DynaVox Reports Second Quarter Fiscal 2011 Results

Forward-Looking Statements

This press release contains forward-looking statements, including the information presented above under the caption "Fiscal 2011 Guidance" 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 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. In addition, our expectations with respect to net sales, Adjusted EBITDA and adjusted pro forma net income (loss) per share for fiscal year 2011 reflect an assumption that our revenues will experience a revenue decline in the third and fourth quarters of fiscal year 2011 comparable to what we experienced in the first and second quarters, and that certain expense reduction initiatives initiated during the first and second quarters will result in material benefit to our results in the second half of fiscal year 2011. Our actual results for fiscal year 2011 may differ from current expectations if these assumptions prove inaccurate due to continued deterioration in the funding environment 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) (In thousands, except per share amounts)
	Successor	Predecessor		Successor	Predecessor
	Thirteen Weeks Ended			Twenty-six Weeks Ended
	December 31, 2010	January 1, 2010		December 31, 2010	January 1, 2010
NET SALES	$25,526	$28,608		$47,095	$52,863
COST OF SALES	7,587	7,085		13,821	13,149
GROSS PROFIT	17,939	21,523		33,274	39,714
OPERATING EXPENSES:
Selling and marketing	8,747	9,022		17,484	17,535
Research and development	2,358	2,341		4,892	4,582
General and administrative	4,977	3,901		9,764	6,784
Amortization of certain intangibles	114	421		222	841
Total operating expenses	16,196	15,685		32,362	29,742
INCOME FROM OPERATIONS	1,743	5,838		912	9,972
OTHER INCOME (EXPENSE):
Interest income	4	9		13	31
Interest expense	(663)	(1,920)		(1,346)	(3,930)
Change in fair value and net loss on interest rate swap agreements	(9)	(122)		(76)	(449)
Other expense—net	33	(13)		(235)	(74)
Total other expense-net	(635)	(2,046)		(1,644)	(4,422)
INCOME (LOSS) BEFORE INCOME TAXES	1,108	3,792		(732)	5,550
INCOME TAX EXPENSE (BENEFIT)	114	68		(7)	166
NET INCOME (LOSS) ATTRIBUTABLE TO THE CONTROLLING AND NON-CONTROLLING INTERESTS	$994	$3,724		$(725)	$5,384
Less: net income (loss) attributable to the non-controlling interests	(842)			373
NET INCOME (LOSS) ATTRIBUTABLE TO DYNAVOX INC	$152			$(352)
Weighted-average shares of Class A common stock outstanding:
Basic	9,375,000			9,375,000
Diluted	9,375,000			9,375,000
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) (In thousands)
	Successor	Successor
	December 31, 2010	July 2, 2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$12,576	$20,777
Trade receivables—net	15,553	17,741
Inventories—net	6,950	6,808
Other current assets	2,215	2,441
Total current assets	37,294	47,767
PROPERTY AND EQUIPMENT—Net	7,319	7,065
GOODWILL AND INTANGIBLES—Net	91,714	92,177
DEFERRED TAXES	41,644	41,474
OTHER ASSETS	2,570	2,683
TOTAL ASSETS	$180,541	$191,166
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$4,541	$3,961
Trade accounts payable	4,566	5,541
Other liabilities	10,008	14,562
Total current liabilities	19,115	24,064
LONG-TERM DEBT	41,600	44,200
OTHER LONG-TERM LIABILITIES	43,197	45,038
Total liabilities	103,912	113,302
STOCKHOLDERS' EQUITY	76,629	77,864
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$180,541	$191,166

DYNAVOX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
			Successor	Predecessor
			Twenty-six Weeks Ended
			December 31, 2010	January 1, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities			$(1,568)	$7,437
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in investing activities			(2,325)	(3,338)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash used in financing activities			(4,348)	(4,119)
EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS			40	33
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			(8,201)	13
CASH AND CASH EQUIVALENTS:
Beginning of period			20,777	12,631
End of period			$12,576	$12,644

DYNAVOX INC. AND SUBSIDIARIES ADJUSTED EBITDA (Unaudited) (In thousands)
	Successor	Predecessor	Successor	Predecessor
	Thirteen Weeks Ended		Twenty-six Weeks Ended
	December 31, 2010	January 1, 2010	December 31, 2010	January 1, 2010
Adjusted EBITDA(1)	$3,901	$7,707	$4,693	$13,227
(1)  Adjusted EBITDA represents income (loss) before income taxes, interest income, interest expense depreciation and amortization and the other adjustments noted in the table below.

	Adjusted EBITDA Reconciliation
	Successor	Predecessor	Successor	Predecessor
	Thirteen Weeks Ended		Twenty-six Weeks Ended
	December 31, 2010	January 1, 2010	December 31, 2010	January 1, 2010
	(Amounts in thousands)
Income (loss) before income taxes	$1,108	$3,792	$ (732)	$5,550
Depreciation	884	759	1,663	1,423
Amortization	234	475	463	950
Interest income	(4)	(9)	(13)	(31)
Interest expense	663	1,920	1,346	3,930
Change in fair value and net loss on interest rate swaps	9	122	76	449
Other (income) expense, net (a)	(36)	(3)	201	2
Equity-based compensation	514	144	1,059	334
Employee severance and other costs	248	--	244	--
Acquisition costs (b)	209	274	241	312
Management fees (c)	--	75	--	150
Other adjustments (d)	72	158	145	158
Adjusted EBITDA	$3,901	$7,707	$4,693	$13,227
(a)  Excludes realized foreign currency gains or losses.
(b)  Legal, accounting and other external costs related to the purchase of certain assets and liabilities of Blink-Twice Inc. and the purchase of Eye Response Technologies, Inc. including certain post-closing expenses which may be reimbursed to the Company at a later date under the terms of the applicable agreements.
(c)  Prior to April 21, 2010 we received advisory services from Vestar and certain pre-IPO owners. These arrangements concluded on April 21, 2010.
(d)  Includes certain amounts related to other taxes, executive recruiting fees, relocation and other costs.

	DYNAVOX INC. AND SUBSIDIARIES ADJUSTED PRO FORMA NET INCOME (LOSS) (Unaudited) (Dollars in thousands, except per share amounts)
				Thirteen Weeks Ended	Twenty-six Weeks Ended
				December 31, 2010	December 31, 2010
Net income (loss) attributable to DynaVox Inc.				$ 152	$ (352)
Adjustments:
Net income (loss) attributable to the non-controlling interest				842	(373)
Income taxes				(307)	271
Total adjustments				535	(102)
Adjusted pro forma net income (loss)				$ 687	$ (454)
Pro forma fully exchanged shares outstanding				29,834,983	29,834,983
Adjusted pro forma net income (loss) per fully exchanged share				$0.02	$(0.02)

Adjusted pro forma net income (loss), as defined by DynaVox, represents net income (loss) before non-controlling interest 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 aggregate 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.

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