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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



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FORM 10-Q



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

For the quarterly period ended March 31, 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



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DA-LITE SCREEN COMPANY, INC.

(Exact Name of Registrant as Specified in its Charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|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



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

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



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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 May 1, 2006, there were 5,368.62 shares of the registrants common stock outstanding (all of which are privately owned and are not traded
on any public market).



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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                            |  | 14  
|        |  |                                                                                      
|Item 4. |  | Controls and Procedures                                                               |  | 15  
|        |  |                                                                                      
|PART II |  | Other Information                                                                     |  |     
|        |  |                                                                                      
|Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 16  
|        |  |                                                                                      
|Item 6. |  | Exhibits                                                                              |  | 16  
|        |  |                                                                                      
|        |  | Signatures                                                                            |  | 17  
|        |  |                                                                                      
|        |  | Exhibit Index                                                                         |  | 18  



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PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

DA-LITE SCREEN COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)



|                                                                                                        |  |                           |         |   |                   |         |  
|------------------------------------------------------------------------------------------------------- |  | ------------------------- | ------- | - | ----------------- | ------- | -
|                                                                                                        |  | (Unaudited)March 31, 2006 |         |   | December 30, 2005 |        
|Assets                                                                                                  |  |                           |         |   |                   |         |  
|Current Assets:                                                                                         |  |                           |         |   |                   |         |  
|Cash and cash equivalents                                                                               |  | $                         | 16,138  |   |                   | 12,547  |  
|Accounts receivable, less allowance for doubtful accounts                                               |  |                           | 18,945  |   |                   | 16,492  |  
|Inventories                                                                                             |  |                           | 12,344  |   |                   | 12,195  |  
|Prepaid expenses and other                                                                              |  |                           | 551     |   |                   | 439     |  
|Prepaid income taxes                                                                                    |  |                           | 119     |   |                   | 179     |  
|                                                                                                        |  |                           |         |   |                   |         |  
|Total current assets                                                                                    |  |                           | 48,097  |   |                   | 41,852  |  
|                                                                                                        |  |                           |         |   |                   |         |  
|Property, plant and equipment                                                                           |  |                           | 54,061  |   |                   | 52,803  |  
|Less accumulated depreciation                                                                           |  |                           | 33,715  |   |                   | 32,610  |  
|                                                                                                        |  |                           |         |   |                   |         |  
|Net property, plant, and equipment                                                                      |  |                           | 20,346  |   |                   | 20,193  |  
|                                                                                                        |  |                           |         |   |                   |         |  
|Goodwill                                                                                                |  |                           | 25,984  |   |                   | 25,851  |  
|Other assets, net                                                                                       |  |                           | 5,018   |   |                   | 5,193   |  
|                                                                                                        |  |                           |         |   |                   |         |  
|                                                                                                        |  | $                         | 99,445  |   |                   | 93,089  |  
|                                                                                                        |  |                           |         |   |                   |         |  
|Liabilities and Stockholders Deficit                                                                   |  |                           |         |   |                   |         |  
|Current liabilities:                                                                                    |  |                           |         |   |                   |         |  
|Accounts payable                                                                                        |  | $                         | 5,127   |   |                   | 4,318   |  
|Accrued expenses                                                                                        |  |                           |         |   |                   |         |  
|Interest                                                                                                |  |                           | 5,179   |   |                   | 1,754   |  
|Other                                                                                                   |  |                           | 4,007   |   |                   | 4,495   |  
|                                                                                                        |  |                           |         |   |                   |         |  
|Total accrued expenses                                                                                  |  |                           | 9,186   |   |                   | 6,249   |  
|                                                                                                        |  |                           |         |   |                   |         |  
|Total current liabilities                                                                               |  |                           | 14,313  |   |                   | 10,567  |  
|Long-term debt                                                                                          |  |                           | 144,200 |   |                   | 144,200 |  
|Minority interest                                                                                       |  |                           | 993     |   |                   | 960     |  
|                                                                                                        |  |                           |         |   |                   |         |  
|Total liabilities                                                                                       |  |                           | 159,506 |   |                   | 155,727 |  
|                                                                                                        |  |                           |         |   |                   |         |  
|Stockholders deficit:                                                                                  |  |                           |         |   |                   |         |  
|Common stock, $1 par value. Authorized 1,000,000 shares; issued 10,686 shares                           |  |                           | 11      |   |                   | 11      |  
|Additional paid-in capital                                                                              |  |                           | 602     |   |                   | 574     |  
|Accumulated deficit                                                                                     |  |                           | (37,927 | ) |                   | (40,036 | )
|Accumulated other comprehensive income                                                                  |  |                           | 944     |   |                   | 439     |  
|Less treasury stock, 5,375.62 shares at March 31, 2006 and 5,371.62 shares at December 30, 2005 at cost |  |                           | (23,691 | ) |                   | (23,626 | )
|                                                                                                        |  |                           |         |   |                   |         |  
|Total stockholders deficit                                                                             |  |                           | (60,061 | ) |                   | (62,638 | )
|Commitments and contingencies (note 9)                                                                  |  |                           |         |   |                   |         |  
|                                                                                                        |  |                           |         |   |                   |         |  
|                                                                                                        |  | $                         | 99,445  |   |                   | 93,089  |  
|                                                                                                        |  |                           |         |   |                   |         |  

See accompanying notes to condensed consolidated financial statements.



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DA-LITE SCREEN COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts, unaudited)



|                                              |  |                             |          |   |                            |          |  
|--------------------------------------------- |  | --------------------------- | -------- | - | -------------------------- | -------- | -
|                                              |  | 13 WeeksEnded March 31,2006 |          |   | 13 WeeksEnded April 1,2005 |         
|Net sales                                     |  | $                           | 42,976   |   |                            | 41,915   |  
|Cost of sales                                 |  |                             | 25,655   |   |                            | 25,555   |  
|                                              |  |                             |          |   |                            |          |  
|Gross profit                                  |  |                             | 17,321   |   |                            | 16,360   |  
|Selling, general, and administrative expenses |  |                             | 5,379    |   |                            | 4,586    |  
|                                              |  |                             |          |   |                            |          |  
|Operating income                              |  |                             | 11,942   |   |                            | 11,774   |  
|                                              |  |                             |          |   |                            |          |  
|Other expense (income):                       |  |                             |          |   |                            |          |  
|Interest, net                                 |  |                             | 3,486    |   |                            | 3,694    |  
|Minority interest                             |  |                             | 33       |   |                            | 32       |  
|Miscellaneous, net                            |  |                             | (1       | ) |                            | (1       | )
|                                              |  |                             |          |   |                            |          |  
|Total other expense                           |  |                             | 3,518    |   |                            | 3,725    |  
|                                              |  |                             |          |   |                            |          |  
|Income before income taxes                    |  |                             | 8,424    |   |                            | 8,049    |  
|Income taxes                                  |  |                             | 340      |   |                            | 374      |  
|                                              |  |                             |          |   |                            |          |  
|Net income                                    |  | $                           | 8,084    |   |                            | 7,675    |  
|                                              |  |                             |          |   |                            |          |  
|Basic earnings per share                      |  | $                           | 1,504.08 |   |                            | 1,434.13 |  
|                                              |  |                             |          |   |                            |          |  
|Basic weighted-average shares outstanding     |  |                             | 5,374.72 |   |                            | 5,351.69 |  
|                                              |  |                             |          |   |                            |          |  
|Diluted earnings per share                    |  | $                           | 1,485.25 |   |                            | 1,413.57 |  
|                                              |  |                             |          |   |                            |          |  
|Diluted weighted-average shares outstanding   |  |                             | 5,442.84 |   |                            | 5,429.52 |  
|                                              |  |                             |          |   |                            |          |  

See accompanying notes to condensed consolidated financial statements.



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DA-LITE SCREEN COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands, unaudited)



|                                                                                  |  |                             |        |   |                            |        |  
|--------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | -------------------------- | ------ | -
|                                                                                  |  | 13 WeeksEnded March 31,2006 |        |   | 13 WeeksEnded April 1,2005 |       
|Cash flows from operating activities:                                             |  |                             |        |   |                            |        |  
|Net income                                                                        |  | $                           | 8,084  |   |                            | 7,675  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                             |        |   |                            |        |  
|Depreciation                                                                      |  |                             | 1,008  |   |                            | 1,155  |  
|Amortization and write-off of debt issuance costs                                 |  |                             | 194    |   |                            | 201    |  
|Minority interest earnings                                                        |  |                             | 33     |   |                            | 32     |  
|Change in:                                                                        |  |                             |        |   |                            |        |  
|Accounts receivable                                                               |  |                             | (2,121 | ) |                            | (913   | )
|Inventories                                                                       |  |                             | (65    | ) |                            | (369   | )
|Prepaid expenses and other                                                        |  |                             | (106   | ) |                            | (423   | )
|Accounts payable                                                                  |  |                             | 494    |   |                            | (274   | )
|Accrued expenses                                                                  |  |                             | 2,968  |   |                            | 2,857  |  
|Other                                                                             |  |                             | (19    | ) |                            | 1      |  
|                                                                                  |  |                             |        |   |                            |        |  
|Net cash provided by operating activities                                         |  |                             | 10,470 |   |                            | 9,942  |  
|                                                                                  |  |                             |        |   |                            |        |  
|Cash flows from investing activities:                                             |  |                             |        |   |                            |        |  
|Purchase of property, plant and equipment                                         |  |                             | (915   | ) |                            | (676   | )
|                                                                                  |  |                             |        |   |                            |        |  
|Net cash used in investing activities                                             |  |                             | (915   | ) |                            | (676   | )
|                                                                                  |  |                             |        |   |                            |        |  
|Cash flows from financing activities:                                             |  |                             |        |   |                            |        |  
|Distributions to stockholders                                                     |  |                             | (5,975 | ) |                            | (5,116 | )
|Repurchase of common stock                                                        |  |                             | (97    | ) |                            | (350   | )
|Exercise of common stock options                                                  |  |                             | 60     |   |                            | 132    |  
|                                                                                  |  |                             |        |   |                            |        |  
|Net cash used in financing activities                                             |  |                             | (6,012 | ) |                            | (5,334 | )
|                                                                                  |  |                             |        |   |                            |        |  
|Effect of foreign currency exchange rate changes on cash and cash equivalents     |  |                             | 48     |   |                            | 31     |  
|                                                                                  |  |                             |        |   |                            |        |  
|Net change in cash and cash equivalents                                           |  |                             | 3,591  |   |                            | 3,962  |  
|Cash and cash equivalents at beginning of period                                  |  |                             | 12,547 |   |                            | 9,306  |  
|                                                                                  |  |                             |        |   |                            |        |  
|Cash and cash equivalents at end of period                                        |  | $                           | 16,138 |   |                            | 13,268 |  
|                                                                                  |  |                             |        |   |                            |        |  

See accompanying notes to condensed consolidated financial statements.



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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 wholly owned 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 quarters of 2005 and 2006 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 U.S. generally accepted accounting principles 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.



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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
first quarter of 2006. The change in the balance of goodwill from December 30, 2005 to March 31, 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 ended April 1, 2005, depreciation expense was classified separately on the condensed consolidated statement of operations
included in operating income below gross profit. For the thirteen weeks ended March 31, 2006, depreciation expense was included in Cost of sales and Selling, general and administrative expenses. Cost of sales for the thirteen weeks ended
April 1, 2005 was increased from amounts previously reported by $1.1 million for the thirteen weeks ended April 1, 2005 to conform with the fiscal 2006 presentation.

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 ended April 1, 2005 were increased from the amounts previously reported by $2.0 million 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 ended April 1, 2005 were also increased from the amounts previously reported by $2.2 million and Selling, general and administrative expenses were reduced by $0.2 million for the thirteen weeks ended
April 1, 2005 to conform with EITF 00-10.

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

Long-term debt at March 31, 2006 and December 30, 2005 consisted of the following (in thousands):



|                      |  |                |         |                  |        
|--------------------- |  | -------------- | ------- | ---------------- | -------
|                      |  | March 31, 2006 |         | December 30,2005
|Senior notes due 2011 |  | $              | 144,200 |                  | 144,200

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



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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 has an unsecured revolving credit facility that expires in May 2006 with maximum possible borrowings equal to $5.0 million. At March 31,
2006 and December 30, 2005, the Company had no outstanding balances under this line of credit. Interest on outstanding borrowings related to this line of credit is calculated at the prime rate, which was 7.75% on March 31, 2006.

Projecta, the Companys Dutch subsidiary, has an overdraft line of credit with maximum possible borrowings equal to the lower of
1.5 million Euros or certain percentages of Projectas eligible accounts receivable and inventory. At March 31, 2006 and December 30, 2005, Projecta had no outstanding balances under this line of credit. 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 4.75% on March 31, 2006.

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. Earnings Per Share

Basic earnings per share is computed using the weighted average number of actual common shares
outstanding during the period. Diluted earnings per share reflect the potential dilution that would occur from the exercise of common stock options outstanding. The following table presents the calculations of earnings per share for the periods
ended (in thousands except share data):



|                                            |  |                              |          |                            |         
|------------------------------------------- |  | ---------------------------- | -------- | -------------------------- | --------
|                                            |  | 13 Weeks Ended March 31,2006 |          | 13 WeeksEnded April 1,2005
|Net income                                  |  | $                            | 8,084    |                            | 7,675   
|                                            |  |                              |          |                            |         
|Basic weighted average shares outstanding   |  |                              | 5,374.72 |                            | 5,351.69
|Dilutive effect of stock options            |  |                              | 68.12    |                            | 77.83   
|                                            |  |                              |          |                            |         
|Diluted weighted average shares outstanding |  | $                            | 5,442.84 |                            | 5,429.52
|                                            |  |                              |          |                            |         
|Earnings per share:                         |  |                              |          |                            |         
|Basic                                       |  | $                            | 1,504.08 |                            | 1,434.13
|Diluted                                     |  |                              | 1,485.25 |                            | 1,413.57



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6. 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 will require
the Company to 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. No options were granted
during 2005 or the first quarter of 2006. The plan authorizes grants of options to purchase 737 shares, all of which have been granted. Options under the plan generally vest one-fifth each year from the anniversary date of grant. For previously
granted options, the Company used the Black-Scholes option pricing model and the minimum value method and determined that the fair value of grants made and their effect on net income was not material.

There were no anti-dilutive securities outstanding at March 31, 2006 or April 1, 2005.

7. Inventories

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



|                 |  |                |        |                  |       
|---------------- |  | -------------- | ------ | ---------------- | ------
|                 |  | March 31, 2006 |        | December 30,2005
|Raw materials    |  | $              | 7,106  |                  | 7,030 
|Work in progress |  |                | 1,732  |                  | 1,651 
|Finished goods   |  |                | 3,506  |                  | 3,514 
|                 |  |                |        |                  |       
|                 |  | $              | 12,344 |                  | 12,195
|                 |  |                |        |                  |       

8. Comprehensive Income

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



|                                                    |  |                               |       |                             |        |  
|--------------------------------------------------- |  | ----------------------------- | ----- | --------------------------- | ------ | -
|                                                    |  | 13 Weeks Ended March 31,
2006 |       | 13 WeeksEnded April 1, 2005 |       
|Net income                                          |  | $                             | 8,084 |                             | 7,675  |  
|Other comprehensive income:                         |  |                               |       |                             |        |  
|Cumulative foreign exchange translation adjustments |  |                               | 505   |                             | (1,067 | )
|                                                    |  |                               |       |                             |        |  
|Total comprehensive income                          |  | $                             | 8,589 |                             | 6,608  |  
|                                                    |  |                               |       |                             |        |  



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9. 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 March 31,
2006 |         | 13 WeeksEnded April 1, 2005
|Net sales:             |  |                               |         |                             |        
|United States          |  | $                             | 35,879  |                             | 35,140 
|Europe                 |  |                               | 7,097   |                             | 6,775  
|                       |  |                               |         |                             |        
|Total net sales        |  | $                             | 42,976  |                             | 41,915 
|                       |  |                               |         |                             |        
|Operating income:      |  |                               |         |                             |        
|United States          |  | $                             | 10,790  |                             | 10,588 
|Europe                 |  |                               | 1,152   |                             | 1,186  
|                       |  |                               |         |                             |        
|Total operating income |  | $                             | 11,942  |                             | 11,774 
|                       |  |                               |         |                             |        
|                       |  |                              
|                       |  | March 31, 2006                |         | December 30, 2005          
|Total assets           |  |                               |         |                             |        
|United States          |  | $                             | 74,790  |                             | 69,662 
|Europe                 |  |                               | 24,655  |                             | 23,427 
|                       |  |                               |         |                             |        
|Total assets           |  | $                             | 99,445  |                             | 93,089 
|                       |  |                               |         |                             |        
|Total liabilities      |  |                               |         |                             |        
|United States          |  | $                             | 155,030 |                             | 151,203
|Europe                 |  |                               | 4,476   |                             | 4,524  
|                       |  |                               |         |                             |        
|Total liabilities      |  | $                             | 159,506 |                             | 155,727
|                       |  |                               |         |                             |        

10. Commitments and Contingencies

The Company is involved in certain legal proceedings in the ordinary course of business. Management believes that all of the Companys pending
litigation is routine in nature and that none of this litigation is likely to have a material adverse effect on the results of operations or financial position of the Company.



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11. Subsequent Event

On April 24, 2006, the Company entered into a new two-year agreement for an unsecured revolving credit facility, with maximum possible borrowings equal to $10.0 million, with Lake City Bank (the
Bank). The terms of the new two-year unsecured revolving credit facility are substantially similar to a pre-existing credit agreement with the Bank that allowed for maximum borrowings of $5.0 million and which was due to expire on
May 1, 2006. Interest on any outstanding borrowings related to the new line of credit is calculated at the prime rate, which was 7.75% on the signing date of the agreement. The previous financing agreement with the Bank was replaced with the
new unsecured revolving credit facility discussed above.



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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 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 and monitor mounts.

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 March 31, 2006, the Companys critical
accounting policies had not changed from December 30, 2005.

Results of Operations

Thirteen Weeks Ended March 31, 2006, Compared with Thirteen Weeks Ended April 1, 2005

Net Sales. Net sales were $43.0 million for the 13 weeks ended March 31, 2006, as compared to $41.9 million for the 13 weeks ended
April 1, 2005, an increase of $1.1 million or 2.5%. Sales by the Companys United States (U.S.) operations increased 2.1%. In the U.S., electric screen sales increased $0.9 million, wall screen sales decreased $0.4 million, and portable
screen sales remained unchanged from 2005 levels. Net sales from the Companys European subsidiaries increased by $0.3 million or



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4.8%. The stronger dollar reduced U.S. dollar translated sales by $0.6 million. The increase in Europe resulted from an
improvement in economic outlook for key customers as well as an increase in demand for screens leading to the World Cup soccer event.

Cost of Sales. The cost of sales was $25.7 million for the first quarter of 2006, as compared to $25.6 million for the first quarter of 2005, an increase of $0.1 million, or 0.4%. As a percentage of net sales, the cost of sales
represented 59.7% and 61.0% for the first quarter of 2006 and the first quarter of 2005, respectively. This constitutes a 1.3 percentage-point improvement in margin. Margins at our U.S. facilities increased 0.8 points, the result of incremental
productivity improvements and cost savings that have been implemented throughout our facilities. Margins at our European operations increased 1.3 points reflecting the increase in product volumes.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $5.4 million in the first quarter of 2006, as
compared to $4.6 million for the first quarter of 2005. Selling, general and administrative expenses in the U.S. increased $0.5 million resulting from increased marketing and travel expense together with an increase in bad debt expense. Selling,
general and administrative expenses in Europe increased $0.3 million as a result of increased spending in marketing programs designed to offset the negative sales trend demonstrated in 2005.

Interest, net. Interest expense totaled $3.5 million for the first quarter of 2006, as compared to $3.7 million for the first quarter of 2005, a
decrease of $0.2 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.

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% in the first quarters of 2005 and 2006. 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 $0.4 million from $7.7 million for the first quarter of 2005 to $8.1 million for the first quarter of 2006.

Liquidity and Capital
Resources

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 March 31, 2006, the Companys cash position was $16.1 million, an increase of $3.6 million from December 30, 2005. Additionally, the Company had an unsecured
revolving credit facility, with maximum possible borrowings equal to $5.0 million, which expires in May 2006. Interest on any outstanding borrowings related to this line of credit is calculated at the prime rate, which was 7.75% on March 31,
2006. At March 31, 2006, the Company had no outstanding balance under this line of credit. Furthermore, Da-Lites working capital position improved to $33.8 million (including $16.1 million of cash and cash equivalents) at March 31,
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 approximately 1.5 million Euros or certain percentages of Projectas eligible accounts receivable and inventory. This facility is secured by
Projectas accounts receivable and



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inventory. 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 4.75% on March 31, 2006. At March 31, 2006, there were no borrowings outstanding under this line of credit.

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.

Cash Flows

For the first quarter of
2006, cash provided by operating activities was $10.5 million, as compared to $9.9 million during the first quarter of 2005, an increase of $0.5 million or 5.3%, reflecting the increase in net income and an increase in accounts payable and accrued
expenses, somewhat offset by increased accounts receivable. Cash used in investing activities was $0.9 million during the first quarter of 2006, as compared to $0.7 million during the first quarter of 2005, all of which in both periods represented
capital expenditures. Cash used in financing activities was $6.0 million during the first quarter of 2006, as compared to $5.3 million during the first quarter of 2005.

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.

Capital Expenditures

Capital expenditures were $0.9 million during the first quarter of 2006 compared to $0.7 million during the first quarter 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 March 31, 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 |  | $                      | 219.5 |                 | 13.7 |           | 27.4 |           | 27.4 |                  | 151.0
|Self-insurance letter of credit                 |  |                        | 0.5   |                 | 0.5  |           |     |           |     |                  |     
|                                                |  |                        |       |                 |      |           |      |           |      |                  |      
|Total                                           |  | $                      | 220.0 |                 | 14.2 |           | 27.4 |           | 27.4 |                  | 151.0
|                                                |  |                        |       |                 |      |           |      |           |      |                  |      



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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 $2.8 million and $2.3 million in the first quarter of 2006 and the first quarter of 2005,
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.



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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 March 31, 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 $5.0 million revolving credit facility in the U.S. is calculated at the
prime rate, which was 7.75% on March 31, 2006. At March 31, 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 4.75% on March 31, 2006. At March 31, 2006, Projecta had no outstanding balances under this credit facility.

On April 24, 2006, the Company entered into a $10.0 million revolving credit facility that replaced the aforementioned $5.0 million facility which was
due to expire on May 1, 2006. Interest on any outstanding borrowings related to the new line of credit is calculated at the prime rate, which was 7.75% on the signing date of the agreement.

At March 31, 2006, the Company had $144.2 million in fixed-rate long-term debt outstanding. There are no earnings risks 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 $160 million from the fair value of approximately $154 million at March 31, 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.



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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.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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PART II

OTHER INFORMATION

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

During the first quarter of 2006,
four employees exercised options to purchase an aggregate of 7.0 shares of our common stock at an aggregate purchase price of $59,836. These transactions were exempt from registration pursuant to, among other things, Section 4(2) of the
Securities Act of 1933, as amended, and Rule 701 thereunder. The Company repurchased 3.0 shares from stockholders during the same period.

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  



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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: May 1, 2006



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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  



18