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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

For the quarterly period ended April 1, 2005

OR

For the transition period from                      to                     

Commission File Number 333-116673

DA-LITE SCREEN COMPANY, INC.

(Exact Name of Registrant as Specified in its Charter)

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

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

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ¨ No x

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PART I

FINANCIAL INFORMATION

DA-LITE SCREEN COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, unaudited)

See accompanying notes to consolidated financial statements.

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DA-LITE SCREEN COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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

See accompanying notes to consolidated financial statements.

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DA-LITE SCREEN COMPANY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands, unaudited)

See accompanying notes to consolidated financial statements.

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DA-LITE SCREEN COMPANY, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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 its subsidiaries, the “Company” or “Da-Lite”) for the fiscal year ended December 31, 2004. In the opinion of management, the accompanying unaudited 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 Company uses a 52- or 53-week fiscal year ending on the last Friday of December. The first quarter of 2005 was a 13-week period, and the first quarter of 2004 was a 14-week period. The Company’s 2005 fiscal year will be a 52-week period, and the 2004 fiscal year was a 53-week period.

Certain reclassifications have been made in the prior period information to conform with the current period’s presentation.

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.

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.

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.

Goodwill—Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired. Prior to 2002, goodwill was amortized on a straight-line basis over periods of 15 to 40 years. Effective January 1, 2002, the Company adopted the provisions of SFAS No. 142, Accounting for Goodwill and Other Intangible Assets. With the adoption of SFAS No. 142, goodwill is no longer subjected to amortization. Management tests, at least annually or when events or changes in circumstances occur, goodwill for impairment to determine whether its carrying value exceeds its implied fair value.

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Long-term debt at April 1, 2005 and December 31, 2004 consisted of the following (in thousands):

The Company issued $160 million of 9½% senior unsecured notes due in May 2011, which were subsequently exchanged for substantially identical notes that were registered with the Securities and Exchange Commission (the “9½% Senior Notes due 2011” or “Notes”). The net proceeds from the issuance of the Notes were used to retire approximately $15.0 million of indebtedness outstanding under a then existing credit facility, to pay a special distribution to shareholders 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 109.500% of their principal amount plus accrued interest. In addition, before May 15, 2007, the Company may redeem up to 35% of the notes at a redemption price of 109.500% of their principal amount plus accrued interest using the proceeds from sales of certain kinds of its capital stock. The Company has determined the early redemption option to be an embedded derivative and has determined the value of the embedded derivative to be immaterial. 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 beginning on November 15, 2004.

In the Indenture related to the 9½% Senior Notes due 2011, the Company agreed to covenants that limit its and its Restricted Subsidiaries’ 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 shareholders 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.

At April 1, 2005, the Company had an unsecured revolving credit facility that expires in May 2006 with maximum possible borrowings equal to $5.0 million. At April 1, 2005 and December 31, 2004, 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 5.75% on April 1, 2005.

At April 1, 2005, Projecta had a 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. No borrowings were outstanding under this line of credit at April 1, 2005 and December 31, 2004.

The Company has provided an insurance carrier with a standby letter of credit for $0.3 million.

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Basic earnings per share are 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):

The Company applies the intrinsic value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. Since the exercise price equals the market value of the underlying common stock on the date of grant, no compensation expense is recognized. For the thirteen weeks ended April 1, 2005 and the fourteen weeks ended April 2, 2004, the Company did not recognize any compensation expense. SFAS No. 123, Accounting for Stock-Based Compensation, established accounting and disclosure requirements using a fair value method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to continue to apply the intrinsic value-based method of accounting described above, and has adopted the disclosure requirements of SFAS No. 123.

The Company has a nonqualified stock option plan under which options are granted to certain employees. The plan authorizes grants of options to purchase 737 shares, all of which have been granted. The Company has not disclosed the effect on net income as if the Company had applied the fair value recognition provisions of SFAS 123, Accounting for Stock Based Compensation, due to immateriality.

In December 2004, the FASB issued SFAS No. 123 (Revised 2004), Share-Based Payment, that revised FASB Statement No. 123, Accounting for Stock-Based Compensation and superseded APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. SFAS No. 123R focuses primarily on accounting for transactions in which an entity obtains employee services through share-based payment transactions. SFAS No. 123R requires a public entity to measure the cost of employee services received in exchange for the award of equity instruments based on the fair value of the award at the date of grant. The cost will be recognized over the period during which an employee is required to provide services in exchange for the award. SFAS No. 123R is effective January 1, 2006 for the Company. The ultimate amount of increased compensation expense will be dependent on whether the Company adopts SFAS 123R using the modified prospective or retrospective method, the number of option shares granted during the year, their timing and vesting period, and the method used to calculate the fair value of the awards, among other factors. The adoption of SFAS 123R is not expected to have a material effect on the results of operations or financial position of the Company.

There were no anti-dilutive securities outstanding at April 1, 2005 or April 2, 2004.

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

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

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 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.

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

The Company leases production space and equipment under noncancelable operating leases. Some of the Company’s leases provide that the Company pay taxes, insurance, maintenance and other operating expenses. Rent expense under operating leases totaled $7,000 and $10,000 for the thirteen weeks ended April 1, 2005 and the fourteen weeks ended April 2, 2004, respectively.

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

Results of Operations

Thirteen Weeks Ended April 1, 2005, Compared with Fourteen Weeks Ended April 2, 2004

Net Sales. Net sales were $39.9 million for the first 13 weeks of 2005, as compared to net sales of $39.1 million for the first 14 weeks of 2004, an increase of $0.8 million or 2.0%. Year-over-year sales growth for the two periods was moderated by an additional week in 2004 compared to 2005. In the U.S., electric screen sales increased $1.3 million, wall screen sales increased $1.2 million, and portable screen sales increased $0.4 million from 2004 levels. Net sales from the Company’s European subsidiaries decreased by $1.3 million or 15.9%, with the stronger Euro offsetting $0.3 million of the overall decrease. The decrease in Europe was attributable to the difficult economic conditions during the first quarter of 2005, which resulted in a decline in unit sales as compared to the first quarter of 2004.

Cost of Sales. The cost of sales was $22.2 million for the first quarter of 2005, as compared to $21.7 million for the first quarter of 2004, an increase of $0.5 million, or 2.2%. As a percentage of net sales, the

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cost of sales represented 55.7% and 55.6% for the first quarter of 2005 and the first quarter of 2004, respectively. This constitutes a 0.1% reduction in margin and was the result of fluctuations in the mix of products sold.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $4.7 million in the first quarter of 2005, as compared to $4.6 million for the first quarter of 2004. Increased legal and audit fees related to public filing requirements and Sarbanes-Oxley compliance efforts were partially offset by reductions in bad debt expense and by bad debt recoveries.

Depreciation and Amortization. Depreciation and amortization was $1.2 million for the first quarter of 2005 and $1.0 million for the first quarter of 2004. Depreciation is an expense recorded to reduce the value of long-lived tangible assets used mostly in the manufacturing of product. Depreciation expense is expected to be somewhat higher in 2005 as a result of the capital expenditures made in 2004.

Interest. Interest expense totaled $3.7 million for the first quarter of 2005, as compared to $0.2 million for the first quarter of 2004, an increase of $3.5 million. This increase was a direct result of the interest on the 9½% Senior Notes due 2011 issued in May 2004.

Miscellaneous, net. Miscellaneous, net was $0.0 million for the first quarter of 2005, as compared to $0.2 million for the first quarter of 2004, a decrease of $0.2 million. Miscellaneous, net in 2004 consisted primarily of costs relating to the closing of a subsidiary in 2003.

Net Income. Net income fell from $10.6 million for the first quarter of 2004 to $7.7 million for the first quarter of 2005, reflecting the higher interest expense associated with the Notes.

EBITDA

EBITDA was $12.9 million for the period ended in 2005 as compared to $12.5 million for the period ended in 2004, an increase of $0.4 million or 3.0%. The Company calculates EBITDA as net income before income taxes, interest and depreciation, amortization and impairment loss. EBITDA is a non-GAAP measure of operations that the Company’s management uses to generally evaluate the financial performance of the business and to assess its cash flow generating abilities, and is also used by investors and financial analysts. EBITDA should not be considered independently from, and is not presented as an alternative measure of, operating income (loss) or cash provided by operating activities as determined under generally accepted accounting principles or GAAP. The calculation of EBITDA may vary among companies. The following table reconciles the computation of EBITDA, as compared to net income for the periods indicated:

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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 April 1, 2005, the Company’s cash position was $13.3 million, an increase of $4.0 million from December 31, 2004. Additionally, the Company had an unsecured revolving credit facility, with maximum possible borrowings equal to $5.0 million available under current terms until May 2006. Interest on outstanding borrowings related to this line of credit is calculated at the prime rate. At April 1, 2005, the Company had no outstanding balance under this line of credit. Furthermore, Da-Lite’s working capital position improved to $29.2 million (including $13.3 million of cash and cash equivalents) at April 1, 2005, from $26.4 million (including $9.3 million of cash and cash equivalents) at December 31, 2004.

At April 1, 2005, the Company’s Dutch subsidiary, Projecta, had a 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 inventory. Interest on outstanding borrowings related to this line of credit is calculated at the Fortis Basic Rate plus 1.50% and was 4.25% on April 1, 2005. At April 1, 2005, there was no outstanding balance under this line of credit.

The Company expects to be able to fund its working capital requirements, its capital expenditures and its distributions to shareholders with cash generated from operations.

Depending on the Company’s expected cash needs, the prevailing prices of the Notes and other factors, the Company may repurchase outstanding Notes from time to time in the open market or otherwise.

Cash Flows

For the first quarter of 2005, cash provided by operating activities was $9.9 million, as compared to $12.6 million during the first quarter of 2004, a decrease of $2.7 million or 21.3%, reflecting the reduction of net income attributable to the increased interest expense associated with the Notes. Cash used in investing activities was $0.7 million during the first quarter of 2005, as compared to $1.9 million during the first quarter of 2004, all of which in both periods represented capital expenditures. Cash used in financing activities was $5.3 million during the first quarter of 2005, as compared to $8.4 million during the first quarter of 2004, reflecting debt paydowns in the first quarter of 2004 as compared to no reduction of debt in the first quarter of 2005.

Interest expense will be substantially higher in the first half of 2005 compared to the first half of 2004 as a result of the interest on the 9½% Senior Notes due 2011 issued in May 2004. Management believes that the cash generated by the Company’s operations will be sufficient to cover this interest expense as well as to fund planned capital expenditures, although there can be no assurances in this regard.

Capital Expenditures

Capital expenditures were $0.7 million during the first quarter of 2005 compared to $1.9 million during the first quarter of 2004. The Company’s management currently expects to spend approximately $3.5 million on capital expenditures in 2005 using cash generated from operations.

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Contractual Obligations

The following table sets forth, as of April 1, 2005, certain of the Company’s contractual obligations:

Distributions

As a subchapter S corporation under the Internal Revenue Code of 1986, distributions are made by Da-Lite to its shareholders to pay estimated taxes relating to taxable income allocated to them by the Company on a quarterly basis. Tax related distributions were $2.3 million in the first quarter of 2005 and $2.3 million in the first quarter of 2004.

The Company has paid regular distributions to its shareholders in 2005 at the monthly rate of $175 per share or $0.9 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 shareholders in the first part of 2004, through April 2004, at the monthly rate of $200 per share or $1.0 million in the aggregate. In May 2004, the Company paid a special distribution to its shareholders of approximately $134.6 million ($25,500 per share). Although the Company continued to make quarterly tax distributions to its shareholders, additional regular monthly distributions during the remainder of 2004 were not issued.

Inflation

The Company’s management believes that inflation has not had a material effect on the results of its operations.

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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Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash 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 10% of the Company’s total outstanding receivables as of April 1, 2005. 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 hedge raw material purchases from vendors outside of the country of purchase. Gains and losses on these contracts offset changes in the related foreign currency denominated costs.

Interest Rate Risk

Da-Lite does not have any variable rate debt outstanding and the Company’s management does not foresee the need to pursue additional debt financing at this time. Interest related to outstanding balances in the Company’s $5.0 million revolving credit facility is calculated at the prime rate, which was 5.75% at April 1, 2005. At April 1, 2005, the Company had no outstanding balances under this line of credit.

At April 1, 2005, the Company had $150.2 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 $175 million from the fair value of approximately $166 million at December 31, 2004. Note that 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, including cash and cash equivalents, accounts receivable, inventory, prepaid expenses, accounts payable and accrued expenses.

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PART II

OTHER INFORMATION

During the first quarter of 2005, seven employees exercised options to purchase an aggregate of 15.6 shares of our common stock at an aggregate purchase price of $133,000. 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 11.9 shares from stockholders during the same period.

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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.

Date: May 3, 2005

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EXHIBIT INDEX

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