DynaVox Reports Third Quarter Fiscal Year 2013 Results

DynaVox Reports Third Quarter Fiscal Year 2013 Results

PITTSBURGH, May 17, 2013 (GLOBE NEWSWIRE) -- DynaVox (OTC:DVOX) today
announced results for the third quarter ended March 29, 2013.

Results for the Thirteen Weeks Ended March 29, 2013

Net sales were $14.9 million, a decrease of 38%, compared to net sales of
$24.0 million for the third quarter ended March 30, 2012. Sales for the
Company's speech generating devices decreased 39% to $12.5 million and sales
from its special education software declined 28% to $2.4 million from the
prior year.

Gross profit for the third quarter of fiscal year 2013 decreased 40% to $10.4
million, compared to gross profit of $17.4 million in the third quarter of the
prior fiscal year. The Company's gross margin for the third quarter decreased
230 basis points to 70.0%, compared to a gross margin of 72.3% in the third
quarter of the prior fiscal year. The decrease in margin is mainly the result
of lower sales volume in both devices and special education software and
changes within the mix of product sales.

Operating expenses, excluding impairment losses, in the third quarter of
fiscal year 2013 decreased 18% to $11.4 million, compared to $13.9 million in
the prior fiscal year. Operating income (loss), excluding impairment charges,
for the third quarter was $(0.9) million, compared to $3.5 million in the same
period a year ago. An impairment charge of $2.0 million was recorded in the
third quarter of fiscal year 2013 of which $1.9 million related to
indefinite-lived intangible assets and $0.1 million related to the abandonment
of certain leasehold improvements. Operating expenses in the third quarter of
fiscal year 2012 included impairment charges of $62.1 million related to
goodwill and other intangible assets.

GAAP net loss for the third quarter of fiscal year 2013 was $(6.6) million, or
$(0.58) per share, compared to GAAP net loss of $(14.1) million, or $(1.33)
per share, for the same quarter a year ago. GAAP net loss for the third
quarter of fiscal year 2013 reflects other income of $43.9 million for a
change in estimate relating to amounts payable to related parties pursuant to
a tax receivable agreement and income tax expense of $49.4 million related to
a substantial valuation allowance on deferred tax assets.

Adjusted pro forma net income (loss), as defined below, was $(1.2) million, or
$(0.04) per share, compared to adjusted pro forma net income of $1.8 million,
or $0.06 per share, in the prior fiscal year.

Adjusted EBITDA, as defined below, decreased 87% to $0.6 million, compared to
$5.0 million in the previous fiscal year.

Results for the Thirty-Nine Weeks Ended March 29, 2013

For the first thirty-nine weeks of fiscal 2013, net sales decreased 30% to
$51.1 million from $73.4 million in the same period last fiscal year.

Gross profit for the first thirty-nine weeks of fiscal 2013 decreased 31% to
$36.7 million. The Company's gross profit margin decreased 50 basis points to
71.7% from 72.2% in the same period last fiscal year.

Operating income, excluding impairment losses of, for the first thirty-nine
weeks of fiscal year 2013 decreased 92% to $0.7 million, compared to operating
income of $8.7 million in the prior fiscal year. Operating expenses in the
first thirty-nine weeks of fiscal year 2013 included an impairment charge of
$2.0 million of which $1.9 million related to indefinite-lived intangible
assets and $0.1 million related to the abandonment of certain leasehold
improvements. Operating expenses in the first thirty-nine weeks of fiscal year
2012 included impairment charges of $62.1 million related to goodwill and
other intangible assets.

GAAP net loss for the first thirty-nine weeks of fiscal year 2013 was $(6.7)
million, or $(0.60) per share, compared to GAAP net loss of $(13.3) million,
or $(1.29) per share, a year ago.GAAP net loss for the first thirty-nine
weeks of fiscal year 2013 reflects other income of $43.9 million for a change
in estimate relating to amounts payable to related parties pursuant to a tax
receivable agreement and income tax expense of $49.4 million related to a
substantial valuation allowance on deferred tax assets. Adjusted pro forma net
income (loss), as defined below, was $(0.5) million for the first thirty-nine
weeks, compared to $4.4 million in the prior year and adjusted pro forma net
income (loss) per share for the first thirty-nine weeks was $(0.02) per share,
compared to $0.15 per share in the prior year.

For the first thirty-nine weeks of fiscal 2013, Adjusted EBITDA was $5.1
million, a decrease of 63%, from $13.7 million in the same period last year.

Default under the Credit Agreement

Due to the continued declining operating performance and limited visibility on
future liquidity, the Company's Board of Directors determined that, in order
to preserve cash, the Company would not make a voluntary prepayment on its
outstanding indebtedness that would have been due on or before March 29, 2013
to maintain financial covenant compliance. A voluntary prepayment of $4.0
million would have been required to maintain financial covenant compliance.
Accordingly, the Company is in violation of the Net Senior Debt to EBITDA
financial covenant under its credit agreement as of March 29, 2013 and has
received a notice of events of default from its primary lender. The Notice
states that the lenders are not required to make further loans or incur
further obligations under the revolving loan portion of the credit agreement
and are entitled to exercise any and all default-related rights and remedies
under the agreement.The Company has classified all of its $25.2 million of
outstanding debt as a current liability on its March 29, 2013 balance sheet.
The Company continues to engage in active and continuing discussions with its
lenders. There can be no assurance that the Company can reach a resolution
with the lenders, obtain sufficient financing or enter into other transactions
to satisfy its obligations in a timely manner, or at all. If the Company is
unable to resolve its situation with the lenders and/or to raise sufficient
additional funds, it would be required to reduce operating expenses by, among
other things, curtailing significantly or delaying or eliminating part or all
of its new product development programs and/or scaling back its commercial
operations. In addition, at any time, the holders of 50% or more of the
outstanding principal amount under the credit agreement can accelerate the
Company's obligations under the agreement and require payment of the full
outstanding principal amount plus accrued and unpaid interest. The Company
does not have sufficient cash resources to pay the amount that would become
payable in the event of an acceleration of these amounts, and even if the
Company could obtain additional financing, it is unlikely that it could obtain
an amount sufficient to repay the outstanding indebtedness under the credit
agreement in full. In the event of an acceleration of its obligations and its
failure to pay the amount that would then become due, the holders of the
credit facility could seek to foreclose on the Company's assets, as a result
of which the Company would likely need to seek protection under the provisions
of the U.S. Bankruptcy Code. In that event, the Company could seek to
reorganize its business, or the Company or a trustee appointed by the court
could be required to liquidate the Company's assets.In either of these
events, whether the stockholders receive any value for their shares is highly
uncertain.

Delisting and Deregistration of Class A Common Stock

On April 15, 2013, the Company's Class A common stock was delisted from the
NASDAQ Global Select Market and began trading on the OTC Markets OTCQB
marketplace on April 16, 2013.

The Company intends to file a Form 15 with the Securities and Exchange
Commission ("SEC") after the end of the fiscal year 2013 to effect (i) the
voluntary deregistration of its Class A common stock under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and (ii) the suspension
of its reporting obligations with respect to its Class A common shares under
the Exchange Act. Upon the filing of the Form 15, the Company's obligations to
file certain reports (including periodic reports and proxy statements) with
the SEC will cease although the Company will be required to file an Annual
Report on Form 10-K for fiscal year 2013. Subject to satisfaction of certain
regulatory requirements, the Company expects deregistration of its Class A
common stock to become effective 90 days after the filing of the Form 15.

The Company intends to deregister its Class A common stock because the Company
believes the incremental cost of compliance with the provisions of the
Sarbanes-Oxley Act of 2002 and other public company reporting requirements
outweighs any discernable benefit to the Company or its shareholders from
continued registration, and that continuing to incur such costs is not in the
best interests of the Company or its shareholders. Factors influencing the
Company's decision to deregister its Class A common shares include the
following:

  *the ever increasing accounting, legal and administrative costs of
    preparing and filing periodic reports and other filings with the SEC;
  *the amount of time senior management is required to devote to matters
    related to the Company's public reporting obligations, compared to time
    concentrating on the Company's business; and
  *the already limited trading volume and liquidity in the Company's Class A
    common shares.

As a result of the deregistration, investors will have significantly less
information about theCompany and may find it more difficult to dispose of or
obtain accurate quotations as to the market value of the Company's Class A
common stock.In addition, the Company expects there will be a substantial
decrease in the liquidity in the Class A common stock and that the ability of
shareholders to sell the Company's securities in the secondary market may be
materially limited. Further, the market's interpretation of the Company's
motivation for "going dark" could vary from cost savings, to negative changes
in the Company's prospects, to serving insider interests, all of which may
affect the overall price and liquidity of the Company's Class A common stock
and its ability to raise capital on terms acceptable to the Company or at all.

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,
impairment loss, adjustments to the payable to related parties pursuant to the
tax receivable agreement 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, our performance under the credit agreement and
deregistration of our Class A common stock. 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
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. (OTC:DVOX) is a holding Company with its headquarters in
Pittsburgh, Pennsylvania, whose primary operating entities are DynaVox Systems
LLC and Mayer-Johnson LLC. DynaVox provides speech generating devices and
symbol-adapted special education software 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    Thirty-Nine Weeks Ended
                              March 29,   March 30,   March 29,   March 30,
                               2013        2012        2013        2012
                                                               
NET SALES                      $14,927   $24,027   $51,113   $73,434
COST OF SALES                  4,479      6,649      14,453     20,415
                                                               
GROSS PROFIT                   10,448     17,378     36,660     53,019
                                                               
OPERATING EXPENSES:                                             
Selling and marketing          5,204      7,868      18,369     25,472
Research and development       1,726      1,540      5,190      5,251
General and administrative     4,267      4,388      11,810     13,222
Amortization of certain        192        110        575        330
intangibles
Impairment loss                1,994      62,107     1,994      62,107
                                                               
Total operating expenses       13,383     76,013     37,938     106,382
                                                               
LOSS FROM OPERATIONS           (2,935)    (58,635)   (1,278)    (53,363)
                                                               
OTHER INCOME (EXPENSE):                                         
Interest income                22         7          33         22
Interest expense               (460)      (574)      (1,426)    (1,716)
Other income (expense) — net   43,842     13         44,359     (27)
                                                               
Total other income (expense) — 43,404     (554)      42,966     (1,721)
net
                                                               
INCOME (LOSS)BEFORE INCOME    40,469     (59,189)   41,688     (55,084)
TAXES
INCOME TAX EXPENSE (BENEFIT)   49,151     (7,248)    50,156     (6,614)
                                                               
NET LOSS ATTRIBUTABLE TO THE
CONTROLLING AND                $(8,682)  $(51,941) $(8,468)  $(48,470)
NON-CONTROLLING INTERESTS
                                                               
Less: net loss attributable to 2,115      37,821     1,779      35,129
the non-controlling interests
                                                               
NET LOSS ATTRIBUTABLE TO       $(6,567)  $(14,120) $(6,689)  $(13,341)
DYNAVOX INC.
                                                               
Weighted-average shares of
Class A common stock                                            
outstanding:
Basic                          11,360,418 10,642,642 11,214,338 10,354,917
                                                               
Diluted                        11,360,418 10,642,642 11,214,338 10,354,917
                                                               
Net loss available to Class A                                   
common stock per share:
Basic                          $(0.58)   $(1.33)   $(0.60)   $(1.29)
                                                               
Diluted                        $(0.58)   $(1.33)   $(0.60)   $(1.29)



DYNAVOX INC. AND SUBSIDIARIES
                                                   
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
                                                   
                                          March 29, June 29,
                                           2013      2012
ASSETS                                              
CURRENT ASSETS:                                     
Cash and cash equivalents                  $14,109 $17,944
Trade receivables - net                   10,798   14,864
Other receivables                          264      253
Inventories                                3,437    5,401
Prepaid expenses and other current assets  1,068    1,055
Deferred taxes                             67       685
                                                   
Total current assets                       29,743   40,202
                                                   
PROPERTY AND EQUIPMENT - Net               1,467    2,890
INTANGIBLES - Net                          20,145   22,941
DEFERRED TAXES                             --      48,709
OTHER ASSETS                              949      1,499
                                                   
TOTAL ASSETS                               $52,304 $116,241
                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY                
                                                   
CURRENT LIABILITIES:                                
Current portion of long-term debt          $25,200 $--
Trade accounts payable                     2,788    4,900
Other liabilities                          7,273    9,688
                                                   
Total current liabilities                  35,261   14,588
                                                   
LONG-TERM DEBT                             --      31,200
DEFERRED TAXES                             564      --
OTHER LONG-TERM LIABILITIES                1,417    46,388
                                                   
Total liabilities                          37,242   92,176
                                                   
STOCKHOLDERS' EQUITY                       15,062   24,065
                                                   
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $52,304 $116,241



DYNAVOX INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
                                                               
                                 Thirteen Weeks Ended Thirty-Nine Weeks Ended

                                 March 29,  March 30, March 29,   March 30,
                                  2013       2012      2013        2012
                                                               
CASH FLOWS FROM OPERATING                                       
ACTIVITIES:
Net cash provided by operating    $1,166   $3,332  $4,272    $12,801
activities
                                                               
CASH FLOWS FROM INVESTING                                       
ACTIVITIES:
Net cash used in investing        (154)     (88)     (268)      (372)
activities
                                                               
CASH FLOWS FROM FINANCING                                       
ACTIVITIES:
Cash used in financing activities (948)     (1,149)  (7,788)    (2,383)
                                                               
EFFECT OF CURRENCY EXCHANGE RATE
CHANGES ON CASH AND CASH          (81)      44       (51)       (58)
EQUIVALENTS
                                                               
NET (DECREASE) INCREASE IN CASH   (17)      2,139    (3,835)    9,988
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS:                                      
Beginning of period               14,126    20,020   17,944     12,171
End of period                     $14,109  $22,159 $14,109   $22,159



DYNAVOX INC. AND SUBSIDIARIES
                                                              
ADJUSTED EBITDA
(Unaudited)
(Dollars in thousands)
                                                              
                        Thirteen Weeks Ended       Thirty-Nine Weeks Ended
                        March 29,    March 30,     March 29,     March 30,
                         2013         2012          2013          2012
Other Financial Data                                           
                                                              
Adjusted EBITDA (1)      $647       $5,038      $5,079      $13,741
                                                              
(1) Adjusted EBITDA represents income (loss) 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       Thirty-Nine Weeks Ended
                        March 29,    March 30,     March 29,     March 30,
                         2013         2012          2013          2012
                                                              
Income (loss) before     $40,469    $(59,189)   $41,688     $(55,084)
income taxes
Depreciation             439         733          1,525        2,325
Amortization of certain  298         228          896          681
intangibles
Interest income          (22)        (7)          (33)         (22)
Interest expense         460         574          1,426        1,716
Other expense (income),  52          (29)         72           (35)
net (1)
Equity-based             290         543          1,088        1,672
compensation
Employee severance and   497         3            775          151
other costs
Impairment loss          1,994       62,107       1,994        62,107
Tax receivable agreement (43,884)    --          (44,459)     --
(2)
Other adjustments(3)     54          75           107          230
Adjusted EBITDA          $647       $5,038      $5,079      $13,741
                                                              
(1) Excludes realized foreign currency gains and losses.
(2) Includes other expense (income), net recognized as a result of changes to
the estimated amounts payable to related parties pursuant to the tax
receivable agreement.
(3) 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            Thirty-Nine Weeks Ended
                     March 29, 2013  March 30, 2012  March 29,    March 30,
                                                      2013         2012
                                                               
Net loss attributable $(6,567)      $(14,120)     $(6,689)   $(13,341)
to DynaVox Inc.
                                                               
Adjustments:                                                    
Impairment loss       1,994          62,107         1,994       62,107
Net loss attributable
to the                (2,115)        (37,821)       (1,779)     (35,129)
non-controlling
interests
Adjustments to
payable to related
parties pursuant to   (44,459)       --            (44,459)    --
the tax receivable
agreement
Income tax benefit    49,909         (8,357)        50,451      (9,283)
(expense)
Total adjustments     5,329          15,929         6,207       17,695
                                                               
Adjusted pro forma    $(1,238)      $1,809        $(482)     $4,354
net income (loss)
                                                               
Pro forma
weighted-average      30,916,270     29,804,179     30,357,181  29,804,252
shares outstanding -
diluted
                                                               
Adjusted pro forma
net income (loss) per $(0.04)       $0.06         $(0.02)    $0.15
share - diluted
                                                               
Adjusted pro forma net income (loss), as defined by DynaVox, represents net
income (loss) before non-controlling interest, impairment loss, adjustments to
the payable to related parties pursuant to the tax receivable agreement 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 (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 table above provides a reconciliation of net loss to adjusted pro forma
net income (loss) and adjusted pro forma net income (loss) per share.

CONTACT: News Media Contact:
         DynaVox
         Dave Colson
         Communications Director
         (412) 995-4090
        
         Investor Contact:
         DynaVox
         Ray Merk
         VP Administration
         (412) 209-6547
 
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