DynaVox (DVOX), $150mm IPO, projected market cap of $474mm at price range mid-point of $16

SUMMARY

. Stable, growing profitable revenue . Very high gross margins of 75% . Largest competitor in the market sector . Positioned to benefit from positive industry trends

BUSINESS

. A leader in two areas within the broader market for assistive technologies—speech generating technologies and special education software. . DVOX believes it is the largest player and has no dominant competitors.

DVOX believes that there are substantial opportunities for growth within both of these areas. . Non-verbal populations in targeted geographies are large and underserved. . The portion of the student populations who are classified as having special educational requirements is significant and growing.

PRODUCTS

Broad and Innovative Speech Generating Device Portfolio.

. DVOX believes it offers the broadest and most innovative portfolio of speech generating devices that address the needs of individuals with severe physical or cognitive limitations. . Portfolio consists of seven different devices, each of which is designed to provide users with a broad range of features and adaptive technology so that they can access and control the device. Devices can be connected to a variety of access methods including touch screens, joysticks, tongue switches and eye-tracking, among others. . DVOX believes that its EyeMax accessory, which enables users to access their device by blinking or by dwelling their eyes on a desired area of the screen, is one of the most advanced access method available in the industry.

LEGISLATIVE CHANGES

. Recent health reform acts include significant funding for expansion of Medicaid and enrollment in Children's Health Insurance Plans and for subsidies to fund insurance for individuals and families that currently lack health insurance. . As a result of this expected increase in individuals and families with health insurance, DVOX believes that these acts will increase funding opportunities for DVOX’s augmentative speech devices.

SPEECH GENERATING TECHNOLOGIES

82% of sales

. In fiscal years 2007, 2008 and 2009, sales of speech generating technologies produced 75%, 79% and 82%, respectively, of net sales. . Revenue from sales of speech generating technologies has grown to $75.0 million in fiscal year 2009 from $49.8 million in fiscal year 2007. . Awareness of speech generating technology among potential users and speech language pathologists is growing, although still remains low.

Third-party payors

The pricing levels at which third party payors, including Medicare, Medicaid and private insurers, are willing to provide coverage for speech generating technology also significantly influences sales of speech generating technologies because a significant portion of the speech generating devices that DVOX sells are funded by such third-party payors.

SPECIAL EDUCATION SOFTWARE

18% of sales

. Expect sales of special education software products and related content to increase as a percentage of total sales on a going forward basis, as the next generation of the software platform later this year. . In fiscal years 2007, 2008 and 2009, sales of special education software produced approximately 25%, 21% and 18%, respectively, of net sales. . Special education software sales increased as a percentage of net sales during the twenty-six week period ended January 1, 2010 as compared to the twenty-six week period ended December 26, 2008.

DVOX expects additional growth in special education software sales . Software products are generally purchased by special education teachers and are generally funded by schools, which receive funding from federal, state and local sources. The level of funding available for special education and educational technology is an important driver of software sales.

RECENT TRANSACTIONS

. Completed the acquisition of Eye Response Technologies in January of 2010, which DVOX believes strengthens its intellectual property assets and will support and enhance existing products. . In the December 17, 2009 valuation, DVOX did not include any incremental financial performance from Eye Response Technologies because the acquisition had not . DVOX believes the intellectual property acquired in the acquisition provides superior technology in one of the fastest growing segments of the speech generating device market and may in the future provide opportunities for high-margin royalty contracts in the industry and other applications.

OUTPERFORMING DEC 17 VALUATION PROJECTIONS

. Financial performance during the period since December 17, 2009 has continued to be ahead of the projections contained in the December 17, 2009 valuation. Over the same period, net income continued to increase at a rate higher than the increase in sales and ahead of projections resulting from DVOX’s ability to leverage the operating costs. . Tango, acquired as part of the Blink Twice acquisition in July 2009, in combination with other products, have enabled DVOX to outperform projections used in the December 17, 2009 valuation. DVOX has been able to increase its penetration into the marketplace for children. . Additionally, DVOX introduced its Xpress product in the first quarter of fiscal year 2010, which has also performed above projections used in the December 17, 2009 valuation. . Investments in DVOX’s software business such as the introduction of its dynamic web-based catalog, including direct marketing and social-media support, the continued support of the user community called AdaptedLearning.com and the introduction of a direct sales channel to penetrate large accounts have helped DVOX perform above revenue and net income projections utilized in the December 17, 2009 valuation.

COMPETITIVE ADVANTAGES

. DVOX believe its assets will enable them to create future value to the business by enabling DVOX to develop, and improve product lines more quickly, improve the functionality of speech generating devices, and enable DVOX to reach a larger portion of our potential customer base.

. DVOX believes the addition of this technology to its own products, which is expected to occur before the end of 2010, coupled with DVOX’s direct sales force will increase the potential customer base and provide a competitive advantage in the marketplace.

COMPETITION

Within DVOX’s particular areas of speech generating technology and interactive software for students with special educational needs, DVOX believes it is the largest player and has no dominant competitors. However, additional entrants, including larger technology companies and other assistive technology companies, could also choose to compete with us in these areas.

INTELLECTUAL PROPERTY

Owns both copyrights and trademarks on PCS, the industry standard symbol set, and seeks to obtain trademark registrations for certain of products, including Boardmaker, DynaVox, DynaWrite, InterAACT, Tango! and DynaSyms.

Licenses symbol sets to third parties, and in fiscal year ended July 3, 2009, received royalties for the use of PCS by other companies of approximately $800,000. In recent years, we has begun to make greater use of patent laws to protect innovations. Also owns intellectual property rights in software and proprietary technology.

ORGANIZATION

DynaVox Inc. will be a holding company, and its sole material asset will be a controlling equity interest in DynaVox Systems Holdings LLC.

DynaVox Inc. will consolidate the financial results of DynaVox Systems Holdings LLC and its subsidiaries, and the ownership interest of the other members of DynaVox Systems Holdings LLC will be reflected as a non-controlling interest in DynaVox Inc.'s consolidated financial statements.

PRIVATE EQUITY SPONSOR

Vestar Capital Partners, a leading global private equity firm. More than 65 transactions completed, in companies with a total value of over $30 billion.

USE OF IPO PROCEEDS

$140mm -- DVOX will retain none of the IPO proceeds

$64mm million of these proceeds to purchase newly-issued New Holdings Units from DynaVox Systems Holdings LLC, of which $42.6 million will be used to repay debt

$86.0 million to purchase additional shares of Class A common stock), to purchase New Holdings Units from existing owners, including members of senior management,

 

DynaVox	DVOX, C+, 7					Post-IPO shares: 30mm
Speech software			June 30 fiscal
Pittsburgh PA		2007	2008	2009	Dec 6mos	IPO Mkt
Revenue ($mm)		$66	$81	$91	$53	Cap (mm)
Gross profit %		70%	72%	75%	75%	$474
Operating income %		16%	16%	21%	19%	@$16
Profit (loss)		$5	$7	$12	$7
Profit (loss) % of revenue		7%	9%	13%	13%
EBITDA		$19	$24	$24	$13
EBITDA % of revenue		28%	30%	27%	25%
Quarterly performance	Sept 08	Dec 08	March 09	Jan 09	Sept 09	Dec 09
Revenue ($mm)	$19	$20	$22	$30	$24	$29
Gross profit %	69%	70%	73%	76%	75%	74%
Operating income %	17%	13%	20%	11%	17%	20%
Profit (loss)	$1	$0	$1	$7	$2	$4
Profit (loss) % of revenue	5%	-1%	6%	22%	7%	13%
VALUATION RATIOS	IPO Mrkt	Price /	Price /	Price /	Price /	% offered
trailing 12 months	Cap (mm)	Sales	Earnings	BookValue	TangibleBV	in IPO
DynaVox (DVOX)	$474	4.5	35	7.1	-31.4	32%
COMPARE
VALUATION RATIOS	IPO Mrkt	Price /	Price /	Price /	Price /	Price/
trailing 12 months	Cap (mm)	Sales	Earnings	BookValue	TangibleBV	EBITDA
DynaVox (DVOX)	$474	4.5	35	7.1	-31.4	18.9
Nuance Comm (NUAN)	$4,890	4.9	606	2.3	-7.9	131.1
DVOX SCORECARD		Mgt	Market	Market Do-	Proprie-	Total
1-5, 5 is high			Growth	mination	tary	rating
20 is perfect		2	2	2	1	7