##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 September 29, 2006

OR



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

For the transition period from  to

Commission File Number 333-116673



---

DA-LITE SCREEN COMPANY, INC.

(Exact Name of Registrant as Specified in its Charter)



---



|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Indiana                                                        |  | 35-1013951                             
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification Number)



|                                                        |  |           
|------------------------------------------------------- |  | ----------
|3100 North Detroit Street, P.O. Box 137 Warsaw, Indiana |  | 46581-0137
|(Address of Principal Executive Offices)                |  | (Zip Code)

Registrants telephone number, including area code: (574) 267-8101



---

Securities registered pursuant
to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None



---

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 a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ̈Accelerated
filer ̈Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes ̈No  x

As of September 29, 2006, there were 5,364.12 shares of the registrants common stock outstanding (all of which are privately owned and are not
traded on any public market).



---



---

##### Table of Contents

TABLE OF CONTENTS



|         |  |                                                                                       |  |     
|-------- |  | ------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                       |  | Page
|PART I   |  | Financial Information                                                                 |  |     
|         |  |                                                                                      
|Item 1.  |  | Condensed Consolidated Financial Statements (unaudited)                               |  | 1   
|         |  |                                                                                      
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 10  
|         |  |                                                                                      
|Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 15  
|         |  |                                                                                      
|Item 4.  |  | Controls and Procedures                                                               |  | 16  
|         |  |                                                                                      
|PART II  |  | Other Information                                                                     |  |     
|         |  |                                                                                      
|Item 1.  |  | Legal Proceedings                                                                     |  | 17  
|         |  |                                                                                      
|Item 1A. |  | Risk Factors                                                                          |  | 17  
|         |  |                                                                                      
|Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 17  
|         |  |                                                                                      
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 18  
|         |  |                                                                                      
|Item 6.  |  | Exhibits                                                                              |  | 18  
|         |  |                                                                                      
|         |  | Signatures                                                                            |  | 19  
|         |  |                                                                                      
|         |  | Exhibit Index                                                                         |  | 20  



i



---

##### Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

DA-LITE SCREEN COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)



|                                                                                                            |  |                               |         |   |                   |   |         |  
|----------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                            |  | (Unaudited)September 29, 2006 |         |   | December 30, 2005 |  
|Assets                                                                                                      |  |                               |         |   |                   |   |         |  
|Current Assets:                                                                                             |  |                               |         |   |                   |   |         |  
|Cash and cash equivalents                                                                                   |  | $                             | 13,831  |   |                   | $ | 12,547  |  
|Accounts receivable, less allowance for doubtful accounts                                                   |  |                               | 18,448  |   |                   |   | 16,492  |  
|Inventories                                                                                                 |  |                               | 13,246  |   |                   |   | 12,195  |  
|Prepaid expenses and other                                                                                  |  |                               | 451     |   |                   |   | 439     |  
|Prepaid income taxes                                                                                        |  |                               | 22      |   |                   |   | 179     |  
|                                                                                                            |  |                               |         |   |                   |   |         |  
|Total current assets                                                                                        |  |                               | 45,998  |   |                   |   | 41,852  |  
|                                                                                                            |  |                               |         |   |                   |   |         |  
|Property, plant and equipment                                                                               |  |                               | 55,479  |   |                   |   | 52,803  |  
|Less accumulated depreciation                                                                               |  |                               | 35,675  |   |                   |   | 32,610  |  
|                                                                                                            |  |                               |         |   |                   |   |         |  
|Net property, plant, and equipment                                                                          |  |                               | 19,804  |   |                   |   | 20,193  |  
|                                                                                                            |  |                               |         |   |                   |   |         |  
|Goodwill                                                                                                    |  |                               | 26,228  |   |                   |   | 25,851  |  
|Other assets, net                                                                                           |  |                               | 3,549   |   |                   |   | 5,193   |  
|                                                                                                            |  |                               |         |   |                   |   |         |  
|                                                                                                            |  | $                             | 95,579  |   |                   | $ | 93,089  |  
|                                                                                                            |  |                               |         |   |                   |   |         |  
|Liabilities and Stockholders Deficit                                                                       |  |                               |         |   |                   |   |         |  
|Current liabilities:                                                                                        |  |                               |         |   |                   |   |         |  
|Accounts payable                                                                                            |  | $                             | 4,153   |   |                   | $ | 4,318   |  
|Accrued expenses                                                                                            |  |                               |         |   |                   |   |         |  
|Interest                                                                                                    |  |                               | 5,030   |   |                   |   | 1,754   |  
|Other                                                                                                       |  |                               | 5,107   |   |                   |   | 4,495   |  
|                                                                                                            |  |                               |         |   |                   |   |         |  
|Total accrued expenses                                                                                      |  |                               | 10,137  |   |                   |   | 6,249   |  
|                                                                                                            |  |                               |         |   |                   |   |         |  
|Total current liabilities                                                                                   |  |                               | 14,290  |   |                   |   | 10,567  |  
|Long-term debt                                                                                              |  |                               | 140,200 |   |                   |   | 144,200 |  
|Minority interest                                                                                           |  |                               | 1,079   |   |                   |   | 960     |  
|                                                                                                            |  |                               |         |   |                   |   |         |  
|Total liabilities                                                                                           |  |                               | 155,569 |   |                   |   | 155,727 |  
|                                                                                                            |  |                               |         |   |                   |   |         |  
|Commitments and contingencies (note 9)                                                                      |  |                               |         |   |                   |   |         |  
|                                                                                                            |  |                              
|Stockholders deficit:                                                                                      |  |                               |         |   |                   |   |         |  
|Common stock, $1 par value. Authorized 1,000,000 shares; issued 10,686 shares                               |  |                               | 11      |   |                   |   | 11      |  
|Additional paid-in capital                                                                                  |  |                               | 618     |   |                   |   | 574     |  
|Accumulated deficit                                                                                         |  |                               | (38,418 | ) |                   |   | (40,036 | )
|Accumulated other comprehensive income                                                                      |  |                               | 1,918   |   |                   |   | 439     |  
|Less treasury stock, 5,321.88 shares at September 29, 2006 and 5,314.38 shares at December 30, 2005 at cost |  |                               | (24,119 | ) |                   |   | (23,626 | )
|                                                                                                            |  |                               |         |   |                   |   |         |  
|Total stockholders deficit                                                                                 |  |                               | (59,990 | ) |                   |   | (62,638 | )
|                                                                                                            |  |                               |         |   |                   |   |         |  
|                                                                                                            |  | $                             | 95,579  |   |                   | $ | 93,089  |  
|                                                                                                            |  |                               |         |   |                   |   |         |  

See accompanying notes to condensed consolidated financial statements.



1



---

##### Table of Contents

DA-LITE SCREEN COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, unaudited)



|                                              |  |                                 |        |   |                                 |   |        |                                 |  |                                 |         |  |   |        
|--------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------- | - | ------ | ------------------------------- |  | ------------------------------- | ------- |  | - | -------
|                                              |  | 13 WeeksEnded September 29,2006 |        |   | 13 WeeksEnded September 30,2005 |   |        | 39 weeksEnded September 29,2006 |  | 39 weeksEnded September 30,2005
|Net sales                                     |  | $                               | 42,711 |   |                                 | $ | 41,920 |                                 |  | $                               | 129,054 |  | $ | 125,874
|Cost of sales                                 |  |                                 | 26,538 |   |                                 |   | 25,227 |                                 |  |                                 | 78,422  |  |   | 76,420 
|                                              |  |                                 |        |   |                                 |   |        |                                 |  |                                 |         |  |   |        
|Gross profit                                  |  |                                 | 16,173 |   |                                 |   | 16,693 |                                 |  |                                 | 50,632  |  |   | 49,454 
|Selling, general, and administrative expenses |  |                                 | 4,066  |   |                                 |   | 3,904  |                                 |  |                                 | 14,033  |  |   | 13,117 
|                                              |  |                                 |        |   |                                 |   |        |                                 |  |                                 |         |  |   |        
|Operating income                              |  |                                 | 12,107 |   |                                 |   | 12,789 |                                 |  |                                 | 36,599  |  |   | 36,337 
|                                              |  |                                 |        |   |                                 |   |        |                                 |  |                                 |         |  |   |        
|Other expense (income):                       |  |                                 |        |   |                                 |   |        |                                 |  |                                 |         |  |   |        
|Interest                                      |  |                                 | 3,384  |   |                                 |   | 3,665  |                                 |  |                                 | 10,442  |  |   | 11,052 
|Minority interest                             |  |                                 | 44     |   |                                 |   | 24     |                                 |  |                                 | 119     |  |   | 77     
|Miscellaneous, net                            |  |                                 | (98    | ) |                                 |   | (11    | )                               |  |                                 | 425     |  |   | 54     
|                                              |  |                                 |        |   |                                 |   |        |                                 |  |                                 |         |  |   |        
|Total other expense                           |  |                                 | 3,330  |   |                                 |   | 3,678  |                                 |  |                                 | 10,986  |  |   | 11,183 
|                                              |  |                                 |        |   |                                 |   |        |                                 |  |                                 |         |  |   |        
|Income before income taxes                    |  |                                 | 8,777  |   |                                 |   | 9,111  |                                 |  |                                 | 25,613  |  |   | 25,154 
|Income taxes                                  |  |                                 | 411    |   |                                 |   | 285    |                                 |  |                                 | 1,192   |  |   | 893    
|                                              |  |                                 |        |   |                                 |   |        |                                 |  |                                 |         |  |   |        
|Net income                                    |  | $                               | 8,366  |   |                                 | $ | 8,826  |                                 |  | $                               | 24,421  |  | $ | 24,261 
|                                              |  |                                 |        |   |                                 |   |        |                                 |  |                                 |         |  |   |        

See accompanying notes to condensed consolidated financial statements.



2



---

##### Table of Contents

DA-LITE SCREEN COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands, unaudited)



|                                                                                  |  |                                |         |   |                                 |   |         |  
|--------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ------------------------------- | - | ------- | -
|                                                                                  |  | 39 weeksEndedSeptember 29,2006 |         |   | 39 weeksEnded September 30,2005 |  
|Cash flows from operating activities:                                             |  |                                |         |   |                                 |   |         |  
|Net income                                                                        |  | $                              | 24,421  |   |                                 | $ | 24,261  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                |         |   |                                 |   |         |  
|Depreciation                                                                      |  |                                | 2,970   |   |                                 |   | 3,319   |  
|Amortization and write-off of debt issuance costs                                 |  |                                | 681     |   |                                 |   | 607     |  
|Gain on disposal of assets                                                        |  |                                | (475    | ) |                                 |   |        |  
|Minority interest earnings                                                        |  |                                | 119     |   |                                 |   | 77      |  
|Change in:                                                                        |  |                                |         |   |                                 |   |         |  
|Accounts receivable                                                               |  |                                | (1,500  | ) |                                 |   | (1,100  | )
|Inventories                                                                       |  |                                | (817    | ) |                                 |   | (1,112  | )
|Prepaid expenses and other                                                        |  |                                | 5       |   |                                 |   | (355    | )
|Accounts payable                                                                  |  |                                | (570    | ) |                                 |   | (1,135  | )
|Accrued expenses                                                                  |  |                                | 4,091   |   |                                 |   | 3,349   |  
|Other                                                                             |  |                                |        |   |                                 |   | (24     | )
|                                                                                  |  |                                |         |   |                                 |   |         |  
|Net cash provided by operating activities                                         |  |                                | 28,924  |   |                                 |   | 27,887  |  
|                                                                                  |  |                                |         |   |                                 |   |         |  
|Cash flows from investing activities:                                             |  |                                |         |   |                                 |   |         |  
|Proceeds from sale of assets                                                      |  |                                | 1,339   |   |                                 |   |        |  
|Purchase of property, plant and equipment                                         |  |                                | (1,811  | ) |                                 |   | (2,029  | )
|                                                                                  |  |                                |         |   |                                 |   |         |  
|Net cash used in investing activities                                             |  |                                | (472    | ) |                                 |   | (2,029  | )
|                                                                                  |  |                                |         |   |                                 |   |         |  
|Cash flows from financing activities:                                             |  |                                |         |   |                                 |   |         |  
|Payments to retire senior notes                                                   |  |                                | (4,000  | ) |                                 |   |        |  
|Distributions to stockholders                                                     |  |                                | (22,808 | ) |                                 |   | (19,351 | )
|Repurchase of common stock                                                        |  |                                | (533    | ) |                                 |   | (350    | )
|Exercise of common stock options                                                  |  |                                | 84      |   |                                 |   | 508     |  
|                                                                                  |  |                                |         |   |                                 |   |         |  
|Net cash used in financing activities                                             |  |                                | (27,257 | ) |                                 |   | (19,193 | )
|                                                                                  |  |                                |         |   |                                 |   |         |  
|Effect of foreign currency exchange rate changes on cash and cash equivalents     |  |                                | 89      |   |                                 |   | (50     | )
|                                                                                  |  |                                |         |   |                                 |   |         |  
|Net change in cash and cash equivalents                                           |  |                                | 1,284   |   |                                 |   | 6,615   |  
|Cash and cash equivalents at beginning of period                                  |  |                                | 12,547  |   |                                 |   | 9,306   |  
|                                                                                  |  |                                |         |   |                                 |   |         |  
|Cash and cash equivalents at end of period                                        |  | $                              | 13,831  |   |                                 | $ | 15,921  |  
|                                                                                  |  |                                |         |   |                                 |   |         |  

See accompanying notes to condensed consolidated financial statements.



3



---

##### Table of Contents

DA-LITE SCREEN COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

The financial data presented herein is unaudited and should be read in conjunction with the consolidated financial statements and accompanying notes
included in the annual report on Form 10-K filed by Da-Lite Screen Company, Inc. (together with all of its subsidiaries, the Company or Da-Lite) for the fiscal year ended December 30, 2005. In the opinion of management,
the accompanying unaudited condensed consolidated financial statements include all of the adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. All
intercompany accounts and transactions have been eliminated. Results for interim periods should not be considered indicative of results for the full year.

The accompanying condensed consolidated financial statements include the accounts of Da-Lite Screen Company, Inc. (Da-Lite) and its subsidiary, Projecta B.V. (Projecta), a Netherlands limited liability company, which
is 96% owned by Da-Lite and Projectas wholly owned subsidiary Procolor S.A.S. (Procolor), a French corporation. All material intercompany accounts and transactions have been eliminated.

The Company uses a 52- or 53-week fiscal year ending on the last Friday of December. The first, second and third quarters of 2006 and 2005 were 13-week
periods. The Companys 2006 fiscal year will be a 52-week period and the 2005 fiscal year was a 52-week period.

2. Critical Accounting Policies
and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States
of America requires that management make a number of assumptions and estimates that affect the reported amounts of assets, liabilities, revenue and expenses in the consolidated financial statements and accompanying notes. Management bases its
estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on managements best knowledge of current events and actions that may impact the Company in the future, actual
results may differ from these estimates and assumptions. The Companys critical accounting policies are those that affect its consolidated financial statements materially and involve a significant level of judgment by management. There were no
changes to the Companys critical accounting policies during the quarter.

Revenue RecognitionThe Company recognizes
revenue when it has received an order from a customer, product has been shipped FOB shipping point, the sales price is fixed or determinable and the collectibility of sales price is reasonably assured. All amounts billed to customers in a sales
transaction related to shipping and handling are recorded as revenue, and costs incurred by the Company for shipping and handling are recorded as cost of sales in conformity with Emerging Issues Task Force (EITF) 00-10, Accounting for Shipping
and Handling Fees and Costs(EITF 00-10).

Allowance for Doubtful AccountsThe financial status of customers is routinely
checked and monitored by the Company when granting credit. The Company provides an allowance for doubtful accounts based upon historical experience and managements analysis of past due accounts.



4



---

##### Table of Contents

GoodwillGoodwill represents the excess of purchase price over the fair value of identifiable
net assets acquired. Management tests goodwill for impairment to determine whether its carrying value exceeds its implied fair value at least annually, or when events or changes in circumstances occur. Goodwill was not impaired in 2005 or during the
period ended September 29, 2006. The change in the balance of goodwill from December 30, 2005 to September 29, 2006 is the result of foreign currency translation.

Income TaxesDa-Lite is taxed under the provision of the Internal Revenue Code regulating small business corporations (Subchapter S). Under
the provision of Subchapter S, tax liabilities and benefits flow through to the stockholders of Da-Lite. Therefore, no provision or liability is recorded in the condensed consolidated financial statements for taxable income of Da-Lite. The Company
pays foreign income taxes on the earnings of Projecta and Procolor. Foreign income taxes are recorded in the consolidated financial statements.

3.
Reclassification

Certain prior-year financial information has been reclassified to conform to the fiscal 2006 financial statement
presentation.

For the thirteen weeks and thirty-nine weeks ended September 30, 2005, depreciation expense was classified separately
on the condensed consolidated statement of operations included in operating income below gross profit. For the thirteen weeks and thirty-nine weeks ended September 29, 2006, depreciation expense was included in Cost of sales and Selling,
general and administrative expenses. Cost of sales for the thirteen weeks and thirty-nine weeks ended September 30, 2005 was increased from amounts previously reported by $0.9 million and $3.2 million to conform to the fiscal 2006 presentation.
The amounts reclassified from Selling, general and administrative expenses were not significant in either period.

As discussed in note 2,
the Company records amounts billed for shipping and handling costs in accordance with EITF 00-10. Net sales for the thirteen weeks and thirty-nine weeks ended September 30, 2005 were increased from the amounts previously reported by $2.3
million and $6.6 million, respectively, to be in conformity with EITF 00-10 which prescribes that shipping billings be recorded in revenues and corresponding costs be recorded in cost of sales. Cost of sales for the thirteen weeks and thirty-nine
weeks ended September 30, 2005 were also increased from the amounts previously reported by $2.5 million and $7.1 million, respectively. Selling, general and administrative expenses were reduced by $0.2 million and $0.5 million for the thirteen
weeks and thirty-nine weeks ended September 30, 2005 to conform with EITF 00-10.

4. Notes Payable, Revolving Credit Agreement and Long-term Debt

Long-term debt at September 29, 2006 and December 30, 2005 consisted of the following (in thousands):



|                      |  |                   |         |                  |   |        
|--------------------- |  | ----------------- | ------- | ---------------- | - | -------
|                      |  | September 29,2006 |         | December 30,2005
|Senior notes due 2011 |  | $                 | 140,200 |                  | $ | 144,200



5



---

##### Table of Contents

The Company issued $160 million of 91/2% senior unsecured notes due in May 2011 during fiscal year 2004, which were subsequently exchanged for substantially identical notes that were registered with the Securities and
Exchange Commission (the 91/2% Senior Notes due 2011 or Notes). The net proceeds from
the issuance of the Notes were used during fiscal year 2004 to retire approximately $15.0 million of indebtedness outstanding under a then existing credit facility, to pay a special distribution to stockholders of approximately $134.6 million and
for general corporate purposes. The Company may redeem any of the Notes beginning on May 15, 2007 with an initial redemption price of 109.5% of their principal amount plus accrued interest. In addition, before May 15, 2007, the Company may
redeem up to 35% of the Notes at a redemption price of 109.5% of their principal amount plus accrued interest using the proceeds from sales of certain kinds of its capital stock. Any outstanding principal is due in May 2011 and interest is payable
semi-annually in arrears on May 15 and November 15 of each year.

In the Indenture related to the 91/2% Senior Notes due 2011, the Company agreed to covenants that limit it and its restricted subsidiaries (i.e.,
Projecta B.V., Procolor S.A.S.) ability, among other things, to: (a) incur additional debt and issue preferred stock, (b) pay dividends, acquire shares of capital stock, make payments on subordinated debt or make investments,
(c) place limitations on distributions from restricted subsidiaries, (d) issue or sell capital stock of restricted subsidiaries, (e) issue guarantees, (f) sell or exchange assets, (g) enter into transactions with
stockholders and affiliates, (h) create liens and (i) effect mergers. In addition, if a change of control occurs, each holder of Notes will have the right to require the Company to repurchase all or part of the holders Notes at a
price equal to 101% of their principal amount, plus any accrued interest to the date of purchase. The Company was in compliance with all covenants at September 29, 2006 and December 30, 2005.

The Company has an unsecured revolving credit facility that expires in April 2008 with maximum possible borrowings equal to $10.0 million which replaced
the $5.0 million revolving credit facility that expired in May 2006. At September 29, 2006 and December 30, 2005, the Company had no outstanding balances under these lines of credit. Interest on outstanding borrowings related to the $10.0
million line of credit is calculated at the prime rate, which was 8.25% on September 29, 2006.

The Companys Dutch subsidiary,
Projecta, has an overdraft line of credit with maximum possible borrowings equal to 1.5 million Euros. Interest on outstanding borrowings related to this line of credit is calculated at the Fortis basic rate plus 1.50%, the sum of which was
5.25% on September 29, 2006. At September 29, 2006 and December 30, 2005, Projecta had no outstanding balances under this line of credit.

The Company has provided an insurance carrier with a standby letter of credit for $0.5 million for self-insured amounts under its insurance program.

5. Stock Options

On December 31, 2005, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 123 (revised 2004), Share-Based Payment (SFAS 123R) using a prospective method. SFAS 123R requires the Company record compensation expense for stock options or other share-based awards when future awards are granted.

The Company has a nonqualified stock option plan under which options are granted to certain employees. Options under the plan generally
vest one-fifth each year from the anniversary date of grant and additional awards are generally made each year. During 2004 and 2002, the Company also granted options to certain employees that were immediately 100% vested. The options expire after
ten years from the date of grant. Fair value calculations are based on highly subjective assumptions about the future.



6



---

##### Table of Contents

The Company used the Black-Scholes option pricing model and the minimum value method and determined that the fair value
of grants made was not material.

The stock option activity and weighted average exercise prices follow:



|                                  |  |              |   |  |                |        |                                         |   |      
|--------------------------------- |  | ------------ | - |  | -------------- | ------ | --------------------------------------- | - | -----
|                                  |  | Year to Date
|                                  |  | Options      |   |  | Exercise Price |        | AggregateIntrinsic Value (in thousands)
|Outstanding at December 30, 2005  |  | 153          |   |  | $              | 16,530 |                                         |   |      
|Exercised                         |  | (9           | ) |  |                | 9,362  |                                         |   |      
|                                  |  |              |   |  |                |        |                                         |   |      
|Outstanding at September 29, 2006 |  | 144          |   |  | $              | 16,978 |                                         | $ | 2,150
|                                  |  |              |   |  |                |        |                                         |   |      
|Exercisable at September 29, 2006 |  | 142          |   |  | $              | 17,091 |                                         | $ | 2,104

6. Inventories

The Company accounts for its inventory at the lower of cost or market using the first-in, first-out (FIFO) method. Inventory at September 29, 2006 and December 31, 2005 is comprised of the following (in
thousands):



|                 |  |                    |        |                  |   |       
|---------------- |  | ------------------ | ------ | ---------------- | - | ------
|                 |  | September 29, 2006 |        | December 30,2005
|Raw materials    |  | $                  | 7,596  |                  | $ | 7,030 
|Work in progress |  |                    | 2,293  |                  |   | 1,651 
|Finished goods   |  |                    | 3,357  |                  |   | 3,514 
|                 |  |                    |        |                  |   |       
|                 |  | $                  | 13,246 |                  | $ | 12,195
|                 |  |                    |        |                  |   |       

7. Comprehensive Income

The changes in the components of comprehensive income are as follows for the periods ended (in thousands):



|                                                    |  |                                   |       |   |                                  |   |       |                                   |  |                                  |        |  |   |        |  
|--------------------------------------------------- |  | --------------------------------- | ----- | - | -------------------------------- | - | ----- | --------------------------------- |  | -------------------------------- | ------ |  | - | ------ | -
|                                                    |  | 13 Weeks Ended September 29, 2006 |       |   | 13 WeeksEnded September 30, 2005 |   |       | 39 weeks Ended September 29, 2006 |  | 39 weeksEnded September 30, 2005 |       
|Net income                                          |  | $                                 | 8,366 |   |                                  | $ | 8,826 |                                   |  | $                                | 24,421 |  | $ | 24,261 |  
|Other comprehensive income:                         |  |                                   |       |   |                                  |   |       |                                   |  |                                  |        |  |   |        |  
|Cumulative foreign exchange translation adjustments |  |                                   | (135  | ) |                                  |   | (74   | )                                 |  |                                  | 1,479  |  |   | (2,424 | )
|                                                    |  |                                   |       |   |                                  |   |       |                                   |  |                                  |        |  |   |        |  
|Total comprehensive income                          |  | $                                 | 8,231 |   |                                  | $ | 8,752 |                                   |  | $                                | 25,900 |  | $ | 21,837 |  
|                                                    |  |                                   |       |   |                                  |   |       |                                   |  |                                  |        |  |   |        |  



7



---

##### Table of Contents

8. Segment Information

The Company primarily manufactures projection screens and other meeting room equipment that are sold throughout the United States and Europe. Based on its operations, the Company has established two reportable
segments: United States and Europe. The United States segment includes the operations of Da-Lite; the Europe segment includes the operations of Projecta and Procolor. All significant intersegment transactions have been eliminated.

Operating cash flow is the measure reported to the chief operating decision maker for use in assessing segment performance and allocating resources.
Operating cash flow for segment reporting is net sales less operating costs and does not include depreciation and amortization, interest expense or minority interest. The Company does not allocate costs between segments.

The following table presents financial information by segment for the periods stated (in thousands):



|                       |  |                                   |        |                                  |   |                                   |  |                                  |         |  |   |        
|---------------------- |  | --------------------------------- | ------ | -------------------------------- | - | --------------------------------- |  | -------------------------------- | ------- |  | - | -------
|                       |  | 13 Weeks Ended September 29, 2006 |        | 13 WeeksEnded September 30, 2005 |   | 39 weeks Ended September 29, 2006 |  | 39 weeksEnded September 30, 2005
|Net sales:             |  |                                   |        |                                  |   |                                   |  |                                  |         |  |   |        
|United States          |  | $                                 | 36,667 |                                  | $ | 36,421                            |  | $                                | 108,397 |  | $ | 107,716
|Europe                 |  |                                   | 6,044  |                                  |   | 5,499                             |  |                                  | 20,657  |  |   | 18,158 
|                       |  |                                   |        |                                  |   |                                   |  |                                  |         |  |   |        
|Total net sales        |  | $                                 | 42,711 |                                  | $ | 41,920                            |  | $                                | 129,054 |  | $ | 125,874
|                       |  |                                   |        |                                  |   |                                   |  |                                  |         |  |   |        
|Operating income:      |  |                                   |        |                                  |   |                                   |  |                                  |         |  |   |        
|United States          |  | $                                 | 11,053 |                                  | $ | 11,883                            |  | $                                | 32,913  |  | $ | 33,491 
|Europe                 |  |                                   | 1,054  |                                  |   | 906                               |  |                                  | 3,686   |  |   | 2,846  
|                       |  |                                   |        |                                  |   |                                   |  |                                  |         |  |   |        
|Total operating income |  | $                                 | 12,107 |                                  | $ | 12,789                            |  | $                                | 36,599  |  | $ | 36,337 
|                       |  |                                   |        |                                  |   |                                   |  |                                  |         |  |   |        



|                  |  |                    |         |                  |   |        
|----------------- |  | ------------------ | ------- | ---------------- | - | -------
|                  |  | September 29, 2006 |         | December 30,2005
|Total assets      |  |                    |         |                  |   |        
|United States     |  | $                  | 72,090  |                  | $ | 69,662 
|Europe            |  |                    | 23,489  |                  |   | 23,427 
|                  |  |                    |         |                  |   |        
|Total assets      |  | $                  | 95,579  |                  | $ | 93,089 
|                  |  |                    |         |                  |   |        
|Total liabilities |  |                    |         |                  |   |        
|United States     |  | $                  | 151,380 |                  | $ | 151,203
|Europe            |  |                    | 4,189   |                  |   | 4,524  
|                  |  |                    |         |                  |   |        
|Total liabilities |  | $                  | 155,569 |                  | $ | 155,727
|                  |  |                    |         |                  |   |        



8



---

##### Table of Contents

9. Commitments and Contingencies

On May 19, 2006, Draper, Inc. (Draper), a competitor of the Company, filed an action entitled Draper, Inc. v. Da-Lite Screen Company, Inc. and Stewart Filmscreen Corporation in the United
States District Court for the Southern District of Indiana, Indianapolis Division. The complaint, as amended, alleges that certain projection screens manufactured by the Company and Stewart Filmscreen Corporation, another competitor of the Company,
infringe patents issued to Draper, and seeks unspecified damages and injunctive relief. The Company has filed an amended answer denying the allegations and asserting eight affirmative defenses. The defenses include: non-infringement, invalidity
based on prior art, and unenforceability because of inequitable conduct in procuring at least some of the patents in suit. The Company believes that it has good defenses to this suit and intends to vigorously defend this action.

In addition, the Company is subject to certain other legal proceedings and claims that have arisen in the ordinary course of business and which have not
been fully adjudicated. In the opinion of management, the Company does not have a potential liability related to any of these other current legal proceedings and claims that should individually or in the aggregate have a material adverse effect on
its financial condition, liquidity or results of operations.

However, the results of legal proceedings cannot be predicted with certainty.
Should the Company fail to prevail in legal matters, it is possible that its results of operations or financial condition could be materially adversely affected.



9



---

##### Table of Contents

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking
Statements

This quarterly report on Form 10-Q contains certain statements that may be deemed to be forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this report are
forward-looking statements. When used in this report, the words may, will, should, would, anticipate, estimate, expect, plan, believe,
predict, potential, intend, and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ
materially from those projected. These risks and uncertainties include, but are not limited to, changes in sales or industry trends, competition, retention of senior management and other key personnel, availability of materials or components,
ability to make continued product innovations, casualty or work stoppages at the Companys facilities, adverse results of lawsuits against the Company and currency exchange rates. Forward-looking statements are based on assumptions and
assessments made by the Companys management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Readers of this report are
cautioned not to place undue reliance on these forward-looking statements, as there can be no assurance that these forward-looking statements will prove to be accurate. Management undertakes no obligation to update any forward-looking statements.
This cautionary statement is applicable to all forward-looking statements contained in this report.

Overview

Da-Lite is the worlds leading manufacturer of projection screens based on internal estimates of market share. Projection screens are the
Companys main product line and the Company produces three types: (1) electrically operated screens, which have the ability to retract into a concealed ceiling recess or into a wall-mounted case, (2) wall screens, which are normally
mounted on an exposed wall surface and may either be manually retractable or attached to a rigid frame, and (3) portable screens which can easily be set up and removed. Da-Lite also sells custom engineered rear projection systems and
complementary presentation products such as lecterns, easels, audiovisual carts, monitor mounts and brackets for plasma and LCD displays.

Critical
Accounting Policies

Da-Lites critical accounting policies are summarized in the Companys Annual Report on Form 10­K for
the year ended December 30, 2005. As of September 29, 2006, the Companys critical accounting policies had not changed from December 30, 2005.



10



---

##### Table of Contents

Results of Operations

Thirteen Weeks Ended September 29, 2006, Compared with Thirteen Weeks Ended September 30, 2005

Net
Sales. Net sales were $42.7 million for the 13 weeks ended September 29, 2006, as compared to $41.9 million for the 13 weeks ended September 30, 2005, an increase of $0.8 million or 1.9%. Net sales by the Companys United States
(U.S.) operations increased 0.7%. In the U.S., electric screen sales increased $0.9 million primarily because demand for the Companys core business of electrically operated screens with viewing surfaces measuring 100 inches in diagonal and
above continues to grow. Wall screen sales decreased $0.3 million and were likely impacted by a slowdown in the housing market that has reduced the demand for the Companys products used in home cinemas. Portable screen sales decreased $0.2
million and sales of other products decreased $0.2 million from 2005 levels. The decrease in sales of other products was a result of lower sales of screen fabric. Net sales from the Companys European subsidiaries increased by $0.5 million or
9.9%, with the stronger Euro accounting for $0.3 million of the overall increase. The increase in Europe resulted from an improvement in economic outlook for key customers.

Cost of Sales. The cost of sales was $26.5 million for the 13 weeks ended September 29, 2006, as compared to $25.2 million for the 13 weeks
ended September 30, 2005, an increase of $1.3 million, or 5.2%. As a percentage of net sales, the cost of sales represented 62.1% and 60.2% for the 13 weeks ended September 29, 2006 and for the 13 weeks ended September 30, 2005,
respectively. This constitutes a 1.9 percentage-point reduction in margin. Margins at our U.S. facilities decreased 2.7 points due to a decrease in the custom engineered and complementary audiovisual products margins and an increase in commodity
costs. Margins at our European operations increased 0.6 points reflecting the increase in product volumes.

Selling, General and
Administrative Expenses. Selling, general and administrative expenses were $4.1 million for the 13 weeks ended September 29, 2006, as compared to $3.9 million for the 13 weeks ended September 30, 2005. Selling, general and
administrative expenses in the U.S. increased $0.1 million as increases in legal fees related to patent litigation were partially offset by decreases in Sarbanes-Oxley preparation expenses and bad debts. Selling, general and administrative expenses
in Europe increased $0.1 million as a result of increased spending in operating costs.

Interest. Interest expense totaled
$3.4 million for the 13 weeks ended September 29, 2006, as compared to $3.7 million for the 13 weeks ended September 30, 2005, a decrease of $0.3 million. The decrease was a result of a reduction in the outstanding amount of the 91/2% Senior Notes due 2011 issued in May 2004.

Miscellaneous, net. Miscellaneous, net was income of $0.1 million for the 13 weeks ended September 29, 2006, as compared to $0.0 million for
the 13 weeks ended September 30, 2005, an improvement of $0.1 million.

Income Taxes. As a subchapter S corporation for United
States tax purposes, the Company is generally not subject to United States federal and state income taxation. Rather, the Companys income, gains, losses, deductions and credits flow through to its stockholders and the Company makes
distributions to them to meet their tax obligations at an assumed maximum federal and state tax rate (based on the state with the highest tax rate in which any of the Companys stockholders reside). This assumed rate was 40.4% for the 13 weeks
ended September 29, 2006 and for the 13 weeks ended September 30, 2005. The Company pays foreign income taxes on the earnings of its European subsidiaries.



11



---

##### Table of Contents

Net Income. As a result of the aforementioned factors, net income decreased $0.4 million from $8.8
million for the 13 weeks ended September 30, 2005 to $8.4 million for the 13 weeks ended September 29, 2006.

Thirty-nine Weeks Ended
September 29, 2006, Compared with Thirty-nine Weeks Ended September 30, 2005

Net Sales. Net sales were $129.1
million for the 39 weeks ended September 29, 2006, as compared to $125.9 million for the 39 weeks ended September 30, 2005, an increase of $3.2 million or 2.5%. Net sales by the Companys United States (U.S.) operations increased
0.6%. In the U.S., electric screen sales increased $3.0 million primarily because demand for the Companys core business of electrically operated screens with viewing surfaces measuring 100 inches in diagonal and above continues to grow. Wall
screen sales decreased $0.9 million and were likely impacted by a slowdown in the housing market that has reduced the demand for the Companys products used in home cinemas. Portable screen sales decreased $0.7 million and sales of other
products decreased $0.7 million from 2005 levels. The decrease in sales of other products was a result of lower sales of screen fabric. Net sales from the Companys European subsidiaries increased by $2.5 million or 13.8%, with the weaker Euro
offsetting $0.3 million of the overall increase. The increase in Europe resulted from an improvement in economic outlook for key customers as well as an increase in demand for screens leading up to the World Cup soccer event.

Cost of Sales. The cost of sales was $78.4 million for the 39 weeks ended September 29, 2006, as compared to $76.4 million for the 39 weeks
ended September 30, 2005, an increase of $2.0 million, or 2.6%. As a percentage of net sales, the cost of sales represented 60.8% and 60.7% for the 39 weeks ended September 29, 2006 and the 39 weeks ended September 30, 2005,
respectively. This constitutes a 0.1 percentage-point reduction in margin. Margins at our U.S. facilities decreased 0.8 points due to a decrease in the custom engineered and complementary audiovisual products margins. Margins at our European
operation increased 1.6 points reflecting the increase in product volume.

Selling, General and Administrative Expenses. Selling,
general and administrative expenses were $14.0 million for the 39 weeks ended September 29, 2006, as compared to $13.1 million for the 39 weeks ended September 30, 2005. Selling, general and administrative expenses in the U.S. increased
$0.4 million. Increases in legal fees related to patent litigation and bad debt expense offset a decrease associated with Sarbanes-Oxley preparation expense. Selling, general and administrative expenses in Europe increased $0.5 million as a result
of increased spending in marketing programs and other operating costs.

Interest. Interest expense totaled $10.4 million for
the 39 weeks ended September 29, 2006, as compared to $11.1 million for the 39 weeks ended September 30, 2005, a decrease of $0.7 million. The decrease was a result of a reduction in the outstanding amount of the 91/2% Senior Notes due 2011 issued in May 2004.

Miscellaneous, net. Miscellaneous, net was $0.4 million for the 39 weeks ended September 29, 2006, as compared to $0.1 million for the 39
weeks ended September 30, 2005, an increase of $0.3 million. The increase was primarily due to the premium of $0.3 million paid to retire $4.0 million of the Companys 91/2% senior notes in May 2006.

Income Taxes. As a
subchapter S corporation for United States tax purposes, the Company is generally not subject to United States federal and state income taxation. Rather, the Companys income, gains, losses, deductions and credits flow through to its
stockholders and the Company makes distributions to them to meet their tax obligations at an assumed maximum federal and state tax rate



12



---

##### Table of Contents

(based on the state with the highest tax rate in which any of the Companys stockholders reside). This assumed rate
was 40.4% for the 39 weeks ended September 29, 2006 and for the 39 weeks ended September 30, 2005. The Company pays foreign income taxes on the earnings of its European subsidiaries.

Net Income. As a result of the aforementioned factors, net income increased $0.1 million from $24.3 million for the 39 weeks ended
September 30, 2005 to $24.4 million for the 39 weeks ended September 29, 2006.

Liquidity and Capital Resources

The Company expects to be able to fund its working capital requirements, interest expense, capital expenditures and its distributions to stockholders with
cash generated from operations, although there can be no assurances in this regard.

Depending on the Companys expected cash needs,
the prevailing prices of its 91/2% senior notes and other factors, the Company may repurchase some amount of its
outstanding 91/2% senior notes from time to time in the open market or otherwise.

Management believes the principal indicators of the Companys liquidity are its cash position, remaining availability under its bank credit
facilities and its excess working capital. At September 29, 2006, the Companys cash position was $13.8 million, an increase of $1.3 million from December 30, 2005. Additionally, the Company had an unsecured revolving credit facility,
with maximum possible borrowings equal to $10.0 million, which expires in April 2008. Interest on any outstanding borrowings related to this line of credit is calculated at the prime rate, which was 8.25% on September 29, 2006. At
September 29, 2006, the Company had no outstanding balances under this line of credit. Da-Lites working capital position increased to $31.7 million (including $13.8 million of cash and cash equivalents) at September 29, 2006, from
$31.3 million (including $12.5 million of cash and cash equivalents) at December 30, 2005.

The Companys Dutch subsidiary,
Projecta, has an overdraft line of credit, with maximum possible borrowings equal to 1.5 million Euros. Interest on outstanding borrowings related to this line of credit is calculated at the Fortis Basic Rate plus 1.50%, the sum of which was
5.25% on September 29, 2006. At September 29, 2006 and December 30, 2005, Projecta had no outstanding balances under this line of credit.

Cash Flows

For the first three quarters of 2006, cash provided by operating activities was $28.9 million, as compared to
$27.9 million during the first three quarters of 2005, an increase of $1.0 million or 3.7%. Cash used in investing activities was $0.5 million during the first three quarters of 2006, as compared to $2.0 million during the first three quarters of
2005. Cash used for investing activities in 2006 was significantly offset by the proceeds from the sale of the prior manufacturing facility in the Netherlands. All of the expenditures in 2005 were related to the purchase of property, plant and
equipment. Cash used in financing activities was $27.3 million during the first three quarters of 2006, as compared to $19.2 million during the first three quarters of 2005. The increase in cash used for financing activities in 2006 was related to
payments to retire $4.0 million of the Companys 91/2% senior notes in May 2006 and distributions to
shareholders.



13



---

##### Table of Contents

Capital Expenditures

Capital expenditures were $1.8 million during the first three quarters of 2006 compared to $2.0 million during the first three quarters of 2005. The Companys management currently expects to spend approximately
$2.5 million on capital expenditures in 2006 using cash generated from operations.

Contractual Obligations

The following table sets forth, as of September 29, 2006, certain of the Companys contractual obligations:



|                                                |  |                        |       |                 |      |           |      |           |       |                  |  
|----------------------------------------------- |  | ---------------------- | ----- | --------------- | ---- | --------- | ---- | --------- | ----- | ---------------- | -
|                                                |  | Payments due by period
|Contractual Obligations                         |  | Total                  |       | Less than1 year |      | 1-3 years |      | 3-5 years |       | More than5 years
|                                                |  | (in millions)         
|Interest and principal payments for senior debt |  | $                      | 206.8 |                 | 13.3 |           | 26.6 |           | 166.9 |                  | 
|Self-insurance letter of credit                 |  |                        | 0.5   |                 | 0.5  |           |     |           |      |                  | 
|                                                |  |                        |       |                 |      |           |      |           |       |                  |  
|Total                                           |  | $                      | 207.3 |                 | 13.8 |           | 26.6 |           | 166.9 |                  | 
|                                                |  |                        |       |                 |      |           |      |           |       |                  |  

Distributions

As a subchapter S corporation under the Internal Revenue Code of 1986, Da-Lite is not subject to U.S. federal income taxes. Instead, such taxes are payable by Da-Lites stockholders. Distributions are made by
Da-Lite to its stockholders to pay estimated taxes relating to taxable income allocated to them by the Company on a quarterly basis. Tax related distributions were $3.0 million and $13.0 million in the third quarter of 2006 and the first three
quarters of 2006, respectively.

The Company has paid regular distributions to its stockholders in 2006 at the monthly rate of $200 per
share or $1.1 million in the aggregate, subject to the covenants contained in the indenture related to its notes. Regular monthly distributions were paid to the Companys stockholders in 2005 at the monthly rate of $175 per share or $0.9
million in the aggregate.

Inflation

The Company manages its inflation risks by ongoing review of product selling prices and production costs. Management does not believe that inflation risks are material to the Companys business, its consolidated financial position,
results of operations or cash flows. However, there can be no assurance that future inflation will not have an adverse impact on the Companys operating results and financial condition.

Environmental

The Company has incurred, and in the
future will continue to incur, expenditures for matters relating to environmental control, remediation, monitoring and compliance. The Companys management believes that compliance with current environmental laws and regulations is not likely
to have a material adverse effect on the Companys financial condition, the results of its operations or its liquidity; however, environmental laws and regulations have changed rapidly in recent years and the Company may become subject to more
stringent environmental laws and regulations in the future.



14



---

##### Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and
accounts receivable.

The Company maintains cash and cash equivalents with well-capitalized financial institutions.

The Companys sales are not materially dependent on a single customer or a small group of customers. No one individual customer balance represented
more than 5% of the Companys total outstanding receivables as of September 29, 2006. Credit risk associated with the Companys receivables is representative of the geographic, industry and customer diversity associated with the
Companys global business.

The Company also maintains credit controls for evaluating and granting customer credit. As a result, the
Company may require that customers provide some type of financial guarantee in certain circumstances.

Foreign Currency Risk

Da-Lite routinely uses forward exchange contracts to economically hedge raw material purchases from vendors outside of the country of purchase.

Interest Rate Risk

The Company has
two credit facilities available for general corporate purposes that are subject to variable interest rates. Interest related to any outstanding balances on the Companys $10.0 million revolving credit facility in the U.S. is calculated at the
prime rate, which was 8.25% on September 29, 2006. At September 29, 2006, the Company had no outstanding balances under this revolving credit facility. Interest on outstanding borrowings in Europe, related to Projectas overdraft line
of credit, is calculated at the Fortis Basic Rate plus 1.50%, the sum of which was 5.25% on September 29, 2006. At September 29, 2006, Projecta had no outstanding balances under this credit facility.

At September 29, 2006, the Company had $140.2 million in fixed-rate long-term debt outstanding. There is no interest rate risk associated with the
Companys fixed rate debt. The fair market value of the fixed-rate debt (based on discounted cash flows reflecting borrowing rates currently available for debt with similar terms and maturities) varies with fluctuations in interest rates. A 10%
decrease in interest rates would have changed the fair market value of the fixed-rate debt to approximately $154 million from the fair value of approximately $148 million at September 29, 2006. Note that financial instruments are described as
cash or contractual obligations or rights to pay or receive cash. The fair value of all other financial instruments approximates the carrying value because of the short-term maturity of these instruments.



15



---

##### Table of Contents

Item 4. Controls and Procedures.



|(a) | Evaluation of Disclosure Controls and Procedures. Based on the evaluation required by Rule 15d-15(e) under the Securities Exchange Act of 1934, the principal executive
officer and principal financial officer of the Company have concluded that the Companys disclosure controls and procedures (as defined in Rule 15d-15(e)), as of the end of the period covered by this report, were effective to ensure that the
information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. The
disclosure controls and procedures are designed to only provide reasonable assurance of achieving the desired control objections.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Changes in Internal Control Over Financial Reporting. There were no changes in the Companys internal control over financial reporting that occurred during the last
fiscal quarter that has materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



16



---

##### Table of Contents

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

On May 19, 2006, Draper, Inc. (Draper), a competitor of the
Company, filed an action entitled Draper, Inc. v. Da-Lite Screen Company, Inc. and Stewart Filmscreen Corporation in the United States District Court for the Southern District of Indiana, Indianapolis Division. The complaint, as amended,
alleges that certain projection screens manufactured by the Company and Stewart Filmscreen Corporation, another competitor of the Company, infringe patents issued to Draper, and seeks unspecified damages and injunctive relief. The Company has filed
an amended answer denying the allegations and asserting eight affirmative defenses. The defenses include: non-infringement, invalidity based on prior art, and unenforceability because of inequitable conduct in procuring at least some of the patents
in suit. The Company believes that it has good defenses to this suit and intends to vigorously defend this action. The results of legal proceedings cannot be predicted with certainty, and it is possible that a failure of the Company to prevail in
this action could have a material adverse effect on its results of operations or financial condition.

Item 1A. Risk Factors

In addition to the risk factors previously disclosed in the Companys Form
10-K, the following are important factors which could cause actual results or events to differ materially from those contained in any forward looking statements made by or on behalf of the Company.

The results of legal proceedings cannot be predicted with certainty. Should the Company fail to prevail in legal matters, it is possible that its
results of operations or financial condition could be materially adversely affected.

The Company is subject to certain legal
proceedings and claims that have arisen in the ordinary course of business and which have not been fully adjudicated. These legal matters could have a materially adverse effect on the Companys financial condition, liquidity or results of
operations should the Company fail to prevail in any of these legal proceedings or claims.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the third quarter of 2006,
the Company repurchased 6.0 shares from stockholders. These transactions were exempt from registration pursuant to, among other things, Section 4(2) of the Securities Act of 1933, as amended.



17



---

##### Table of Contents

Item 4. Submission of Matters to a Vote of Security Holders.

Our annual meeting of shareholders was held
on July 18, 2006. Set forth below are the matters that were presented to and voted upon by our shareholders, and the results of such shareholders votes.

Election of directors.



|                   |  |           |  |               
|------------------ |  | --------- |  | --------------
|Nominee            |  | Votes For |  | Votes Withheld
|James S. Cownie    |  | 5,309.13  |  |              
|                   |  |          
|James M. Hoak      |  | 5,309.13  |  |              
|                   |  |          
|Wayne Kern         |  | 5,309.13  |  |              
|                   |  |          
|Richard E. Lundin  |  | 5,309.13  |  |              
|                   |  |          
|David J. Lundquist |  | 5,309.13  |  |              
|                   |  |          
|David N. Walthall  |  | 5,309.13  |  |              

Item 6. Exhibits



|            |  |                                                                                                                                
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                    
|31.1        |  | Certification of CEO pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|            | 
|31.2        |  | Certification of CFO pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|            | 
|32.1        |  | Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  
|            | 
|32.2        |  | Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  



18



---

##### Table of Contents

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.



DA-LITE SCREEN COMPANY, INC. (Registrant)By:

/s/ Jerry C. YoungJerry C. YoungVice President  Finance and Chief Financial Officer (Principal Financial and Accounting Officer)


Date: October 31, 2006



19



---

##### Table of Contents

EXHIBIT INDEX



|            |  |                                                                                                                                
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                    
|31.1        |  | Certification of CEO pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|            | 
|31.2        |  | Certification of CFO pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|            | 
|32.1        |  | Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  
|            | 
|32.2        |  | Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  



20