UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the quarterly period ended July 2, 2005

                                       OR

            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                         Commission file number 1-7753

                           DECORATOR INDUSTRIES, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                  Pennsylvania                                  25-1001433
           -------------------------------                   -------------------
           (State or other jurisdiction of                    (I.R.S. Employer
            incorporation or organization)                   Identification No.)

10011 Pines Blvd., Suite #201, Pembroke Pines, Florida                33024
------------------------------------------------------             ----------
     (Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code:  (954) 436-8909

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

                                 Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

         Title of each class                      Outstanding at August 12, 2005
         -------------------                      ------------------------------
Common Stock, Par Value $.20 Per Share                      2,881,769

<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS.

                           DECORATOR INDUSTRIES, INC.
                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                           ASSETS                                        JULY 2,        JANUARY 1,
                                                                          2005             2005
                                                                       -----------     -----------
                                                                       (UNAUDITED)
<S>                                                                    <C>             <C>
CURRENT ASSETS:
     Cash and Cash Equivalents                                         $   376,706     $   730,539
     Accounts Receivable, less allowance for
        doubtful accounts ($152,077 and $144,077)                        5,211,265       3,464,674
     Inventories                                                         5,313,053       5,113,651
     Other Current Assets                                                  516,390         588,853
                                                                       -----------     -----------
TOTAL CURRENT ASSETS                                                    11,417,414       9,897,717
                                                                       -----------     -----------
Property and Equipment
     Land, Buildings & Improvements                                      7,249,467       7,250,064
     Machinery, Equipment, Furniture & Fixtures                          6,366,404       6,482,534
                                                                       -----------     -----------
Total Property and Equipment                                            13,615,871      13,732,598
     Less: Accumulated Depreciation and Amortization                     6,151,283       5,874,855
                                                                       -----------     -----------
Net Property and Equipment                                               7,464,588       7,857,743
                                                                       -----------     -----------
Goodwill, less accumulated Amortization of $1,348,569                    2,731,717       2,731,717
Identifiable intangible asset, less accumulated Amortization
     of $935,713 and $611,713                                            2,959,278       3,283,278
Other Assets                                                               245,017         191,622
                                                                       -----------     -----------
TOTAL ASSETS                                                           $24,818,014     $23,962,077
                                                                       ===========     ===========
                LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts Payable                                                  $ 3,406,849     $ 2,539,252
     Current Maturities of Long-term Debt                                  188,869         170,709
     Checks Issued but Not Yet Presented                                   571,642              --
     Accrued Expenses:
        Compensation                                                       886,072       1,016,262
        Acquisition Liability                                                   --       1,067,472
        Other                                                            1,090,829         936,146
                                                                       -----------     -----------
TOTAL CURRENT LIABILITIES                                                6,144,261       5,729,841
                                                                       -----------     -----------
Long-Term Debt                                                           1,649,244       1,752,568
Deferred Income Taxes                                                      604,000         680,000
                                                                       -----------     -----------
TOTAL LIABILITIES                                                        8,397,505       8,162,409
                                                                       -----------     -----------
Stockholders' Equity
     Common Stock $.20 par value: Authorized shares, 10,000,000;
        Issued shares, 4,534,282 and 4,489,728                             906,856         897,946
     Paid-in Capital                                                     1,510,125       1,423,275
     Retained Earnings                                                  22,120,382      21,633,044
                                                                       -----------     -----------
                                                                        24,537,363      23,954,265
     Less: Treasury stock, at cost: 1,652,513 and 1,660,197 shares       8,116,854       8,154,597
                                                                       -----------     -----------
TOTAL STOCKHOLDERS' EQUITY                                              16,420,509      15,799,668
                                                                       -----------     -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $24,818,014     $23,962,077
                                                                       ===========     ===========
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       1
<PAGE>
                           DECORATOR INDUSTRIES, INC.
                             STATEMENTS OF EARNINGS
                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                           FOR THE THIRTEEN WEEKS ENDED                FOR THE TWENTY-SIX WEEKS ENDED
                                 ------------------------------------------------  ------------------------------------------------
                                       JULY 2, 2005            JULY 3, 2004             JULY 2, 2005              JULY 3, 2004
                                 -----------------------  -----------------------  -----------------------  -----------------------
<S>                              <C>               <C>    <C>               <C>    <C>               <C>    <C>               <C>
Net Sales                        $ 13,275,952      100.0% $ 14,320,830      100.0% $ 25,707,334      100.0% $ 27,112,878      100.0%
Cost of Products Sold              10,687,552       80.5%   11,349,047       79.2%   20,517,235       79.8%   21,857,867       80.6%
                                  ------------             ------------             ------------             ------------
Gross Profit                        2,588,400       19.5%    2,971,783       20.8%    5,190,099       20.2%    5,255,011       19.4%
Selling and
  Administrative Expenses           2,202,951       16.6%    2,081,898       14.6%    4,146,408       16.1%    4,036,921       14.9%
                                 ------------             ------------             ------------             ------------
Operating Income                      385,449        2.9%      889,885        6.2%    1,043,691        4.1%    1,218,090        4.5%

Other Income (Expense)
      Interest, Investment and
         Other Income                  22,866        0.1%       26,035        0.2%       40,159        0.2%       53,476        0.2%
      Interest Expense                (18,998)      -0.1%      (28,308)      -0.2%      (41,197)      -0.2%      (55,070)      -0.2%
                                 ------------             ------------             ------------             ------------
Earnings Before Income Taxes          389,317        2.9%      887,612        6.2%    1,042,653        4.1%    1,216,496        4.5%
Provision for Income Taxes            148,000        1.1%      349,000        2.4%      383,000        1.5%      477,000        1.8%
                                 ------------             ------------             ------------             ------------
NET INCOME                       $    241,317        1.8% $    538,612        3.8% $    659,653        2.6% $    739,496        2.7%
                                 ============             ============             ============             ============
EARNINGS PER SHARE
      BASIC                      $       0.08             $       0.19             $       0.23             $       0.26
                                 ============             ============             ============             ============
      DILUTED                    $       0.08             $       0.18             $       0.22             $       0.25
                                 ============             ============             ============             ============
Weighted Average
 Number of Shares Outstanding
      Basic                         2,880,102                2,813,699                2,866,186                2,809,831
      Diluted                       3,015,562                2,956,044                3,005,009                2,942,386
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       2
<PAGE>
                           DECORATOR INDUSTRIES, INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                       FOR THE TWENTY-SIX WEEKS ENDED
                                                       ------------------------------
                                                        JULY 2, 2005     JULY 3, 2004
                                                        ------------     ------------
<S>                                                     <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Income                                          $   659,653      $   739,496
    Adjustments to Reconcile Net Income to Net Cash
    Provided by Operating Activities
       Depreciation and Amortization                        733,110          673,901
       Provision for Losses on Accounts Receivable            8,000               --
       Deferred Taxes                                       (86,000)          15,000
       Loss (Gain) on Disposal of Assets                    160,622             (584)
    Increase (Decrease) from Changes in:
       Accounts Receivable                               (1,754,591)      (1,893,246)
       Inventories                                         (199,402)        (320,837)
       Prepaid Expenses                                      69,953         (406,773)
       Other Assets                                         (64,435)         168,056
       Accounts Payable                                     867,597        2,024,129
       Accrued Expenses                                      24,493           (3,443)
                                                        -----------      -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES                   419,000          995,699
                                                        -----------      -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Net cash paid for acquisitions                       (1,067,472)      (4,083,277)
    Capital Expenditures                                   (222,627)        (552,420)
    Proceeds from Property Dispositions                      69,600            1,150
                                                        -----------      -----------
NET CASH USED IN INVESTING ACTIVITIES                    (1,220,499)      (4,634,547)
                                                        -----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Long-term Debt Payments                                 (85,164)         (84,666)
    Dividend Payments                                      (172,315)        (168,773)
    Change in Checks Issued but Not Yet Presented           571,642               --
    Proceeds from Exercise of Stock Options                 100,003           17,580
    Issuance of Stock for Directors Trust                    33,500           25,000
                                                        -----------      -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES         447,666         (210,859)

Net Decrease in Cash and Cash Equivalents                  (353,833)      (3,849,707)
Cash and Cash Equivalents at Beginning of Year              730,539        3,991,631
                                                        -----------      -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD              $   376,706      $   141,924
                                                        ===========      ===========
Supplemental Disclosures of Cash Flow Information:
    Cash Paid for:
       Interest                                         $    75,568      $    26,527
       Income Taxes                                     $   186,372      $   621,757
</TABLE>

                                       3
<PAGE>
                           DECORATOR INDUSTRIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
              TWENTY-SIX WEEKS ENDED JULY 2, 2005 AND JULY 3, 2004
                                   (UNAUDITED)

NOTE 1.  In the opinion of management, the accompanying unaudited financial
         statements contain all adjustments necessary to present fairly the
         Company's financial position as of July 2, 2005, the changes therein
         for the twenty-six week period then ended and the results of operations
         for the twenty-six week periods ended July 2, 2005 and July 3, 2004.

NOTE 2.  The financial statements included in the Form 10-Q are presented in
         accordance with the requirements of the form and do not include all of
         the disclosures required by accounting principles generally accepted in
         the United States of America. For additional information, reference is
         made to the Company's annual report on Form 10-K for the year ended
         January 1, 2005. The results of operations for the twenty-six week
         periods ended July 2, 2005 and July 3, 2004 are not necessarily
         indicative of operating results for the full year.

NOTE 3.  INVENTORIES

         Inventories at July 2, 2005 and January 1, 2005 consisted of the
following:
<TABLE>
<CAPTION>
                                          JULY 2, 2005       JANUARY 1, 2005
                                          ------------       ---------------
<S>                                        <C>                 <C>
         Raw Material and supplies         $4,735,819          $4,438,916
         In Process and Finished Goods        577,234             674,735
                                           ----------          ----------
         Total Inventory                   $5,313,053          $5,113,651
                                           ==========          ==========
</TABLE>

NOTE 4.  EARNINGS PER SHARE

         Basic earnings per share is computed by dividing net income by
         weighted-average number of shares outstanding. Diluted earnings per
         share includes the dilutive effect of stock options. In accordance with
         SFAS No. 128, the following is a reconciliation of the numerators and
         denominators of the basic and diluted EPS computations:
<TABLE>
<CAPTION>
                                     FOR THE THIRTEEN WEEKS ENDED      FOR THE TWENTY-SIX WEEKS ENDED
                                     ----------------------------      ------------------------------
                                      JULY 2, 2005   JULY 3, 2004       JULY 2, 2005   JULY 3, 2004
                                      ------------   ------------       ------------   ------------
<S>                                    <C>            <C>                <C>            <C>
Numerator:
   Net income                          $  241,317     $  538,612         $  659,653     $  739,496
                                       ==========     ==========         ==========     ==========
Denominator:
   Weighted-average number of
       common shares outstanding        2,880,102      2,813,699          2,866,186      2,809,831

   Dilutive effect of
       stock options on net income        135,460        142,345            138,823        132,555
                                       ----------     ----------         ----------     ----------

                                        3,015,562      2,956,044          3,005,009      2,942,386
                                       ==========     ==========         ==========     ==========

   Diluted earnings per share:         $     0.08     $     0.18         $     0.22     $     0.25
                                       ==========     ==========         ==========     ==========
</TABLE>


                                       4
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

CAUTIONARY STATEMENT: This Quarterly Report on Form 10-Q may contain statements
relating to future events, including results of operations, that are considered
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements represent the
Company's expectations or belief as to future events and, by their very nature,
are subject to risks and uncertainties which may result in actual events
differing materially from those anticipated. In particular, future operating
results and future liquidity will be affected by the level of demand for
recreational vehicles, manufactured housing and hotel/motel accommodations and
may be affected by changes in economic conditions, interest rate fluctuations,
competitive products and pricing pressures within the Company's markets, the
Company's ability to contain its manufacturing costs and expenses, and other
factors. Forward-looking statements by the Company speak only as of the date
made, and the Company undertakes no obligation to update or revise such
statements to reflect events or circumstances after such date or to reflect the
occurrence of unanticipated events.

FINANCIAL CONDITION

The Company's financial ratios improved as illustrated below. The financial
condition remains strong, and the long-term debt to total capitalization ratio
remained low at 9.13%
<TABLE>
<CAPTION>
                                                           JULY 2, 2005             JANUARY 1, 2005
                                                           ------------             ---------------
<S>                                                        <C>                        <C>
                  Current Ratio                               1.86:1                     1.73:1
                  Quick Ratio                                 0.99:1                     0.83:1
                  LT Debt to Total Capital                    9.13%                      9.98%
                  Working Capital                          $5,273,153                 $4,167,876
</TABLE>

The Company paid $1,067,472 (plus accrued interest) in January 2005 relating to
the January 2004 acquisition of Fleetwood Enterprises, Inc.'s drapery operation
in Douglas, Georgia. This payment represented the final payment of the purchase
price due to Fleetwood. The Company drew on its line of credit to make this
payment. At July 2, 2005, the Company had no outstanding borrowings on its line
of credit. The Company expects to use its line of credit periodically in 2005.

In January 2004, the Company began assigning certain account receivables under a
"Receivables Servicing and Credit Approved Receivables Purchasing Agreement"
with CIT Group/Commercial Services Inc. Only receivables from sales to the
Hospitality industry may be assigned to CIT. Under the agreement CIT provides
credit checking, credit approval, and collection responsibilities for the
assigned receivables. If CIT approves an order from a Hospitality customer and
the resulting receivables are not paid or disputed by the Customer within ninety
days of sale, CIT will pay the receivable to the Company and assume ownership of
the receivable. CIT begins collection efforts for the assigned receivables (both
approved and not approved) when they are due (Hospitality sales are made on Net
30 terms). Hospitality customers are instructed to make payments directly to CIT
and CIT then wires collected funds to the Company. The Company pays CIT
six-tenths of a percent of all assigned receivables. Management believes this
cost is mostly offset by reductions in Bad Debt expense and collection costs.
The Company entered into this arrangement to take advantage of CIT's extensive
credit checking and collection capabilities. Management believes this
arrangement has improved liquidity.

                                       5
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS. (CONTINUED)

Days sales outstanding in accounts receivable were 34.8 days at July 2, 2005
compared to 33.4 days at July 3, 2004. Net accounts receivable decreased by
$201,399 and inventories decreased by $388,295 from July 3, 2004 to July 2,
2005. The decreases in net accounts receivable and inventories are primarily due
to the slowdown in sales to the recreation vehicle market.

Capital expenditures were $222,627 for the twenty-six weeks ended July 2, 2005,
compared to $552,420 for the same period of the prior year. The prior year
expenditures included a building addition to the Company's Elkhart, Indiana
facility of $303,410, which increased the Company's pleated shade capacity.
Capital expenditures for the second half of 2005 will be higher than
expenditures in the first half. The Company will spend approximately $400,000 to
convert its Enterprise-Resource-Planning (ERP) system to a different software
platform. Total capital expenditures for 2005 are projected to be in excess of
$1,000,000.

The Company had sporadic borrowings against its $5,000,000 line of credit during
the second quarter. The maximum borrowed was less than $400,000, and there were
no outstanding borrowings at the end of the second quarter.

Management does not foresee any events which will adversely affect its liquidity
during 2005.

SALES BY MARKET

The following table represents net sales to each of the three different markets
that the Company serves for the thirteen week and twenty-six week periods ended
July 2, 2005 and July 3, 2004:

<TABLE>
<CAPTION>
(dollars in thousands)

                             FOR THE THIRTEEN WEEKS ENDED             FOR THE TWENTY-SIX WEEKS ENDED
                         ------------------------------------      ------------------------------------
                           JULY 2, 2005         JULY 3, 2004        JULY 2, 2005          JULY 3, 2004
                         ---------------      ---------------      ---------------      ---------------
                           NET       % OF       NET       % OF       NET       % OF       NET       % OF
                          SALES     TOTAL      SALES     TOTAL      SALES     TOTAL      SALES     TOTAL
                         -------     ---      -------     ---      -------     ---      -------     ---
<S>                      <C>         <C>      <C>         <C>      <C>         <C>      <C>         <C>
Recreational Vehicle     $ 7,060      53%     $ 8,693      61%     $14,351      56%     $16,944      62%
Manufactured Housing       2,671      20%       2,631      18%       5,128      20%       4,873      18%
Hospitality                3,545      27%       2,997      21%       6,228      24%       5,296      20%
                         -------     ---      -------     ---      -------     ---      -------     ---
Total Net Sales          $13,276     100%     $14,321     100%     $25,707     100%     $27,113     100%
                         =======              =======              =======              =======
</TABLE>


                                       6
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS. (CONTINUED)

RESULTS OF OPERATIONS

THIRTEEN WEEK PERIOD ENDED JULY 2, 2005, (SECOND QUARTER 2005) COMPARED TO
THIRTEEN WEEK PERIOD ENDED JULY 3, 2004, (SECOND QUARTER 2004)

The following table shows a comparison of the results of operations between
Second Quarter 2005 and Second Quarter 2004:
<TABLE>
<CAPTION>
                                       SECOND QUARTER         %      SECOND QUARTER        %      $ INCREASE
                                           2005            OF SALES      2004           OF SALES   (DECREASE)     % CHANGE
                                       --------------      --------  --------------     --------  -----------     --------
<S>                                     <C>                  <C>     <C>                  <C>     <C>               <C>
Net Sales                               $ 13,275,952          100%   $ 14,320,830          100%   $(1,044,878)       -7.3%
Cost of Products Sold                     10,687,552         80.5%     11,349,047         79.2%      (661,495)       -5.8%
                                        ------------         ----    ------------         ----    -----------
Gross Profit                               2,588,400         19.5%      2,971,783         20.8%      (383,383)      -12.9%

Selling and Administrative Expenses        2,202,951         16.6%      2,081,898         14.6%       121,053         5.8%
                                        ------------         ----    ------------         ----    -----------
Operating Income                             385,449          2.9%        889,885          6.2%      (504,436)      -56.7%

Other Income (Expense)
    Interest, Investment and
       Other Income                           22,866          0.1%         26,035          0.2%        (3,169)      -12.2%
    Interest Expense                         (18,998)        -0.1%        (28,308)        -0.2%         9,310       -32.9%
                                        ------------         ----    ------------         ----    -----------
Earnings Before Income Taxes                 389,317          2.9%        887,612          6.2%      (498,295)      -56.1%
Provision for Income Taxes                   148,000          1.1%        349,000          2.4%      (201,000)      -57.6%
                                        ------------         ----    ------------         ----    -----------

NET INCOME                              $    241,317          1.8%   $    538,612          3.8%   $  (297,295)      -55.2%
                                        ============         ====    ============         ====    ===========
</TABLE>

Net sales for the Second Quarter 2005 were $13,275,952, compared to $14,320,830
for the same period in the previous year, a 7.3% decrease. This is due to an
18.8% drop in sales to the Company's recreational vehicle customers, partially
offset by increases of 1.5% and 18.3% to the Company's manufactured housing and
hospitality customers, respectively. The recreational vehicle industry reported
a drop in shipments of 4.9% for the Second Quarter 2005 compared to the same
period of the prior year. The manufactured housing industry reported that
shipments for the Second Quarter 2005 decreased by 0.3% compared to the same
period of the prior year.

Cost of products sold increased to 80.5% in the Second Quarter 2005 compared to
79.2% a year ago. The major reasons for the increase in this percentage were
higher raw material costs as a percentage of sales, and somewhat higher overhead
costs spread over a lower sales volume. Some of the increased costs are due to
the opening of the Company's Phoenix, Arizona plant, which began production in
December 2004.

Selling and administrative expenses were $2,202,951 in the Second Quarter 2005
versus $2,081,898 in the Second Quarter 2004. The reason for this increase was a
pretax charge of $165,647 in the Second Quarter 2005 resulting from the
Company's decision to convert its ERP system to a different software platform.
The percentage of selling and administrative expenses to net sales increased
from 14.6% to 16.6%. Without the one-time software charge, the Company's selling
and administrative costs for the Second Quarter 2005 would have been 15.3%.
Fixed costs being spread over a lower sales volume also contributed to the
increase in this percentage.


                                       7
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS. (CONTINUED)

Interest expense decreased to $18,998 in the Second Quarter 2005 from $28,308 in
the Second Quarter 2004, mostly because of the interest on the Fleetwood
liability that was accruing during the Second Quarter 2004 that the Company did
not incur in the same period of the current year.

Net income decreased to $241,317 in the Second Quarter 2005 compared to $538,612
in the Second Quarter 2004. This decrease is the result of reduced sales, a
lower gross profit percentage on sales, and the one-time charge for the disposal
of the Company's financial software package. Diluted earnings per share
decreased from $0.18 per share during the Second Quarter 2004 to $0.08 per share
during the Second Quarter 2005.

TWENTY-SIX WEEK PERIOD ENDED JULY 2, 2005, (FIRST SIX MONTHS 2005) COMPARED TO
TWENTY-SIX WEEK PERIOD ENDED JULY 3, 2004, (FIRST SIX MONTHS 2004)

The following table shows a comparison of the results of operations between
First Six Months 2005 and First Six Months 2004:
<TABLE>
<CAPTION>
                                            FIRST                       FIRST
                                         SIX MONTHS           %       SIX MONTHS           %      $ INCREASE
                                            2005           OF SALES      2004           OF SALES  (DECREASE)       % CHANGE
                                        ------------       --------  ------------       --------  -----------      --------
<S>                                     <C>                  <C>     <C>                  <C>     <C>               <C>
Net Sales                               $ 25,707,334          100%   $ 27,112,878          100%   $(1,405,544)       -5.2%
Cost of Products Sold                     20,517,235         79.8%     21,857,867         80.6%    (1,340,632)       -6.1%
                                        ------------         ----    ------------         ----    -----------
Gross Profit                               5,190,099         20.2%      5,255,011         19.4%       (64,912)       -1.2%

Selling and Administrative Expenses        4,146,408         16.1%      4,036,921         14.9%       109,487         2.7%
                                        ------------         ----    ------------         ----    -----------
Operating Income                           1,043,691          4.1%      1,218,090          4.5%      (174,399)      -14.3%

Other Income (Expense)
    Interest, Investment and
       Other Income                           40,159          0.2%         53,476          0.2%       (13,317)      -24.9%
    Interest Expense                         (41,197)        -0.2%        (55,070)        -0.2%        13,873       -25.2%
                                        ------------         ----    ------------         ----    -----------
Earnings Before Income Taxes               1,042,653          4.1%      1,216,496          4.5%      (173,843)      -14.3%
Provision for Income Taxes                   383,000          1.5%        477,000          1.8%       (94,000)      -19.7%
                                        ------------         ----    ------------         ----    -----------

NET INCOME                              $    659,653          2.6%   $    739,496          2.7%   $   (79,843)      -10.8%
                                        ============         ====    ============         ====    ===========
</TABLE>

Net sales for the First Six Months 2005 were $25,707,334, compared to
$27,112,878 for the same period in the previous year, a 5.2% decrease. This is
due to a 15.3% drop in sales to the Company's recreational vehicle customers,
partially offset by increases of 5.2% and 17.6% to the Company's manufactured
housing and hospitality customers, respectively. The recreational vehicle
industry reported mixed results for the first half of 2005, with travel trailer
shipments increasing by 3.4% and motor home shipments decreasing by 12.7% from a
year earlier. Total combined recreational vehicle industry shipments increased
0.3% for the first six months. The manufactured housing industry reported that
shipments for the first half of 2005 increased by 3.4% compared to the same
period of the prior year.

Cost of products sold decreased to 79.8% in the First Six Months 2005 compared
to 80.6% a year ago. The major reasons for the decrease in this percentage were
the higher costs of production during the prior year at the Douglas, Georgia
facility acquired from Fleetwood and the transition costs incurred by the


                                       8
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS. (CONTINUED)

Company to re-distribute most of the acquired business to its other facilities
during the prior year. Without these expenses, the cost of goods sold percentage
would have been 79.1% for the First Six Months 2004.

Selling and administrative expenses were $4,146,408 in the First Six Months 2005
versus $4,036,921 in the First Six Months 2004. The percentage of selling and
administrative expenses to net sales increased from 14.9% to 16.1%. This was
partially due to a one-time $165,647 pretax charge resulting from the Company's
decision to convert its ERP system to a different software platform. Without
this charge, selling and administrative expenses as a percentage of sales would
have been 15.5%. Excluding the software conversion, the reason for the increase
was due to fixed expenses being spread over a lower sales volume.

Net income decreased to $659,653 in the First Six Months 2005 compared to
$739,496 in the First Six Months 2004, a decrease of 10.8%. This decrease is
largely due to a lower sales volume as well as the one-time charge for the
disposal of the Company's financial software package. Diluted earnings per share
decreased from $0.25 for the first half of fiscal 2004 compared to $0.22 for the
same period of the current year.

EBITDA

EBITDA represents income before income taxes, interest expense, depreciation and
amortization, and gain or loss on disposal of assets. EBITDA is an approximation
of cash flow from operations before tax. The Company uses EBITDA as an internal
measure of performance and believes it is a useful and commonly used measure of
financial performance in addition to income before taxes and other profitability
measures under Generally Accepted Accounting Principles ("GAAP").

EBITDA is not a measure of performance under GAAP. EBITDA should not be
construed as an alternative to operating income and income before taxes as an
indicator of the Company's operations in accordance with GAAP. Nor is EBITDA an
alternative to cash flow from operating activities in accordance with GAAP. The
Company's definition of EBITDA can differ from that of other companies.

The following table reconciles Net Income, the most comparable measure under
GAAP, to EBITDA for the thirteen week and twenty-six week periods ended July 2,
2005 and July 3, 2004:
<TABLE>
<CAPTION>
                                             FOR THE THIRTEEN WEEKS ENDED          FOR THE TWENTY-SIX WEEKS
                                            -----------------------------      -------------------------------
                                            JULY 2, 2005     JULY 3, 2004      JULY 2, 2005       JULY 3, 2004
                                            ------------     ------------      ------------       ------------
<S>                                           <C>             <C>               <C>               <C>
Net Income                                    $241,317        $  538,612        $  659,653        $   739,496

Add:
     Interest                                   18,998            28,308            41,197             55,070
     Taxes                                     148,000           349,000           383,000            477,000
     Depreciation & Amortization               367,778           359,143           733,110            673,901
     Loss (Gain) on Disposal of Assets         154,915                --           160,622               (584)
                                              --------        ----------        ----------        -----------
EBITDA                                        $931,008        $1,275,063        $1,977,582        $ 1,944,883
                                              ========        ==========        ==========        ===========
</TABLE>


                                        9
<PAGE>

ITEM 4.  CONTROLS AND PROCEDURES.

(a) The Company's principal executive officer and principal financial officer
have reviewed the Company's disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) as of July 2, 2005 and have
concluded that they were adequate and effective.

(b) During the most recent fiscal quarter, there were no changes in the
Company's internal control over financial reporting identified in connection
with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or
15d-15 that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.

                           PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a) Exhibits:

             31.1  -  Certification of Chief Executive Officer and President

             31.2  -  Certification of Chief Financial Officer

             32  -    Certificate required by 18 U.S.C.ss.1350.


         (b) The Company filed a report on Form 8-K on May 9, 2005 for the
         purpose of furnishing the Company's May 9, 2005 press release
         announcing the results for the fiscal quarter ended April 2, 2005.


                                       10
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                   DECORATOR INDUSTRIES, INC.
                                                         (Registrant)



Date: August 12, 2005             By: /s/  William A. Bassett
                                           ------------------
                                           William A. Bassett,
                                           Chief Executive Officer and President


Date: August 12, 2005             By: /s/  Michael K. Solomon
                                           ------------------
                                           Michael K. Solomon,
                                           Chief Financial Officer


                                       11