expanded 30 basis points to
72.4% from 72.1% in the same period last year.

Operating income for the first twenty-six weeks of fiscal year 2013 decreased
69% to $1.7 million, compared to operating income of $5.3 million in the prior
year.

GAAP net loss for the first twenty-six weeks of fiscal year 2013 was $0.1
million, or $0.01 per share, compared to GAAP net income of $0.8 million, or
$0.08 per share, a year ago. Adjusted pro forma net income, as defined below,
was $0.8 million for the first twenty-six weeks, compared to $2.5 million in
the prior year and adjusted pro forma net income per share for the first
twenty-six weeks was $0.02 per share, compared to $0.09 per share in the prior
year.

For the first twenty-six weeks of fiscal 2013, Adjusted EBITDA was $4.4
million, a decrease of 49%, from $8.7 million in the same period last year.

Conference Call

The conference call is scheduled to begin at 4:30 p.m. EST on February 11,
2013. 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
February 25, 2013. 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 Wilver, Chief Executive Officer, and Ken
Misch, Chief Financial Officer.

A telephonic playback will be available from 7:45 p.m. EST, February 11, 2013
through February 14, 2013. To hear the playback participants may dial (855)
859-2056 and international listeners may dial (404) 537-3406. The conference
ID number is 90194263.

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      Twenty-Six Weeks Ended
                           December 28, December 30, December 28, December 30,
                           2012         2011         2012         2011
                                                                   
NET SALES                   $ 17,554     $ 23,225     $ 36,186     $ 49,407
COST OF SALES               4,786        6,580        9,974        13,766
                                                                   
GROSS PROFIT                12,768       16,645       26,212       35,641
                                                                   
OPERATING EXPENSES:                                                
Selling and marketing       6,043        8,041        13,165       17,604
Research and development    1,730        1,520        3,464        3,711
General and administrative  3,408        4,458        7,543        8,834
Amortization of certain     191          110          383          220
intangibles
                                                                   
Total operating expenses    11,372       14,129       24,555       30,369
                                                                   
INCOME FROM OPERATIONS      1,396        2,516        1,657        5,272
                                                                   
OTHER INCOME (EXPENSE):                                            
Interest income             4            9            11           15
Interest expense            (449)        (573)        (966)        (1,142)
Other income (expense) —    (250)        (31)         517          (40)
net
                                                                   
Total other expense — net   (695)        (595)        (438)        (1,167)
                                                                   
INCOME BEFORE INCOME TAXES  701          1,921        1,219        4,105
INCOME TAX EXPENSE          (22)         275          1,005        634
(BENEFIT)
                                                                   
NET INCOME ATTRIBUTABLE TO
THE CONTROLLING AND         $ 723        $ 1,646      $ 214        $ 3,471
NON-CONTROLLING INTERESTS
                                                                   
Less: net income
attributable to the         (575)        (1,307)      (336)        (2,692)
non-controlling interests
                                                                   
NET INCOME (LOSS)
ATTRIBUTABLE TO DYNAVOX     $ 148        $ 339        $ (122)      $ 779
INC.
                                                                   
Weighted-average shares of
Class A common stock                                               
outstanding:
Basic                       11,347,792   10,400,682   11,214,338   10,234,088
                                                                   
Diluted                     11,347,792   10,400,682   11,214,338   10,234,088
                                                                   
Net income (loss)
available to Class A                                               
common stock per share:
Basic                       $ 0.01       $ 0.03       $ (0.01)     $ 0.08
                                                                   
Diluted                     $ 0.01       $ 0.03       $ (0.01)     $ 0.08

 
 
DYNAVOX INC. AND SUBSIDIARIES
                                                         
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
                                                         
                                           December 28, June 29,
                                           2012         2012
ASSETS                                                   
CURRENT ASSETS:                                          
Cash and cash equivalents                   $ 14,126     $ 17,944
Trade receivables - net                     12,135       14,864
Other receivables                           208          253
Inventories - net                           4,531        5,401
Prepaid expenses and other current assets   1,298        1,055
Deferred taxes                              689          685
                                                         
Total current assets                        32,987       40,202
                                                         
PROPERTY AND EQUIPMENT - Net                1,919        2,890
GOODWILL AND INTANGIBLES - Net              22,344       22,941
DEFERRED TAXES                              47,930       48,709
OTHER ASSETS                                1,153        1,499
                                                         
TOTAL ASSETS                                $ 106,333    $ 116,241
                                                         
LIABILITIES AND STOCKHOLDERS' EQUITY                     
                                                         
CURRENT LIABILITIES:                                     
Current portion of long-term debt           $ 825        $ -- 
Trade accounts payable                      3,477        4,900
Other liabilities                           7,642        9,688
                                                         
Total current liabilities                   11,944       14,588
                                                         
LONG-TERM DEBT                              24,375       31,200
OTHER LONG-TERM LIABILITIES                 45,604       46,388
                                                         
Total liabilities                           81,923       92,176
                                                         
STOCKHOLDERS' EQUITY                        24,410       24,065
                                                         
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $ 106,333    $ 116,241

 
 
DYNAVOX INC. AND SUBSIDIARIES
                                                                   
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
                                                                   
                           Thirteen Weeks Ended      Twenty-Six Weeks Ended
                           December 28, December 30, December 28, December 30,
                           2012         2011         2012         2011
                                                                   
CASH FLOWS FROM OPERATING                                          
ACTIVITIES:
Net cash provided by        $ 1,495      $ 5,982      $ 3,106      $ 9,469
operating activities
                                                                   
CASH FLOWS FROM INVESTING                                          
ACTIVITIES:
Net cash used in investing  (95)         (102)        (114)        (284)
activities
                                                                   
CASH FLOWS FROM FINANCING                                          
ACTIVITIES:
Cash used in financing      (134)        (299)        (6,840)      (1,234)
activities
                                                                   
EFFECT OF CURRENCY
EXCHANGE RATE CHANGES ON    (8)          (11)         30           (102)
CASH AND CASH EQUIVALENTS
                                                                   
NET INCREASE (DECREASE) IN  1,258        5,570        (3,818)      7,849
CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS:                                         
Beginning of period         12,868       14,450       17,944       12,171
End of period               $ 14,126     $ 20,020     $ 14,126     $ 20,020

 
 
DYNAVOX INC. AND SUBSIDIARIES
                                                                              
ADJUSTED EBITDA
(Unaudited)
(Dollars in thousands)
                                                                              
                       Thirteen Weeks Ended        Twenty Six Weeks Ended     
                       December 28,  December 30,  December 28, December 30,  
                       2012          2011          2012         2011
Other Financial Data                                                          
                                                                              
Adjusted EBITDA (1)     $ 2,764       $ 4,206       $ 4,433      $ 8,703      
                                                                              
(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        Twenty Six Weeks Ended     
                       December 28,  December 30,  December 28, December 30,  
                       2012          2011          2012         2011
                                                                              
Income before income    $ 701         $ 1,921       $ 1,219      $ 4,105      
taxes
Depreciation            492           778           1,086        1,592        
Amortization of         298           226           597          453          
certain intangibles
Interest income         (4)           (9)           (11)         (15)         
Interest expense        449           573           966          1,142        
Other (income)          250           (8)           (555)        (6)          
expense, net (a)
Equity-based            489           587           799          1,129        
compensation
Employee severance and  107           60            278          148          
other costs
Other adjustments(b)    (18)          78            54           155          
Adjusted EBITDA         $ 2,764       $ 4,206       $ 4,433      $ 8,703      
                                                                              
(a) Includes other (income) expense, net recognized as a result of a
increase/decrease in an obligation related to state tax rates. 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 Weeks Ended        Twenty-Six Weeks Ended       
                     December 28,  December 30,  December 28,  December 30,   
                     2012          2011          2012          2011
                                                                              
Net income (loss)
attributable to       $ 148         $ 339         $ (122)       $ 779         
DynaVox Inc.
                                                                              
Adjustments:                                                                  
Net income
attributable to the   575           1,307         336           2,692         
non-controlling
interest
Income tax (expense)  (288)         (455)         542           (926)         
benefit
Total adjustments     287           852           878           1,766         
                                                                              
Adjusted pro forma    $ 435         $ 1,191       $ 756         $ 2,545       
net income
                                                                              
Pro forma
weighted-average      30,854,195    29,804,179    30,357,181    29,804,288    
shares outstanding -
diluted
                                                                              
Adjusted pro forma
net income per share  $ 0.01        $ 0.04        $ 0.02        $ 0.09        
- 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:
         DynaVox
         Ray Merk
         VP Finance
         (412) 209-6547