##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM
10-Q/A
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTER ENDED
June 30, 2006
    
    COMMISSION FILE NUMBER
1-11781
 DAYTON SUPERIOR CORPORATION
  OHIO
    
    31-0676346(State or other jurisdiction of
Incorporation or organization)
    
    (I.R.S. Employer
Identification No.)7777 Washington Village Dr., Suite 130
Dayton, Ohio
    
    45459(Address of principal
executive offices)
    
    (Zip Code)
 937-428-6360
 
  þ o
  o o þ
 o þ




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##### Table of Contents



DAYTON SUPERIOR CORPORATION FORM 10-Q/A
Amendment No. 1




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TABLE OF CONTENTS  Part I.  Financial InformationItem 1  Financial StatementsDayton Superior Corporation and Subsidiaries Condensed Consolidated Balance Sheets As of June 30, 2006 and December 31, 2005 (Amounts in thousands) (Unaudited)Dayton Superior Corporation and Subsidiaries Consolidated Statements of Operations For The Three and Six Fiscal Months Ended June 30, 2006 and July 1, 2005 (Amounts in thousands) (Unaudited)Dayton Superior Corporation and Subsidiaries Consolidated Statements of Cash Flows For The Six Fiscal Months Ended June 30, 2006 and July 1, 2005 (Amounts in thousands) (Unaudited)Dayton Superior Corporation and Subsidiaries Consolidated Statements of Comprehensive Income (Loss) For The Six months Ended June 30, 2006 and July 1, 2005 (Amounts in thousands) (Unaudited)Dayton Superior Corporation and Subsidiaries            Notes to Consolidated Financial Statements (Amounts in thousands, except share and per share amounts) (Unaudited)Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market Risk.Item 4. Controls and Procedures.Part II.  Other InformationItem 6. ExhibitsSIGNATURESEX-31.1EX-31.2EX-32.1EX-32.2    Table of Contents  
 Part I.  Financial Information
 
 Item 1  Financial Statements
 
 
 June 30,
    
    
    December 31,2006
    
    
    2005ASSETSCurrent assets:Cash
    
    $
    
    
    
    $
    Accounts receivable, net of allowances for doubtful accounts and
sales returns and allowances of $5,412 and $5,435
    
    
    75,388
    
    
    
    62,326Inventories
    
    
    61,373
    
    
    
    57,372Prepaid expenses and other current assets
    
    
    6,076
    
    
    
    5,134Prepaid income taxes
    
    
    765
    
    
    
    546Total current assets
    
    
    143,602
    
    
    
    125,378Rental equipment, net of accumulated depreciation of $62,910 and $56,591
    
    
    68,139
    
    
    
    68,400Property, plant and equipment
    
    
    101,315
    
    
    
    96,491Less accumulated depreciation
    
    
    (62,051
    )
    
    
    (58,327
    )Net property, plant and equipment
    
    
    39,264
    
    
    
    38,164Goodwill
    
    
    43,643
    
    
    
    43,643Intangible assets, net of accumulated amortization
    
    
    4,152
    
    
    
    5,025Other assets
    
    
    1,182
    
    
    
    910Total assets
    
    $
    299,982
    
    
    $
    281,520LIABILITIES AND SHAREHOLDERS DEFICITCurrent liabilities:Current maturities of long-term debt
    
    $
    2,760
    
    
    $
    2,864Revolving credit facility
    
    
    69,950
    
    
    
    Current portion of deferred gain on sale-leaseback
    
    
    2,997
    
    
    
    3,530Accounts payable
    
    
    31,047
    
    
    
    27,267Accrued compensation and benefits
    
    
    13,195
    
    
    
    12,266Accrued interest
    
    
    6,712
    
    
    
    6,589Accrued freight
    
    
    5,289
    
    
    
    4,031Other accrued liabilities
    
    
    5,167
    
    
    
    5,247Total current liabilities
    
    
    137,117
    
    
    
    61,794Revolving credit facility
    
    
    
    
    
    
    48,700Other long-term debt, net of current portion
    
    
    319,709
    
    
    
    317,690Deferred income taxes
    
    
    11,406
    
    
    
    11,406Deferred gain on sale-leaseback, net of current portion
    
    
    3,870
    
    
    
    5,199Other long-term liabilities
    
    
    6,483
    
    
    
    8,068Total liabilities
    
    
    478,585
    
    
    
    452,857Class A common shares subject to put option, 693,724 and 233,617
shares, net of related loans to shareholders
    
    
    
    
    
    
    Shareholders deficit:Class A common shares; no par value; 6,000,000 shares authorized,
5,091,335 and 4,627,178 shares issued, 4,397,611 and 4,393,561
not subject to put option
    
    
    115,771
    
    
    
    115,703Loans to shareholders
    
    
    (2,121
    )
    
    
    (2,098
    )Class A treasury shares, at cost, 51,293 shares
    
    
    (1,509
    )
    
    
    (1,509
    )Accumulated other comprehensive loss
    
    
    (1,087
    )
    
    
    (1,357
    )Accumulated deficit
    
    
    (289,657
    )
    
    
    (282,076
    )Total shareholders deficit
    
    
    (178,603
    )
    
    
    (171,337
    )Total liabilities and shareholders deficit
    
    $
    299,982
    
    
    $
    281,520
 
 2




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##### Table of Contents



Three Fiscal Months Ended
    
    
    Six Fiscal Months EndedJune 30,
    
    
    July 1,
    
    
    June 30,
    
    
    July 1,2006
    
    
    2005
    
    
    2006
    
    
    2005Product sales
    
    $
    109,459
    
    
    $
    101,997
    
    
    $
    192,683
    
    
    $
    173,086Rental revenue
    
    
    14,890
    
    
    
    12,015
    
    
    
    28,153
    
    
    
    22,145Used rental equipment sales
    
    
    5,866
    
    
    
    3,692
    
    
    
    10,710
    
    
    
    8,255Net sales
    
    
    130,215
    
    
    
    117,704
    
    
    
    231,546
    
    
    
    203,486Product cost of sales
    
    
    80,921
    
    
    
    77,863
    
    
    
    146,403
    
    
    
    133,012Rental cost of sales
    
    
    8,791
    
    
    
    9,294
    
    
    
    16,730
    
    
    
    17,795Used rental equipment cost of sales
    
    
    1,775
    
    
    
    1,695
    
    
    
    3,192
    
    
    
    2,918Cost of sales
    
    
    91,487
    
    
    
    88,852
    
    
    
    166,325
    
    
    
    153,725Product gross profit
    
    
    28,538
    
    
    
    24,134
    
    
    
    46,280
    
    
    
    40,074Rental gross profit
    
    
    6,099
    
    
    
    2,721
    
    
    
    11,423
    
    
    
    4,350Used rental equipment gross profit
    
    
    4,091
    
    
    
    1,997
    
    
    
    7,518
    
    
    
    5,337Gross profit
    
    
    38,728
    
    
    
    28,852
    
    
    
    65,221
    
    
    
    49,761Selling, general and
administrative expenses
    
    
    24,945
    
    
    
    23,243
    
    
    
    48,571
    
    
    
    46,257Facility closing and severance
expenses
    
    
    26
    
    
    
    81
    
    
    
    277
    
    
    
    331Gain on disposals of property,
plant, and equipment
    
    
    (667
    )
    
    
    (1,147
    )
    
    
    (1,336
    )
    
    
    (1,086
    )Amortization of intangibles
    
    
    176
    
    
    
    164
    
    
    
    327
    
    
    
    306Income from operations
    
    
    14,248
    
    
    
    6,511
    
    
    
    17,382
    
    
    
    3,953Other expense (income):Interest expense
    
    
    12,465
    
    
    
    12,136
    
    
    
    24,621
    
    
    
    24,356Interest income
    
    
    (8
    )
    
    
    (43
    )
    
    
    (27
    )
    
    
    (122
    )Other expense
    
    
    206
    
    
    
    16
    
    
    
    154
    
    
    
    5Income (loss) before provision
for income taxes
    
    
    1,585
    
    
    
    (5,598
    )
    
    
    (7,366
    )
    
    
    (20,286
    )Provision for income taxes
    
    
    91
    
    
    
    
    
    
    
    215
    
    
    
    Net income (loss)
    
    $
    1,494
    
    
    $
    (5,598
    )
    
    $
    (7,581
    )
    
    $
    (20,286
    )
 
 3




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##### Table of Contents



Six Fiscal Months EndedJune 30, 2006
    
    
    July 1, 2005Cash Flows From Operating Activities:Net loss
    
    $
    (7,581
    )
    
    $
    (20,286
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation
    
    
    11,887
    
    
    
    14,990Amortization of intangibles
    
    
    327
    
    
    
    306Stock option expense
    
    
    62
    
    
    
    Deferred income taxes
    
    
    
    
    
    
    (118
    )Amortization of deferred financing costs and debt discount
    
    
    2,799
    
    
    
    2,678Amortization of deferred gain on sale-leaseback transactions
    
    
    (1,862
    )
    
    
    (647
    )Gain on sales of rental equipment
    
    
    (7,517
    )
    
    
    (5,337
    )Gain on sales of property, plant and equipment
    
    
    (13
    )
    
    
    (573
    )Changes in assets and liabilities:Accounts receivable
    
    
    (13,062
    )
    
    
    (10,345
    )Inventories
    
    
    (4,001
    )
    
    
    (4,963
    )Prepaid expenses and other assets
    
    
    (1,520
    )
    
    
    3,760Prepaid income taxes
    
    
    (219
    )
    
    
    (66
    )Accounts payable
    
    
    3,687
    
    
    
    3,978Accrued liabilities and other long-term liabilities
    
    
    572
    
    
    
    (609
    )Net cash used in operating activities
    
    
    (16,441
    )
    
    
    (17,232
    )Cash Flows From Investing Activities:Property, plant and equipment additions
    
    
    (4,103
    )
    
    
    (3,060
    )Proceeds from sales of property, plant and equipment
    
    
    21
    
    
    
    987Rental equipment additions
    
    
    (10,531
    )
    
    
    (12,845
    )Proceeds from sales of rental equipment
    
    
    10,710
    
    
    
    8,255Net cash used in investing activities
    
    
    (3,903
    )
    
    
    (6,663
    )Cash Flows From Financing Activities:Borrowings under revolving credit facility
    
    
    77,950
    
    
    
    74,175Repayments of revolving credit facility
    
    
    (56,700
    )
    
    
    (65,500
    )Repayments of other long-term debt
    
    
    (1,159
    )
    
    
    (757
    )Proceeds from sale-leaseback transaction
    
    
    
    
    
    
    11,636Financing costs incurred
    
    
    
    
    
    
    (3
    )Change in loans to shareholders
    
    
    (17
    )
    
    
    25Issuance of common shares subject to put option
    
    
    
    
    
    
    13Net cash provided by financing activities
    
    
    20,074
    
    
    
    19,589Effect of Exchange Rate Changes on Cash
    
    
    270
    
    
    
    (198
    )Net decrease in cash
    
    
    
    
    
    
    (4,504
    )Cash, beginning of period
    
    
    
    
    
    
    4,504Cash, end of period
    
    $
    
    
    
    $
    Supplemental Disclosures:Cash paid for income taxes
    
    $
    284
    
    
    $
    150Cash paid for interest
    
    
    21,699
    
    
    
    20,918Rental equipment acquired under capital lease
    
    
    1,200
    
    
    
    Property, plant and equipment and rental equipment additions in accounts
payable
    
    
    1,563
    
    
    
    1,471Reclassification of common shares due to repayment of shareholder loans
through redemption of common shares
    
    
    
    
    
    
    75Reclassification of common shares due to expiration of put option
    
    
    6
    
    
    
    
 
 4




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Three Fiscal Months Ended
    
    
    Six Fiscal Months EndedJune 30, 2006
    
    
    July 1, 2005
    
    
    June 30, 2006
    
    
    July 1, 2005Net income (loss)
    
    $
    1,494
    
    
    $
    (5,598
    )
    
    $
    (7,581
    )
    
    $
    (20,286
    )Other comprehensive income
(loss):Foreign currency
translation
adjustment
    
    
    287
    
    
    
    (86
    )
    
    
    270
    
    
    
    (198
    )Comprehensive income (loss)
    
    $
    1,781
    
    
    $
    (5,684
    )
    
    $
    (7,311
    )
    
    $
    (20,484
    )
 
 5




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##### Table of Contents



Dayton
Superior Corporation and Subsidiary
Notes to Consolidated Financial Statements
(Amounts in thousands, except share and per share amounts)
(Unaudited)
 (1) Consolidated Financial Statements
  (2) Accounting
Policies (Restated)
  (a)
    
    Fiscal Quarter  The Companys fiscal year end is December 31. The Companys
fiscal quarters are defined as the 13-week periods ending on a Friday near the end of
March, June and September.(b)
    
    Inventories  The Company values all inventories at the lower of first-in,
first-out (FIFO) cost or market. The Company provides net realizable value reserves which
reflect the Companys best estimate of the excess of the cost of potential obsolete and
slow moving inventory over the expected net realizable value.Following is a summary of the components of inventories as of June 30, 2006 and
December 31, 2005:
 June 30, 2006
    
    December 31, 2005Raw materials
    
    $
    14,415
    
    
    $
    13,248Work in progress
    
    
    2,848
    
    
    
    2,813Finished goods
    
    
    44,110
    
    
    
    41,311Total Inventory
    
    $
    61,373
    
    
    $
    57,372
 (c)
    
    Rental Equipment  Rental equipment is purchased and manufactured by the
Company for resale and for rent to others on a short-term basis. Rental equipment is
recorded at the lower of FIFO cost or market and is depreciated over the estimated useful
lives of the equipment, three to fifteen years, on a straight-line method. Effective
January 1, 2006, the Company changed its estimate of depreciable lives on certain families
of rental equipment from three years to fifteen years on a prospective basis. The impact of
this change in estimate was to reduce rental cost of sales by $750 and $1,500 for the three
and six months ended June 30, 2006.
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##### Table of Contents



(d)
    
    Goodwill  The Company completed its assessment of the fair value of goodwill
as of December 31, 2005. No adjustment to the estimated impairment loss recorded during
the year ended December 31, 2005 was required to be recognized.(e)
    
    Common Stock Valuation  The Company is required
to value its common stock for purposes of (i) calculating
compensation expense in connection with the award of unvested shares
and stock option grants and (ii) calculating the
redemption value of the shares of its common stock that are subject
to put under the Companys Management Stockholders Agreement. The value of the Companys common stock is
determined by the Company after careful consideration of all
available facts and circumstances.On June 30, 2006, the Company awarded 464,157 unvested shares
of stock to three of its executive officers. The Company valued these
shares on June 30, 2006 at $12.67 per share using an implied adjusted
EBITDA multiple of 9.82x, based on the best available information at
that time.Because the compensation expense reflected in the Companys
results of operations is based in part on managements judgment as to
the value of the Companys common stock  which is necessarily
subjective  subjective discretion impacts the Companys reported
results of operations. Similarly, the redemption value of shares
subject to put reflected on its balance sheet is based on the
judgment of an independent appraiser and, in the case of shares held
by employees whose term of employment ends during the second half of
any fiscal year, the Companys own judgment as to fair market value.
As a result, these accounting policies require management to make
estimates and assumptions that impact the Companys financial
statements.(f)
    
    New Accounting Pronouncements   In June, 2006, the Financial
Accounting Standards Board issued Interpretation No. 48, Accounting for Uncertainty in
Income Taxes, which prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. This Interpretation also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods, disclosure, and
transition. The Company will be required to comply with Interpretation No. 48 as of the
first annual period that begins after December 15, 2006. The Company has not determined
the impact that Interpretation No. 48 will have on its consolidated financial statements.
 (3) Credit Arrangements
   Three fiscal months ended
    
    Six fiscal months endedJune 30, 2006
    
    July 1, 2005
    
    June 30, 2006
    
    July 1, 2005Revolving Credit Facility:Average borrowings
    
    $
    74,560
    
    
    $
    68,010
    
    
    $
    66,963
    
    
    $
    65,381Peak borrowing
    
    
    77,950
    
    
    
    77,500
    
    
    
    77,950
    
    
    
    77,500Weighted average
interest rate
    
    
    7.9
    %
    
    
    6.0
    %
    
    
    7.8
    %
    
    
    5.8
    %
  June 30,
    
    
    December 31,2006
    
    
    2005Senior Subordinated Notes, interest rate of 13.0%
    
    $
    154,729
    
    
    $
    154,729Debt discount on Senior Subordinated Notes
    
    
    (5,476
    )
    
    
    (6,114
    )Senior Second Secured Notes, interest rate of 10.75%
    
    
    165,000
    
    
    
    165,000Debt discount on Senior Second Secured Notes
    
    
    (4,003
    )
    
    
    (4,776
    )Senior unsecured notes payable to seller of Safway,
non-interest bearing, accreted at 6.0% to 14.5%
    
    
    7,994
    
    
    
    7,534Debentures previously held by Dayton Superior
Capital Trust, interest rate of 9.1%, due on demand
    
    
    1,068
    
    
    
    1,068Capital lease obligations
    
    
    3,157
    
    
    
    2,930Payable to vendor on extended terms, non-interest
bearing, accreted at 6.0%
    
    
    
    
    
    
    183Total long-term debt
    
    
    322,469
    
    
    
    320,554Less current maturities
    
    
    (2,760
    )
    
    
    (2,864
    )Long-term portion
    
    $
    319,709
    
    
    $
    317,690
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##### Table of Contents



(4) Stock-Based
Compensation Plans (Restated)
    Accounting for
Stock-Based Compensation
 For the three
    
    
    For the six fiscalfiscal months ended
    
    
    months endedJuly 1, 2005
    
    
    July 1, 2005Net loss
    
    As Reported
    
    $
    (5,598
    )
    
    $
    (20,286
    )Deduct:
Total stock-based employee compensation expense determined under fair
value-based method for all awards, net of related tax effect
    
    
    (72
    )
    
    
    (144
    )Pro Forma
    
    $
    (5,670
    )
    
    $
    (20,430
    )
 8




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##### Table of Contents



Weighted Average
    
    
    
    
    
    
    Weighted AverageTotal Number of
    
    
    Exercise Price Per
    
    
    Unvested Number of
    
    
    Grant-Date
    
    
    Aggregate IntrinsicShares
    
    
    Share
    
    
    Shares
    
    
    Fair Value
    
    
    ValueOutstanding at
December 31, 2005
    
    
    402,063
    
    
    $
    25.92
    
    
    
    310,018
    
    
    $
    6.34
    
    
    $
    Expired
    
    
    (5,792
    )
    
    
    26.61
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (33,694
    )
    
    
    27.47
    
    
    
    (33,694
    )
    
    
    4.71
    
    
    
    Outstanding at June
30, 2006
    
    
    362,577
    
    
    $
    25.76
    
    
    
    276,324
    
    
    $
    6.54
    
    
    $
    
     Weighted Average
    
    
    
    
    
    Weighted AverageTotal Number of
    
    Exercise Price Per
    
    Unvested Number of
    
    Grant-DateShares
    
    Share
    
    Shares
    
    Fair ValueOutstanding at December 31, 2005
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Granted
    
    
    464,157
    
    
    
    
    
    
    
    464,157
    
    
    
    12.67Outstanding at June 30, 2006
    
    
    464,157
    
    
    $
    
    
    
    
    464,157
    
    
    $
    12.67
  (5) Retirement Plans
   9




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Pension BenefitsFor the three
    
    
    For the three
    
    
    For the six
    
    
    For the sixfiscal months ended
    
    
    fiscal months ended
    
    
    fiscal months ended
    
    
    fiscal months endedJune 30, 2006
    
    
    July 1, 2005
    
    
    June 30, 2006
    
    
    July 1, 2005Service cost
    
    $
    176
    
    
    $
    173
    
    
    $
    351
    
    
    $
    346Interest cost
    
    
    187
    
    
    
    164
    
    
    
    375
    
    
    
    327Expected return on plan assets
    
    
    (207
    )
    
    
    (184
    )
    
    
    (414
    )
    
    
    (369
    )Amortization of prior service cost
    
    
    3
    
    
    
    3
    
    
    
    7
    
    
    
    7Amortization of net loss
    
    
    33
    
    
    
    22
    
    
    
    66
    
    
    
    45Net periodic benefit cost
    
    $
    192
    
    
    $
    178
    
    
    $
    385
    
    
    $
    356
 Symons Postretirement BenefitsFor the three
    
    
    For the three
    
    
    For the six
    
    
    For the sixfiscal months ended
    
    
    fiscal months ended
    
    
    fiscal months ended
    
    
    fiscal months endedJune 30, 2006
    
    
    July 1, 2005
    
    
    June 30, 2006
    
    
    July 1, 2005Service cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest cost
    
    
    7
    
    
    
    6
    
    
    
    14
    
    
    
    13Expected return on plan assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    6
    
    
    
    6
    
    
    
    12
    
    
    
    12Amortization of net loss
    
    
    (2
    )
    
    
    (2
    )
    
    
    (5
    )
    
    
    (5
    )Net periodic benefit cost
    
    $
    11
    
    
    $
    10
    
    
    $
    21
    
    
    $
    20
  (6) Segment Reporting
      10




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Three Fiscal Months Ended
    
    
    Six Fiscal Months EndedJune 30, 2006
    
    
    July 1, 2005
    
    
    June 30, 2006
    
    
    July 1, 2005Product sales
    
    $
    109,459
    
    
    $
    101,997
    
    
    $
    192,683
    
    
    $
    173,086Rental revenue
    
    
    14,890
    
    
    
    12,015
    
    
    
    28,153
    
    
    
    22,145Used rental equipment sales
    
    
    5,866
    
    
    
    3,692
    
    
    
    10,710
    
    
    
    8,255Net sales
    
    
    130,215
    
    
    
    117,704
    
    
    
    231,546
    
    
    
    203,486Product cost of sales
    
    
    80,921
    
    
    
    77,863
    
    
    
    146,403
    
    
    
    133,012Rental cost of sales
    
    
    8,791
    
    
    
    9,294
    
    
    
    16,730
    
    
    
    17,795Used rental equipment cost of sales
    
    
    1,775
    
    
    
    1,695
    
    
    
    3,192
    
    
    
    2,918Cost of sales
    
    
    91,487
    
    
    
    88,852
    
    
    
    166,325
    
    
    
    153,725Product gross profit
    
    
    28,538
    
    
    
    24,134
    
    
    
    46,280
    
    
    
    40,074Rental gross profit
    
    
    6,099
    
    
    
    2,721
    
    
    
    11,423
    
    
    
    4,350Used rental equipment gross profit
    
    
    4,091
    
    
    
    1,997
    
    
    
    7,518
    
    
    
    5,337Gross profit
    
    $
    38,728
    
    
    $
    28,852
    
    
    $
    65,221
    
    
    $
    49,761Depreciation Expense:Product sales (property, plant,
and equipment)
    
    $
    1,393
    
    
    $
    1,472
    
    
    $
    2,545
    
    
    $
    2,917Rental Revenue (rental equipment)
    
    
    4,604
    
    
    
    5,515
    
    
    
    8,693
    
    
    
    10,661Corporate
    
    
    346
    
    
    
    694
    
    
    
    649
    
    
    
    1,412Total depreciation
    
    $
    6,343
    
    
    $
    7,681
    
    
    $
    11,887
    
    
    $
    14,990
 (7) Facility Closing and Severance Expenses
  Involuntary
    
    
    Lease
    
    
    
    
    
    
    OtherTermination
    
    
    Termination
    
    
    Relocation
    
    
    Post-ClosingBenefits
    
    
    Costs
    
    
    of Operations
    
    
    Costs
    
    
    TotalBalance, January 1, 2005
    
    $
    
    
    
    $
    120
    
    
    $
    
    
    
    $
    
    
    
    $
    120Facility closing and severance expenses
    
    
    105
    
    
    
    264
    
    
    
    5
    
    
    
    157
    
    
    
    531Items charged against reserve
    
    
    (105
    )
    
    
    (339
    )
    
    
    (5
    )
    
    
    (157
    )
    
    
    (606
    )Balance, December 31, 2005
    
    
    
    
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    45Facility closing and severance expenses
    
    
    
    
    
    
    67
    
    
    
    
    
    
    
    28
    
    
    
    95Items charged against reserve
    
    
    
    
    
    
    (100
    )
    
    
    
    
    
    
    (28
    )
    
    
    (128
    )Balance, June 30, 2006
    
    $
    
    
    
    $
    12
    
    
    $
    
    
    
    $
    
    
    
    $
    12
 11




---



##### Table of Contents



Involuntary
    
    
    Lease
    
    
    
    
    
    
    OtherTermination
    
    
    Termination
    
    
    Relocation
    
    
    Post-ClosingBenefits
    
    
    Costs
    
    
    of Operations
    
    
    Costs
    
    
    TotalFacility closing and severance expenses
    
    $
    642
    
    
    $
    
    
    
    $
    539
    
    
    $
    
    
    
    $
    1,181Items charged against reserve
    
    
    (225
    )
    
    
    
    
    
    
    (101
    )
    
    
    
    
    
    
    (326
    )Balance, December 31, 2005
    
    
    417
    
    
    
    
    
    
    
    438
    
    
    
    
    
    
    
    855Facility closing and severance expenses
    
    
    
    
    
    
    102
    
    
    
    (203
    )
    
    
    36
    
    
    
    (65
    )Items charged against reserve
    
    
    (335
    )
    
    
    (102
    )
    
    
    (235
    )
    
    
    (36
    )
    
    
    (708
    )Balance, June 30, 2006
    
    $
    82
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    82
  Involuntary
    
    
    Lease
    
    
    
    
    
    
    OtherTermination
    
    
    Termination
    
    
    Relocation
    
    
    Post-ClosingBenefits
    
    
    Costs
    
    
    of Operations
    
    
    Costs
    
    
    TotalFacility closing and severance expenses
    
    $
    247
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    247Items charged against reserve
    
    
    (206
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (206
    )Balance, June 30, 2006
    
    $
    41
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    41
  (8) Benefit for Income Taxes
  12




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
   
    
    Product sales consist of:
 
    
    Concrete accessories,which are used for connecting forms for
poured-in-place concrete walls, anchoring or bracing for walls and floors,
supporting bridge framework and positioning steel reinforcing bars, and include
products which remain in place at the convenience of the contractors.
    
    Masonry products,which are placed between layers of brick and concrete
blocks and covered with mortar to provide additional strength to walls.
    
    Paving products,which are used in the construction and rehabilitation
of concrete roads, highways and airport runways to extend the life of the pavement,
and include products that remain in place at the convenience of the contractors.
Welded dowel assemblies are a paving product used to transfer dynamic loads between
two adjacent slabs of concrete roadway. Metal dowels are part of a dowel basket
design that is imbedded in two adjacent slabs to transfer the weight of vehicles as
they move over a road.
    
    Chemicals,which include a broad spectrum of chemicals for use in
concrete construction, including form release agents, bond breakers, curing
compounds, liquid hardeners, sealers, water repellents, bonding agents, grouts and
epoxies, and other chemicals used in the pouring, placement, and stamping of
concrete as well as curing compounds used in concrete road construction.
 
    
    Rental equipment consists primarily of:
 
    
    Forming Systems,which are reusable engineered modular forms, hold
liquid concrete in place on concrete construction jobs while it hardens. Standard
forming systems are made of steel and plywood and are used in the creation of
concrete walls and columns. Specialty forming systems consist primarily of steel
forms that are designed to meet architects specific needs for concrete placements.
Both standard and specialty forming systems and related accessories are sold as
used rental equipment and rented.
    
    Shoring Systems,including aluminum beams and joists, are reusable post
shores and shoring frames which are used to support deck and other raised forms
while concrete is being poured.
 13




---



##### Table of Contents



Facility Closing and Severance Expenses
  InvoluntaryTermination
    
    
    Lease Termination
    
    
    Relocation of
    
    
    Other Post-ClosingBenefits
    
    
    Costs
    
    
    Operations
    
    
    Costs
    
    
    Total(Amounts in thousands)Balance, January 1, 2005
    
    $
    
    
    
    $
    120
    
    
    $
    
    
    
    $
    
    
    
    $
    120Facility closing and severance expenses
    
    
    105
    
    
    
    264
    
    
    
    5
    
    
    
    157
    
    
    
    531Items charged against reserve
    
    
    (105
    )
    
    
    (339
    )
    
    
    (5
    )
    
    
    (157
    )
    
    
    (606
    )Balance, December 31, 2005
    
    
    
    
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    45Facility closing and severance expenses
    
    
    
    
    
    
    67
    
    
    
    
    
    
    
    28
    
    
    
    95Items charged against reserve
    
    
    
    
    
    
    (100
    )
    
    
    
    
    
    
    (28
    )
    
    
    (128
    )Balance, June 30, 2006
    
    $
    
    
    
    $
    12
    
    
    $
    
    
    
    $
    
    
    
    $
    12
  InvoluntaryTermination
    
    
    Lease Termination
    
    
    Relocation of
    
    
    Other Post-ClosingBenefits
    
    
    Costs
    
    
    Operations
    
    
    Costs
    
    
    Total(Amounts in thousands)Facility closing and severance expenses
    
    $
    642
    
    
    $
    
    
    
    $
    539
    
    
    $
    
    
    
    $
    1,181Items charged against reserve
    
    
    (225
    )
    
    
    
    
    
    
    (101
    )
    
    
    
    
    
    
    (326
    )Balance, December 31, 2005
    
    
    417
    
    
    
    
    
    
    
    438
    
    
    
    
    
    
    
    855Facility closing and severance expenses
    
    
    
    
    
    
    102
    
    
    
    (203
    )
    
    
    36
    
    
    
    (65
    )Items charged against reserve
    
    
    (335
    )
    
    
    (102
    )
    
    
    (235
    )
    
    
    (36
    )
    
    
    (708
    )Balance, June 30, 2006
    
    $
    82
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    82
  InvoluntaryTermination
    
    
    Lease Termination
    
    
    Relocation of
    
    
    Other Post-ClosingBenefits
    
    
    Costs
    
    
    Operations
    
    
    Costs
    
    
    Total(Amounts in thousands)Facility closing and severance expenses
    
    $
    247
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    247Items charged against reserve
    
    
    (206
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (206
    )Balance, June 30, 2006
    
    $
    41
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    41
  14




---



##### Table of Contents



Results of Operations
  Three fiscal months Ended
    
    Six fiscal months endedJune 30, 2006
    
    July 1, 2005
    
    June 30, 2006
    
    July 1, 2005Product sales
    
    
    84.1
    %
    
    
    86.7
    %
    
    
    83.2
    %
    
    
    85.1
    %Rental revenue
    
    
    11.4
    
    
    
    10.2
    
    
    
    12.2
    
    
    
    10.9Used rental equipment sales
    
    
    4.5
    
    
    
    3.1
    
    
    
    4.6
    
    
    
    4.0Net sales
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Product cost of sales
    
    
    73.9
    
    
    
    76.3
    
    
    
    76.0
    
    
    
    76.8Rental cost of sales
    
    
    59.0
    
    
    
    77.4
    
    
    
    59.4
    
    
    
    80.4Used rental equipment cost of sales
    
    
    30.3
    
    
    
    45.9
    
    
    
    29.8
    
    
    
    35.3Cost of sales
    
    
    70.3
    
    
    
    75.5
    
    
    
    71.8
    
    
    
    75.5Product gross profit
    
    
    26.1
    
    
    
    23.7
    
    
    
    24.0
    
    
    
    23.2Rental gross profit
    
    
    41.0
    
    
    
    22.6
    
    
    
    40.6
    
    
    
    19.6Used rental equipment gross profit
    
    
    69.7
    
    
    
    54.1
    
    
    
    70.2
    
    
    
    64.7Gross profit
    
    
    29.7
    
    
    
    24.5
    
    
    
    28.2
    
    
    
    24.5Selling, general and
administrative expenses
    
    
    19.2
    
    
    
    19.8
    
    
    
    21.0
    
    
    
    22.7Facility closing and severance
expenses
    
    
    
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.2Gain on disposals of property,
plant, and equipment
    
    
    (0.5
    )
    
    
    (1.0
    )
    
    
    (0.6
    )
    
    
    (0.5
    )Amortization of intangibles
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.2Income from operations
    
    
    10.9
    
    
    
    5.5
    
    
    
    7.5
    
    
    
    1.9Interest expense
    
    
    9.6
    
    
    
    10.3
    
    
    
    10.6
    
    
    
    12.0Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Other expense
    
    
    0.1
    
    
    
    
    
    
    
    0.1
    
    
    
    Income (loss) before provision for
income taxes
    
    
    1.2
    
    
    
    (4.8
    )
    
    
    (3.2
    )
    
    
    (10.0
    )Provision for income taxes
    
    
    0.1
    
    
    
    
    
    
    
    0.1
    
    
    
    Net income (loss)
    
    
    1.1
    %
    
    
    (4.8
    )%
    
    
    (3.3
    )%
    
    
    (10.0
    )%
 Comparison of Three Fiscal Months Ended June 30, 2006 and July 1, 2005
 Net Sales
  Three fiscal months endedJune 30, 2006
    
    
    July 1, 2005(In thousands)Net Sales
    
    
    %
    
    
    Net Sales
    
    
    %
    
    
    % ChangeProduct sales
    
    $
    109,459
    
    
    
    84.1
    %
    
    $
    101,997
    
    
    
    86.7
    %
    
    
    7.3
    %Rental revenue
    
    
    14,890
    
    
    
    11.4
    
    
    
    12,015
    
    
    
    10.2
    
    
    
    23.9Used rental equipment sales
    
    
    5,866
    
    
    
    4.5
    
    
    
    3,692
    
    
    
    3.1
    
    
    
    58.9Net sales
    
    $
    130,215
    
    
    
    100.0
    %
    
    $
    117,704
    
    
    
    100.0
    %
    
    
    10.6
    %
 15




---



##### Table of Contents



Gross Profit
     Operating Expenses
   Other Expenses
  Income (Loss) Before Income Taxes
  16




---



##### Table of Contents



Provision for Income Taxes
  Net Income (Loss)
  Comparison of Six Fiscal Months Ended June 30, 2006 and July 1, 2005
 Net Sales
  Six fiscal months endedJune 30, 2006
    
    
    July 1, 2005(In thousands)Net Sales
    
    
    %
    
    
    Net Sales
    
    
    %
    
    
    % ChangeProduct sales
    
    $
    192,683
    
    
    
    83.2
    %
    
    $
    173,086
    
    
    
    85.1
    %
    
    
    11.3
    %Rental revenue
    
    
    28,153
    
    
    
    12.2
    
    
    
    22,145
    
    
    
    10.9
    
    
    
    27.1Used rental equipment sales
    
    
    10,710
    
    
    
    4.6
    
    
    
    8,255
    
    
    
    4.0
    
    
    
    29.7Net sales
    
    $
    231,546
    
    
    
    100.0
    %
    
    $
    203,486
    
    
    
    100.0
    %
    
    
    13.8
    %
    Gross Profit
    17




---



##### Table of Contents



Operating Expenses
   Other Expenses
  Loss Before Income Taxes
  Provision for Income Taxes
  Net Loss
  Liquidity and Capital Resources
    18




---



##### Table of Contents



2006
    
    
    2005(in millions)Net loss
    
    $
    (7.6
    )
    
    $
    (20.3
    )Adjustments to reconcile net loss to net cash used
in operating activities
    
    
    5.7
    
    
    
    11.3Net loss after non-cash adjustments
    
    
    (1.9
    )
    
    
    (9.0
    )Changes in assets and liabilities
    
    
    (14.6
    )
    
    
    (8.2
    )Net cash used in operating activities
    
    $
    (16.5
    )
    
    $
    (17.2
    )
      June 30, 2006Senior Subordinated Notes, interest rate of 13.0%
    
    $
    154,729Debt discount on Senior Subordinated Notes
    
    
    (5,476
    )Senior Second Secured Notes, interest rate of 10.75%
    
    
    165,000Debt discount on Senior Second Secured Notes
    
    
    (4,003
    )Senior unsecured notes payable to seller of Safway,
non-interest bearing, accreted at 6.0% to 14.5%
    
    
    7,994Debentures previously held by Dayton Superior Capital
Trust, interest rate of 9.1%, due on demand
    
    
    1,068Capital lease obligations
    
    
    3,157Total long-term debt
    
    
    322,469Less current maturities
    
    
    (2,760
    )Long-term portion
    
    $
    319,709
  19




---



##### Table of Contents




    
    $69.9 million of reclassification of the revolving credit facility to
current liabilities, as the facility expires within a year, on January 30, 2007,
    
    $3.8 million increase in accounts payable due to seasonally higher
purchasing activity in June relative to December,
    
    $2.2 million increase in accrued liabilities due to higher expenses needed
to support the higher sales volumes, offset by
    
    $13.1 million increase in accounts receivable due to the seasonally higher
net sales in June relative to December,
    
    $4.0 million increase in inventories due to the anticipated seasonal higher
sales in the third quarter relative to the first quarter, and
    
    $1.7 million of changes in other items.
   Commitments
  Seasonality
  Inflation
  20




---



##### Table of Contents



Stock Collateral Valuation  Senior Second Secured Notes
   21




---



##### Table of Contents



DaytonSuperiorCanada Ltd.Net Income
    
    $
    958Provision for Income Taxes
    
    
    621Income from Operations
    
    
    1,579Depreciation Expense
    
    
    61Adjusted valuation EBITDA
    
    
    1,640Multiple
    
    
    5.5Estimated Fair Value
    
    $
    9,020
   Change in
    
    Change in AdjustedSubsidiary
    
    Applicable Value
    
    Valuation EBITDADayton Superior Canada Ltd.
    
    $
    23,980
    
    
    $
    4,360
 Critical Accounting Policies
  Accounting
for Uncertainty in Income Taxes
 22




---



##### Table of Contents



Forward-Looking Statements
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
    
    $95.0 million revolving credit facility, $69.9 million of which was outstanding at June 30, 2006;
    
    $165.0 million of Senior Second Secured Notes with a net book value of $161.0 million;
    
    $154.7 million of Senior Subordinated Notes with a net book value of $149.3 million;
    
    $8.0 million of Notes payable to the seller of Safway;
    
    $3.2 million in capital lease obligations;
    
    $1.1 million in other fixed-rate, long-term debt.
   23




---



##### Table of Contents



Item 4. Controls and Procedures.
     Changes in Internal Control Over Financial Reporting
  24




---



##### Table of Contents



Part II.  Other Information
 
 Item 6. Exhibits
  25




---



##### Table of Contents



SIGNATURES
  DAYTON SUPERIOR CORPORATIONDATE: December 15, 2006
    BY:
    /s/ Edward J. PuisisEdward J. PuisisExecutive Vice President and
Chief Financial Officer 26




---



##### Table of Contents



INDEX TO EXHIBITS
 Exhibit No.
    
    Description(10) Material Contracts10.1
    
    
    2006 Executive Incentive Plan [Incorporated by reference from Exhibit 10.1 to
the Companys Form 8-K filed on July 7, 2006]10.2
    
    
    Restricted Stock Agreement [Incorporated by reference from Exhibit 10.2 to the
Companys Form 8-K filed on July 7, 2006](31) Rule 13a-14(a)/15d-14(a) Certifications31.1
    
    
    Rule 13a-14(a)/15d-14(a) Certification of President and Chief Executive Officer31.2
    
    
    Rule 13a-14(a)/15d-14(a) Certification of Executive Vice President and Chief
Financial Officer(32) Section 1350 Certifications32.1
    
    
    Section 1350 Certification of President and Chief Executive Officer32.2
    
    
    Section 1350 Certification of Executive Vice President and Chief Financial
Officer
 27