Form 10-Q

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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, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act, or a smaller reporting company (Check one):

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

As of August 3, 2010, there were 5,407,923 shares of the registrant’s common stock outstanding (all of which are privately owned and are not traded on any public market).

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 January 1, 2010. 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. Results for interim periods should not be considered indicative of results for the full year.

The accompanying consolidated financial statements include the accounts of Da-Lite Screen Company, Inc. (Da-Lite), Da-Lite International, Inc., a domestic international sales corporation, and Projecta B.V. (Projecta), a Netherlands limited liability company, and Projecta’s wholly-owned subsidiary Procolor S.A.S. (Procolor), a French corporation. All intercompany accounts and transactions have been eliminated.

The Company operates on a 52/53-week fiscal year ending on the last Friday of December. The second quarters of 2010 and 2009 were 13-week periods, respectively. The Company’s 2010 and 2009 fiscal years will be 52-week and 53-week years, respectively.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires that management make a number of assumptions and estimates that affect the reported amounts of assets, liabilities, revenue and expenses in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events and actions that may impact the Company in the future, actual results may differ from these estimates and assumptions. The Company’s critical accounting policies are those that affect its consolidated financial statements materially and involve a significant level of judgment by management.

The Company recognizes revenue when it has received an order from a customer, title has transferred to customer, the sales price is fixed or determinable and the collectability 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. Provision for customer sales allowances, returns and warranties are made at the time of shipment. The Company does not have any post-shipment obligations related to its sales such as installation, training or customer acceptance.

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 estimate of amounts to be collected from past due accounts.

If circumstances change, for example, due to the occurrence of higher-than-expected defaults or a significant adverse change in a major customer’s ability to meet its financial obligations to the Company, estimates of recoverability of receivable amounts due could be reduced.

Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired. The Company applies the provisions of ASC 350 “Intangibles-Goodwill and Other”, and management tests goodwill for impairment to determine whether its carrying value exceeds its implied fair value at least annually or more frequently if events or circumstances indicate that the carrying amount of goodwill may be impaired. The Company has three reporting units (Da-Lite US, Procolor S.A.S, and Projecta BV) of which only Da-Lite US has goodwill as of July 2, 2010 and January 1, 2010. The Company’s annual impairment testing date is the last day of the fiscal year.

The goodwill impairment test involves a two-step process. The first step is a comparison of each reporting unit’s fair value to its carrying value. The Company estimates fair value based on a combination of the market value approach and income approach using discounted cash flows. These valuations are based on assumptions and estimates including projected future cash flows, discount rates, and determination of appropriate market comparables. The fair value of each reporting unit is estimated using both methods and each method is given equal weighting in arriving at the fair value of the reporting unit.

The second step, if needed, requires the Company to allocate the fair value of the reporting unit derived in the first step to the fair value of the reporting unit’s net assets to calculate the implied value of the goodwill. If the carrying value of the reporting unit’s goodwill is in excess of the implied fair value of goodwill, an impairment charge is taken to reduce the goodwill to its implied fair value.

Financial instruments are described as cash or contractual obligations or rights to pay or receive cash. The fair value of certain financial instruments approximates the carrying value because of the short-term maturity of these instruments. The estimated fair value of the 12¹/2% Senior Notes due 2015 is $105 million at July 2, 2010 and of the 9¹/2% Senior Notes due 2011 was $97 million at January 1, 2010.

There were various accounting standards and interpretations issued recently, none of which are expected to have a material impact on the Company’s financial position, operations or cash flows.

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”). On March 29, 2010, the Company repurchased $43.5 million of the outstanding $98.0 million principal amount of its 9¹/2 % Senior Notes from the open market for an aggregate purchase price of $44.5 million. The Company retired these Notes and wrote-off the purchase premium and the deferred financing cost related to the repurchase. On May 17, 2010, the Company redeemed the remaining $54.5 million of its 9¹/2 % Senior Notes at the principal amount plus accrued interest due and wrote-off the remaining purchase premium and the deferred financing cost.

The Company issued $105 million of 12 ¹/2% senior unsecured notes due in April 2015 during the first quarter of 2010 (the “12¹/2% Senior Notes”). The 12¹/2% Senior Notes were issued with an original issue discount at a price of 97.305% and were recorded at the discounted amount of $102.2 million. The discount will be accreted over the life of these notes as interest expense. The Company used the proceeds from the issuance of the 12¹/2% Senior Notes, together with borrowings under our bank credit facility, to purchase approximately $43.5 million principal amount of the 9¹/2% senior unsecured notes in March 2010, to redeem the remaining $54.5 million of 9¹/2% senior unsecured notes in May 2010 and to pay issuance costs for the new 12¹/2% Senior Notes. The Company may redeem any of the 12¹/2% Senior Notes beginning on April 1, 2013. The initial redemption price is 106.250% of their principal amount, plus accrued interest. The redemption price will decline each year after 2013 and will be 100% of their principal amount, plus accrued interest, beginning on April 1, 2014. In addition, before April 1, 2013, the Company may redeem up to 35% of the aggregate principal amount of outstanding notes with the proceeds from sales of certain kinds of our capital stock at a redemption price equal to 112.500% of their principal amount, plus accrued interest to the redemption date. The Company may make such redemption only if, after any such redemption, at least 65% of the aggregate principal amount of notes originally issued under the indenture remains outstanding. Interest is payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2010.

The Company registered with the Securities and Exchange Commission (the “SEC”) $105 million of new 12¹/2% Senior Notes due 2015 (“Exchange Notes”), which have substantially identical terms to the Company’s outstanding 12¹/2% Senior Notes (“Original Notes”), pursuant to a Registration Statement on Form S-4 which was declared effective by the SEC on June 8, 2010. On June 8, 2010, the Company commenced an offer to exchange its outstanding Original Notes for the Exchange Notes which have been registered with the SEC. This exchange offer expired on July 12, 2010. All of the Original Notes were tendered and exchanged for the Exchange Notes.

In the Indenture related to the 12¹/2% Senior Notes, the Company agreed to covenants that limit it and its restricted subsidiaries’ (i.e., Projecta B.V., Procolor S.A.S.) ability, among other things, to: (a) incur additional debt and issue preferred stock, (b) pay dividends, acquire shares of capital stock, make payments on subordinated debt or make investments, (c) place limitations on distributions from restricted

subsidiaries, (d) issue or sell capital stock of restricted subsidiaries, (e) issue guarantees, (f) sell or exchange assets, (g) enter into transactions with stockholders and affiliates, (h) create liens and (i) effect mergers. In addition, if a change of control occurs, each holder of Notes will have the right to require the Company to repurchase all or part of the holder’s Notes at a price equal to 101% of their principal amount, plus any accrued interest to the date of purchase. The Company was in compliance with all covenants at July 2, 2010.

On March 26, 2010, the Company entered into a two-year arrangement for an unsecured revolving credit facility, with maximum possible borrowings equal to $19.5 million, with Lake City Bank (the “Bank”). Interest on any outstanding borrowings related to the line of credit is calculated at the prime rate, subject to an interest rate floor of 4.00%. As the prime rate is below the floor, the interest rate in effect as of July 2, 2010 was 4.00%. As of July 2, 2010, the Company had no outstanding balances under this agreement.

The Company’s Dutch subsidiary, Projecta, has an overdraft line of credit with maximum possible borrowings equal to 1.5 million Euros. Interest on outstanding borrowings in Europe related to Projecta’s overdraft line of credit is calculated at the ABN AMRO Bank Basic Rate plus 1.50%, the sum of which was 6.10% on July 2, 2010. At July 2, 2010, Projecta had no outstanding balance with ABN AMRO Bank under this credit facility.

The Company has provided an insurance carrier with a standby letter of credit for $0.4 million for self-insured amounts under its insurance program.

On June 21, 2010 the Board of Directors of the Company approved a 1,000 to 1 stock split and in connection with the stock split, amended and restated the Amended and Restated Articles of Incorporation of the Company. The Second Amended and Restated Articles of Incorporation were approved by the shareholders in a shareholders meeting on July 2, 2010. All share and per share information set forth herein gives retrospective effect to the stock split. The amended and restated articles of incorporation required that all treasury shares be retired prior to the stock split. The Company retired the treasury shares and retained deficit was impacted by the retirement of the treasury shares by $25.5 million.

The Company has a nonqualified stock option plan under which options are granted to certain employees. During 2004, the Company granted options to certain employees that were immediately 100% vested. The options expire after ten years from the date of grant.

During the thirteen weeks ended July 2, 2010, the Company adopted the Da-Lite Screen Company, Inc. 2010 Stock Option Plan (“2010 Stock Option Plan”) pursuant to which eligible employees may be granted options to purchase up to 200,000 new shares of the Company. The Company granted 159,000 nonqualified options to certain employees that were immediately 100% vested. The options expire after five years from the date of grant.

The aggregate intrinsic value of exercisable shares at July 2, 2010 was less than $0.1 million with a weighted average contractual term of 4.7 years.

Under the 2010 Stock Option Plan the fair value of the employees’ purchase right under this Plan was estimated on the date of grant. The employees’ purchase right was determined using the Black-Scholes option-pricing model with the following assumptions and results:

The Company recognized share based compensation expense of $0.2 million for the period ended July, 2, 2010.

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

The only component of accumulated other comprehensive income as of July 2, 2010 and January 1, 2010 was for cumulative foreign exchange translation adjustments.

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 excluding its foreign subsidiaries. The Europe segment includes the operations of Projecta and Procolor. All intersegment transactions have been eliminated. Information regarding the sales of specific product categories within the Company’s geographic business segments is not presented because it is not practical to determine these amounts.

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 assessing segment performance is net sales less cost of sales and selling, general, and administrative expenses excluding depreciation and amortization. The Company does not allocate costs between segments.

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

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

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

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, changes in economic conditions, competition, retention of senior management and other key personnel, availability of materials or components, ability to make continued product innovations, casualty or work stoppages at the Company’s facilities, adverse results of lawsuits against the Company and currency exchange rates, the availability of financing and other factors described under Item 1A in the Company’s Annual Report on Form 10-K for the year ended January 1, 2010. 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. The Company’s actual results could differ materially from those currently anticipated and discussed in the forward-looking statements as a result of risks and uncertainties described under Item 1A in the Company’s Annual Report on Form 10-K for the year ended January 1, 2010. Management undertakes no obligation to update any forward-looking statements. This cautionary statement is applicable to all forward-looking statements contained in this report.

Da-Lite is one of the world’s leading manufacturers and distributors of projection screens. Da-Lite’s projection screens, which are focused on the premium end of the large screen market, are used in a wide range of settings including conference rooms, educational institutions, live entertainment venues, meeting rooms, training facilities, houses of worship and private homes. Da-Lite’s products provide the viewer with an enhanced visual experience in settings where a large screen adds to the communication of information or entertainment. The Company’s products are versatile and can be customized to fit the needs of unique viewing venues.

There were no changes in the thirteen week period ended July 2, 2010 to the application of critical accounting policies and estimates as described in our Annual Report on Form 10-K for the year ended January 1, 2010.

There were various accounting standards and interpretations issued recently, none of which are expected to have a material impact on the company’s financial position, operations or cash flows.

Thirteen Weeks Ended July 2, 2010, Compared with Thirteen Weeks Ended July 3, 2009

Net Sales. Net sales were $33.9 million for the 13 weeks ended July 2, 2010, as compared to $31.4 million for the 13 weeks ended July 3, 2009, an increase of $2.5 million or 7.9%. Net sales by the Company’s United States (U.S.) operations increased 7.5%. In the U.S., electric screen sales increased $1.1 million, wall screen sales increased $0.1 million, portable screen sales increased $0.2 million, and the sales of other products increased $0.6 million from 2009 levels, reflecting primarily increases in volume. Sales benefited from an improvement in economic activity during the second quarter, including the Hospitality, Business/IT and housing markets. Net sales from the Company’s European subsidiaries increased $0.4 million or 10.4%. Sales in Europe also benefited from an improvement in the economy. The stronger dollar produced a decrease of $0.4 million.

Cost of Sales. Cost of sales was $20.1 million for the 13 weeks ended July 2, 2010, as compared to $20.8 million for the 13 weeks ended July 3, 2009, a decrease of $0.7 million, or 3.5%. As a percentage of net sales, the cost of sales represented 59.2% in the 13 weeks ended July 2, 2010 and 66.2% for the 13 weeks ended July 3, 2009. This constitutes a 7.0 percentage point increase in margins. Margins at our U.S. facilities increased 5.8 points while margins at our European operations increased 10.0 points. These increases resulted primarily from a decrease in material cost and, to a lesser extent, an increase in product volumes.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $5.0 million for the 13 weeks ended July 2, 2010, as compared to $5.6 million for the 13 weeks ended July 3, 2009. Selling, general and administrative expenses in the U.S. decreased $0.3 million primarily as a result of a decrease in bad debt expense.

Goodwill Impairment. There were no impairment charges in the 13 weeks ended July 2, 2010. The goodwill impairment charge totaled $5.9 million for the 13 weeks ended July 3, 2009 as a result of the impairment charge recorded at the Projecta BV reporting unit.

Interest. Interest expense totaled $4.3 million for the 13 weeks ended July 2, 2010, as compared to $3.0 million for the 13 weeks ended July 3, 2009, an increase of $1.3 million. The increase was primarily due to the changes in rates as a result of refinancing the 9¹/2% Senior Notes with 12¹/2% Senior Notes.

Miscellaneous, net. Miscellaneous, net was income of less than $0.1 million for the 13 weeks ended July 2, 2010, as compared to $0.6 million for the 13 weeks ended July 3, 2009, that included a gain from the repurchase of debt at a discount.

Income Taxes. As a subchapter S corporation for United States tax purposes, the Company is generally not subject to United States federal and state income taxation. Rather, the Company’s income, gains, losses, deductions and credits flow through to its stockholders, and the Company makes distributions to them to meet their tax obligations at an assumed maximum federal and state tax rate (based on the state with the highest tax rate in which any of the Company’s stockholders reside). This assumed rate was 40.4% for the 13 weeks ended July 2, 2010 and for the 13 weeks ended July 3, 2009. The Company pays foreign income taxes on the earnings of its European subsidiaries.

Net Income (Loss). As a result of the aforementioned factors, net income increased $7.6 million to income of $4.5 million for the 13 weeks ended July 2, 2010 compared to a loss of $3.2 million for the 13 weeks ended July 3, 2009.

Twenty Six Weeks Ended July 2, 2010, Compared with Twenty Seven Weeks Ended July 3, 2009

Net Sales. Net sales were $65.2 million for the 26 weeks ended July 2, 2010, as compared to $65.1 million for the 27 weeks ended July 03, 2009, an increase of $0.1 million or 0.1%. Net sales by the Company’s United States (U.S.) operations decreased 1.0%. In the U.S., electric screen sales decreased $1.0 million and wall screen sales decreased $0.1 million. Portable screen sales increased $0.2 million and sales of other product increased $0.4 million from 2009 levels. Sales were marginally impacted by a leveling in the economy, in the Hospitality, Business/IT and housing markets. Portable screen sales were positively impacted by a slight increase in demand from the rental and staging markets within the broader Hospitality market. Net sales from the Company’s European subsidiaries increased $0.6 million or 6.4%. Sales in Europe benefited from an improvement in the economy. The stronger dollar produced a decrease of $0.1 million.

Cost of Sales. Cost of sales was $39.4 million for the 26 weeks ended July 2, 2010, as compared to $42.8 million for the 27 weeks ended July 3, 2009, a decrease of $3.4 million, or 8.1%. As a percentage of net sales, the cost of sales represented 60.4% in the 26 weeks ended July 2, 2010 and 65.8% for the 27 weeks ended July 3, 2009. This constitutes a 5.4 percentage point increase in margins. Margins at our U.S. facilities increased 5.0 points while margins at our European operations increased 3.9 points. These increases resulted primarily from the decrease in material cost and, to a lesser extent, an increase in product volumes.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $9.7 million for the 26 weeks ended July 2, 2010, as compared to $10.5 million for the 27 weeks ended July 3, 2009. Selling, general and administrative expenses in the U.S. decreased $0.6 million as a result of a decrease in bad debt and marketing expense.

Goodwill Impairment There were no impairment charges in the 26 weeks ended July 2, 2010. The goodwill impairment charge totaled $5.9 million for the 27 weeks ended July 3, 2009 as a result of the impairment charge taken at the Project BV reporting unit.

Interest. Interest expense totaled $7.2 million for the 26 weeks ended July 2, 2010, as compared to $6.4 million for the 27 weeks ended July 3, 2009, an increase of $0.8 million, reflecting the increase in interest as a result of refinancing the 9¹/2% Senior Notes with 12¹/2% Senior Notes.

Miscellaneous, net. Miscellaneous, net was an expense of $1.0 million for the 26 weeks ended July 2, 2010, as compared to income of $1.3 million for the 27 weeks ended July 3, 2009, an increase of $2.3 million. The change resulted from the repurchase of debt at a premium in the 2010 period compared to the repurchase of debt at a discount in 2009.

Income Taxes. As a subchapter S corporation for United States tax purposes, the Company is generally not subject to United States federal and state income taxation. Rather, the Company’s income, gains, losses, deductions and credits flow through to its stockholders, and the Company makes distributions to them to meet their tax obligations at an assumed maximum federal and state tax rate (based on the state with the highest tax rate in which any of the Company’s stockholders reside). This assumed rate was 40.4% for the 26 weeks ended July 2, 2010 and for the 27 weeks ended July 3, 2009. The Company pays foreign income taxes on the earnings of its European subsidiaries.

Net Income (Loss). As a result of the aforementioned factors, net income increased $6.9 million to income of $7.9 million for the 26 weeks ended July 2, 2010 compared to $1.0 million for the 27 weeks ended July 3, 2009.

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.

The Company issued $105 million 12¹/2% Senior Notes during the first quarter of 2010. These notes were issued with an original issue discount at a price of 97.305% and this debt was recorded at the discounted amount of $102.2 million. The discount will be accreted over the life of these notes as interest expense.

In March 2010, the Company repurchased $43.5 million of the outstanding principal amount of its 9 ¹/2% Senior Notes from the open market for an aggregate purchase price of $44.5 million. On May 17, 2010, the Company redeemed the remaining $54.5 million of the 9¹ /2% Senior Notes balance at the principal amount. The funds to repurchase these notes were from the cash received from the $102.2 million of the 12¹/2% Senior Notes along with the borrowings under our bank credit facility.

Management believes the principal indicators of the Company’s liquidity are its cash position (total cash and cash equivalents), remaining availability under its bank credit facilities and its excess working capital. At July 2, 2010, the Company’s cash position was $1.2 million, an increase of $0.6 million from January 1, 2010. Additionally, the Company has an unsecured revolving credit facility, with maximum possible borrowings equal to $19.5 million, which expires in April 2012. Interest on any outstanding borrowings related to this line of credit is calculated at the prime rate, subject to a floor of 4.00%. As the prime rate is below the floor, the interest rate in effect as of July 2, 2010 was 4.00%. At July 2, 2010, the Company had no outstanding balance under this line of credit. Da-Lite’s working capital position increased to $18.6 million (including $1.2 million of total cash and cash equivalents) at July 2, 2010, from $13.5 million (including $0.6 million of total cash and cash equivalents) at January 1, 2010.

The Company’s Dutch subsidiary, Projecta, has an overdraft line of credit, with maximum possible borrowings equal to 1.5 million Euros. Interest on outstanding borrowings in Europe related to Projecta’s overdraft line of credit is calculated at the ABN AMRO Bank Basic Rate plus 1.50%, the sum of which was 6.10% on July 2, 2010. At July 2, 2010, Projecta had no outstanding balances under this credit facility.

For the 26 weeks ended July 2, 2010, cash provided by operating activities was $7.8 million, as compared to $16.6 million for the 27 weeks ended July 3, 2009, a decrease of $8.8 million or 53.5%, that resulted from an increase in working capital for the 26 weeks ended July 2, 2010 compared to the decrease in working capital for the 27 weeks ended July 3, 2009. Cash used in investing activities was $0.5 million for the 26 weeks ended July 2, 2010, as compared to $0.8 million for the 27 weeks ended July 3, 2009 due to a reduction in capital expenditures. Cash used in financing activities was $6.7 million during the 26 weeks ended July 2, 2010, as compared to $14.8 million for the 27 weeks ended July 3, 2009. The decrease in cash used in financing activities in 2010 was primarily due to the refinancing.

Capital expenditures were $0.5 million for the twenty six weeks ended July 2, 2010 compared to $0.8 million for the twenty seven weeks ended July 3, 2009. The Company’s management currently expects to spend approximately $1.5 million on capital expenditures in 2010, using cash generated from operations.

The following table sets forth, as of July 2, 2010, certain of the Company’s contractual obligations:

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 $4.6 million and $4.3 million for the 26 weeks ended July 2, 2010 and the 27 weeks ended July 3, 2009, respectively.

The Company paid regular distributions to its stockholders in the amount of $3.2 million during the 27 weeks ending July 3, 2009. The Company has not paid any regular distribution to its stockholders in the first half of 2010, and there are no current plans to commence making any regular distributions to its stockholders in 2010.

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.

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.

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 7.4% of the Company’s total outstanding receivables as of July 2, 2010. 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.

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

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 $19.5 million revolving credit facility in the U.S. is calculated at 4.00% on July 2, 2010. At July 2, 2010, the Company had no outstanding balance. Interest on outstanding borrowings in Europe, related to Projecta’s overdraft line of credit, is calculated at the ABN AMRO Basic Rate plus 1.50%, the sum of which was 6.10% on July 2, 2010. At July 2, 2010, Projecta had no outstanding balance with ABN AMRO Bank.

At July 2, 2010, the Company had $105.0 million in fixed-rate long-term debt outstanding from the 12¹/2% Senior Notes. There is no interest rate risk associated with the Company’s fixed rate debt. The fair market value of the fixed-rate debt (based on discounted cash flows reflecting borrowing rates currently available for debt with similar terms and maturities) varies with fluctuations in interest rates. A 10% decrease in interest rates on the value of the 12¹/2% Senior Notes due in 2015 would have changed the fair market value of the fixed-rate debt to approximately $111.4 million from the fair value of approximately $105.0 million at July 2, 2010. 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.

The Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchanges Act of 1934 as of the end of the period covered by this report. Based on the evaluation, performed under the supervision and with the participation of the Company’s management, including the Chairman, Chief Executive Officer and President (the “CEO”) and the Chief Financial Officer (the “CFO”), the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by the report.

There were no significant changes with respect to the Company’s internal control over financial reporting or in other factors that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended July 2, 2010.

On July 2, 2010, the shareholders of the Company convened a special meeting to adopt the Second Amended and Restated Articles of Incorporation of the Company, which effected a 1,000-for-1 stock split of the Company’s common stock (the “Stock Split”). The Company filed the Second Amended and Restated Articles of Incorporation with the Secretary of State of the State of Indiana on that date to be effective as of July 2, 2010 (the “Effective Date”).

As of the Effective Date, the Company’s shareholders were entitled to receive 1,000 shares of the Company’s common stock, par value $0.001 per share, in exchange for one share of the Company’s common stock, par value $1.00 per share (“Old Shares”). The total number of authorized shares of the Company was increased to 10,000,000 on the Effective Date. The Second Amended and Restated Articles of Incorporation of the Company was included as Exhibit 3.1 to the Periodic Report on Form 8-K filed on July 8, 2010.

During the quarter ended July 2, 2010, the Company adopted the Da-Lite Screen Company, Inc. 2010 Stock Option Plan (“2010 Stock Option Plan”) pursuant to which eligible employees may be granted options to purchase up to 200,000 new shares of the Company. A copy of the 2010 Stock Option Plan and Form Award Agreement are included as Exhibits 10.1 and 10.2 hereto.

As of August 1, 2010, the Company entered into amendments to employment agreements with Richard Lundin, Judith Loughran and Jerry Young. Copies of these amendments are included as Exhibits 10.3, 10.4 and 10.5 hereto.

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. Young
		Jerry C. Young
		Vice President – Finance and Chief Financial Officer (Principal Financial and Accounting Officer)


		Page
PART I	Financial Information

Item 1.	Condensed Consolidated Financial Statements (unaudited)	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15

Item 4.	Controls and Procedures	16

PART II	Other Information

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17

Item 5.	Other Information	17

Item 6.	Exhibits	17

	Signatures	19

	Exhibit Index	20


	(Unaudited) As of July 2, 2010			As of January 1, 2010
Assets
Current Assets:
Cash and cash equivalents	$	1,194		$	552
Accounts receivable, less allowance for doubtful accounts		16,708			13,559
Inventories		8,370			8,482
Prepaid expenses and other		2,374			2,045
Prepaid income taxes		784			519

Total current assets		29,430			25,157


Property, plant and equipment		58,483			60,104
Less accumulated depreciation		43,685			43,256

Net property, plant, and equipment		14,798			16,848

Goodwill		20,440			20,440
Other assets, net		3,999			805

	$	68,667		$	63,250


Liabilities and Stockholders’ Deficit
Current liabilities:
Revolving credit facility	$	—		$	1,975
Checks written in excess of bank balance		344			890
Accounts payable		2,716			3,281
Accrued expenses
Interest		3,589			1,167
Vacation		1,289			1,239
Other		2,856			3,088

Total accrued expenses		7,734			5,494

Total current liabilities		10,794			11,640
Long-term debt		102,276			98,005

Total liabilities		113,070			109,645


Commitments and contingencies (note 8)

Stockholders’ deficit:
Common stock, $.001 par value. Authorized 10,000,000 shares; issued 5,388,620 shares at July 2, 2010		5			11
Additional paid-in capital		1,927			1,710
Accumulated deficit		(48,952	)		(26,770	)
Accumulated other comprehensive income		2,617			4,120
Less treasury stock, 5,297.38 shares at January 1, 2010 at cost		—			(25,466	)

Total stockholders’ deficit		(44,403	)		(46,395	)

	$	68,667		$	63,250


	13 Weeks Ended July 2, 2010			13 Weeks Ended July 3, 2009			26 Weeks Ended July 2, 2010			27 Weeks Ended July 3, 2009

Net sales	$	33,896		$	31,413		$	65,178		$	65,097
Cost of sales		20,081			20,803			39,389			42,844


Gross profit		13,815			10,610			25,789			22,253
Selling, general, and administrative expenses		5,031			5,644			9,707			10,539
Goodwill impairment		—			5,926			—			5,926


Operating income (loss)		8,784			(960	)		16,082			5,788


Other expense (income):
Interest		4,323			2,998			7,232			6,381
Miscellaneous, net		(48	)		(574	)		995			(1,289	)

Total other expense		4,275			2,424			8,227			5,092

Income (loss) before income taxes		4,509			(3,384	)		7,855			696
Income tax expense (benefit)		21			(228	)		(41	)		(272	)


Net income (loss)	$	4,488		$	(3,156	)	$	7,896		$	968


	26 weeks Ended July 2, 2010			27 weeks Ended July 3, 2009
Cash flows from operating activities:
Net income	$	7,896		$	968
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		1,398			1,485
Amortization and write-off of debt issuance costs		505			610
Accretion of original issue discount on senior notes due 2015		106			—
Stock compensation expense		217			—
Goodwill impairment		—			5,926
Change in:
Accounts receivable		(4,091	)		2,389
Inventories		(158	)		5,228
Prepaid expenses and other		(404	)		524
Accounts payable		317			(1,725	)
Accrued expenses		2,049			1,203

Net cash provided by operating activities		7,835			16,608


Cash flows from investing activities:
Purchase of property, plant and equipment		(457	)		(771	)

Net cash used in investing activities		(457	)		(771	)


Cash flows from financing activities:
Decrease in checks written in excess of bank balance		(546	)		—
Proceeds from revolving credit facility		4,700			5,500
Payments on revolving credit facility		(6,675	)		(3,500	)
Proceeds from sale of senior notes due 2015		102,170			—
Payments to retire senior notes due 2011		(98,005	)		(9,300	)
Distributions to stockholders		(4,618	)		(7,516	)
Payment of financing costs		(3,700	)		—

Net cash used in financing activities		(6,674	)		(14,816	)


Effect of foreign currency exchange rate changes on cash and cash equivalents		(62	)		271

Net change in cash and cash equivalents		642			1,292
Cash and cash equivalents at beginning of period		552			1,633

Cash and cash equivalents at end of period	$	1,194		$	2,925

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting Company


Long-term debt consists of the following (in thousands):	July 2, 2010		January 1, 2010

9¹/2 % Senior Notes due May 2011	$	—	$	98,005
12¹/2 % Senior Notes due April 2015 (net of unamortized issue discount of $2,724)		102,276		—

Total Long-term debt	$	102,276	$	98,005


	Option Shares	Weighted Average Exercise Price		Option Exercisable	Weighted Average Exercise Price
Outstanding, January 1, 2010 (1)	54,000	$	17.11	54,000	$	17.11
Granted	159,000		17.62	159,000		17.62
Exercised	0		0	0		0
Canceled	0		0	0		0

Outstanding July 2, 2010	213,000	$	17.49	213,000	$	17.49


	2010 Stock Option Plan
Expected life in years		2.8
Interest rate		1.11	%
Volatility		16.7	%
Dividend yield		3.4	%
Fair value of options	$	1.36


	July 2, 2010		January 1, 2010
Raw materials	$	6,189	$	5,715
Work in progress		890		915
Finished goods		1,291		1,852

	$	8,370	$	8,482


For the period ended:	13 Weeks Ended July 2, 2010		13 Weeks Ended July 3, 2009			26 Weeks Ended July 2, 2010		27 Weeks Ended July 3, 2009
Net sales:
United States	$	29,122	$	27,088		$	55,021	$	55,552
Europe		4,774		4,325			10,157		9,545

Total net sales	$	33,896	$	31,413		$	65,178	$	65,097


Operating income (loss):
United States	$	8,610	$	5,849		$	16,079	$	12,718
Europe		174		(6,809	)		3		(6,930	)

Total operating income (loss)	$	8,784	$	(960	)	$	16,082	$	5,788


As of:	July 2, 2010		January 1, 2010
Total assets
United States	$	54,961	$	47,751
Europe		13,706		15,499

Total assets	$	68,667	$	63,250


	Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years	More than 5 years
	(in millions)
Interest and principal payments for senior debt	$	170.9	$	13.4	$	26.3	131.2	—
Interest and principal for line of credit		—		—		—	—	—
Self-insurance letter of credit		0.4		0.4		—	—	—

Total	$	171.3	$	13.8	$	26.3	131.2	—


Exhibit No.		Description

10.1		Da-Lite Screen Company, Inc 2010 Stock Option Plan.

10.2		Form of Options Award Agreement.

10.3		Amendment to Employment Agreement between the Da-Lite Screen Company, Inc. and Richard Lundin.

10.4		Amendment to Employment Agreement between the Da-Lite Screen Company, Inc and Judith Loughran.

10.5		Amendment to Employment Agreement between the Da-Lite Screen Company, Inc and Jerry Young.

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