UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 orOR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2010~~2011

Commission File Number 1-4773

AMERICAN BILTRITE INC.

(Exact name of registrant as specified in its charter)

Delaware	04-1701350
(State or Other Jurisdiction of	(IRS Employer Identification No.)
Incorporation or Organization)

57 River Street

Wellesley Hills, MA 02481-2097

(Address of Principal Executive Offices)

(781) 237-6655

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

	Name of Exchange on	~~Name of Exchange on~~
Title of Each Class	Which Registered	~~Which Registered~~
Common Stock, par value $.01 per share	None	~~NYSE Amex~~

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

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES [ ] NO [X]

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES [ ] NO [X]

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 and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]

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 [ X] NO [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

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 the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X]

The aggregate market value of the registrant’s common stock held by non-affiliates as of June 30, ~~2010~~2011 was $514.02 million.

The number of shares of the registrant’s common stock, par value $.01 per share, outstanding as of March 1516, ~~2011~~2012 was 3,~~441~~447,~~357~~142.

Documents Incorporated by Reference – Portions of the proxy statement for the annual meeting of stockholders to be held on May 9, 2011, which will be filed by the registrant within 120 days after December 31, 2010, are incorporated by reference into Part III of this Annual Report on Form 10-KNone.

Factors That May Affect Future Results – Some of the information presented in or incorporated by reference in this report constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks, uncertainties and assumptions. These forward-looking statements are based on the registrant’s expectations, as of the date of this report, of future events. The registrant undertakes no obligation to update any of these forward-looking statements, except as required by applicable law. Although the registrant believes that its expectations are based on reasonable assumptions, within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from expectations. Any or all of these expectations may turn out to be incorrect and any forward-looking statements made in this report speak only as of the date of this report. Readers are cautioned not to place undue reliance on any forward-looking statements. Actual results could differ significantly as a result of various factors. Factors that could cause or contribute to the registrant’s actual results differing from its expectations include those factors discussed elsewhere in this report, including in Item 1A (Risk Factors).

PART I

ITEM 1. BUSINESS

General Development of Business

American Biltrite Inc. (together with, unless the context otherwise indicates, its wholly-owned subsidiaries, “ABI” or the “Company”) was organized in 1908 and is a Delaware corporation. ABI’s major operations include its Tape Division, its jewelry division K&M Associates L.P., a Rhode Island limited partnership (“K&M”), and its Canadian division, which consists of a wholly-owned Canadian subsidiary, American Biltrite (Canada) Ltd. (“AB Canada”).

The Tape Division produces adhesive-coated, pressure-sensitive papers and films used to protect material during handling or storage or to serve as a carrier for transferring decals or die-cut lettering. The Tape Division also produces pressure sensitive tapes and adhesive products used for applications in the heating, ventilating and air conditioning (“HVAC”), footwear, automotive, electrical and electronic industries.

In 1995, ABI acquired a controlling interest in K&M, a designer, supplier and distributor of a wide variety of adult, children’s and specialty items of fashion jewelry and related accessories throughout the U.S. and Canada. In August 2010, ABI, through wholly-owned subsidiaries, acquired the remaining 5.5% limited partner interest, and consequently, owns 100% of K&M as of August 23, 2010. K&M wholesales its products to mass merchandisers, specialty stores and department stores.

Outside the United States, the Tape Division operates converting facilities in Belgium, Italy and Singapore, where bulk tape products are converted into various sizes. Sales offices at the Belgium, Italy and Singapore locations and sales representative offices in Shanghai, China, Bangkok Thailand and Seoul, South Korea enable quicker response to customer demands in the European and Asian markets. AB Canada produces resilient floor tile, rubber tiles and rolled rubber flooring and Performance Sheet Rubber materials, uncured rubber, truck flaps and footwear products and imports certain products from Asia for resale. K&M maintains a representative office in China, from which it sources the majority of the products it sells.

For financial reporting purposes, ABI operates in three industry segments: the Tape Division, jewelry (K&M) and the Canadian division (AB Canada). See Note 13 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K.

On December 31, 2003, ABI's former majority-owned subsidiary Congoleum Corporation (“Congoleum”) filed a voluntary petition with the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”) seeking relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago, and on August 17, 2009, the United States District Court for the District of New Jersey (the “District Court”) withdrew the reference of Congoleum’s Chapter 11 case from the Bankruptcy Court and assumed authority over the proceedings

~~On December 31, 2003, American Biltrite Inc.'s former majority-owned subsidiary~~ Congoleum Corporation (“Congoleum”) filed a voluntary petition with the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”) seeking relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago, and on August 17, 2009, the United States District Court for the District of New Jersey (the “District Court”) withdrew the reference of Congoleum’s ~~Chapter 11 case from the Bankruptcy Court and assumed authority over the proceedings. Congoleum’s~~ plan of reorganization was confirmed by the District Court on June 7, 2010 and became effective July 1, 2010. By operation of the plan, all shares of Congoleum’s Class A and Class B common stock outstanding immediately prior to the plan becoming effective were cancelled effective as of July 1, 2010, including those shares owned by ABI. As a result, effective as of that time, ABI ceased to own any equity interest in reorganized Congoleum and Congoleum is no longer a subsidiary of ABI. The former holders of the cancelled shares of Congoleum common stock, including ABI, did not receive any compensation on account of their cancelled shares. Congoleum is a manufacturer of resilient sheet and tile flooring and it previously comprised the Company’s flooring products division.

Narrative Description of Business

Marketing, Distribution and Sales The Tape Division’s protective papers and films are sold domestically and throughout the world, principally through distributors, but also directly to certain manufacturers. Other tape products are marketed through the Tape Division’s own sales force and by third-party sales representatives and distributors throughout the world. ABI’s Belgian, Italian and Singapore facilities sell these products throughout Europe and the Far East.

The products of K&M are sold to retailers domestically and in Canada through its own direct sales force and through third-party sales representatives. K&M’s business and operations experience seasonal variations. In general, fashion jewelry supply and distribution businesses respond to the seasonal demands of mass merchandisers and other major retailers, which typically peak in preparation for end-of-year holiday shopping. Accordingly, K&M’s working capital needs tend to be greatest in the second and third fiscal quarters as it increases inventories in advance of its peak selling season, while its revenues tend to be greater toward the end of each fiscal year, especially in the latter part of the third quarter and the first half of the fourth quarter.

AB Canada’s flooring and Performance Sheet Rubber products are marketed principally through distributors. Seasonal variations in the sales and working capital requirements of this division are not significant.

None of the Company’s customers contributed more than 10% of the Company’s consolidated revenue during the last two fiscal years. See Note 13 of the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K for additional financial information about the Company’s operating segments.

Working Capital and Cash Flow In general, ABI’s working capital requirements are not affected by accelerated delivery requirements of major customers or by obtaining a continuous allotment of raw material from suppliers. ABI does not provide special rights for customers to return merchandise and does not provide special seasonal or extended terms to its customers, except that K&M does provide pre-approved allowances in the form of markdowns and return authorizations, as may be warranted by market conditions.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” in Item 7 of this Annual Report on Form 10-K.

Raw Materials ABI generally designs and engineers its own products. Most of the raw materials required for its manufacturing operations are available from multiple sources, although some raw materials are purchased from a single source or supplier. Any significant delay in or disruption of the supply of raw materials could substantially increase ABI’s cost of materials, require product reformulation or require qualification of new suppliers, any one or more of which could materially adversely affect the business, operations or financial condition of ABI. Although ABI has generally not had difficulty in obtaining its requirements for these materials, it has occasionally experienced significant price increases for some of these materials. While ABI has been able to obtain sufficient supplies of specialty resin and other raw materials, there can be no assurances that they may not experience difficulty obtaining supplies and raw materials in the future, particularly if global supply conditions deteriorate, which could have a material adverse effect on profit margins.

Competition All businesses in which ABI is engaged are highly competitive, principally based upon pricing of the product, the quality of the product and service to the customer. ABI’s tape products compete with products of some of the largest fully integrated rubber and plastic companies, as well as those of smaller producers. Included among its competitors are 3M/Venture, Kansai, ~~Tessa~~Tesa Tape, Novacel, Nitto, and R-Tape. AB Canada’s flooring products compete with those of other manufacturers of rubber and resilient floor tiles and with all other types of floor covering. AB Canada competes with Armstrong World Industries, Inc., Flexco/Roppe, Nora and Mondo and with other manufacturers of alternate floor covering products. In the Performance Sheet Rubber products category, AB Canada has several competitors, principally among them being GRT Division of Enpro and WARCO/Biltrite, as well as several importers.

K&M competes with other companies that sell similar products on the basis of product pricing, design, logistical capability and the effectiveness of merchandising services offered. In assessing K&M’s products and services, K&M’s customers tend to focus on margin dollars realized from the customers’ sales of product and return on the necessary inventory investment. In its business of supplying and servicing fashion jewelry and accessory products, K&M competes with a variety of competitors, including ~~Liz Claiborne Inc.,~~ Jones Apparel Group and a number of other companies offering similar products and/or services. K&M also competes with numerous importers and overseas suppliers of similar items.

Patents, Trademarks and Licenses ABI and its subsidiaries own many trademarks, including the AB® logo, TransferRite®, ProtecRite®, Autowrap®, Ideal Seal®, Therm-X®, and Ideal®, atwhich are used by the Tape Division. AB Canada licenses from American Biltrite Intellectual Properties, ~~Estrie~~Inc. the trademarks AB Electrostatic®, BLAST™, Fortress®, Marathon®, Mirra®, Oasis®, TecCare®, Texas Granite®, Viera®, AB Colors Plus®, Dura-Shield® , and Transseal®. at AB Canada, licenses from ABI the trademarks Cat’s Paw® and Amtico®, which isare used solely in the Canadian market. AB Canada owns the trademark Stonescape™. These trademarks are important for the Company in maintaining a competitive position. K&M also licenses the Guess?®, ~~Elie~~ Tahari®, Ellen Tracy®, Panama Jack®, and Rocawear®, trademarks as well as certain other trademarks for use with its jewelry products. The licensing agreements are subject to expiration dates and other termination provisions, and the licensor or the Company may choose not to extend or renew certain agreements. K&M considers the Guess?® license, which expires December 31, 2012, to be material to its business and results of operations. The Company has an ongoing program to renew, add or replace successful licenses. The Company also believes that proprietary technology and know-how play an important role in maintaining competitiveposition. The section captioned “Royalty and Advertising Commitments” included in Note 8 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K, to the extent addressing matters related to royalties, is incorporated by reference herein.

~~Research~~not ~~and~~to ~~Development~~extend ~~Research~~or ~~and development~~renew ~~efforts~~certain atagreements. K&M considers the ~~Company~~Guess?® ~~concentrate~~license onto ~~new~~be ~~product~~material ~~development,~~to ~~increasing~~its ~~efficiencies~~business and results of ~~the~~operations. ~~various~~The ~~manufacturing~~Company has an ongoing ~~processes~~program to renew, ~~and~~add ~~improving~~or ~~the~~replace ~~features~~successful licenses. The Company also believes that proprietary technology and ~~performance~~know-how ofplay ~~existing~~an ~~products~~important role in maintaining competitive position. ~~Expenditures~~The ~~for~~section ~~research~~captioned “Royalty and ~~development~~Advertising ~~were $1.7~~Commitments” ~~million,~~included onin aNote ~~consolidated~~8 ~~basis,~~of ~~for~~the ~~each~~Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K, to the ~~years~~extent ~~2010~~addressing ~~and~~matters ~~2009~~related to royalties, is incorporated by reference herein.

~~Key~~Research ~~Customers~~and NoDevelopment ~~customer~~Research ~~accounted~~and ~~for~~development ~~more~~efforts ~~than~~at ~~10%~~the Company concentrate on new product development, increasing efficiencies of ~~ABI’s~~the various manufacturing processes, and improving the features and performance of existing products. Expenditures for research and development were $2.0 million and $1.7 million, respectively, on a consolidated ~~sales~~basis, for ~~either~~each ~~2010~~of orthe ~~2009~~years 2011 and 2010.

~~K&M’s~~Key ~~top~~Customers ~~three~~No ~~customers~~customer ~~in terms~~accounted offor ~~net~~more ~~sales~~than ~~in 2010 together accounted for 54~~10% of ~~K&M~~ABI’s ~~net~~consolidated sales. ~~The~~for ~~loss~~either of2011 the largest of these customers would have a material adverse effect on K&M’s business, results of operations and financial condition and would likely have a material adverse effect on the K&M’s business, results of operations or ~~financial condition~~2010.

~~Sales~~K&M’s totop ~~five~~three ~~unaffiliated~~ customers ofin ~~the~~terms ~~Tape~~of ~~Division~~net ~~together~~sales ~~constituted~~in ~~approximately~~2011 ~~23%~~and of2010 ~~the~~together ~~net~~accounted ~~sales~~ for ~~the~~52% ~~Tape~~and ~~Division~~54% ~~for~~of ~~the~~K&M’s ~~year~~net ~~ended December 31~~sales, ~~2010~~respectively. The loss of the largest of these ~~unaffiliated~~ customers ~~and/or~~would ~~two~~have ora ~~more~~material adverse effect on K&M’s business, results of ~~the~~operations ~~other~~and ~~four~~financial ~~unaffiliated~~condition and ~~customers~~would ~~could~~likely have a material adverse effect on the ~~Tape Division~~Company’s business, results of operations ~~and~~or financial condition.

Sales to five unaffiliated customers of ABthe ~~Canada~~Tape Division together ~~constitute~~constituted approximately 2425% and 23% of the net sales for ABthe ~~Canada~~Tape Division for the ~~year~~years ended December 31, 2011 and 2010, respectively. The loss of the largest of these unaffiliated customers and/or two or more of the other four unaffiliated customers could have a material adverse effect on ABthe ~~Canada~~Tape Division’s business, results of operations and financial condition.

~~Through~~Sales ~~June~~to ~~30,~~five ~~2010,~~unaffiliated ~~the~~customers ~~Tape~~of ~~Division’s~~AB ~~and~~Canada ABtogether ~~Canada’s~~constitute ~~sales~~approximately to22% ~~Congoleum~~and ~~were~~24% ~~recorded~~of asthe ~~intercompany~~net sales ~~and~~for ~~eliminated~~AB inCanada ~~consolidation.~~for ~~Upon~~ the ~~deconsolidation of~~years ~~Congoleum,~~ended ~~which~~December ~~occurred~~31, as2011 ofand ~~July 1,~~ 2010, respectively. asThe aloss ~~result~~ of the ~~Congoleum~~largest ~~plan~~ of ~~reorganization~~these ~~becoming~~unaffiliated ~~effect~~customers ~~as of that date, sales made to Congoleum by the Tape Division~~ and/or ABtwo ~~Canada~~or ~~were~~more ~~included in net sales~~ of ~~ABI~~the ~~and~~other ~~were~~four ~~not~~unaffiliated ~~eliminated in consolidation.~~customers ~~Net~~could ~~sales~~have toa ~~Congoleum~~material ~~recorded~~adverse byeffect ~~the~~on ~~Tape Division and~~ AB Canada’s ~~subsequent to June 30~~business, ~~2010,~~results ~~through~~of ~~December~~operations ~~31, 2010, totaled $637 thousand~~ and ~~$1.2~~financial ~~million, respectively~~condition.

~~Backlog~~Through ~~The~~June ~~dollar~~30, ~~amount~~2010, ofthe ~~backlog~~Tape Division’s ofand ~~orders~~AB ~~believed~~Canada’s sales to beCongoleum ~~firm~~were recorded as ofintercompany ~~December~~sales ~~31, 2010~~ and ~~2009~~eliminated ~~was~~in ~~$11~~consolidation.7 ~~million~~Upon ~~and~~the ~~$9.3~~deconsolidation of ~~million~~Congoleum, ~~respectively.~~which Itoccurred isas ~~anticipated that~~of ~~all~~July 1, 2010, as a result of the ~~backlog~~Congoleum asplan of ~~December~~reorganization 31becoming effective as of that date, ~~2010~~sales ~~will~~made beto ~~filled~~reorganized ~~within~~Congoleum by the ~~current~~Tape ~~fiscal~~Division ~~year.~~and ~~There~~AB ~~are~~Canada nowere ~~seasonal~~included orin ~~other~~net ~~significant aspects~~sales of ~~the~~ABI ~~backlog~~and were not eliminated in consolidation. InNet sales to reorganized Congoleum recorded by the ~~opinion~~Tape ofDivision ~~management~~and AB Canada subsequent to June 30, ~~backlog~~2010, isthrough December ~~not~~31, ~~significant~~2010, tototaled $637 thousand and $1.2 million, respectively. During 2011, the ~~business~~Tape Division and AB Canada recorded net sales to reorganized Congoleum of ~~ABI~~$207 thousand and $2.3 million, respectively.

Backlog The dollar amount of backlog of orders believed to be firm as of December 31, 2011 and 2010 was $11.5 million and $11.7 million, respectively. It is anticipated that all of the backlog as of December 31, 2011 will be filled within the current fiscal year. There are no seasonal or other significant aspects of the backlog. In the opinion of management, backlog is not significant to the business of ABI.

Environmental Compliance Because of the nature of the operations conducted by ABI, its facilities are subject to a broad range of federal, state, local and foreign legal and regulatory provisions relating to the environment, including those regulating the discharge of materials into the environment, the handling and disposal of solid and hazardous substances and wastes, and the remediation of contamination associated with releases of hazardous substances at owned or leased facilities and off-site disposal locations.

ABI has historically expended substantial amounts for compliance with existing environmental laws and regulations, including those matters described in Item 3 (Legal Proceedings) and Note 8 to the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K. ABI will continue to be required to expend amounts in the future, due to the nature of past activities at their facilities, to comply with existing environmental laws, and those amounts may be substantial. Because environmental requirements have grown increasingly strict, however, ABI is unable to determine the ultimate cost of compliance with environmental laws and enforcement policies. In addition, legislation and regulation regarding climate change, including greenhouse gas emissions, and other environmental matters may be adopted or administered and enforced differently in the future, which could require the Company to expend significant amounts. The Company has established accruals for matters for which management considers a loss to be probable and reasonably estimable. ABI believes that compliance with existing federal, state, local and foreign provisions will not have a material adverse effect upon its financial positions nor does ABI expect to incur material recurring costs or capital expenditures relating to environmental matters, except as may otherwise be referenced in Item 3 (Legal Proceedings) and Note 8 to the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K. However, there can be no assurances that the ultimate liability concerning these matters will not have a material adverse effect on the Company’s business, results of operations and financial condition.

Employees As of December 31, ~~2010~~2011, ABI employed approximately ~~625~~600 people. Substantially all of ABI’s employees are employed on a full time basis.

Financial Information about Foreign and Domestic Operations and Export Sales

Financial information concerning foreign and domestic operations is in Note 13 of the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K. The Company’s consolidated export sales from the United States were $2225.71 million in ~~2010~~2011 and $1722.57 million in ~~2009~~2010.

Available Information

The Common Stock of ABI was traded on the NYSE Amex (ticker symbol: ABL) through January 27, 2012. On January 6, 2012, the Company isnotified ~~subject~~the NYSE Amex of its intention to voluntarily withdraw the ~~reporting~~Company’s common stock from listing on the NYSE Amex and ~~other~~ ~~information~~to ~~requirements~~voluntarily terminate the registration of the common stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company was eligible to voluntarily delist and deregister the common stock because there were fewer than 300 record holders of the common stock. On January 17, 2012, the Company filed a Notification of Removal from Listing and/or ~~files~~Registration on Form 25 with the United States Securities and Exchange Commission (the “SEC”). On January 27, 2012, the Company filed with the SEC a Certification and Notice of Termination of Registration on Form 15 to voluntarily terminate the registration of its common stock and suspend its reporting obligations under the Exchange Act. The filing of the Form 15 suspended the Company’s periodic reporting obligations. Until the Company filed the Form 15, however, the Company was subject to the reporting and other information requirements of the Exchange Act, and filed annual, quarterly, and current reports, proxy statements and other documents with the ~~Securities~~SEC ~~and Exchange Commission~~ pursuant to those requirements. The public may read and copy any materials that the Company files ~~with~~or ~~the~~has ~~Securities~~filed ~~and~~with ~~Exchange~~the ~~Commission~~SEC at the ~~Securities and Exchange Commission~~SEC’s ~~Public~~ Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public ~~Reference~~ Reference Room by calling the ~~Securities~~SEC ~~and Exchange Commission~~ at 1-800-SEC-0330. Also, the ~~Securities~~SEC ~~and Exchange Commission~~ maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that file electronically with the ~~Securities and Exchange Commission~~SEC. The public can obtain any documents that the Company files ~~with~~or ~~the~~has ~~Securities~~filed ~~and~~with ~~Exchange~~the ~~Commission~~SEC at http://www.sec.gov.

Item 1A. RISK FACTORS

The Company has significant asbestos liability and funding exposure, and the Company’s strategies for resolving this liability and exposure may not be successful.

The Company has significant liability and funding exposure for asbestos personal injury claims. The Company’s strategy remains to vigorously defend against and strategically settle its asbestos claims on a case-by-case basis in the normal course of business. To date, the Company’s insurers have funded substantially all of the Company’s liabilities and expenses related to its asbestos liability under the Company’s applicable insurance policies. The Company expects its insurance carriers will continue to defend and indemnify it for a substantial amount of its asbestos liabilities for the foreseeable future pursuant to an umbrella/first-layer excess policies arrangement between the Company and the applicable insurance carriers. However, it is possible that asbestos claims may be asserted against the Company alleging exposure allocable solely to years in which the Company’s insurance policies excluded coverage for asbestos, that the policies providing coverage under the umbrella/first-layer excess policies arrangement will exhaust, or that the carriers responsible for such policies may at some future date be unwilling or unable to fund coverage under the policies or that arrangement. If ABI were to incur significant additional asbestos liabilities for which it did not have insurance coverage or was not able to receive recoveries under its insurance policies, ABI may have to fund such liabilities, which could have a material adverse effect on ABI’s business, results of operations or financial condition.

In the past, federal legislation has been proposed which would establish a national trust to provide compensation to victims of asbestos-related injuries and channel all current and future asbestos-related personal injury claims to that trust. In light of the numerous uncertainties surrounding this and other possible asbestos legislation in the United States, ABI does not know what effects any such legislation, if adopted, may have upon its business, results of operations or financial conditions.6

6In the past, federal legislation has been proposed which would establish a national trust to provide compensation to victims of asbestos-related injuries and channel all current and future asbestos-related personal injury claims to that trust. In light of the numerous uncertainties surrounding this and other possible asbestos legislation in the United States, ABI does not know what effects any such legislation, if adopted, may have upon its business, results of operations or financial conditions.

InFor ~~addition,~~further byinformation ~~operation~~regarding of the ~~Congoleum~~Company’s ~~plan~~asbestos ~~of reorganization~~liability, insurance ~~the~~coverage ~~joint venture agreement between ABI~~ and ~~Congoleum~~strategies ~~was~~to ~~effectively~~resolve ~~terminated.~~that Asasbestos ~~a result~~liability, ~~ABI’s~~see ~~previous~~Notes ~~rights~~1, 8 and ~~claims~~ to9 ~~indemnification~~of ~~from~~the ~~Congoleum~~Notes ~~under~~to ~~that~~Consolidated ~~joint~~Financial ~~venture~~Statements and ~~agreement~~“Management’s ~~have~~Discussion ~~been~~and ~~terminated.~~Analysis Toof ~~the~~Financial ~~extent~~Condition ~~ABI~~and ~~incurs~~Results ~~material amounts~~of ~~for~~Operations,” which itare ~~would~~included in ~~have~~Part ~~been~~II, ~~entitled~~Item to8 ~~receive~~and ~~indemnification~~Part ~~from~~II, ~~Congoleum~~Item ~~pursuant~~9, ~~to that former joint venture agreement~~respectively, ~~ABI’s~~ ~~financial condition and results~~ of ~~operations~~this ~~may~~Annual beReport ~~materially~~on ~~adversely~~Form ~~affected~~10-K.

~~For~~ABI ~~further~~continues ~~information~~to ~~regarding~~have ~~the~~business ~~Company’s~~arrangements ~~asbestos~~with ~~liability~~Congoleum, ~~insurance~~ABI’s ~~coverage~~executives ~~and~~continue ~~strategies~~ to ~~resolve~~provide ~~that~~services ~~asbestos~~to ~~liability~~Congoleum, ~~see~~which ~~Notes~~reduces 1,their 8availability ~~and~~to ~~9 of~~ the ~~Notes to~~Company, ~~Consolidated~~and ~~Financial~~expiration ~~Statements~~or ~~and~~termination ~~“Management~~of the Company’s ~~Discussion~~business ~~and~~arrangements ~~Analysis~~with ofCongoleum ~~Financial~~could ~~Condition~~have ~~and~~a ~~Results~~material ofadverse ~~Operations,”~~impact ~~which~~on ~~are~~ABI’s ~~included in Part II~~business, ~~Item~~operations 8 and ~~Part~~financial ~~II, Item 9, respectively, of this Annual Report on Form 10-K~~condition.

Although ABI’s equity interests in Congoleum were cancelled effective as of July 1, 2010 by operation of Congoleum’s plan of reorganization, ABI continues to have business arrangements with Congoleum. In particular, ~~ABI~~pursuant to Congoleum’s plan ~~executives~~of ~~continue~~reorganization, toABI ~~provide~~and Congoleum entered into a management services and commercial agreement. Pursuant to agreement, ABI’s current Chief Executive Officer, Mr. Roger Marcus, serves as a director and the chief executive officer of Congoleum and American Biltrite’s current Chief Financial Officer, ~~which~~Mr. ~~reduces~~Howard ~~their~~Feist ~~availability~~III, toserves as the ~~Company~~chief financial officer of Congoleum. In addition, the Company’s President and ~~expiration~~Chief orOperating ~~termination~~Officer, Mr. Richard Marcus, currently serves as an executive vice president of Congoleum. Pursuant to the ~~Company~~management services and commercial agreement, substantially all of Mr. Roger Marcus’s ~~business~~time, ~~arrangements~~approximately ~~with~~25% of Mr. Richard Marcus’s time and approximately 50% of Mr. Feist’s time, in each case, during normal working hours on a monthly basis, is required to be made available to Congoleum. As a result, the availability of those executives to the Company is reduced, which could have a material adverse impact on ~~ABI~~the Company to the extent they are unable to provide services to the Company which the Company needs or which would further the Company’s business, ~~operations~~ and ~~financial condition~~operations.

~~Although ABI’s equity interests in Congoleum~~The were cancelled effective as of July 1, 2010 by operation of Congoleum’s plan of reorganization, ABI continues to have business arrangements with Congoleum. In particular, pursuant to Congoleum’s plan of reorganization, ABI and Congoleum entered into a management services and commercial agreement. ~~Pursuant~~also toincludes ~~that~~certain ~~agreement,~~other ~~ABI’s~~commercial ~~current~~arrangements ~~Chief~~between ~~Executive~~ABI ~~Officer,~~and ~~Mr.~~its ~~Roger~~subsidiaries ~~Marcus, serves as a director~~ and ~~the chief executive officer of~~ Congoleum ~~and American Biltrite’s current Chief Financial Officer~~, ~~Mr.~~which ~~Howard~~are ~~Feist~~substantially ~~III,~~consistent ~~serves~~with astheir ~~the~~traditional ~~chief financial officer of Congoleum. In addition~~relationships, ~~the~~including ~~Company’s~~purchase ~~President~~ and ~~Chief~~ ~~Operating~~sale ~~Officer, Mr. Richard Marcus, currently serves as an executive vice president~~ of ~~Congoleum.~~floor ~~Pursuant to the management~~tile ~~services~~products and ~~commercial agreement~~urethane, ~~substantially~~rights ~~all~~ of ~~Mr.~~American ~~Roger~~Biltrite ~~Marcus’s~~to ~~time,~~resell ~~approximately~~Congoleum ~~25%~~vinyl, ofvinyl ~~Mr.~~composition ~~Richard~~or ~~Marcus’s time~~other ~~and~~floor ~~approximately~~tile ~~50% of Mr. Feist’s time,~~ in ~~each case~~Canada, ~~during normal working hours on a monthly basis, is required~~ ~~to be made available to Congoleum. As a result,~~ the ~~availability~~cross-licensing of ~~those~~urethane ~~executives to the Company is reduced~~technology, ~~which~~and ~~could have a material adverse impact on~~ the ~~Company~~provision toof ~~the~~information ~~extent~~technology ~~they~~services ~~are~~by ~~unable~~Congoleum to ~~provide~~American ~~services to the Company which the Company needs or which would further the Company’s business and operations~~Biltrite.

The management services and commercial agreement also includes certain other commercial arrangements between ABI and its subsidiaries and Congoleum, which are substantially consistent with their traditional relationships, including purchase and sale of floor tile products and urethane, rights of American Biltrite to resell Congoleum vinyl, vinyl composition or other floor tile in Canada, the cross-licensing of urethane technology, and the provision of information technology services by Congoleum to American Biltrite.7

The management services and commercial agreement expires on July 1, 2012, unless renewed. That agreement provides that it may be terminated in whole or in part with respect to the provision of certain management services prior to the expiration of that two year term and there can be no assurances that an early termination will not occur, and the agreement may give rise to other possible sources of claims. ~~The expiration or termination of the Company’s business arrangements with Congoleum would have a material adverse impact on ABI’s business, operations and financial condition.~~

7The independent members of Congoleum’s Board of Directors adopted a resolution on February 9, 2012 authorizing the lead outside director of Congoleum to extend an employment offer to an individual to serve as President and CEO of Congoleum Corporation, and to terminate Roger S. Marcus as President and CEO upon that individual’s acceptance of the employment offer, which acceptance has taken place. ABI has not received notice of early termination of the management services and commercial agreement or of any termination of the Congoleum offices held by Richard Marcus or Howard Feist or of Roger Marcus’ position as Chairman of Congoleum’s Board of Directors.

The ~~Company relies on debt financing to~~ ~~fund~~expiration ~~its~~or ~~business,~~termination ~~operations~~of ~~and working capital needs; it has had to amend its debt agreements in~~ the ~~past~~Company’s inbusiness ~~order~~arrangements towith ~~avoid being~~Congoleum incould ~~default under those agreements and may~~ have toa domaterial soadverse ~~again~~impact ~~in the future, and the Company~~on ABI’s ~~ability~~business, tooperations ~~obtain~~and ~~additional financing~~financial ~~may be limited~~condition.

The Company relies on ~~borrowings~~debt ~~under its~~financing ~~revolving and letter of credit facilities~~ to fund its ~~working~~business, ~~capital requirements and~~ operations. ~~The credit agreement governing those credit facilities requires the Company to satisfy certain financial~~ and ~~other~~working ~~covenants.~~capital Inneeds; ~~the~~it ~~past, the Company~~ has had to amend its debt agreements in the past in order to avoid being ~~defaulting~~in default under those agreements asand amay ~~result~~have ~~of failing~~ to ~~satisfy~~do ~~certain~~so ~~financial covenants~~again ~~contained~~ in ~~those agreements. Most recently,~~ the ~~Company amended its current credit agreement in March 2010 to reduce the minimum required levels of earnings before interest~~future, ~~taxes, depreciation,~~ and ~~amortization under~~ the credit agreement, and further provide that meeting the minimum level of earnings before interest, taxes, depreciation, and amortization and the minimum fixed charge coverage ratio would not be required for any monthly test period during which the Company’s ~~unused~~ability ~~available credit under the credit agreement was at least $6 million for 30 consecutive days. Although the Company currently anticipates it will be able~~ to comply with its covenants under its credit agreement, due to economic or other conditions or reasons, the Company may in the future fail to comply with its covenants. If that were to occur, the Company would likely need to obtain ~~a waiver of~~additional ~~such covenant breach from the lenders or enter into an amendment to the credit agreement to address the covenant breach, or obtain replacement~~ financing. ~~There~~may ~~can~~ be ~~no assurance that the Company would be successful in obtaining any such waiver, entering into any such amendment or obtaining such replacement financing~~limited.

IfThe anCompany ~~event~~relies ofon ~~default~~borrowings under its ~~the~~revolving and letter of credit facilities to fund its working capital requirements and operations. The credit agreement governing ~~were~~those credit facilities requires the Company to ~~occur,~~satisfy certain financial and other covenants. In the ~~lenders~~past, ~~could~~the ~~cease~~Company has had to ~~make~~amend ~~borrowings~~its ~~available~~debt agreements in order to avoid defaulting under ~~the~~those ~~credit~~agreements ~~facilities~~as ~~and~~a ~~require~~result of failing to satisfy certain financial covenants contained in those agreements. Although the Company currently anticipates it will be able to ~~repay all~~comply ~~amounts~~with ~~outstanding~~its covenants under ~~the~~its credit agreement, ~~including~~due ~~amounts~~to ~~outstanding~~economic ~~under~~or other conditions or reasons, the ~~term~~Company ~~loan~~may ~~and~~in ~~revolving~~the ~~credit~~future ~~facilities.~~fail to comply with its covenants. If that were to occur, the Company ~~were~~would ~~unable~~likely need to ~~repay~~obtain ~~those~~a ~~amounts~~waiver ~~due,~~of such covenant breach from the lenders ~~could~~or enter ~~have~~into ~~their~~an ~~rights~~amendment ~~over~~to the ~~collateral~~credit ~~exercised~~agreement to address the covenant breach, ~~which would~~or ~~likely~~obtain ~~have~~replacement afinancing. ~~material~~There ~~adverse~~can ~~effect~~be onno assurance that the Company’s ~~business~~would be successful in obtaining any such waiver, ~~results~~entering ofinto ~~operations~~any such amendment or ~~financial~~obtaining ~~condition~~such replacement financing.

InIf ~~addition,~~an ~~under~~event ~~the~~of ~~terms~~default ofunder the credit agreement, ~~the~~were ~~Company’s ability~~ to ~~obtain additional debt financing is limited. Moreover~~occur, ~~since~~ the ~~Company~~lenders ~~and~~could ~~its subsidiaries~~cease ~~have~~to ~~already~~make ~~granted~~borrowings ~~security~~available ~~interests~~under inthe ~~most~~credit offacilities ~~their~~and ~~assets,~~require the Company~~’s ability~~ to ~~obtain~~repay ~~any~~all ~~additional debt~~amounts ~~financing~~outstanding ~~may~~under bethe ~~limited. Further~~credit agreement, inincluding ~~light~~amounts ofoutstanding under the ~~recent~~term ~~and~~loan ~~current economic, industry~~ and ~~global~~revolving credit ~~market~~ ~~conditions~~facilities. ~~and~~If the Company’s ~~recent~~were ~~operating~~unable ~~losses,~~to ~~credit~~repay ~~may~~those beamounts ~~more~~due, ~~expensive~~the ~~and~~lenders ~~difficult~~could ~~for~~have ~~the~~their ~~Company~~rights toover ~~obtain~~the collateral exercised, which ifwould ~~such~~likely ~~conditions~~have ~~continue,~~a ~~may~~material ~~further~~adverse ~~limit~~effect on the ~~availability~~Company’s ofbusiness, ~~any~~results ~~additional~~of ~~financing~~operations ~~for~~or ~~the~~financial ~~Company~~condition.

~~The~~In ~~Company~~addition, ~~sells~~under ~~its~~the ~~products~~terms onof the credit agreement, the Company’s ability to obtain additional debt financing is limited. Moreover, since the Company and its ~~customers~~subsidiaries ~~may fail~~have toalready ~~pay~~granted security interests in most of their assets, orthe ~~they~~Company’s ability to obtain any additional debt financing may ~~extend~~be limited. Further, in light of the ~~payment~~recent ~~period~~and current economic, ~~for~~industry ~~products~~and ~~sold~~global credit tomarket ~~them~~conditions onand the Company’s recent operating losses, credit. may be more expensive and difficult for the Company to obtain, which if such conditions continue, may further limit the availability of any additional financing for the Company.

The Company sells its products on credit~~. Customers~~ ~~purchasing~~and ~~goods~~its oncustomers ~~credit from the Company~~ may ~~default~~fail ~~on their obligations~~ to pay, or they may extend the payment period, for products sold to them on credit~~, which may result in an increased investment in accounts receivable by the Company~~. In light of the recent difficult economic and industry conditions, the risk that the Company may realize an increased investment in accounts receivable may be greater. To the extent the Company is unable to collect receivables owed to it in a timely fashion, increased demands may be placed on its working capital, which could have a material adverse effect on its business, results of operations or financial condition.

The Company ~~may~~sells ~~incur~~its ~~substantial~~products ~~liability~~on credit. Customers orpurchasing begoods ~~required~~on credit from the Company may default on their obligations to ~~expend~~pay, ~~significant~~or ~~amounts~~they may extend the payment period, for products ~~environmental~~sold ~~claims~~to them on credit, which may result in an increased investment in accounts receivable by the Company. In light of the recent difficult economic and ~~compliance~~industry ~~matters~~conditions, ~~including~~the ~~possible~~risk ~~climate~~that ~~change~~the Company may realize an increased investment in accounts ~~related~~receivable ~~matters~~may be greater. To the extent the Company is unable to collect receivables owed to it in a timely fashion, increased demands may be placed on its working capital, which could have a material adverse effect on its business, results of operations or financial condition.

~~Due to the nature of the Company’s business~~The ~~and certain of the substances which are or have been used, produced or discharged with respect to its business, the~~ Company~~’s operations~~ ~~and~~may ~~facilities~~incur are subject to a broad range of federal, state, local and foreign legal and regulatory provisions relating to the environment, including those regulating the discharge of materials into the environment, the handling and disposal of solid and hazardous substances and wastes and the remediation of contamination associated with releases of hazardous substances at Company facilities and off-site disposal locations. The Company has historically expended substantial ~~amounts~~liability ~~for compliance with existing environmental laws~~ or ~~regulations, including environmental remediation costs at both third-party sites and Company-owned sites. The Company will continue to~~ be required to expend ~~amounts~~significant ~~in the future because of the nature of its prior activities at its facilities, in order to comply with existing environmental laws, and those~~ amounts ~~may~~for ~~be substantial. In addition, legislation and regulation regarding climate change, including greenhouse gas emissions, and other~~ environmental ~~matters~~claims ~~may be adopted or administered~~ and ~~enforced~~ differently in the future, which could require the Company to expend significant amounts. Further, legislation and regulations that limit carbon emissions may cause the Company’s energy costs at its facilities to increase. Although the Company believes that those amounts should not have a material adverse effect on its results of operations or financial position, there is no certainty that these amounts will not have such an effect because, as a result of environmental requirements becoming increasingly strict, the Company is unable to determine the ultimate cost of compliance ~~with environmental laws and enforcement policies. For instance~~matters, ~~such~~including anpossible ~~effect~~climate ~~could~~change ~~occur~~related ~~in connection with those~~ matters ~~disclosed in Item 3 (Legal Proceedings) and Note 8 to the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K for the fiscal year ended December 31, 2010~~.

~~Moreover~~Due to the nature of the Company’s business and certain of the substances which are or have been used, inproduced ~~addition~~or discharged with respect to ~~potentially~~its ~~having~~business, the Company’s operations and facilities are subject to ~~pay~~a broad range of federal, state, local and foreign legal and regulatory provisions relating to the environment, including those regulating the discharge of materials into the environment, the handling and disposal of solid and hazardous substances and wastes and the remediation of contamination associated with releases of hazardous substances at Company facilities and off-site disposal locations. The Company has historically expended substantial amounts for compliance, ~~future~~with existing environmental laws or regulations, ~~may~~including ~~require~~environmental orremediation ~~cause~~costs ~~the~~at both third-party sites and Company-owned sites. The Company will continue to ~~modify~~be required to expend amounts in the future because of the nature of its prior activities at its facilities, in order to comply with existing environmental laws, and those amounts may be substantial. In addition, legislation and regulation regarding climate change, including greenhouse gas emissions, and other environmental matters may be adopted or ~~curtail~~administered ~~their~~and enforced ~~operations~~differently in the future, which could require the Company to expend significant amounts. Further, legislation and regulations that limit carbon emissions may cause the Company’s energy costs at its facilities to increase. Although the Company believes that those amounts should not have a material adverse effect on its results of operations or financial position, there is no certainty that these amounts will not have such an effect because, as a result of environmental requirements becoming increasingly strict, the Company’s ~~business,~~is ~~results~~unable to determine the ultimate cost of ~~operations~~compliance with environmental laws and enforcement policies. For instance, orsuch ~~financial~~an ~~condition~~effect could occur in connection with those matters disclosed in Item 3 (Legal Proceedings) and Note 8 to the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

~~The~~Moreover, ~~Company~~in ~~may~~addition ~~incur~~to potentially having to pay substantial ~~liability~~amounts for ~~other~~compliance, ~~product~~future environmental laws or regulations may require or cause the Company to modify ~~and~~or ~~general~~curtail ~~liability~~their ~~claims~~operations, which could have a material adverse effect on the Company’s business, results of operations or financial condition.

~~In the ordinary course of its business, the~~The Company ~~becomes~~may ~~involved~~incur insubstantial ~~lawsuits, administrative proceedings, product~~ liability ~~claims~~for ~~and~~ other ~~matters.~~product ~~In some of these proceedings, plaintiffs may seek to recover large~~ and ~~sometimes~~general ~~unspecified~~liability ~~amounts and the matters may remain unresolved for several years~~claims. These matters could have a material adverse effect on the Company’s business, results of operations or financial condition if the Company is unable to successfully defend against or settle these matters, its insurance coverage is insufficient to satisfy judgments against it or settlements relating to these matters, or the Company is unable to collect insurance proceeds relating to these matters.

~~Raw~~In ~~material~~the ordinary ~~and~~course ~~energy~~of ~~costs~~its ~~have~~business, ~~been volatile~~the ~~and~~Company ~~are~~becomes atinvolved ~~high~~in ~~levels~~lawsuits, ~~which~~administrative ~~has~~proceedings, product liability claims and other matters. In some of these proceedings, plaintiffs may ~~continue~~seek to ~~negatively~~recover ~~impact~~large and sometimes unspecified amounts and the matters may remain unresolved for several years. These matters could have a material adverse effect on the Company’s business, results of operations ~~and~~or financial condition if the Company is unable to successfully defend against or settle these matters, its ~~liquidity~~insurance coverage is insufficient to satisfy judgments against it or settlements relating to these matters, or the Company is unable to collect insurance proceeds relating to these matters.

Raw material and energy costs have been ~~volatile~~ ~~over~~volatile ~~the past several years,~~ and ~~the~~are ~~Company~~at ~~experienced~~high ~~significant inflation in its inputs during certain periods~~levels, ~~including 2010.~~which ~~Global~~has ~~economic recovery~~ and ~~political instability in oil producing nations~~ may ~~contribute~~continue to ~~further~~negatively increasing price levels, and any such further increases could be significant. In addition to supply and demand issues affecting raw material and energy costs, the adoption of new, or any heightened administration and enforcement of existing, legislation and regulations that impact ~~those~~ ~~costs, such as legislation or regulations regarding climate change, including greenhouse gas emissions, may result in increased raw material and energy costs for~~ the Company.’s Inresults ~~light~~ of ~~the~~operations ~~current~~ and ~~forecasted economic conditions in the United States~~ ~~and the industries in which the Company conducts business, the Company may be unable to pass increased raw material and energy costs on to its customers~~liquidity.

~~The~~Raw material and energy costs have been volatile over the past several years, and the Company isexperienced ~~dependent~~significant ~~upon~~inflation ain ~~continuous~~its inputs ~~supply~~during ofcertain ~~raw~~periods, ~~materials~~including ~~from~~2011. ~~third~~Global ~~party~~economic ~~suppliers~~recovery and ~~would~~political beinstability ~~harmed~~in ifoil ~~there~~producing ~~were~~nations amay ~~significant~~contribute to further increasing price levels, ~~prolonged~~and ~~disruption~~any insuch further increases could be significant. In addition to supply or ~~increase~~and indemand ~~its~~issues affecting raw material and energy costs, the adoption of new, or ~~other~~any ~~costs~~heightened administration and enforcement of ~~sales~~existing, legislation and regulations that impact those costs, such as legislation or regulations regarding climate change, including greenhouse gas emissions, may result in increased raw material and energy costs for the Company. In light of the current and forecasted economic conditions in the United States and the industries in which the Company conducts business, the Company may be unable to pass increased raw material and energy costs on to its customers.

The Company ~~generally~~is ~~designs~~dependent ~~and~~upon ~~engineers~~a continuous ~~its~~supply ~~own products. Most~~ of ~~the~~ raw materials ~~required by the Company for its manufacturing operations are available~~ from ~~multiple sources;~~third ~~however,~~party ~~the~~suppliers ~~Company~~and ~~does~~would ~~purchase~~be ~~some~~harmed ofif ~~its~~there ~~raw~~were ~~materials from~~ a ~~single source or supplier. Any~~ significant, ~~delay~~prolonged ~~in or~~ disruption ofin ~~the~~ supply ~~of raw materials could substantially increase the Company’s cost of materials, require product~~ ~~reformulation~~ or ~~require~~increase ~~qualification~~in of new suppliers, any one or more of which could materially adversely affect the Company’s business, results of operations or financial condition. The Company has occasionally experienced significant price increases for some of its raw ~~materials.~~material ~~Although~~costs ~~the~~or ~~Company~~other ~~has~~costs ~~been able to obtain sufficient supplies~~ of ~~raw materials~~sales, ~~there~~such ~~can~~as beenergy ~~no assurances that it may not experience difficulty in the future, particularly if global supply conditions deteriorate, which could have a material adverse effect on profit margins~~costs.

10The Company generally designs and engineers its own products. Most of the raw materials required by the Company for its manufacturing operations are available from multiple sources; however, the Company does purchase some of its raw materials from a single source or supplier. Any significant delay in or disruption of the supply of raw materials could substantially increase the Company’s cost of materials, require product reformulation or require qualification of new suppliers, any one or more of which could materially adversely affect the Company’s business, results of operations or financial condition. The Company has occasionally experienced significant price increases for some of its raw materials. Although the Company has been able to obtain sufficient supplies of raw materials, there can be no assurances that it may not experience difficulty in the future, particularly if global supply conditions deteriorate, which could have a material adverse effect on profit margins.

The Company operates in highly competitive markets and some of its competitors have greater resources, and in order to be successful, the Company must keep pace with and anticipate changing customer preferences.10

The ~~market for the~~ Company’s ~~products and~~operates ~~services~~in is highly competitive. markets ~~Some~~and some of its competitors have greater ~~financial and other~~ resources, and ~~access to capital. In addition,~~ in order to ~~maintain~~be ~~its competitive position~~successful, the Company ~~may~~must ~~need~~keep topace ~~make~~with ~~substantial investments in its business, including, as applicable, product development, manufacturing facilities, distribution network~~ and ~~sales and marketing activities.~~ ~~Competitive~~anticipate ~~pressures~~changing ~~may~~customer ~~also result in decreased demand for its products and in the loss of market share for its products~~preferences. Moreover, due to the competitive nature of its industries, it may be commercially restricted from raising or even maintaining the sales prices of its products, which could result in the incurrence of significant operating losses if its expenses were to increase or otherwise represent an increased percentage of sales.

The ~~markets~~market for ~~in which~~ the Company’s ~~competes~~products ~~are characterized by frequent new product introductions~~ and ~~changing~~services ~~customer~~is ~~preferences~~highly competitive. ~~There~~Some ~~can~~of beits nocompetitors ~~assurance~~have ~~that~~greater ~~the~~financial ~~Company’s existing~~and ~~products~~other resources and ~~services~~access ~~will~~to becapital. ~~properly~~In ~~positioned~~addition, in ~~the~~order ~~market~~to ormaintain ~~that~~its competitive position, the Company ~~will~~may beneed ~~able~~ to ~~introduce~~make ~~new~~substantial ~~or enhanced~~investments ~~products~~in orits ~~services~~business, ~~into~~including, ~~its~~as ~~markets~~applicable, onproduct adevelopment, ~~timely~~manufacturing ~~basis~~facilities, ordistribution atnetwork ~~all,~~and orsales ~~that~~and ~~those~~marketing activities. ~~new~~Competitive orpressures ~~enhanced~~may ~~products~~also orresult ~~services~~in ~~will~~decreased ~~receive customer~~demand ~~acceptance.~~for ~~The~~its ~~Company’s~~products ~~failure~~and toin ~~introduce~~the ~~new~~loss orof ~~enhanced~~market share for its products. orMoreover, ~~services~~due onto athe ~~timely~~competitive ~~basis~~nature of its industries, ~~keep~~it ~~pace with~~may ~~industry~~be orcommercially ~~market~~restricted ~~changes~~from raising or ~~effectively~~even ~~manage~~ maintaining the ~~transitions~~sales toprices ~~new~~of its products, ~~technologies~~which orcould ~~services~~result ~~could~~in ~~have~~the aincurrence ~~material adverse~~of ~~effect~~significant onoperating ~~the~~losses ~~Company’s~~if ~~business,~~its ~~results~~expenses ofwere ~~operations~~to increase or ~~financial~~otherwise ~~condition~~represent an increased percentage of sales.

The markets in which the Company iscompetes ~~subject~~are tocharacterized ~~general~~by ~~economic~~frequent new product introductions and changing customer preferences. There ~~conditions~~can be no assurance that the Company’s existing products and ~~conditions~~services ~~specific~~will be properly positioned in the market or that the Company will be able to introduce new or enhanced products or services into its ~~industries~~markets on a timely basis, or at all, or that those new or enhanced products or services will receive customer acceptance. The Company’s failure to introduce new or enhanced products or services on a timely basis, keep pace with industry or market changes or effectively manage the transitions to new products, technologies or services could have a material adverse effect on the Company’s business, results of operations or financial condition.

~~While the United States economy and the Company’s~~The ~~business~~Company ~~appeared~~is subject to ~~experience~~general ~~some~~ economic ~~recovery~~conditions ~~during 2010, certain end markets such as construction remain weak. Both the Tape Division~~ and ABconditions ~~Canada~~specific ~~sell~~to ~~into~~its ~~the construction market as well as other industrial markets, while K&M’s sales are influenced by consumer and retail spending levels~~industries.

~~The~~While ~~Company~~the ~~expects~~United ~~economic~~States ~~conditions~~economy ~~may negatively~~and ~~impact or restrain~~ the Company’s business ~~and~~appeared ~~operations~~to ~~and~~experience ~~that~~some ~~that~~economic ~~impact~~recovery ~~will~~during ~~depend~~2011, oncertain ~~the~~end ~~speed,~~markets ~~extent and~~such ~~sustainability~~as ofconstruction remain weak. Both the ~~United~~Tape ~~States~~Division and ~~global~~AB ~~economic~~Canada ~~recovery~~sell into the construction market as well as ~~geopolitical~~other ~~factors~~industrial markets, while K&M’s sales are influenced by consumer and retail spending levels.

11The Company expects economic conditions may negatively impact or restrain the Company’s business and operations and that that impact will depend on the speed, extent and sustainability of the United States and global economic recovery as well as geopolitical factors.

The Company could realize shipment delays, depletion of inventory and increased production costs resulting from unexpected disruptions of operations at any of the Company’s facilities.

The Company depends upon the timely ~~manufacturing~~ manufacturing and delivery of products that meet the needs of its customers and the end users of its products. If the Company were to realize an unexpected, significant and prolonged disruption of its operations at any of its facilities, including disruptions in its manufacturing operations, it could result in shipment delays of its products, depletion of its inventory as a result of reduced production and increased production costs as a result of taking actions in an attempt to cure the disruption or carry on its business while the disruption remains. Any resulting delay, depletion or increased production cost could result in increased costs, lower revenues and damaged customer and product end user relations, which could have a material adverse effect on the Company’s business, results of operations or financial condition.

~~The Company offers limited warranties on its products which could result in the Company incurring significant costs as a result of warranty claims.~~11

The Company offers a limited ~~warranty~~warranties on ~~many of~~ its products ~~against~~which ~~manufacturing~~could ~~defects.~~result Ifin the Company ~~were~~incurring ~~to incur a~~ significant ~~number~~costs ofas ~~warranty~~a ~~claims,~~result ~~the resulting~~of warranty ~~costs could be substantial~~claims.

The Company offers ~~relies~~a onlimited awarranty ~~small~~on ~~number~~many of ~~customers,~~ ~~distributors~~its ~~and~~products ~~sales~~against ~~representatives~~manufacturing ~~for~~defects. If the Company were to incur a significant ~~portion~~ number of ~~its~~warranty ~~sales~~claims, ~~and~~the toresulting ~~sell~~warranty ~~its~~costs ~~products~~could be substantial.

The Company’s ~~Tape~~relies ~~Division~~on ~~principally sells~~a ~~its~~small ~~products~~number ~~through~~of ~~distributors. Sales to five unaffiliated~~ customers, ~~accounted~~distributors ~~for~~and ~~approximately 23% of the Tape Division’s net~~ sales representatives for ~~the~~a ~~year~~significant ~~ended~~portion ~~December 31, 2010. The loss~~ of ~~the~~its ~~largest~~sales ~~unaffiliated customer~~ and~~/or two or more of the other four~~ ~~unaffiliated~~to ~~customers~~sell ~~could~~its ~~have a material adverse effect on the Tape Division’s business, results of operations or financial condition~~products.

ABThe ~~Canada~~Company’s Tape Division principally sells its products through distributors ~~and a direct sales force~~. Sales to five unaffiliated customers accounted for approximately 2425% of ABthe ~~Canada~~Tape Division’s net sales for the year ended December 31, ~~2010~~2011. The loss of the largest unaffiliated customer and/or two or more of the other four ~~unaffiliated~~ unaffiliated customers could have a material adverse effect on the ABTape ~~Canada~~Division’s business, results of operations or financial condition.

~~K&M~~AB Canada sells its products through ~~its own~~distributors ~~direct sales force~~ and, ~~indirectly, through~~ a ~~wholly~~direct ~~owned subsidiary and through third-party~~ sales ~~representatives~~force. ~~Three~~Sales ofto ~~K&M’s~~ five unaffiliated customers accounted for approximately 5422% of ~~its~~AB Canada’s net sales for the year ended December 31, ~~2010~~2011. The loss of the largest ofunaffiliated ~~these customers~~customer ~~would~~and/or ~~have~~two aor ~~material~~more ~~adverse effect on K&M’s business, results~~ of ~~operations~~the ~~and~~other ~~financial~~four ~~condition and would~~unaffiliated ~~likely~~customers could have a material adverse effect on the ~~Company~~AB Canada’s business, results of operations or financial condition.

12K&M sells its products through its own direct sales force and, indirectly, through a wholly owned subsidiary and through third-party sales representatives. Three of K&M’s customers accounted for approximately 52% of its net sales for the year ended December 31, 2011. The loss of the largest of these customers would have a material adverse effect on K&M’s business, results of operations and financial condition and would likely have a material adverse effect on the Company’s business, results of operations or financial condition.

The failure of the Company’s distributors or sales representatives to adequately perform with respect to the sale of the Company’s products and furtherance of the Company’s business could have a material adverse effect on the Company’s business, results of operations or financial condition.

The Company depends on key executives to run its business, and the loss of any of these executives would likely harm the Company’s business.

The Company depends on key executives to run its business. Three of the persons that serve as key executives at the Company also serve as key executives at Congoleum pursuant to the management services and commercial agreement the Company and Congoleum entered into pursuant to Congoleum’s plan of reorganization effective as of July 1, 2010. The Company’s future success will depend largely upon the continued service of these key executives, all of whom have no employment contract with the Company and may terminate their employment at any time without notice. Although certain key executives of the Company are large stockholders of the Company, and thus are less likely to terminate their employment, the loss of any key executive, or the failure by the key executive to perform in his current position, could have a material adverse effect on the Company’s business, results of operations or financial condition.

Item 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

At December 31, ~~2010~~2011, ABI owned five manufacturing plants and a jewelry distribution center (located in Providence, Rhode Island) and leased office and warehousing space as follows:

Location	Square Feet	~~Owned Or Leased~~OwnedOrLeased	Industry Segment For Which Properties Used
Sherbrooke, Quebec	379,000	Owned	Canadian division
Moorestown , NJ	226,000	Owned	Tape products
Moorestown, NJ	226,000	Owned	Tape products
Lowell , MA	57,000	Owned	Tape products
Lowell, MA	57,000	Owned	Tape products
Billerica , MA	20,000	Leased	Tape products
Billerica, MA	20,000	Leased	Tape products
Renaix , Belgium	84,000	Owned	Tape products
Renaix, Belgium	84,000	Owned	Tape products
Singapore	32,000	Owned	Tape products
Providence , RI	103,000	Owned	Jewelry products
Providence, RI	103,000	Owned	Jewelry products
New York, NY, and Yiwa and Qingdao, China	13,000	Leased	Jewelry products
New York, NY, and Yiwu and Qingdao, China	13,000	Leased	Jewelry products

ABI knows of no material defect in the titles to any such properties or material encumbrances thereon other than a mortgage on a property in Singapore securing outstanding debt in an amount equal to approximately 3733% of the original cost of the property, and under the terms of ABI’s principal debt agreements, pursuant to which ABI has granted security interests in the owned properties in Massachusetts, New Jersey and Sherbrooke, Quebec. ABI believes that all of its properties are in good condition and have been well maintained and that these properties are suitable and adequate for the Company’s present purposes.

It is estimated that during ~~2010~~2011, ABI’s plants for the manufacture of tape products operated at approximately 7092% of aggregate capacity and AB Canada operated at approximately 43% of aggregate capacity. All estimates of aggregate capacity have been made on the basis of a five-day, three-shift operation.

1413

ITEM 3. LEGAL PROCEEDINGS

ABI has been named by the United States Environmental Protection Agency as a Potentially Responsible Party (“PRP”) within the meaning of the federal Comprehensive Environmental Response, Compensation and Liability Act, as amended, as to seven sites in six separate states. In addition, ABI has been named a potentially responsible party by the State of Maine’s Department of Environmental Protection with regard to two sites in Maine. See Note 8 of the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K for additional information relating to these matters.

ABI has recorded a reserve of approximately $5.13 million, which represents a probable and reasonably estimable amount to cover the anticipated remediation costs at all sites, net of recoveries, based on facts and circumstances known to the Company at the present time.

ABI is a co-defendant with many other manufacturers and distributors of asbestos-containing products in approximately 1,~~261~~338 pending claims involving approximately 1,~~807~~884 individuals as of December 31, ~~2010~~2011. These claims relate to products of the Company’s former tile division, which ABI contributed to Congoleum. The claimants allege personal injury from exposure to asbestos or asbestos-containing products. The Company utilizes an actuarial study to assist it in developing estimates of the Company’s potential liability for resolving present and possible future asbestos claims. Projecting future asbestos claims costs requires estimating numerous variables that are difficult to predict, including the incidence of claims, the disease that may be alleged by future claimants, future settlement and trial results, future court dismissal rates for claims, and possible asbestos legislation developments. Furthermore, any predictions with respect to these variables are subject to even greater uncertainty as the projection period lengthens. In light of these inherent uncertainties, the Company believes that six years is the most reasonable period over which to include future claims that may be brought against the Company for recognizing a reserve for future costs. The Company believes that costs for claims that might be brought after that period are not reasonably estimable.

The estimated range of liability for settlement of current claims pending and claims anticipated to be filed in the next six years was $17.7 million to $62.0 million as of December 31, ~~2010~~2011. The Company believes no amount within this range is more likely than any other and, accordingly, has recorded a liability of $17.7 million in its financial statements, which represents the minimum probable and reasonably estimable amount for the future liability at the present time. The Company also believes that based on this liability estimate, the corresponding amount of insurance probable of recovery is $17.6 million at December 31, ~~2010~~2011, which has been included in other assets. The estimated amount of insurance that is probable of recovery depends on the liability estimate as well as a number of additional factors, including the financial viability of some of the insurance companies, the method in which losses will be allocated to the various insurance policies and the years covered by those policies, how legal and other loss handling costs will be covered by the insurance policies, and interpretation of the effect on coverage of various policy terms and limits and their interrelationships. The recorded liability and related insurance asset do not include any related defense costs. Defense costs are typically paid in addition to the indemnity limits under the primary layer insurance policies, while certain excess layer policies pay them within policy limits and other excess layer policies pay them in addition to policy limits. Defense costs ~~historically~~can ~~paid~~be byas ~~ABI’s carriers~~much ~~have~~or ~~been~~more ~~approximately~~than ~~150% of the related~~ indemnity costs ~~on average~~.

1514

The recorded amounts were based on facts currently known by ABI and a number of assumptions. However, projecting future events, such as the number of new claims to be filed each year, the average cost of disposing of each such claim, the allocation of claims to specific insurance policies, and the continuing solvency of various insurance companies, as well as numerous uncertainties surrounding asbestos legislation in the United States, could cause the actual liability and insurance recoveries for the Company to be higher or lower than those projected or recorded.

There can be no assurance that the Company’s actual asbestos-related settlement and defense costs will not exceed its accrued asbestos liabilities, or that it will receive the insurance recoveries which it has accrued. It is reasonably possible that the Company will incur charges for resolution of asbestos claims in the future, which could exceed the Company’s existing reserves. The Company’s strategy remains to vigorously defend against and strategically settle its asbestos claims on a case-by-case basis. The Company believes it has substantial insurance coverage to mitigate future costs related to this matter.

See Note 8 of the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K for additional information about these claims.

Notes 1, 8 and 9 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K, to the extent addressing matters reportable under this Item 3, are incorporated by reference herein.

ITEM 4. MINE ~~(REMOVED~~SAFETY ~~AND RESERVED)~~DISCLOSURES

~~PART II~~Not applicable.

~~ITEM 5. MARKET~~PART ~~FOR THE REGISTRANT’S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS~~II

~~The Common Stock of American Biltrite Inc.~~ITEM ~~is traded on the NYSE Amex (ticker symbol: ABL)~~5. MARKET AtFOR ~~the~~THE ~~close of business on March 15, 2011, the closing price of the Common Stock~~REGISTRANT’S ~~was~~COMMON ~~$8.81~~STOCK ~~per~~AND ~~share~~RELATED ~~and~~SECURITY ~~the~~HOLDER ~~approximate number of record holders was 235. High and low sales prices for the Common Stock for each quarter over the last two years were:~~MATTERS

	Sale Prices of Shares of Common Stock
	2010		2009
Quarter Ended	High	Low	High	Low
March 31	$3.70	$1.75	$2.24	$0.25
June 30	4.71	2.90	1.67	1.08
September 30	3.88	3.00	1.60	1.09
December 31	7.65	3.12	1.82	1.02

The Common Stock of ABI was traded on the NYSE Amex (ticker symbol: ABL) through January 27, 2012. On January 6, 2012, the Company notified the NYSE Amex of its intention to voluntarily withdraw the Company’s common stock from listing on the NYSE Amex and to voluntarily terminate the registration of the common stock under the Exchange Act. The Company was eligible to voluntarily delist and deregister the common stock because there were fewer than 300 record holders of the common stock. On January 17, 2012, the Company filed a Notification of Removal from Listing and/or Registration on Form 25 with the SEC. On January 27, 2012, the Company filed with the SEC a Certification and Notice of Termination of Registration on Form 15 to voluntarily terminate the registration of its common stock and suspend its reporting obligations under the Exchange Act. The filing of the Form 15 suspended the Company’s reporting obligations. Effective January 30, 2012, the Company’s common stock began trading from time to time on the Over the Counter Pink Market under the symbol ABLT.PK. As of March 16, 2012, there were 222 record holders of the Common Stock.

1615

NoHigh ~~dividends~~and onlow sales prices for the Common Stock ~~were declared~~ ~~during~~traded ~~2010~~on orthe ~~2009.~~NYSE ~~The~~Amex ~~Company’s~~for ~~principal~~each ~~credit~~quarter ~~agreement~~over ~~restricts~~ the ~~ability~~last oftwo ~~the~~years Company to declare and pay dividends. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” set forth in Item 7 of this Annual Report on Form 10-K.were:

The equity compensation plan information set forth in Item 12 of this Annual Report on Form 10-K is incorporated by reference herein.

	Sale Prices of Shares of Common Stock
	2011		2010
Quarter Ended	High	Low	High	Low

March 31	$11.00	$6.02	$3.70	$1.75
June 30	11.45	7.08	4.71	2.90
September 30	10.00	5.60	3.88	3.00
December 31	6.21	4.35	7.65	3.12

~~ITEM~~No 6dividends on the Common Stock were declared during 2011 or 2010. ~~SELECTED~~ ~~FINANCIAL~~The ~~DATA~~Company’s principal credit agreement restricts the ability of the Company to declare and pay dividends. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” set forth in Item 7 of this Annual Report on Form 10-K.

~~Not~~The ~~applicable~~equity compensation plan information set forth in Item 12 of this Annual Report on Form 10-K is incorporated by reference herein.

ITEM 76. ~~MANAGEMENT’S~~ ~~DISCUSSION~~ SELECTED ~~AND ANALYSIS OF~~ FINANCIAL ~~CONDITION AND RESULTS OF OPERATIONS~~DATA

~~Economic conditions in the United States have~~Not ~~been challenging, including in the industries in which the Company conducts business~~applicable. The downturn in the housing industry resulted in reduced demand for the Company’s products. The slowdown in manufacturing, including in the automotive and industrial sectors, has resulted in reduced demand for the Tape Division’s products. In addition, the decline in consumer and retailer spending resulted in reduced demand for K&M’s products. While the United States economy and the Company’s businesses appeared to experience some economic recovery during 2010, certain end markets such as construction remain weak. Both the Tape Division and AB Canada sell into the construction market as well as other industrial markets, while K&M’s sales are influenced by consumer and retail spending levels. The Company expects economic conditions may negatively impact or restrain the Company’s business and operations and that that impact will depend on the speed, extent and sustainability of the United States and global economic recovery as well as geopolitical factors.

~~In addition, raw material and energy costs~~ITEM ~~increased sharply during 2010, which has negatively impacted the Company’s business and operating results~~7. ~~Global~~ MANAGEMENT’S ~~economic~~DISCUSSION ~~recovery~~AND ~~and~~ANALYSIS ~~political~~OF ~~instability~~FINANCIAL inCONDITION ~~oil~~AND ~~producing~~RESULTS ~~nations~~OF ~~may contribute to further increasing price levels, and any such further increases could be significant. The Company may be unable to pass increased raw material and energy costs on to its customers.~~OPERATIONS

~~ABI~~Economic isconditions ain ~~defendant~~the United States have been challenging, including in athe ~~number~~industries ofin ~~asbestos-related~~which the Company conducts business. The downturn in the housing industry ~~lawsuits~~resulted in reduced demand for the Company’s products. The ~~See~~slowdown ~~Note~~in 8manufacturing, ofincluding in the ~~Notes~~automotive and toindustrial ~~Consolidated~~sectors, ~~Financial~~has ~~Statements~~resulted ~~set~~in ~~forth~~reduced demand for the Tape Division’s products. In addition, the decline in ~~Item~~consumer 8and ofretailer ~~this~~spending ~~Annual~~resulted ~~Report~~in onreduced ~~Form~~demand ~~10-~~for K&M’s products. While the United States economy and the Company’s businesses appeared to experience some economic recovery during 2011, certain end markets such as construction ~~which~~remain isweak. ~~incorporated~~Both ~~herein~~the Tape Division and AB Canada sell into the construction market as well as other industrial markets, while K&M’s sales are influenced by ~~reference.~~consumer ~~These~~and ~~matters~~retail ~~could~~spending ~~have~~levels. aThe ~~material~~Company ~~adverse~~expects economic conditions may negatively impact onor restrain the Company’s business and operations and that that impact will depend on the speed, ~~results~~ extent and sustainability of ~~operations~~the orUnited ~~financial~~States ~~condition~~and global economic recovery as well as geopolitical factors.

OnIn ~~December 31~~addition, ~~2003,~~raw ~~American~~material ~~Biltrite~~and ~~Inc.'s~~energy ~~former~~costs ~~majority-owned~~increased ~~subsidiary~~sharply ~~Congoleum~~during filed a voluntary petition with the Bankruptcy Court seeking relief under Chapter 11 of the Bankruptcy Code as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago2011, ~~and~~which onhas ~~August~~negatively ~~17,~~impacted ~~2009,~~ the ~~District Court withdrew the reference of Congoleum~~Company’s ~~Chapter~~business ~~11 case from the Bankruptcy Court~~ and ~~assumed~~operating ~~authority over the proceedings~~results. ~~Congoleum’s plan of reorganization was confirmed by the District Court~~ onGlobal ~~June~~economic 7,recovery ~~2010~~ and ~~became~~political ~~effective~~instability ~~July~~in 1,oil ~~2010.~~producing Bynations ~~operation~~may ofcontribute ~~the plan, all shares of Congoleum’s Class A and Class B common stock outstanding immediately prior~~ to ~~the~~further ~~plan~~increasing ~~becoming~~price ~~effective were cancelled effective as of July 1~~levels, ~~2010, including those shares owned by ABI. As~~ aand ~~result, effective as of that time, ABI ceased to own~~ any ~~equity~~such ~~interest~~further inincreases ~~reorganized~~could ~~Congoleum~~be ~~and Congoleum is no longer a subsidiary of ABI~~significant. The ~~former~~Company ~~holders~~may ofbe ~~the~~unable ~~cancelled~~to ~~shares~~pass ofincreased ~~Congoleum~~raw ~~common~~material ~~stock, including ABI, did not receive any compensation on account of their cancelled shares. Congoleum is a manufacturer of resilient sheet~~ and ~~tile flooring and it previously comprised~~energy ~~the~~costs ~~Company’s~~on ~~flooring~~to ~~products~~its ~~division~~customers.

1716

~~Results~~ABI is a defendant in a number of ~~Operations~~asbestos-related lawsuits. See Note 8 of the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference. These matters could have a material adverse impact on the Company’s business, results of operations or financial condition.

	Years Ended December 31
	2010				2009
	(In thousands of dollars)
Net sales	$	201,628			$	173,008
Cost of sales		148,909				128,020
Gross profit		52,719		26.1%		44,988		26.0%
Selling, general & administrative expenses		48,678		24.1%		48,308		27.9%
Income (loss) from operations		4,041				(3,320	)
Interest expense, net		(916	)			(1,064	)
Other income, net		1,033				670
Income (loss) before taxes and other items		4,158				(3,714	)
(Benefit from) provision for income taxes		(128	)			62
Net income (loss)		4,286				(3,776	)
Noncontrolling interests		(55	)			(83	)
Net income (loss) from continuing operations of the controlling interest	$	4,231			$	(3,859	)

On December 31, 2003, ABI’s former majority-owned subsidiary Congoleum filed a voluntary petition with the Bankruptcy Court seeking relief under Chapter 11 of the Bankruptcy Code as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago, and on August 17, 2009, the District Court withdrew the reference of Congoleum’s Chapter 11 case from the Bankruptcy Court and assumed authority over the proceedings. Congoleum’s plan of reorganization was confirmed by the District Court on June 7, 2010 and became effective July 1, 2010. By operation of the plan, all shares of Congoleum’s Class A and Class B common stock outstanding immediately prior to the plan becoming effective were cancelled effective as of July 1, 2010, including those shares owned by ABI. As a result, effective as of that time, ABI ceased to own any equity interest in reorganized Congoleum and Congoleum is no longer a subsidiary of ABI. The former holders of the cancelled shares of Congoleum common stock, including ABI, did not receive any compensation on account of their cancelled shares. Congoleum is a manufacturer of resilient sheet and tile flooring and it previously comprised the Company’s flooring products division.

~~Net~~Results ~~sales for the year ended December 31, 2010 were $201.6 million, an increase~~ of ~~$28.6~~Operations million from sales of $173.0 million in 2009. Tape segment sales increased $23.1 million or 30.6% as improved economic conditions lead to increased demand. Substantially all the increase was due to higher unit volumes, with the greatest increases coming from Asian markets. Sales of all major product lines improved over 2009. Canadian segment sales increased $8.4 million or 17.4%, with roughly a third of the increase due to the translation effect of a higher Canadian/US Dollar exchange rate in 2010 versus 2009. The balance of the increase came predominantly from the Performance Sheet Rubber product category, as demand for industrial rubber products and custom rubber mixing improved with economic conditions. Jewelry segment sales decreased $2.7 million or 5.2% due primarily to the loss of a major mid-tier retail account.

Gross profit was 26.1% of net sales in 2010 compared to 26.0% in 2009. Tape segment gross profit margins declined 0.7 points to 22.1% net sales as a result of significant raw material cost inflation experienced in 2010 that the division was unable to pass through in pricing during the year. Canadian segment gross profit margins improved slightly from 24.0% of net sales in 2009 to 24.7% in 2010 due to improved margins on sales of industrial rubber products. Jewelry segment gross profit margins increased from 30.7% of net sales to 34.1% as a result of lower selling allowances and a more profitable customer mix.

	Years Ended December 31
	2011				2010
	(In thousands of dollars)

Net sales	$	208,733			$	201,628
Cost of sales		159,991				148,909
Gross profit		48,742		23.4%		52,719		26.1%
Selling, general & administrative expenses		49,873		23.9%		48,678		24.1%
(Loss) income from operations		(1,131	)			4,041
Interest expense, net		(835	)			(916	)
Other income, net		499				1,033
(Loss) income before taxes and other items		(1,467	)			4,158
Provision for (benefit from) income taxes		186				(128	)
Net (loss) income		(1,653	)			4,286
Noncontrolling interests		(1	)			(55	)
Net (loss) income from continuing operations of the controlling interest	$	(1,654	)		$	4,231

18Net sales for the year ended December 31, 2011 were $208.7 million, an increase of $7.1 million from sales of $201.6 million in 2010. Tape division sales increased $2.4 million or 2.4% from 2010 to 2011 due to price increases averaging 4.2% and the favorable effect of currency translation partly offset by lower volume. Canadian segment sales increased $5.4 million or 9.6% from 2010 to 2011 due to the effect of currency translation, increased sales of rubber products, and the fact that sales to Congoleum during the first half of 2010 were eliminated in consolidation. Jewelry segment K&M’s sales decreased $3.5 million or 7.1% from 2010 to 2011 due to the loss of a large mid-tier retail account and lower sales through mass merchandisers and off-price retailers.

The Company includes the cost of purchasing and finished goods inspection in selling, general and administrative expenses. Some companies also record such costs in operating expenses while others record them in cost of goods sold. Consequently, the Company’s gross profit margins may not be comparable to other companies. Had the Company recorded these expenses in cost of sales, the gross profit margins for the years ended December 31, 2010 and 2009 would have been 25.7% and 25.4%, respectively.17

~~Selling,~~Gross ~~general~~profit ~~and~~was ~~administrative~~23.4% ~~expenses for~~of ~~the~~net ~~year~~sales ~~ended~~in ~~December~~2011 compared ~~31,~~to ~~2010~~26.1% ~~were~~in ~~$48~~2010.7 ~~million,~~Tape ansegment ~~increase~~gross ofprofit ~~$370~~margins ~~thousand~~declined ~~compared to 2009~~2.9% ~~Tape~~of ~~segment~~net ~~selling,~~sales ~~general and~~from ~~administrative~~2010 ~~expenses~~to ~~increased~~2011 ~~$540 thousand~~ due to ~~increased~~raw ~~freight~~material ~~and~~cost increases ~~commissions~~averaging ~~resulting~~10% ~~from~~which ~~the~~were ~~sales~~only ~~growth,~~ partly ~~offset~~ bypassed ~~reductions~~through into ~~bad~~customers ~~debt~~in ~~and~~higher ~~other expenses~~pricing. Canadian ~~segment~~gross ~~selling,~~margins ~~general~~improved ~~and administrative expenses increased $1~~0.64% ~~million,~~of ~~with~~net ~~substantially~~sales ~~all~~in ~~the~~2011 ~~increase~~ due to ~~the~~selling ~~translation~~price ~~effect~~increases ofwhich, acombined ~~higher~~with ~~Canadian/US Dollar exchange rate~~ first-in, ~~2010 versus~~first-out ~~2009.~~inventory ~~Jewelry segment selling~~costing, ~~general~~offset ~~and~~the ~~administrative~~impact of ~~expenses~~raw ~~decreased~~material ~~$892 thousand as a result of~~ cost ~~reductions in wages and occupancy costs~~increases. ~~Net~~Gross ~~corporate~~profit ~~selling,~~margins ~~general~~at ~~and~~K&M ~~administrative~~decreased ~~expenses~~4.3% ~~not~~due ~~allocated~~ to ~~segments~~higher ~~decreased~~product ~~$842 thousand~~costs ~~from~~coupled ~~2009~~with tomargin demands ~~2010 as a result~~ of ~~lower insurance and benefit expenses and lower professional and financing fees~~customers.

~~Net~~The ~~interest~~Company ~~expense~~includes ofthe ~~$916~~cost ~~thousand~~of ~~for 2010~~purchasing ~~was~~and ~~down~~finished ~~$148~~goods ~~thousand~~inspection asin aselling, ~~result~~general ofand ~~lower~~administrative ~~debt~~expenses. ~~levels~~Some ~~and~~companies ~~lower~~also ~~effective~~record ~~borrowing~~such costs. ~~Other~~in ~~income~~operating expenses while others record them in cost of $1goods sold.0 ~~million~~Consequently, inthe ~~2010~~Company’s gross profit margins may not be comparable ~~was~~to upother ~~from~~companies. ~~$670~~Had ~~thousand~~the inCompany ~~2009~~recorded asthese aexpenses ~~result~~in cost of ~~increased~~sales, ~~royalty~~the ~~income~~gross profit margins for the years ended December 31, 2011 and 2010 would have been 23.0% and 25.7%, respectively.

~~The~~Selling, ~~effective~~general ~~income~~and ~~tax~~administrative ~~rate~~ expenses for ~~continuing operations~~the ~~for~~year ~~2010~~ended ~~was~~December a31, ~~benefit~~2011 ofwere 3$49.1%9 onmillion, ~~pre-tax~~an ~~earnings~~increase of $41.2 million, compared to ~~a tax expense of 1~~2010.7% onTape asegment ~~pre-tax~~increased ~~loss~~$856 ofthousand $or 3.79% ~~million~~due ~~for~~to ~~2009.~~higher Inpersonnel ~~2009,~~and ~~the~~benefit ~~Company~~costs, ~~did~~increased ~~not~~freight ~~recognize~~expenses, ~~the~~regulatory ~~tax~~expenses, ~~benefit~~and ofthe ~~losses~~effect ~~incurred because~~ of ~~the uncertainty~~ ofcurrency ~~the~~translation. ~~Company’s~~Canadian ~~ability~~segment toselling, ~~generate~~general ~~future taxable income to utilize the deferred tax assets. State~~ and ~~foreign~~administrative ~~taxes~~expenses ~~resulted in~~increased a $~~62 thousand tax provision despite the pre-tax loss of $3~~1.70 million. Asor of8.6% ~~December~~due ~~31,~~to ~~2010,~~ the ~~Company determined that~~effect ~~the net deferred tax assets~~ of ~~its~~currency ~~Canadian~~translation ~~division~~and ~~did~~higher ~~not~~freight ~~require~~and acommissions. ~~valuation~~K&M ~~allowance~~selling, ~~resulting~~general inand ~~the~~administrative ~~recognition~~expenses ofwere ~~a $1.7~~essentially ~~million~~unchanged ~~benefit~~from ~~for~~ 2010, ~~which~~to ~~was reduced by income tax expense recorded for taxable income arising from the Company’s U~~2011.~~S. operations.~~

~~The~~Net ~~Company~~interest ~~had~~expense ~~net~~of ~~income~~$835 ~~from~~thousand ~~continuing~~for 2011 ~~operations~~was ofdown $~~4.2~~81 ~~million~~thousand ~~for~~as ~~2010~~a ~~compared~~result toof alower ~~net~~effective ~~loss~~borrowing ~~of $3~~costs.9 ~~million~~Other ~~for~~income ~~2009~~of as$499 athousand ~~result~~in of2011 ~~the~~was ~~higher~~down ~~sales~~from ~~and~~$1.0 million ~~gross~~in ~~profit combined~~2010 ~~with~~as ~~little~~a ~~increase~~result inof ~~selling,~~lower ~~general~~royalty income and ~~administrative~~foreign ~~expenses~~exchange losses.

19The effective income tax expense for continuing operations for 2011 was $186 thousand on a pre-tax loss of $1.7 million, compared to a benefit of $128 thousand on pre-tax earnings of $4.2 million in 2010. For 2011, the Company recognized expense for certain minimum state taxes and for foreign taxes. In 2010, the Company recognized a $1.7 million benefit for deferred tax assets of its Canadian division, which was reduced by income tax expense recorded for taxable income arising from the Company’s U.S. operations.

~~Liquidity~~The ~~and~~Company had ~~Capital~~a ~~Resources~~net loss from continuing operations of $1.7 million for 2011 compared to net income from continuing operations of $4.2 million for 2010, primarily as a result of the lower gross profit margins discussed above.

ABI’s principal sources of liquidity are its cash provided by operations and borrowings under the Company’s credit facilities. Cash and cash equivalents of the continuing operations, including short term investments, increased by $465 thousand to $3.3 million at December 31, 2010 as compared to December 31, 2009. Total debt at December 31, 2010 was $12.0 million, down $656 thousand from December 31, 2009. Working capital of the continuing operations at December 31, 2010 was $35.1 million, compared with $28.9 million at December 31, 2009. The ratio of current assets to current liabilities of the continuing operations at December 31, 2010 was 2.10 compared to 2.02 at December 31, 2009. Net cash provided by operating activities of continuing operations for the year ended December 31, 2010 was $2.8 million compared with cash provided of $17.1 million for the year ended December 31, 2009. Despite higher working capital requirements to support increased sales during 2010, the Company generated cash from operations as a result of income earned during the year. The primary sources of the $17.1 million in cash from operating activities in 2009 were a $12.6 million reduction in inventory and a $1.4 million reduction in receivables.18

~~Capital~~Liquidity ~~expenditures~~and ~~for~~Capital ~~2010 were $2.0 million compared to $1.7 million for 2009.~~Resources

~~The~~ABI’s ~~Company~~principal ~~has~~sources ~~historically~~of ~~expended substantial~~liquidity ~~amounts~~are ~~for~~its ~~compliance~~cash ~~with~~provided ~~existing~~by ~~environmental~~operations ~~laws~~ and ~~regulations,~~borrowings ~~including~~under ~~those~~the ~~matters~~Company’s ~~described~~credit infacilities. ~~Item~~Cash ~~3 (Legal Proceedings)~~ and ~~Note~~cash 8equivalents ~~to the Notes to the Consolidated Financial Statements set forth in Item 8~~ of ~~this Annual Report on Form 10-K. The Company~~the ~~will~~continuing ~~continue~~operations, toincluding beshort ~~required~~term toinvestments, ~~expend~~increased ~~amounts~~by in$112 ~~the~~thousand ~~future, due~~ to ~~the~~$3.4 ~~nature~~million ~~of past activities~~ at ~~their~~December ~~facilities~~31, to2011 ~~comply~~as compared ~~with~~to ~~existing~~December ~~environmental laws~~31, ~~and those amounts may be substantial~~2010. ~~The~~Total ~~Company~~debt ~~has~~at ~~recorded~~December ~~provisions which it believes are adequate for environmental remediation~~31, ~~including~~2011 ~~provisions~~was ~~for~~$14.8 ~~testing and potential remediation of conditions at its own facilities~~million, ~~and~~ ~~non-asbestos~~up ~~product-related liabilities~~$2.8 ~~While~~million ~~the~~from ~~Company~~December ~~believes its estimate of the future amount of these liabilities is reasonable~~31, ~~that~~2010. ~~most~~Working capital of ~~such amounts will be paid over a period of one to ten years and that~~ the ~~Company~~continuing ~~expects~~operations toat ~~have~~December ~~sufficient resources to fund such amounts~~31, ~~the~~2011 ~~actual~~was ~~timing and amount of such payments may differ significantly from the Company’s assumptions~~$31.5 ~~In addition~~million, ~~legislation~~compared ~~and~~with ~~regulation~~$35.1 ~~regarding~~million ~~climate~~at ~~change,~~December ~~including greenhouse gas emissions~~31, ~~and~~2010. ~~other~~The ~~environmental~~ratio ~~matters~~of ~~may~~current beassets ~~adopted or administered and enforced differently in the future, which could require the Company~~ to ~~expend~~current ~~significant amounts.~~liabilities ~~Although~~of the ~~effect~~continuing ofoperations ~~future~~at ~~government~~December ~~regulation could have a significant effect on the Company’s costs~~31, ~~the Company~~2011 iswas ~~not~~1.93 ~~aware~~compared ~~of any pending legislation or regulation relating~~ to ~~these~~2.10 ~~matters~~at ~~that would have a material adverse effect~~December ~~on its consolidated results of operations or financial position~~31, ~~except~~2010. asNet ~~may~~cash beused ~~otherwise~~by ~~referenced in~~operating ~~Item~~activities 3of ~~(Legal~~continuing ~~Proceedings)~~operations ~~and~~for ~~Note 8 to~~ the ~~Notes~~year toended ~~Consolidated~~December ~~Financial~~31, ~~Statements~~2011 ~~set~~was ~~forth~~$537 inthousand compared ~~Item~~with 8cash provided of ~~this Annual Report on Form 10-K~~$2.8 ~~There~~million ~~can~~for bethe noyear ~~assurances~~ended ~~that~~December ~~any~~31, ~~such costs could be passed along to its customers~~2010.

~~American~~Capital ~~Biltrite~~expenditures ~~Inc.’s~~for ~~primary~~2011 ~~source of~~were ~~borrowings~~$2.6 ~~are the revolving credit facility (the “Revolver”) and the term loan (“Term Loan”) it has~~million ~~with~~compared ~~Wachovia Bank, National Association (“Wachovia”) pursuant~~ to ~~a loan and security agreement (the “Credit Agreement”)~~$2.0 ~~The~~million ~~Credit~~for Agreement was entered into on June 30, 2009, and initial borrowings on the Credit Agreement were used to pay off borrowings from another financial institution and to pay fees and expenses in connection with the refinancing2010.

20The Company has historically expended substantial amounts for compliance with existing environmental laws and regulations, including those matters described in Item 3 (Legal Proceedings) and Note 8 to the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K. The Company will continue to be required to expend amounts in the future, due to the nature of past activities at their facilities, to comply with existing environmental laws, and those amounts may be substantial. The Company has recorded provisions which it believes are adequate for environmental remediation, including provisions for testing and potential remediation of conditions at its own facilities, and non-asbestos product-related liabilities. While the Company believes its estimate of the future amount of these liabilities is reasonable, that most of such amounts will be paid over a period of one to ten years and that the Company expects to have sufficient resources to fund such amounts, the actual timing and amount of such payments may differ significantly from the Company’s assumptions. In addition, legislation and regulation regarding climate change, including greenhouse gas emissions, and other environmental matters may be adopted or administered and enforced differently in the future, which could require the Company to expend significant amounts. Although the effect of future government regulation could have a significant effect on the Company’s costs, the Company is not aware of any pending legislation or regulation relating to these matters that would have a material adverse effect on its consolidated results of operations or financial position, except as may be otherwise referenced in Item 3 (Legal Proceedings) and Note 8 to the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K. There can be no assurances that any such costs could be passed along to its customers.

~~The~~ABI’s ~~Credit~~primary ~~Agreement~~source ~~provides~~of ~~American~~borrowings ~~Biltrite Inc. and its subsidiaries~~are ~~with (i) a $30.0 million commitment under~~ the ~~Revolver (including a $12 million Canadian~~ revolving credit facility ~~sublimit~~(the “Revolver”) and ~~(ii)~~ anthe ~~$8.0~~term ~~million~~loan (“Term Loan.”) ~~The~~it ~~Credit~~has ~~Agreement also provides letter of credit facilities~~ with ~~availability~~Wachovia ~~of up to $6.0~~Bank, ~~million~~National ~~(including~~Association ~~a $3 million Canadian letters of credit facility sublimit~~(“Wachovia”) ~~subject~~pursuant to ~~availability~~a ~~under~~loan ~~the~~and ~~Revolver.~~security ~~The~~agreement ~~maximum amount available for revolving debt borrowings is reduced to~~ (the ~~amount~~“Credit ~~of the borrowing base if that amount is lower~~Agreement”). The ~~borrowing~~ ~~base~~Credit isAgreement ~~based~~was ~~upon~~entered ~~eligible~~into ~~assets~~on ofJune ~~the~~30, ~~Company~~2009, ~~including accounts receivables~~ and ~~inventory.~~initial ~~The~~borrowings ~~Company’s~~on ~~obligations under~~ the Credit Agreement ~~are~~were ~~secured~~used byto ~~assets~~pay ofoff ~~the Company and its subsidiaries. At December 31, 2010, the Company had $4.6~~borrowings ~~million~~from ~~and~~another ~~$6.1~~financial ~~million~~institution ~~outstanding under the Revolver~~ and ~~Term~~to ~~Loan,~~pay ~~respectively,~~fees and ~~$13.1~~expenses ~~million of additional unused borrowing capacity available under the Revolver. The Term Loan principal is payable~~ in 72connection ~~monthly~~with ~~installments of $111 thousand beginning August 1, 2009 and ending on July 1, 2015. All indebtedness under~~ the ~~Credit Agreement, other than the Term Loan, matures on June 30, 2012~~refinancing.

Interest is payable monthly on borrowings under the Credit Agreement at rates based on a base interest rate plus an applicable margin for each type of loan, which varies depending on whether the loan is based on U.S., Canadian, or Eurodollar rate loans and which ranges from an applicable rate of two hundred basis points over U.S. and Canadian base rates to four hundred basis points over Eurodollar base rates for revolving debt loans and three hundred basis points over U.S. base rates and five hundred basis points over Eurodollar base rates for the Term Loan. The Credit Agreement charges the Company a monthly unused borrowing line fee, at a rate equal to five-eighths of one percent (0.625%) per annum. In addition, the Credit Agreement imposes a monthly letter of credit fee equal to four percent (4%) per annum for unused letter of credit availability.19

~~Pursuant~~The toCredit Agreement provides ABI and its subsidiaries with (i) a $30.0 million commitment under the Revolver (including a $12 million Canadian revolving credit facility sublimit) and (ii) an $8.0 million Term Loan. The Credit Agreement, ~~payments~~also provides letter of credit facilities with availability of up to $6.0 onmillion (including a $3.0 million Canadian letters of credit facility sublimit) subject to availability under the Revolver. The maximum amount available for revolving debt borrowings is reduced to the amount of the borrowing base if that amount is lower. The borrowing base is based upon eligible assets of the Company, including accounts receivables and inventory. The Company’s obligations ~~accounts~~under ~~receivable~~the Credit Agreement are ~~deposited~~secured inby ~~accounts~~assets ~~assigned~~of bythe Company and its subsidiaries. At December 31, 2011, the Company had $9.0 million and $4.8 million outstanding under the ~~other~~Revolver ~~borrowers~~and toTerm ~~Wachovia~~ Loan, respectively, and $11.1 million of additional unused borrowing capacity available under the ~~funds~~Revolver. The Term Loan principal is payable in ~~that~~72 ~~account~~monthly ~~may~~installments ~~used~~of by$111 ~~Wachovia~~thousand beginning toAugust ~~pay~~1, ~~down~~2009 ~~outstanding~~and ~~borrowings~~ending on July 1, 2015. All indebtedness under the Credit Agreement, other than the Term Loan, matures on June 30, 2015.

~~The~~Interest ~~Credit~~is ~~Agreement~~payable ~~contains~~monthly ~~customary~~on ~~bank~~borrowings under ~~covenants,~~the ~~including~~Credit ~~limitations~~Agreement onat ~~incurrence~~rates ofbased ~~debt~~on ~~and~~a ~~liens~~base orinterest ~~other~~rate ~~encumbrances~~plus onan ~~assets~~applicable ormargin ~~properties,~~for ~~sale~~each type of ~~assets~~loan, which varies depending ~~making~~on ofwhether ~~loans~~the orloan ~~investments~~is based on U.S., ~~including~~Canadian, ~~paying~~or ~~dividends~~Eurodollar ~~and~~rate ~~redemptions~~loans ofand ~~capital~~which ~~stock,~~ranges ~~the~~from ~~formation~~an orapplicable ~~acquisition~~rate of ~~subsidiaries~~two hundred ~~and~~basis ~~transactions~~points ~~with~~over ~~affiliates~~U.S. ~~The~~and ~~Credit~~Canadian ~~Agreement~~base ~~requires~~rates ~~the~~to ~~Company~~four ~~and~~hundred ~~the~~basis ~~other~~points ~~borrowers~~over ~~and~~Eurodollar ~~the~~base ~~guarantors~~rates tofor ~~maintain,~~revolving debt loans onand athree ~~consolidated~~hundred basis, apoints ~~minimum~~over ~~fixed~~U.S. ~~charge~~base ~~coverage~~rates ~~ratio~~and offive ~~1.0:1.0.~~hundred ~~The~~basis ~~Credit~~points ~~Agreement~~over ~~also~~Eurodollar ~~requires~~base ~~that~~rates for the ~~Company~~Term Loan. ~~and~~The ~~the~~Credit ~~other~~Agreement ~~borrowers~~charges ~~and~~ the ~~guarantors~~Company toa ~~maintain,~~monthly onunused aborrowing ~~consolidated~~line ~~basis~~fee, at a ~~minimum~~rate ~~amount~~equal to five-eighths of ~~earnings~~one ~~before~~percent ~~interest, taxes,~~(0.625%) ~~depreciation,~~per ~~and~~annum. ~~amortization~~In addition, ~~as determined under~~ the Credit Agreement. ~~The~~imposes ~~Company’s~~a ~~obligation~~monthly toletter ~~meet~~of ~~the~~credit ~~minimum~~fee equal ~~fixed~~to ~~charge~~four ~~coverage~~percent ~~ratio~~(4%) ~~and~~per ~~earnings~~annum ~~before~~for ~~interest,~~unused ~~taxes,~~letter ~~depreciation,~~of ~~and~~credit ~~amortization~~availability. ~~covenants~~Pursuant ~~would~~to ~~not~~an ~~apply~~amendment ~~for~~and ~~any monthly~~extension ~~test~~of ~~period~~the ~~during~~Credit ~~which~~Agreement in February 2012, the ~~Company’s~~interest rate on borrowings, the unused ~~available~~line ~~credit~~fee, ~~under~~and ~~the~~letter ~~Credit~~of ~~Agreement~~credit ~~was~~fee atare ~~least~~reduced $6for ~~million~~periods after ~~for~~June 30, ~~consecutive days~~2012.

21Pursuant to the Credit Agreement, payments on the Company’s accounts receivable are deposited in accounts assigned by the Company and the other borrowers to Wachovia and the funds in that account may be used by Wachovia to pay down outstanding borrowings under the Credit Agreement.

InThe ~~March~~Credit ~~2010,~~Agreement ~~the~~contains ~~Company~~customary ~~and~~bank covenants, ~~Wachovia~~including ~~entered~~limitations ~~into~~on anincurrence ~~amendment~~ of ~~the~~debt ~~Credit~~and ~~Agreement.~~liens ~~The~~or ~~amendment~~other ~~reduced~~encumbrances ~~the~~on ~~minimum~~assets ~~required~~or ~~levels~~properties, sale of ~~earnings~~assets, making ~~before~~of ~~interest,~~loans ~~taxes,~~or ~~depreciation~~investments, including paying dividends and ~~amortization~~ ~~under~~redemptions of capital stock, the formation or acquisition of subsidiaries and transactions with affiliates. The Credit Agreement, requires the Company and ~~further~~the ~~provided~~other ~~that~~borrowers ~~meeting~~and the guarantors to maintain, on a consolidated basis, a minimum ~~level~~fixed charge coverage ratio of ~~earnings~~1.0:1.0. ~~before~~Effective ~~interest~~June 30, ~~taxes~~2012, ~~depreciation,~~ ~~and~~the ~~amortization~~Company’s ~~and~~obligation to meet the minimum fixed charge coverage ratio would not beapply ~~required~~ for any monthly test period during which the Company’s unused available credit under the Credit Agreement ~~was~~does not fall below $3.0 million at ~~least~~any time or below $65.0 million for 30more than three consecutive days. ~~The Company~~Prior ~~paid~~to aJune ~~fee~~30, of2012, ~~$30~~the ~~thousand~~Company’s tounused ~~Wachovia~~available incredit ~~connection~~must ~~with~~not ~~this~~fall ~~amendment~~below $6.0 million.

The Company currently anticipates it will be able to comply with these covenants as revised by the March 2010 amendment. However, the Company had to receive covenant waivers on several occasions under its prior credit agreement or enter amendments to that agreement to address failures to satisfy covenants under that prior credit agreement, and it is possible that, in the future, the Company may need to obtain waivers for failures to satisfy its covenants under the Credit Agreement or enter amendments to the Credit Agreement to address any such failures or obtain replacement financing as a result. There can be no assurance the Company would be successful in obtaining any such waiver, entering any such amendment or obtaining any such replacement financing.20

~~Any~~The ~~waivers,~~Company ~~amendments~~currently ~~and/or~~anticipates ~~replacement financing,~~it ifwill ~~obtained,~~be able ~~could~~to ~~result~~comply inwith ~~significant~~these ~~cost~~covenants. toHowever, the Company. Ifhad anto ~~event~~receive ofcovenant ~~default~~waivers ~~under~~on ~~the~~several ~~Credit~~occasions ~~Agreement~~under ~~were~~its prior tocredit ~~occur,~~agreement ~~the~~or ~~lenders~~enter ~~could~~amendments ~~cease~~to that agreement to ~~make~~address ~~borrowings~~failures ~~available~~to satisfy covenants under ~~the~~that ~~Revolver~~prior credit agreement, and ~~require~~it is possible that, in the future, the Company may need to ~~repay~~obtain ~~all~~waivers ~~amounts outstanding~~for failures to satisfy its covenants under the Credit Agreement. Ifor ~~the~~enter ~~Company~~amendments ~~were~~to ~~unable~~the Credit Agreement to ~~repay~~address ~~those~~any ~~amounts~~such ~~due,~~failures ~~the~~or ~~lenders~~obtain ~~could~~replacement ~~exercise~~financing ~~their~~as a ~~rights~~result. ~~over~~There ~~the~~can ~~collateral,~~be ~~which~~no ~~would~~assurance ~~likely~~the ~~have~~Company awould ~~material~~be ~~adverse~~successful ~~effect~~in onobtaining ~~the~~any ~~Company’s~~such ~~business~~waiver, ~~results~~entering ofany ~~operations~~ such amendment or obtaining ~~financial~~any ~~condition~~such replacement financing.

OnAny ~~June 30~~waivers, ~~2009,~~amendments ~~the~~and/or ~~Company also entered~~replacement ~~into accounts receivable~~ financing, ~~agreements~~if ~~(the~~obtained, ~~“FGI~~could ~~Financing~~result ~~Agreements”)~~in ~~with~~significant ~~Faunus~~cost ~~Group International (“FGI”). The FGI Financing Agreements were intended~~ to ~~provide~~the ~~up to a maximum amount outstanding at any time of $4~~Company.0 ~~million~~If ~~in net amounts funded based upon~~ an ~~80%~~event ~~advance~~of ~~rate.~~default ~~Fees~~ under the ~~FGI~~Credit ~~Financing~~Agreement ~~Agreements included a monthly collateral management fee equal~~were to ~~0.66%~~occur, of the ~~average~~lenders ~~monthly~~could ~~balance~~cease ofto ~~accounts~~make ~~purchased~~borrowings byavailable ~~FGI~~under asthe ~~well~~Revolver asand ~~interest~~require on the ~~daily~~Company ~~net~~to ~~funds~~repay ~~employed~~all ~~at a rate~~amounts ~~equal~~outstanding tounder the ~~greater~~Credit ~~of (i) 7~~Agreement.0% orIf ~~(ii)~~the ~~2.5%~~Company ~~above FGI’s prime rate, and~~ were ~~subject~~unable to ~~certain~~repay ~~minimum~~those ~~monthly~~ amounts~~. ABI’s~~ ~~ability~~due, ~~to borrow funds under~~ the ~~FGI~~lenders ~~Financing~~could ~~agreements~~exercise ~~during~~their rights ~~2009~~over ~~was~~the ~~less than anticipated; at December 31~~collateral, ~~2009, the~~which ~~Company~~would ~~had~~likely ~~$803~~have ~~thousand~~a ~~payable~~material toadverse ~~FGI.~~effect Inon ~~January 2010,~~ the Company’s ~~terminated the FGI Financing Agreement~~business, ~~repaid~~results ~~the~~of ~~outstanding~~operations ~~balance,~~or ~~and~~financial ~~paid an $80 thousand early termination fee~~condition.

The Company has not declared a dividend subsequent to the third quarter of 2003. The Credit Agreement ~~generally~~restricts ~~prohibits~~ the Company’s ~~from~~ability ~~paying~~to pay cash dividends to its stockholders. ~~Therefore,~~Any sodetermination ~~long as the Credit Agreement remains outstanding, the Company would need~~ to ~~obtain the consent of the lenders under the Credit Agreement to~~ pay ~~dividends to its stockholders in the~~ future. Individends ~~addition~~within tothese ~~this~~limitations ~~need for lender consent, any determination to pay future dividends~~ would be made by the Company’s Board of Directors based upon, among other considerations, the financial performance and capital requirements of the Company, as well as market conditions.

22Contingencies

~~Contingencies~~ABI has historically expended substantial amounts for compliance with existing environmental laws and regulations, including those matters described in Item 3 (Legal Proceedings) and Note 8 to the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K. ABI will continue to be required to expend amounts in the future, due to the nature of past activities at their facilities, to comply with existing environmental laws, and those amounts may be substantial. ABI has recorded what it believes are adequate provisions for environmental remediation and product-related liabilities, including provisions for testing for potential remediation of conditions at its own facilities. While ABI believes its estimate of the future amount of these liabilities is reasonable and that they will be paid for the most part over a period of one to ten years, the timing and amount of such payments may differ significantly from ABI’s assumptions. Although the effect of future government regulation could have a significant effect on ABI’s costs, ABI is not aware of any pending legislation which could significantly affect the liabilities ABI has established for these matters, except as may be referenced in Item 3 (Legal Proceedings) and Note 8 to the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K. There can be no assurances that the costs of any future government regulations could be passed along by ABI to its customers.

ABI has historically expended substantial amounts for compliance with existing environmental laws and regulations, including those matters described in Item 3 (Legal Proceedings) and Note 8 to the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K. ABI will continue to be required to expend amounts in the future, due to the nature of past activities at their facilities, to comply with existing environmental laws, and those amounts may be substantial. ABI has recorded what it believes are adequate provisions for environmental remediation and product-related liabilities, including provisions for testing for potential remediation of conditions at its own facilities. While ABI believes its estimate of the future amount of these liabilities is reasonable and that they will be paid for the most part over a period of one to ten years, the timing and amount of such payments may differ significantly from ABI’s assumptions. Although the effect of future government regulation could have a significant effect on ABI’s costs, ABI is not aware of any pending legislation which could significantly affect the liabilities ABI has established for these matters, except as may be referenced in Item 3 (Legal Proceedings) and Note 8 to the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K. There can be no assurances that the costs of any future government regulations could be passed along by ABI to its customers.21

Certain legal and administrative claims are pending or have been asserted against ABI. Among these claims, ABI is a named party in several actions associated with waste disposal sites and asbestos-related claims. These actions include possible obligations to remove or mitigate the effects on the environment of wastes deposited at various sites, including Superfund sites. The exact amount of such future costs to ABI is indeterminable due to such unknown factors as the magnitude of cleanup costs, the timing and extent of the remedial actions that may be required, the determination of ABI’s liability in proportion to other potentially responsible parties and the extent to which costs may be recoverable from insurance. ABI has recorded provisions in its consolidated financial statements for the estimated probable loss associated with all known environmental and asbestos-related contingencies. The contingencies also include claims for personal injury and/or property damage. (See Note 8 to the Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K.)

23Application of Critical Accounting Policies and Estimates

~~Application~~The discussion and analysis of ~~Critical~~the Company’s ~~Accounting~~financial ~~Policies~~condition and ~~Estimates~~results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results and conditions may differ from these estimates and assumptions.

~~The~~Critical ~~discussion~~accounting ~~and~~policies ~~analysis~~are ofdefined ~~the Company’s~~as ~~financial~~those ~~condition~~that ~~and~~entail ~~results~~significant ofjudgments ~~operations~~and ~~are~~uncertainties, ~~based~~and ~~upon~~could ~~its~~potentially ~~consolidated~~result ~~financial~~in ~~statements,~~materially ~~which~~different ~~have~~results ~~been~~under ~~prepared in~~different ~~accordance~~assumptions ~~with~~and ~~accounting~~conditions. ~~principles~~The ~~generally~~Company ~~accepted~~believes inthat ~~the~~its ~~United~~most ~~States.~~critical ~~The~~accounting ~~preparation~~policies ofupon ~~these~~which its financial ~~statements requires~~condition ~~estimates~~depends, and ~~assumptions~~which ~~that~~involve ~~affect~~ the ~~reported~~most ~~amounts~~complex ofor ~~assets~~subjective ~~and~~decisions ~~liabilities~~or assessments, ~~disclosure~~are ofthose ~~contingent~~described ~~assets~~below. ~~and~~For ~~liabilities~~a discussion aton the ~~date~~application of ~~the~~these ~~financial~~and ~~statements,~~other ~~and~~accounting ~~the~~policies, ~~reported~~see ~~amounts~~Note of1 ~~revenues~~in ~~and~~the ~~expenses~~Notes ~~during~~to ~~the~~Consolidated ~~reporting~~Financial ~~period.~~Statements ~~Actual~~set ~~results~~forth ~~and~~in ~~conditions~~Item ~~may~~8 ~~differ~~of ~~from~~this ~~these~~Annual ~~estimates~~Report ~~and~~on ~~assumptions~~Form 10-K.

~~Critical~~Asbestos ~~accounting~~Liability ~~policies~~and ~~are~~Insurance ~~defined as~~Receivable ~~those~~– ~~that~~As ~~entail~~discussed ~~significant~~previously, ~~judgments~~the ~~and~~Company ~~uncertainties,~~is ~~and~~party ~~could~~to ~~potentially~~a ~~result~~significant innumber ~~materially~~of ~~different~~lawsuits ~~results~~stemming ~~under~~from ~~different~~their previous manufacture ~~assumptions~~of ~~and~~asbestos-containing ~~conditions~~products. ~~The~~ABI ~~Company~~has ~~believes~~recorded ~~that~~in its ~~most~~consolidated ~~critical~~balance ~~accounting~~sheet ~~policies~~a ~~upon~~liability ~~which~~and corresponding insurance receivable based on its ~~financial~~estimates ~~condition~~of the future costs and related insurance recoveries to settle asbestos litigation. These estimates are ~~depends~~based on a number of subjective assumptions, ~~and~~including ~~which~~the ~~involve~~anticipated costs to settle claims, the ~~most~~claims ~~complex~~dismissal orrate, ~~subjective~~the ~~decisions~~cost to orlitigate ~~assessments~~claims, ~~are~~the ~~those~~number ~~described~~of ~~below.~~claims ~~For~~expected ato ~~discussion on~~be received, and the ~~application~~applicability and allocation of insurance coverage to these costs. Additionally, due to the numerous uncertainties related to future asbestos litigation trends and ~~other~~costs, ~~accounting~~the ~~policies~~Company does not believe reasonable estimates can be developed for claim developments beyond a six year horizon. Accordingly, ~~see~~the ~~Note~~Company’s estimated 1liability is based on claims currently filed as well as claims anticipated to be filed over the next six years. A change in assumptions could have a material effect on the ~~Notes~~Company’s estimated liability. The estimate is sensitive to ~~Consolidated~~changes ~~Financial~~in ~~Statements~~the ~~set~~mesothelioma acceptance rate. For example, if the calibration window is shifted to the ~~forth~~2004 into ~~Item~~2008 8calibration ofperiod, the mesothelioma acceptance rate decreases by 1.2% to 4.6%, and this ~~Annual~~reduces ~~Report~~the onliability ~~Form~~in the ~~10-K~~low estimate by about 20% (assuming all other variables remain constant).

Asbestos Liability and Insurance Receivable – As discussed previously, the Company is party to a significant number of lawsuits stemming from their previous manufacture of asbestos-containing products. ABI has recorded in its consolidated balance sheet a liability and corresponding insurance receivable based on its estimates of the future costs and related insurance recoveries to settle asbestos litigation. These estimates are based on a number of subjective assumptions, including the anticipated costs to settle claims, the claims dismissal rate, the cost to litigate claims, the number of claims expected to be received, and the applicability and allocation of insurance coverage to these costs. Additionally, due to the numerous uncertainties related to future asbestos litigation trends and costs, the Company does not believe reasonable estimates can be developed for claim developments beyond a six year horizon. Accordingly, the Company’s estimated liability is based on claims currently filed as well as claims anticipated to be filed over the next six years. A change in assumptions could have a material effect on the Company’s estimated liability. The estimate is sensitive to changes in the mesothelioma acceptance rate. For example, if the calibration window is shifted by two years to the 2004 to 2008 calibration period, the mesothelioma acceptance rate decreases by 1.2% to 4.6%, and this reduces the liability in the low estimate by about 20% (assuming all other variables remain constant).22

Due to the highly subjective nature of these assumptions, the Company has estimated a wide range of potential future costs and insurance recoveries and, because management believes that no amount within the range is more likely than any other, has recorded a liability and insurance receivable based on the low end of the range in accordance with accounting principles generally accepted in the United States. As such, the selection of a different amount within the range could have a material effect on the Company’s consolidated financial statements, as could future developments, which may differ from those assumed in developing the Company’s estimates. The same factors that affect developing forecasts of potential indemnity costs for asbestos-related liabilities also affect estimates of the total amount of insurance that is probable of recovery, as do a number of additional factors. These additional factors include the financial viability of some of the insurance companies, the method in which losses will be allocated to the various insurance policies and the years covered by those policies, how legal and other loss handling costs will be covered by the insurance policies, and interpretation of the effect on coverage of various policy terms and limits and their interrelationships. The Company does not include legal defense costs in its estimates of future costs and related insurance recoveries to settle asbestos litigation. The Company analyzes these estimates on an annual basis and reassesses the assumptions used as additional information becomes available over the course of time.

24Environmental Contingencies – As discussed previously, the Company has incurred liabilities related to environmental remediation costs at both third party sites and Company owned sites. The Company accrues for its estimate of future costs associated with environmental claims when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to each individual site, including the extent of clean-up activities to be performed, the methods employed in the clean-up activities, the Company’s relative share in costs at sites where other parties are involved, existing technology, current laws and regulations and prior remediation experience. Where no amount within a range of estimates is more likely to occur than another, the minimum is accrued on an undiscounted basis. For sites with multiple potentially responsible parties, the Company considers its likely proportionate share of the anticipated remediation costs and the ability of the other parties to fulfill their obligations in establishing a provision for those costs. When future liabilities are determined to be reimbursable by insurance coverage or payment from third parties, an accrual is recorded for the potential liability and a receivable is recorded related to the expected recovery. A receivable reserve is recorded when recoveries are disputed or are not highly probable. These estimates are based on certain assumptions such as the Company’s relative share in costs at sites where other parties are involved, and the ultimate insurance coverage available. These projects tend to be long-term in nature, and assumptions are subject to refinement as facts change. As such, it is possible that the Company may need to revise its recorded liabilities and receivables for environmental costs in future periods resulting in potentially material adjustments to the Company’s earnings in future periods. The Company closely monitors existing and potential environmental matters to consider the reasonableness of its estimates and assumptions.

Environmental Contingencies – As discussed previously, the Company has incurred liabilities related to environmental remediation costs at both third party sites and Company owned sites. The Company accrues for its estimate of future costs associated with environmental claims when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to each individual site, including the extent of clean-up activities to be performed, the methods employed in the clean-up activities, the Company’s relative share in costs at sites where other parties are involved, existing technology, current laws and regulations and prior remediation experience. Where no amount within a range of estimates is more likely to occur than another, the minimum is accrued on an undiscounted basis. For sites with multiple potentially responsible parties, the Company considers its likely proportionate share of the anticipated remediation costs and the ability of the other parties to fulfill their obligations in establishing a provision for those costs. When future liabilities are determined to be reimbursable by insurance coverage or payment from third parties, an accrual is recorded for the potential liability and a receivable is recorded related to the expected recovery. A receivable reserve is recorded when recoveries are disputed or are not highly probable. These estimates are based on certain assumptions such as the Company’s relative share in costs at sites where other parties are involved, and the ultimate insurance coverage available. These projects tend to be long-term in nature, and assumptions are subject to refinement as facts change. As such, it is possible that the Company may need to revise its recorded liabilities and receivables for environmental costs in future periods resulting in potentially material adjustments to the Company’s earnings in future periods. The Company closely monitors existing and potential environmental matters to consider the reasonableness of its estimates and assumptions.23

Income Taxes – The Company provides for valuation reserves against its deferred tax assets in accordance with the income tax accounting rules under United States generally accepted accounting principles. In evaluating the recovery of deferred tax assets, the Company makes certain assumptions as to the future reversal of existing taxable temporary differences, taxable income in prior carryback years, the feasibility of tax planning strategies, and estimated future taxable income. The valuation allowance can be affected by changes to tax laws, changes to statutory tax rates and changes to future taxable income estimates. It is possible that the facts underlying these assumptions may not materialize as anticipated in future periods, which may require the Company to record additional deferred tax valuation allowances, or to reduce previously recorded valuation allowances.

25The Company’s income tax returns and payments are subject to ongoing audits by federal, state and foreign tax authorities. The audits may result in questions and ultimately assessments related to the Company’s tax filing positions, including the timing and amount of deductions taken and the allocation of income among various tax jurisdictions. The Company evaluates its exposure associated with its tax filing positions and records a liability. The Company’s estimate of the potential outcome of each uncertain tax issue is based on its evaluation of the facts, circumstances and information available at the reporting date. Adjustments are made to recorded liabilities in the period in which an uncertain tax position is effectively settled, the statute of limitation expires for the relevant taxing authority to examine the tax position, or when more information becomes available.

~~The~~Pension ~~Company’s~~Plans ~~income~~– ~~tax~~The ~~returns~~Company ~~and payments are subject to ongoing audits by federal, state and foreign tax authorities.~~sponsors ~~The~~several ~~audits~~noncontributory ~~may~~defined ~~result~~benefit inpension ~~questions~~plans ~~and~~covering ~~ultimately~~most ~~assessments~~of ~~related to~~ the Company’s ~~tax~~employees. ~~filing~~Benefits ~~positions,~~under ~~including~~ the plans ~~timing~~are ~~and~~based ~~amount~~on years of ~~deductions~~service ~~taken~~ and ~~the~~employee ~~allocation~~compensation. ofThe ~~income~~costs ~~among~~and ~~various~~obligations ~~tax~~associated ~~jurisdictions.~~with ~~The~~these ~~Company~~plans ~~evaluates~~are ~~its~~dependent ~~exposure~~upon ~~associated~~various ~~with~~actuarial ~~its~~assumptions ~~tax~~used ~~filing~~in ~~positions~~calculating ~~and~~such ~~records a liability~~amounts. ~~The~~These ~~Company’s~~assumptions ~~estimate~~include of the ~~potential~~long-term ~~outcome~~rate of ~~each uncertain~~return ~~tax issue is based~~ on ~~its evaluation of the facts~~plan assets, ~~circumstances~~discount rates and ~~information~~other ~~available~~factors. atThese ~~the~~assumptions ~~reporting date. Adjustments~~ are ~~made~~evaluated toand ~~recorded~~updated ~~liabilities~~annually inby ~~the~~management. ~~period~~Other inassumptions used ~~which~~include anemployee ~~uncertain~~demographic ~~tax~~factors ~~position~~such isas ~~effectively~~retirement ~~settled~~patterns, ~~the~~mortality, ~~statute~~turnover ofand ~~limitation expires for~~ the ~~relevant~~rate ~~taxing~~of ~~authority~~compensation ~~to examine the tax position, or when more information becomes available~~increases.

~~Pension~~To ~~Plans –~~determine ~~The~~the ~~Company~~expected ~~sponsors~~long-term ~~several~~rate ~~noncontributory~~of return ~~defined~~on ~~benefit~~plan ~~pension~~assets, ~~plans~~the ~~covering~~Company ~~most~~considers of the ~~Company’s~~current ~~employees.~~and ~~Benefits~~expected ~~under~~asset ~~the~~allocation, ~~plans~~as ~~are~~well ~~based~~as onhistorical ~~years~~and ofexpected ~~service~~returns ~~and~~on ~~employee~~each ~~compensation~~plan asset class. ~~The~~In ~~costs~~2011 and ~~obligations~~2010, ~~associated~~the ~~with~~Company ~~these~~assumed ~~plans~~that ~~are~~the ~~dependent~~expected ~~upon~~long-term ~~various~~rate ~~actuarial~~of ~~assumptions used~~return inon ~~calculating~~plan ~~such~~assets ~~amounts~~will be 6.75% ~~These~~to ~~assumptions~~7.00%. ~~include~~The ~~the~~assumed long-term rate of return on assets is applied to a calculated value of plan assets, ~~discount~~which ~~rates~~recognizes changes ~~and~~in ~~other factors.~~the ~~These~~fair ~~assumptions~~value ~~are~~of ~~evaluated~~plan ~~and~~assets ~~updated~~in ~~annually~~a bysystematic ~~management~~manner over four years. ~~Other~~This ~~assumptions~~produces ~~used~~the ~~include~~expected ~~employee~~return ~~demographic~~on plan assets ~~factors~~that ~~such~~is asincluded ~~retirement~~in ~~patterns,~~pension ~~mortality,~~expense. ~~turnover~~The difference between this expected return and the ~~rate~~actual return on plan assets is deferred. The net deferral of ~~compensation~~past ~~increases~~actuarial gains or losses affects the calculated value of plan assets and, ultimately, future pension expense.

ToAt ~~determine~~ the ~~expected~~end ~~long-term rate~~ of ~~return~~ oneach ~~plan assets~~year, the Company ~~considers~~ determines the ~~current~~discount ~~and~~rate ~~expected~~to ~~asset~~be ~~allocation,~~used asto ~~well~~calculate asthe ~~historical~~present ~~and~~value ~~expected~~of ~~returns on each~~ plan ~~asset class~~liabilities. InThe ~~2010~~discount ~~and 2009, the Company assumed that the expected long-term~~ rate ofis ~~return~~used onto ~~plan~~determine ~~assets will~~expected befuture ~~7.0%.~~benefit ~~The~~payments ~~assumed~~as ~~long-term~~a ~~rate~~present ofvalue ~~return~~ on ~~assets~~the ismeasurement ~~applied~~date, toreflecting athe ~~calculated~~current ~~value~~rate ofat ~~plan assets,~~ which ~~recognizes changes in~~ the ~~fair~~pension ~~value~~liabilities could ofbe ~~plan~~effectively ~~assets~~settled. inIn aestimating ~~systematic~~this ~~manner~~rate, ~~over~~the ~~four~~Company ~~years.~~looks ~~This~~to ~~produces~~rates ~~the~~of ~~expected~~ return on ~~plan~~high-quality, ~~assets~~fixed-income ~~that~~investments isthat ~~included~~receive inone ~~pension~~of ~~expense.~~the ~~The~~two ~~difference~~highest ~~between~~ratings ~~this~~given ~~expected~~by ~~return~~a ~~and~~recognized ~~the~~ratings ~~actual~~agency. ~~return~~At onDecember ~~plan~~31, ~~assets~~2011, isthe ~~deferred.~~Company ~~The~~determined ~~net~~this ~~deferral~~rate ofto ~~past~~be ~~actuarial~~4.50% ~~gains~~for orits ~~losses~~U.S. ~~affects~~pension ~~the~~liability ~~calculated~~and ~~value~~5.00% offor ~~plan~~its ~~assets~~Canadian ~~and, ultimately, future~~ pension ~~expense~~liability.

At the end of each year, the Company determines the discount rate to be used to calculate the present value of plan liabilities. The discount rate is used to determine expected future benefit payments as a present value on the measurement date, reflecting the current rate at which the pension liabilities could be effectively settled. In estimating this rate, the Company looks to rates of return on high-quality, fixed-income investments that receive one of the two highest ratings given by a recognized ratings agency. At December 31, 2010, the Company determined this rate to be 5.50%.24

26Allowance for Doubtful Accounts – The Company’s allowance for doubtful accounts is determined based on a variety of factors that affect the potential collectability of the related receivables, including the length of time receivables are past due, customer credit ratings, financial stability of customers, specific one-time events and past customer history. In addition, in circumstances where the Company is made aware of a specific customer’s inability to meet its financial obligations, a specific allowance is established. The majority of accounts are individually evaluated on a regular basis and reserves are established as deemed appropriate based on the criteria previously noted. The remainder of the reserve is based on management’s estimates and takes into consideration historical trends, market conditions and the composition of the Company’s customer base. The risk associated with this estimate is that the Company would not become aware of potential collectability issues related to specific accounts and thereby become exposed to potential unreserved losses. Historically, the Company’s estimates and assumptions around the allowance have been reasonably accurate and the Company has processes and controls in place to closely monitor customers and potential credit issues.

~~Allowance~~Inventory ~~for~~Allowances ~~Doubtful Accounts~~ – The Company’s ~~allowance~~maintains ~~for doubtful accounts is determined based on a variety of factors that affect the potential collectibility~~obsolescence ofand ~~the related receivables, including the length of time receivables are past due, customer credit ratings, financial stability of customers, specific one~~slow-~~time~~moving ~~events~~allowances ~~and~~for ~~past customer history~~inventory. InProducts ~~addition,~~and inmaterials ~~circumstances~~that ~~where the Company is made aware of a specific customer’s inability to meet its financial obligations, a specific allowance is established. The majority of accounts~~ are ~~individually~~specifically ~~evaluated~~identified onas aobsolete ~~regular basis and reserves~~ are ~~established~~fully ~~as deemed appropriate based on the criteria previously noted~~reserved. The remainder of the ~~reserve~~allowance is based on management’s estimates and ~~takes~~fluctuates ~~into~~with ~~consideration~~market ~~historical trends~~conditions, ~~market~~design ~~conditions~~cycles and other ~~the~~economic ~~composition of the Company’s customer base~~factors. ~~The~~Risks ~~risk~~ associated with this ~~estimate~~allowance isinclude ~~that the~~unforeseen ~~Company~~changes ~~would~~in ~~not~~business ~~become~~cycles ~~aware~~that ofcould ~~potential~~affect ~~collectibility~~the marketability ~~issues~~of ~~related~~certain toproducts ~~specific accounts~~ and ~~thereby~~an ~~become~~unforecasted ~~exposed~~decline ~~to potential~~in ~~unreserved~~current ~~losses~~production. ~~Historically,~~Management ~~the~~closely ~~Company’s~~monitors ~~estimates~~the market place and ~~assumptions~~related ~~around~~inventory ~~the~~levels ~~allowance~~and ~~have~~has ~~been~~historically maintained reasonably accurate ~~and~~allowance levels. In addition, the Company ~~has~~values certain ~~processes~~inventories ~~and~~using ~~controls~~the last-in, ~~place~~first-out to(“LIFO”) ~~closely~~method. ~~monitor~~Accordingly, ~~customers~~a ~~and~~LIFO ~~potential~~valuation ~~credit~~reserve ~~issues~~is maintained to properly value these inventories.

~~Inventory~~Impairment ~~Allowances~~of –Long-Lived Assets – The Company ~~maintains~~ ~~obsolescence~~assesses ~~and~~its ~~slow~~long-~~moving~~lived ~~allowances~~assets ~~for~~other ~~inventory.~~than ~~Products~~goodwill and ~~materials~~indefinite-lived ~~that~~assets ~~are~~for ~~specifically~~impairment ~~identified~~whenever asfacts ~~obsolete~~and ~~are~~circumstances ~~fully~~indicate ~~reserved.~~that ~~The~~the ~~remainder~~carrying ofamount ~~the~~may ~~allowance~~not isbe ~~based~~fully onrecoverable. ~~management’s~~To ~~estimates~~analyze ~~and~~recoverability, ~~fluctuates~~it ~~with~~projects ~~market conditions,~~undiscounted ~~design~~net ~~cycles~~future ~~and~~cash ~~other~~flows ~~economic~~over ~~factors.~~the ~~Risks~~remaining ~~associated~~life ~~with~~of ~~this~~such ~~allowance~~assets. ~~include~~If ~~unforeseen~~these ~~changes~~projected incash ~~business~~flows ~~cycles~~are ~~that could~~less ~~affect~~than the ~~marketability~~carrying ofamount, an ~~certain~~impairment ~~products~~would ~~and~~be anrecognized, ~~unforecasted~~resulting ~~decline~~ in ~~current~~a ~~production.~~write-down ~~Management~~of ~~closely monitors~~ the ~~market~~assets ~~place~~with ~~and~~a ~~related~~corresponding ~~inventory~~charge ~~levels~~to ~~and~~earnings. ~~has~~The ~~historically~~impairment loss ~~maintained~~is ~~reasonably~~measured ~~accurate~~based ~~allowance~~upon ~~levels. In addition,~~ the ~~Company~~difference ~~values~~between ~~certain~~the ~~inventories~~carrying ~~using~~amount and the ~~last-in,~~fair ~~first-out~~value ~~(“LIFO”)~~of ~~method~~the assets. ~~Accordingly,~~The aCompany ~~LIFO valuation~~evaluates ~~reserve~~the isrecoverability ~~maintained~~of toits ~~properly~~other ~~value~~long-lived ~~these~~assets ~~inventories~~on an annual basis.

~~Impairment~~ITEM of Long-Lived Assets – The Company assesses its long-lived assets other than goodwill and indefinite-lived assets for impairment whenever facts and circumstances indicate that the carrying amount may not be fully recoverable7A. ToQUANTITATIVE ~~analyze~~AND ~~recoverability,~~QUALITATIVE itDISCLOSURES ~~projects~~ABOUT ~~undiscounted net~~MARKET future cash flows over the remaining life of such assets. If these projected cash flows are less than the carrying amount, an impairment would be recognized, resulting in a write-down of the assets with a corresponding charge to earnings. The impairment loss is measured based upon the difference between the carrying amount and the fair value of the assets. The Company evaluates the recoverability of its other long-lived assets on an annual basis.RISK

27Not applicable.

~~ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA~~25

~~American~~ITEM 8. FINANCIAL ~~Biltrite~~STATEMENTS ~~Inc.~~AND ~~and~~SUPPLEMENTARY ~~Subsidiaries~~DATA

~~Consolidated~~American Biltrite ~~Balance~~Inc. ~~Sheets~~and ~~– Assets~~Subsidiaries

~~(In~~Consolidated Balance ~~thousands~~Sheets of– ~~dollars)~~Assets

	December 31
	2010		2009
Assets
Current assets:
Cash and cash equivalents	$	867	$	402
Short-term investments		2,400		2,400
Accounts receivable, less allowances for doubtful accounts and discounts of $1,792 in 2010 and $2,228 in 2009		21,887		19,081
Inventories		38,606		32,970
Income taxes		631		287
Prepaid expense & other current assets		2,502		2,133
Current assets of continuing operations		66,893		57,273
Current assets of discontinued operation		—		92,095
Total current assets		66,893		149,368
Property, plant & equipment, net		29,891		31,291
Other assets:
Insurance for asbestos-related liabilities		17,646		17,646
Other assets		8,800		7,736
		26,446		25,382
Non-current assets of continuing operations		56,337		56,673
Non-current assets of discontinued operation		—		71,581
Total assets	$	123,230	$	277,622

(In thousands of dollars)

	December 31
	2011		2010
Assets
Current assets:
Cash and cash equivalents	$	979	$	867
Short-term investments		2,400		2,400
Accounts receivable, less allowances for doubtful accounts and discounts of $1,842 in 2011 and $1,792 in 2010		20,087		21,887
Inventories		39,460		38,606
Income taxes		217		631
Prepaid expense & other current assets		2,310		2,502

Total current assets		65,453		66,893

Property, plant & equipment, net		28,502		29,891

Other assets:
Insurance for asbestos-related liabilities		17,646		17,646
Other assets		8,799		8,800
		26,445		26,446

Total assets	$	120,400	$	123,230

~~American Biltrite Inc. and Subsidiaries~~26

~~Consolidated~~American Biltrite ~~Balance~~Inc. ~~Sheets – Liabilities~~ and ~~Stockholders’ Equity (Deficit)~~Subsidiaries

~~(In~~Consolidated Balance ~~thousands~~Sheets of– ~~dollars)~~Liabilities and Stockholders’ Equity

	December 31
	2010			2009
Liabilities
Current liabilities:
Accounts payable	$	8,829		$	6,827
Accrued expenses		16,864			16,047
Notes payable		4,639			4,051
Current portion of long-term debt		1,487			1,448
Current liabilities of continuing operations		31,819			28,373
Current liabilities of discontinued operation		—			104,182
Total current liabilities		31,819			132,555
Long-term debt, less current portion		5,851			7,134
Asbestos-related liabilities		17,700			17,700
Other liabilities		16,771			14,656
Non-current liabilities of continuing operations		40,322			39,490
Non-current liabilities of discontinued operation		—			149,562
Total liabilities		72,141			321,607
Stockholders’ equity (deficit)
Common stock, par value $.01, authorized 15,000,000 shares, issued 4,607,902 shares		46			46
Additional paid-in capital		20,148			19,950
Less cost of 1,166,545 and 1,166,371 shares of common stock in treasury at December 31, 2010 and 2009, respectively		(15,133	)		(15,132	)
Retained earnings (deficit)		46,769			(10,400	)
Accumulated other comprehensive loss		(1,683	)		(39,088	)
Total stockholders’ equity (deficit) of controlling interests		50,147			(44,624	)
Noncontrolling interests		942			639
Total stockholders’ equity (deficit)		51,089			(43,985	)
Total liabilities and stockholders’ equity (deficit)	$	123,230		$	277,622
See accompanying notes to consolidated financial statements.

(In thousands of dollars)

	December 31
	2011			2010
Liabilities
Current liabilities:
Accounts payable	$	9,154		$	8,829
Accrued expenses		14,330			16,864
Notes payable		8,995			4,639
Current portion of long-term debt		1,458			1,487
Total current liabilities		33,937			31,819

Long-term debt, less current portion		4,299			5,851
Asbestos-related liabilities		17,700			17,700
Other liabilities		20,557			16,771
Total liabilities		76,493			72,141

Stockholders’ equity
Common stock, par value $.01, authorized 15,000,000 shares, issued 4,607,902 shares		46			46
Additional paid-in capital		20,116			20,148
Less cost of 1,160,760 and 1,166,545 shares of common stock in treasury at December 31, 2011 and 2010, respectively		(14,958	)		(15,133	)
Retained earnings		45,115			46,769
Accumulated other comprehensive loss		(7,355	)		(1,683	)
Total stockholders’ equity of controlling interests		42,964			50,147
Noncontrolling interests		943			942
Total stockholders’ equity		43,907			51,089
Total liabilities and stockholders’ equity	$	120,400		$	123,230

See accompanying notes to consolidated financial statements.

~~American Biltrite Inc. and Subsidiaries~~27

~~Consolidated~~American Biltrite ~~Statements~~Inc. ofand ~~Operations~~Subsidiaries

~~(In~~Consolidated Statements ~~thousands~~ of ~~dollars, except per share amounts)~~Operations

	Years Ended December 31
	2010			2009
Net sales	$	201,628		$	173,008
Cost of products sold		148,909			128,020
Selling, general & administrative expenses		48,678			48,308
Income (loss) from operations		4,041			(3,320	)
Other income (expense)
Interest income		6			13
Interest expense		(922	)		(1,077	)
Other income		1,033			670
		117			(394	)
Income (loss) before income taxes and other items		4,158			(3,714	)
(Benefit from) provision for income taxes		(128	)		62
Net income (loss)		4,286			(3,776	)
Noncontrolling interests		(55	)		(83	)
Net income (loss) from continuing operations of the controlling interest		4,231			(3,859	)
Net income (loss) of discontinued operation, net of noncontrolling interests (including gain on deconsolidation of $53,565 in 2010)		52,938			(8,349	)
Net income (loss) attributable to controlling interest	$	57,169		$	(12,208	)
Net income (loss) attributable to controlling interest per common share
Basic
Continuing operations	$	1.23		$	(1.12	)
Discontinued operation		15.38			(2.43	)
	$	16.61		$	(3.55	)
Diluted
Continuing operations	$	1.23		$	(1.12	)
Discontinued operation		15.36			(2.43	)
	$	16.59		$	(3.55	)
Weighted average shares outstanding
Basic		3,441,431			3,441,546
Diluted		3,446,042			3,441,546
See accompanying notes to consolidated financial statements.

(In thousands of dollars, except per share amounts)

	Years Ended December 31
	2011			2010

Net sales	$	208,733		$	201,628
Cost of products sold		159,991			148,909
Selling, general & administrative expenses		49,873			48,678
(Loss) income from operations		(1,131	)		4,041

Other income (expense)
Interest expense		(835	)		(916	)
Other income		499			1,033
		(336	)		117
(Loss) income before income taxes and other items		(1,467	)		4,158

Provision for (benefit from) income taxes		186			(128	)
Net (loss) income		(1,653	)		4,286
Noncontrolling interests		(1	)		(55	)
Net (loss) income from continuing operations of the controlling interest		(1,654	)		4,231
Net income of discontinued operation, net of noncontrolling interests (including gain on deconsolidation of $53,565)		–			52,938
Net (loss) income attributable to controlling interest	$	(1,654	)	$	57,169

Net (loss) income attributable to controlling interest per common share
Basic
Continuing operations	$	(0.48	)	$	1.23
Discontinued operation		–			15.38
	$	(0.48	)	$	16.61
Diluted
Continuing operations	$	(0.48	)	$	1.23
Discontinued operation		–			15.36
	$	(0.48	)	$	16.59
Weighted average shares outstanding
Basic		3,444,762			3,441,431
Diluted		3,444,762			3,446,042

See accompanying notes to consolidated financial statements.

~~American Biltrite Inc. and Subsidiaries~~28

~~Consolidated~~American Biltrite ~~Statements~~Inc. ofand ~~Cash Flows~~Subsidiaries

~~(In~~Consolidated Statements ~~thousands~~ of ~~dollars)~~Cash Flows

	Years Ended December 31
	2010			2009
Operating activities
Net income (loss)	$	57,224		$	(12,125	)
Net (income) loss of discontinued operation, net of noncontrolling interests (including gain on deconsolidation of $53,565 in 2010)		(52,938	)		8,349
Net income (loss) from continuing operations		4,286			(3,776	)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided (used) by operating activities:
Depreciation and amortization		4,494			4,316
Provision for doubtful accounts		2,768			3,173
Stock compensation expense		198			201
Deferred taxes		(1,724	)		182
Change in operating assets and liabilities:
Accounts and notes receivable		(5,642	)		1,431
Inventories		(5,133	)		12,625
Prepaid expenses and other assets		(189	)		453
Accounts payable and accrued expenses		2,614			(1,159	)
Other		1,108			(350	)
Net cash provided by operating activities
Continuing operations		2,780			17,096
Discontinued operation		—			3,116
Net cash provided by operating activities		2,780			20,212
Investing activities
Investments in property, plant and equipment		(2,001	)		(1,680	)
Purchase of short-term investments		(4,800	)		(3,400	)
Proceeds from sale of short-term investments		4,800			1,000
Net cash used by investing activities
Continuing operations		(2,001	)		(4,080	)
Discontinued operation		—			(2,314	)
Net cash used in investing activities		(2,001	)		(6,394	)
Financing activities
Net short-term borrowings (repayments)		538			(15,058	)
Payments on long-term debt		(1,244	)		(6,141	)
Purchase of treasury stock		(1	)		—
Proceeds from borrowings on long-term debt		—			8,000
Refinancing costs		—			(2,007	)
Net cash (used) provided by financing activities
Continuing operations		(707	)		(15,206	)
Discontinued operation		—			186
Net cash used in financing activities		(707	)		(15,020	)
Effect of foreign exchange rate changes on cash		393			(403	)
Net increase (decrease) in cash		465			(1,605	)
Cash and cash equivalents at beginning of year		402			18,072
Cash and cash equivalents at end of year		867			16,467
Less cash and cash equivalents of discontinued operation at end of year		—			(16,065	)
Cash and cash equivalents of continuing operations at end of year	$	867		$	402
See accompanying notes to consolidated financial statements

(In thousands of dollars)

	Years Ended December 31
	2011			2010
Operating activities
Net (loss) income	$	(1,653	)	$	57,224
Net income of discontinued operation, net of noncontrolling interests (including gain on deconsolidation of $53,565 in 2010)		–			(52,938	)
Net (loss) income from continuing operations		(1,653	)		4,286
Adjustments to reconcile net (loss) income from continuing operations to net cash provided (used) by operating activities:
Depreciation and amortization		4,343			4,494
Provision for doubtful accounts		2,447			2,768
Stock compensation expense		164			198
Deferred taxes		643			(1,724	)
Change in operating assets and liabilities:
Accounts and notes receivable		(917	)		(5,642	)
Inventories		(1,352	)		(5,133	)
Prepaid expenses and other assets		181			(189	)
Accounts payable and accrued expenses		(1,300	)		2,614
Income taxes		(1,095	)		–
Other		(1,998	)		1,108
Net cash (used) provided by operating activities		(537	)		2,780
Investing activities
Investments in property, plant and equipment		(2,569	)		(2,001	)
Purchase of short-term investments		(4,800	)		(4,800	)
Proceeds from sale of short-term investments		4,800			4,800
Net cash used in investing activities		(2,569	)		(2,001	)
Financing activities
Net short-term borrowings		4,402			538
Payments on long-term debt		(1,581	)		(1,244	)
Proceeds from exercise of stock options		2			–
Purchase of treasury stock		–			(1	)
Net cash provided (used) in financing activities		2,823			(707	)
Effect of foreign exchange rate changes on cash		395			393
Net increase in cash		112			465
Cash and cash equivalents at beginning of year		867			402
Cash and cash equivalents of continuing operations at end of year	$	979		$	867

See accompanying notes to consolidated financial statements

~~American Biltrite Inc. and Subsidiaries~~29

~~Consolidated~~American Biltrite ~~Statements~~Inc. ofand ~~Stockholders’ Equity (Deficit)~~Subsidiaries

~~(In~~Consolidated Statements ~~thousands~~ of ~~dollars~~Stockholders’ Equity (Deficit)

	Common Stock		Additional Paid-in Capital		Treasury Stock			Retained Earnings (Deficit)			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity (Deficit) of Controlling Interests			Non- Controlling Interests			Total Equity (Deficit)
Balance at December 31, 2008	$	46	$	19,749	$	(15,132	)	$	1,803		$	(53,250	)	$	(46,784	)	$	835		$	(45,949	)
Comprehensive income (loss)
Net loss from continuing operations									(3,859	)					(3,859	)		(6,737	)		(10,596	)
Net loss from discontinued operations									(8,349	)					(8,349	)		—			(8,349	)
Foreign currency translation adjustments												2,699			2,699			—			2,699
Defined benefit plans adjustment												11,463			11,463			6,487			17,950
Total comprehensive income (loss)															1,954			(250	)		1,704
Stock compensation				201											201			—			201
Effect of Congoleum stock compensation									5						5			4			9
Taxes payable adjustment for noncontrolling interests															—			50			50
Balance at December 31, 2009		46		19,950		(15,132	)		(10,400	)		(39,088	)		(44,624	)		639			(43,985	)
Comprehensive income
Net income from continuing operations									4,231						4,231			55			4,286
Net income from discontinued operations									52,938						52,938			—			52,938
Foreign currency translation adjustments												997			997			—			997
Defined benefit plans adjustment												(719	)		(719	)		—			(719	)
Total comprehensive income															57,447			55			57,502
Stock compensation				198											198			—			198
Purchase of treasury stock, 174 shares, weighted average purchase price of $3.50 per share						(1	)								(1	)		—			(1	)
Taxes payable adjustment for noncontrolling interests																		17			17
K &M distribution																		(98	)		(98	)
Deconsolidation of Congoleum												37,127			37,127			329			37,456
Balance at December 31, 2010	$	46	$	20,148	$	(15,133	)	$	46,769		$	(1,683	)	$	50,147		$	942		$	51,089
See accompanying notes to consolidated financial statements

(In thousands of dollars, except share and per share amounts)

	Common Stock		Additional Paid-in Capital			Treasury Stock			Retained Earnings (Deficit)			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity (Deficit) of Controlling Interests			Non- Controlling Interests			Total Equity (Deficit)

Balance at December 31, 2009	$	46	$	19,950		$	(15,132	)	$	(10,400	)	$	(39,088	)	$	(44,624	)	$	639		$	(43,985	)
Comprehensive income
Net income from continuing operations										4,231						4,231			55			4,286
Net income from discontinued operations										52,938						52,938			-			52,938
Foreign currency translation adjustments													997			997			-			997
Defined benefit plans adjustment													(719	)		(719	)		-			(719	)
Total comprehensive income																57,447			55			57,502
Stock compensation				198												198			-			198
Purchase of treasury stock, 174 shares, weighted average purchase price of $3.50 per share							(1	)								(1	)		-			(1	)
Taxes payable adjustment for noncontrolling interests																			17			17
K&M distribution																			(98	)		(98	)
Deconsolidation of Congoleum													37,127			37,127			329			37,456

Balance at December 31, 2010		46		20,148			(15,133	)		46,769			(1,683	)		50,147			942			51,089
Comprehensive loss
Net loss from continuing operations										(1,654	)					(1,654	)		1			(1,653	)
Foreign currency translation adjustments													(413	)		(413	)		-			(413	)
Defined benefit plans adjustment													(5,259	)		(5,259	)		-			(5,259	)
Total comprehensive loss																(7,326	)		1			(7,325	)
Stock compensation				164												164			-			164
Exercise of stock options (30,300 shares)				(196	)		175									(21	)		-			(21	)

Balance at December 31, 2011	$	46	$	20,116		$	(14,958	)	$	45,115		$	(7,355	)	$	42,964		$	943		$	43,907

~~American~~See ~~Biltrite~~accompanying ~~Inc.~~notes ~~and~~to ~~Subsidiaries~~consolidated financial statements.

~~Notes to Consolidated Financial Statements~~30

~~December~~American ~~31,~~Biltrite ~~2010~~Inc. and Subsidiaries

~~1. Significant~~Notes ~~Accounting~~to ~~Policies~~Consolidated Financial Statements

~~Principles of~~December ~~Consolidation~~31, 2011

~~The consolidated financial statements include the accounts of American Biltrite Inc~~1. ~~and~~Significant ~~its~~Accounting wholly-owned subsidiaries (referred to as “American Biltrite,” “ABI” or the “Company”), as well as entities over which it has voting control. Upon consolidation, intercompany accounts and transactions, including transactions with associated companies that result in intercompany profit, are eliminated.Policies

~~The Company’s former subsidiary Congoleum~~Principles ~~Corporation (“Congoleum”) filed a voluntary petition on December 31, 2003, with the United States Bankruptcy Court for the District~~ of New Jersey (the “Bankruptcy Court”) seeking relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago, and on August 17, 2009, the United States District Court for the District of New Jersey (the “District Court”) withdrew the reference of Congoleum’s Chapter 11 case from the Bankruptcy Court and assumed authority over the proceedings. Congoleum’s plan of reorganization was confirmed on June 7, 2010 and became effective July 1, 2010. By operation of the Congoleum plan of reorganization, upon effectiveness of that plan, ABI’s ownership interests in Congoleum were cancelled. Consequently, the results of reorganized Congoleum are not included in the consolidated results of the Company subsequent to June 30, 2010. In the accompanying consolidated financial statements, the historical results of Congoleum have been reported as a discontinued operation (see Note 14). Congoleum’s historical results through June 30, 2010 included losses (including other comprehensive losses) of $90.7 million in excess of the value of ABI’s investment in Congoleum. The deconsolidation of Congoleum in July 2010 resulted in the elimination from American Biltrite’s consolidated stockholders’ equity of the accumulated deficit attributed to Congoleum, $37.1 million of which was recorded against accumulated other comprehensive income for prior period pension adjustments and $53.6 million was recorded as a gain from deconsolidation in net income of discontinued operation. Net income of the discontinued operation for the year ended December 31, 2010 is comprised of (in thousands):Consolidation

Gain on deconsolidation	$	53,565
Net loss of Congoleum for the six months ended June 30, 2010		(1,140	)
Noncontrolling interest of Congoleum’s net loss		513
Net income of discontinued operation, net of noncontrolling interest	$	52,938

The consolidated financial statements include the accounts of American Biltrite Inc. and its wholly-owned subsidiaries (referred to as “American Biltrite,” “ABI” or the “Company”), as well as entities over which it has voting control. Upon consolidation, intercompany accounts and transactions, including transactions with associated companies that result in intercompany profit, are eliminated.

33The Company’s former subsidiary Congoleum Corporation (“Congoleum”) filed a voluntary petition on December 31, 2003, with the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”) seeking relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago, and on August 17, 2009, the United States District Court for the District of New Jersey (the “District Court”) withdrew the reference of Congoleum’s Chapter 11 case from the Bankruptcy Court and assumed authority over the proceedings. Congoleum’s plan of reorganization was confirmed on June 7, 2010 and became effective July 1, 2010. By operation of the Congoleum plan of reorganization, upon effectiveness of that plan, ABI’s ownership interests in Congoleum were cancelled. Consequently, the results of reorganized Congoleum are not included in the consolidated results of the Company subsequent to June 30, 2010. In the accompanying consolidated financial statements, the historical results of Congoleum have been reported as a discontinued operation (see Note 14). Congoleum’s historical results through June 30, 2010 included losses (including other comprehensive losses) of $90.7 million in excess of the value of ABI’s investment in Congoleum. The deconsolidation of Congoleum in July 2010 resulted in the elimination from American Biltrite’s consolidated stockholders’ equity of the accumulated deficit attributed to Congoleum, $37.1 million of which was recorded against accumulated other comprehensive income for prior period pension adjustments and $53.6 million was recorded as a gain from deconsolidation in net income of discontinued operation. Net income of the discontinued operation for the year ended December 31, 2010 is comprised of (in thousands):

American Biltrite Inc. and Subsidiaries

Gain on deconsolidation	$	53,565
Net loss of Congoleum for the six months ended June 30, 2010		(1,140	)
Noncontrolling interest of Congoleum’s net loss		513

Net income of discontinued operation, net of noncontrolling interest	$	52,938

~~Notes to Consolidated Financial Statements (continued)~~31

1.American ~~Significant~~Biltrite ~~Accounting~~Inc. ~~Policies~~and ~~(continued)~~Subsidiaries

~~Use~~Notes ~~of Estimates~~to ~~and~~Consolidated ~~Critical~~Financial ~~Accounting~~Statements ~~Policies~~(continued)

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities, at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period1. ~~Some~~ ofSignificant ~~the~~Accounting ~~more~~Policies significant estimates include asbestos liabilities, environmental contingencies, valuation of deferred tax assets, and actuarial assumptions for the pension plan and post-retirement benefits. Although the Company believes it uses reasonable and appropriate estimates and assumptions in the preparation of its financial statements and in the application of accounting policies, if business conditions were different, or if the Company used different estimates and assumptions, it is possible that actual results could differ from such estimates.(continued)

~~Concentration~~Use of ~~Credit~~Estimates ~~Risk~~and Critical Accounting Policies

The ~~Company~~preparation ~~performs~~of ~~periodic~~consolidated ~~credit~~financial ~~evaluations~~statements ofin ~~its~~conformity ~~customers’~~with ~~financial~~accounting ~~condition~~principles generally accepted in the United States requires management to make estimates and ~~generally~~assumptions that ~~does~~affect ~~not~~the ~~require~~reported ~~collateral.~~amounts ~~Credit~~of ~~losses~~assets inand ~~previous~~liabilities, ~~years~~and ~~have~~disclosure ~~generally~~of contingent liabilities, ~~been~~at ~~within~~the ~~management’s~~date ~~expectations.~~of ~~None~~the consolidated financial statements and the reported amounts of revenues and expenses during the ~~Company’s~~reporting ~~customers~~period. Some ~~accounted~~of ~~for~~the more ~~than~~significant ~~10%~~estimates include asbestos liabilities, environmental contingencies, valuation of ~~consolidated~~deferred ~~net~~tax ~~sales~~assets, and actuarial assumptions for ~~each~~the ofpension plan and post-retirement benefits. Although the ~~years~~Company ~~2010~~believes it uses reasonable and ~~2009~~appropriate orestimates ~~10%~~and ofassumptions in the ~~Company’s~~preparation ~~consolidated~~of ~~accounts~~its ~~receivable~~financial asstatements and in the application of ~~December~~accounting policies, 31if business conditions were different, ~~2010~~ or ~~2009~~if the Company used different estimates and assumptions, it is possible that actual results could differ from such estimates.

~~Cash,~~Concentration ~~Cash~~of ~~Equivalents~~Credit ~~and Short-Term Investments~~Risk

~~Cash~~The ~~equivalents~~Company ~~represent~~performs ~~highly~~periodic ~~liquid~~credit ~~investments~~evaluations ~~with~~of ~~maturities~~its ofcustomers’ ~~three~~financial ~~months~~condition orand ~~less~~generally atdoes not require collateral. Credit losses in previous years have generally been within management’s expectations. None of the ~~date~~Company’s customers accounted for more than 10% of ~~purchase.~~consolidated net ~~The~~sales ~~carrying~~for ~~value~~each of ~~cash~~the ~~equivalents~~years ~~approximates~~2011 ~~fair~~and ~~value~~2010 or 10% of the Company’s consolidated accounts receivable as of December 31, 2011 or 2010.

~~Periodically~~Cash, ~~the Company invests in U.S. bank~~ ~~certificates~~Cash ofEquivalents ~~deposit~~and ~~(“CD”). Such investments are classified as short~~Short-~~term~~Term investments if the original maturity is greater than three months. If the original maturity of a CD is less than three months, the CD is included in cash. The carrying values of the Company’s CD’s approximate their fair values.Investments

34Cash equivalents represent highly liquid investments with maturities of three months or less at the date of purchase. The carrying value of cash equivalents approximates fair value.

~~American~~Periodically, ~~Biltrite~~the ~~Inc~~Company invests in U.S. ~~and~~bank certificates ~~Subsidiaries~~of deposit (“CD”). Such investments are classified as short-term investments if the original maturity is greater than three months. If the original maturity of a CD is less than three months, the CD is included in cash. The carrying values of the Company’s CD’s approximate their fair values.

~~Notes to Consolidated Financial Statements (continued)~~32

1.American ~~Significant~~Biltrite ~~Accounting~~Inc. ~~Policies~~and ~~(continued)~~Subsidiaries

~~Allowance~~Notes ~~for~~to ~~Doubtful~~Consolidated ~~Accounts~~Financial Statements (continued)

The Company’s allowance for doubtful accounts is determined based on a variety of factors that affect the potential collectibility of the related receivables, including length of time receivables are past due, customer credit ratings, financial stability of customers, specific one-time events and past customer history1. InSignificant ~~addition,~~Accounting inPolicies circumstances where the Company is made aware of a specific customer’s inability to meet its financial obligations, a specific allowance is established. The majority of accounts are individually evaluated on a regular basis and reserves are established as deemed appropriate based on the criteria previously mentioned. The remainder of the reserve is based on management’s estimates and takes into consideration historical trends, market conditions and the composition of the Company’s customer base.(continued)

~~Inventories~~Allowance for Doubtful Accounts

~~Inventories~~The ~~are~~Company’s allowance ~~stated~~for atdoubtful accounts is determined based on a variety of factors that affect the ~~lower~~potential collectability of ~~cost~~the related orreceivables, ~~market.~~including ~~Cost~~length isof ~~determined~~time byreceivables ~~the~~are ~~last-in~~past due, ~~first~~customer credit ratings, financial stability of customers, specific one-~~out~~time ~~(LIFO)~~events ~~method~~and ~~for~~past ~~approximately~~customer ~~47%~~history. ofIn addition, in circumstances where the Company’s ~~domestic~~is ~~inventories. The~~made ~~use~~aware of ~~LIFO~~a ~~results~~specific incustomer’s inability ato ~~better~~meet ~~matching~~its offinancial ~~costs~~obligations, ~~and~~a ~~revenues.~~specific ~~Cost~~allowance is ~~determined~~established. byThe ~~the~~majority ~~first-in,~~of ~~first-out~~accounts ~~(FIFO)~~are ~~method~~individually evaluated ~~for~~on a regular basis and reserves are established as deemed appropriate based on the ~~Company’s~~criteria ~~foreign~~previously ~~inventories~~mentioned. The ~~Company~~remainder of ~~records~~the asreserve ais ~~charge~~based toon ~~cost~~management’s ofestimates ~~products~~and ~~sold~~takes ~~any~~into ~~amounts~~consideration ~~required~~historical totrends, ~~reduce the~~market ~~carrying~~conditions ~~value~~and the composition of ~~inventories~~the toCompany’s ~~net~~customer ~~realizable value~~base.

Inventory costs include expenses that are directly or indirectly incurred in the acquisition and production of merchandise and manufactured products for sale. Expenses include the cost of materials and supplies used in production, direct labor costs and allocated overhead costs such as depreciation, utilities, insurance, employee benefits, and indirect labor.Inventories

~~Property~~Inventories are stated at the lower of cost or market. Cost is determined by the last-in, first-out (“LIFO”) method for approximately ~~Plant~~47% of the Company’s domestic inventories. The use of LIFO results in a better matching of costs and ~~Equipment~~revenues. Cost is determined by the first-in, first-out (“FIFO”) method for the Company’s foreign inventories and the remaining domestic inventory. The Company records as a charge to cost of products sold any amounts required to reduce the carrying value of inventories to net realizable value.

~~Property,~~Inventory ~~plant~~costs ~~and~~include ~~equipment~~expenses that are ~~recorded~~directly ator ~~cost.~~indirectly ~~Expenditures~~incurred ~~for~~in ~~improvements~~the ~~that~~acquisition ~~increase~~and ~~asset~~production ~~values~~of merchandise and ~~extend~~manufactured ~~useful~~products ~~lives~~for ~~are capitalized~~sale. ~~Depreciation,~~Expenses ~~which is~~include ~~determined using~~ the cost ~~straight-line~~of ~~method,~~materials ~~is provided over the estimated useful lives (thirty to forty years for buildings~~ and ~~building~~supplies ~~improvements,~~used ~~ten~~in ~~to fifteen years for~~ production, ~~equipment~~direct ~~and~~labor ~~heavy-duty~~costs ~~vehicles,~~ and ~~three~~allocated tooverhead ~~ten~~costs ~~years~~such ~~for~~as ~~light-duty~~depreciation, utilities, ~~vehicles~~insurance, ~~and~~employee ~~office~~benefits, ~~furnishings~~ and ~~equipment)~~indirect labor.

35Property, Plant and Equipment

~~American~~Property, ~~Biltrite~~plant ~~Inc~~and equipment are recorded at cost. Expenditures for improvements that increase asset values and ~~Subsidiaries~~extend useful lives are capitalized. Depreciation, which is determined using the straight-line method, is provided over the estimated useful lives (thirty to forty years for buildings and building improvements, ten to fifteen years for production equipment and heavy-duty vehicles, and three to ten years for light-duty vehicles and office furnishings and equipment).

~~Notes to Consolidated Financial Statements (continued)~~33

1.American ~~Significant~~Biltrite ~~Accounting~~Inc. ~~Policies~~and ~~(continued)~~Subsidiaries

~~Debt Issuance~~Notes ~~Costs~~to Consolidated Financial Statements (continued)

Costs incurred in connection with the issuance of debt have been capitalized and are being amortized over the term of the related debt agreements. Debt issuance costs at December 31, 2010 and 2009 amounted to $1.1 ~~million~~Significant ~~and~~Accounting ~~$1.7~~Policies ~~million, respectively, net of accumulated amortization of $898 thousand and $299 thousand, respectively, and are included in other noncurrent assets.~~(continued)

~~Impairment~~Debt Issuance ~~of Long-Lived Assets~~Costs

~~The~~Costs ~~Company assesses its long-lived assets~~incurred ~~for~~in ~~impairment~~connection ~~whenever~~with ~~facts and circumstances indicate that~~ the ~~carrying~~issuance ~~amount~~of ~~may~~debt ~~not~~have bebeen ~~fully~~capitalized ~~recoverable.~~and Toare ~~analyze~~being ~~recoverability, it~~amortized ~~projects undiscounted net future cash flows~~ over the ~~remaining~~term ~~life~~ of ~~such~~the ~~assets.~~related Ifdebt ~~these projected cash flows are less than~~agreements. ~~the~~Debt ~~carrying~~issuance ~~amount,~~costs anat ~~impairment~~December ~~would be recognized~~31, ~~resulting~~2011 inand a2010 ~~write-down~~amounted ~~of the assets with a corresponding charge~~ to ~~earnings.~~ ~~The~~$511 ~~impairment~~thousand ~~loss is measured based upon the difference between the carrying amount~~ and ~~the~~$1.1 ~~fair~~million, ~~value~~respectively, net of ~~the assets.~~accumulated ~~The~~amortization ~~Company evaluated the recoverability~~ of ~~its~~$1.5 ~~other~~million ~~long-lived assets~~ and ~~determined~~$898 ~~they~~thousand, ~~were~~respectively, ~~not~~and ~~impaired~~are asincluded ofin ~~December~~other ~~31, 2010~~noncurrent ~~or 2009~~assets.

~~Product~~Impairment ~~Warranties~~of Long-Lived Assets

The Company ~~provides~~assesses ~~product~~its ~~warranties~~long-lived ~~for~~assets ~~specific~~for ~~product~~impairment ~~lines~~whenever facts and ~~accrues~~circumstances ~~for~~indicate ~~estimated~~that the carrying amount may not be fully recoverable. To analyze recoverability, it projects undiscounted net future ~~warranty~~cash ~~cost~~flows inover the ~~period~~remaining inlife ~~which~~of such assets. If these projected cash flows are less than the ~~revenue~~carrying isamount, an impairment would be recognized, resulting in a write-down of the assets with a corresponding charge to earnings. The ~~following table~~impairment ~~sets~~loss ~~forth~~is ~~activity~~measured inbased upon the difference between the carrying amount and the fair value of the assets. The Company’s ~~warranty~~evaluated ~~reserves~~the ~~(in~~recoverability ~~thousands):~~of its other long-lived assets and determined they were not impaired as of December 31, 2011 or 2010.

	2010			2009
Beginning balance	$	896		$	912
Accruals		1,610			876
Charges		(1,446	)		(892	)
Ending balance	$	1,060		$	896

Product Warranties

36The Company provides product warranties for specific product lines and accrues for estimated future warranty cost in the period in which the revenue is recognized. The following table sets forth activity in the Company’s warranty reserves (in thousands):

American Biltrite Inc. and Subsidiaries

	2011			2010

Beginning balance	$	1,060		$	896
Accruals		820			1,610
Charges		(1,138	)		(1,446	)

Ending balance	$	742		$	1,060

~~Notes to Consolidated Financial Statements (continued)~~34

1.American ~~Significant~~Biltrite ~~Accounting~~Inc. ~~Policies~~and ~~(continued)~~Subsidiaries

~~Environmental and~~Notes ~~Product~~to ~~Liabilities~~Consolidated Financial Statements (continued)

~~The Company accrues for costs associated with its environmental claims on an undiscounted basis when it is probable that a liability has been incurred and the amount can be reasonably estimated~~1. ~~The~~Significant ~~most~~Accounting ~~likely~~Policies cost to be incurred is accrued based on an evaluation of currently available facts with respect to each individual site, including the extent of clean-up activities to be performed, the methods employed in the clean-up activities, the Company’s relative share in costs at sites where other parties are involved, existing technology, current laws and regulations and prior remediation experience. Where no amount within a range of estimates is more likely to occur than another, the minimum is accrued. For sites with multiple potentially responsible parties, the Company considers its likely proportionate share of the anticipated remediation costs and the ability of the other parties to fulfill their obligations in establishing a provision for those costs. When future liabilities have been recorded for a potential liability, a determination is made as to whether such liabilities are reimbursable by insurance coverage or other source of reimbursement, and a receivable is recorded related to the expected recovery provided such recovery is undisputed and deemed highly probable. Legal fees associated with these claims are accrued when the Company deems that their occurrence is probable and the fees are reasonably estimable. See Notes 4, 6 and 8.(continued)

~~Asbestos Liability~~ Environmental and ~~Insurance~~Product ~~Receivable~~Liabilities

The Company isaccrues afor ~~party~~costs toassociated ~~a number of lawsuits~~with ~~stemming~~its ~~from~~environmental ~~its~~claims ~~manufacture~~on ofan ~~asbestos-containing~~undiscounted ~~products~~basis ~~years~~when ~~ago.~~it ~~The~~is ~~Company~~probable ~~records~~that a liability has been incurred and athe ~~corresponding~~amount ~~insurance~~can be ~~receivable~~reasonably ~~based~~estimated. onThe ~~its~~most ~~estimates~~likely ofcost ~~the~~to ~~future~~be ~~costs~~incurred ~~and~~is ~~related~~accrued ~~insurance~~based ~~recoveries~~on toan ~~settle~~evaluation ~~asbestos~~of ~~litigation.~~currently Inavailable ~~estimating~~facts with respect ~~the~~to ~~Company’s~~each ~~asbestos-related~~individual ~~exposures~~site, including the ~~Company~~extent ~~analyzes~~of ~~and~~clean-up ~~considers~~activities to be performed, the ~~possibility~~methods ofemployed ~~any~~in ~~uncertainties~~the ~~including~~clean-up activities, the ~~anticipated~~Company’s ~~costs~~relative toshare ~~settle~~in ~~claims,~~costs ~~the~~at ~~claims~~sites ~~dismissal~~where ~~rate,~~other ~~the~~parties ~~cost~~are toinvolved, ~~litigate~~existing ~~claims~~technology, ~~the~~current ~~number~~laws ofand ~~claims~~regulations and ~~expected~~prior ~~to be~~remediation ~~received,~~experience. ~~the~~Where ~~applicability~~no ~~and~~amount ~~allocation~~within ofa ~~insurance~~range ~~coverage~~of toestimates ~~these~~is ~~costs,~~more ~~and~~likely ~~the~~to ~~solvency~~occur ofthan ~~insurance~~another, ~~carriers.~~the ~~The~~minimum ~~same~~is ~~factors~~accrued. ~~that~~For ~~affect~~sites ~~developing~~with ~~forecasts~~multiple ofpotentially ~~potential~~responsible ~~indemnity~~parties, ~~costs~~the ~~for~~Company ~~asbestos-related~~considers ~~liabilities~~its ~~also~~likely ~~affect~~proportionate ~~estimates~~ share of the anticipated ~~total~~remediation ~~amount~~costs and the ability of ~~insurance~~the ~~that~~other isparties ~~probable~~to offulfill ~~recovery,~~their asobligations doin establishing a ~~number~~provision offor those ~~additional factors~~costs. ~~These~~When ~~additional~~future ~~factors~~liabilities ~~include the~~have ~~financial~~been ~~viability~~recorded offor ~~the~~a ~~insurance~~potential ~~companies~~liability, ~~the~~a ~~method~~determination inis ~~which~~made ~~losses~~as ~~will~~to bewhether ~~allocated~~such toliabilities are ~~the~~reimbursable ~~various~~by insurance ~~policies and~~coverage ~~the~~or ~~years~~other ~~covered~~source byof ~~those policies~~reimbursement, ~~how legal~~ and ~~other~~a ~~loss~~receivable ~~handling~~is ~~costs~~recorded ~~will~~related beto ~~covered by~~ the ~~insurance~~expected ~~policies, and~~recovery ~~interpretation~~provided ofsuch ~~the~~recovery ~~effect~~is onundisputed ~~coverage~~and ofdeemed ~~various~~highly ~~policy~~probable. ~~terms~~Legal ~~and~~fees ~~limits~~associated ~~and~~with ~~their~~these ~~interrelationships.~~claims ~~The~~are ~~Company~~accrued ~~does~~when ~~not~~the Company ~~include~~deems ~~legal~~that ~~defense~~their ~~costs~~occurrence inis ~~its~~probable ~~estimates~~and ofthe ~~future~~fees ~~costs~~are ~~and~~reasonably ~~related~~estimable. ~~insurance~~See ~~recoveries~~Notes to4, ~~settle~~6 ~~asbestos~~and ~~litigation~~8.

~~Accounting~~Asbestos ~~for~~Liability ~~asbestos-related costs includes significant assumptions~~ and ~~estimates,~~Insurance ~~and actual results could differ materially from the estimates recorded.~~Receivable

37The Company is a party to a number of lawsuits stemming from its manufacture of asbestos-containing products years ago. The Company records a liability and a corresponding insurance receivable based on its estimates of the future costs and related insurance recoveries to settle asbestos litigation. In estimating the Company’s asbestos-related exposures, the Company analyzes and considers the possibility of any uncertainties including the anticipated costs to settle claims, the claims dismissal rate, the cost to litigate claims, the number of claims expected to be received, the applicability and allocation of insurance coverage to these costs, and the solvency of insurance carriers. The same factors that affect developing forecasts of potential indemnity costs for asbestos-related liabilities also affect estimates of the total amount of insurance that is probable of recovery, as do a number of additional factors. These additional factors include the financial viability of the insurance companies, the method in which losses will be allocated to the various insurance policies and the years covered by those policies, how legal and other loss handling costs will be covered by the insurance policies, and interpretation of the effect on coverage of various policy terms and limits and their interrelationships. The Company does not include legal defense costs in its estimates of future costs and related insurance recoveries to settle asbestos litigation.

~~American~~Accounting ~~Biltrite~~for ~~Inc.~~asbestos-related costs includes significant assumptions and ~~Subsidiaries~~estimates, and actual results could differ materially from the estimates recorded.

~~Notes to Consolidated Financial Statements (continued)~~35

1.American ~~Significant~~Biltrite ~~Accounting~~Inc. ~~Policies~~and ~~(continued)~~Subsidiaries

~~Noncontrolling~~Notes ~~Interests~~to Consolidated Financial Statements (continued)

~~On January~~ 1,. ~~2009,~~Significant ~~the Company adopted new accounting standards issued by the Financial~~ Accounting ~~Standards~~Policies ~~Board~~ (~~“FASB”~~continued) for the accounting and reporting of noncontrolling interests. The new accounting guidance requires that noncontrolling interests be presented in the consolidated balance sheets within equity, but separate from the Company’s stockholders’ equity, and that the amount of consolidated net income (loss) attributable to American Biltrite Inc. and to the noncontrolling interests be clearly identified and presented in the consolidated statement of operations. Any losses in excess of the noncontrolling interests’ equity interests will continue to be allocated to the noncontrolling interests. Purchases or sales of equity interests that do not result in a change of control will be accounted for as equity transactions. Upon a sale of equity interests that results in a loss of control of a previously controlling interest, the interest sold, as well as any interest retained, will be measured at fair value, with the gain or loss recognized in earnings.

InNoncontrolling March 2010, in accordance with its partnership agreement, the Company’s majority-owned (94.5%) subsidiary K&M Associates L.P. (“K&M”) made a $1.8 million distribution to its partners. The amount of the distribution made to the minority partner of K&M was $98 thousand (5.5%), which reduced noncontrolling interests. On August 23, 2010, the Company acquired the 5.5% minority interest in K&M in a non-cash transaction. The Company recognized $30 thousand of income attributable to non-controlling interests in K&M, net of tax, for the eight months ended August 28, 2010.Interests

AtIn ~~December~~March ~~31,~~ 2010, ~~the~~in ~~non-controlling~~accordance ~~interest recorded~~with onits partnership agreement, the Company’s ~~balance~~majority-owned ~~sheet~~(94.5%) ~~represents~~subsidiary K&M Associates L.P. (“K&M”) made a $1.8 million distribution to its partners. The amount of the 37distribution made to the minority partner of K&M was $98 thousand (5.5%), ~~non-controlling~~which reduced ~~interest~~noncontrolling ofinterests. ~~Tullahoma~~On ~~Properties~~August ~~LLC~~23, 2010, the Company acquired the 5.5% minority interest in K&M in a non-~~operating~~cash ~~company~~transaction. ~~that~~The ~~owns~~Company arecognized ~~parcel~~$30 thousand of ~~land~~income attributable to non-controlling interests in ~~Tullahoma~~K&M, ~~Tennessee~~net of tax, for the eight months ended August 28, 2010.

~~Revenue~~At ~~Recognition~~December 31, 2011, the non-controlling interest recorded on the Company’s balance sheet represents the 37.5% non-controlling interest of Tullahoma Properties LLC, a non-operating company that owns a parcel of land in Tullahoma, Tennessee.

Revenue is recognized when products are shipped and title has passed to the customer. Net sales are comprised of the total sales billed during the period less the sales value of estimated returns and sales incentives, which consist primarily of trade discounts and customers’ allowances. The Company defers recognition of revenue for its estimate of potential sales returns under right-of-return agreements with its customers until the right-of-return period lapses.Recognition

38Revenue is recognized when products are shipped and title has passed to the customer. Net sales are comprised of the total sales billed during the period less the sales value of estimated returns and sales incentives, which consist primarily of trade discounts and customers’ allowances. The Company defers recognition of revenue for its estimate of potential sales returns under right-of-return agreements with its customers until the right-of-return period lapses.

~~American~~Selling, ~~Biltrite~~General ~~Inc.~~ and ~~Subsidiaries~~Administrative Expenses

~~Notes~~Selling, general and administrative expenses are charged to ~~Consolidated~~income ~~Financial~~as ~~Statements~~incurred. Expenses incurred for promoting and selling products are classified as selling expenses and include such items as advertising, sales commissions and travel. Advertising expense (~~continued~~including cooperative advertising) amounted to $1.3 million and $1.2 million for 2011 and 2010, respectively. General and administrative expenses include such items as officers’ salaries, office supplies, insurance and office rental. In addition, general and administrative expenses include other operating items such as provision for doubtful accounts, professional (accounting and legal) fees, and environmental remediation costs. The Company also records shipping, handling, purchasing and finished goods inspection costs in general and administrative expenses. Shipping and handling costs for the years ended December 31, 2011 and 2010 were $5.8 million and $5.1 million, respectively. Purchasing and finished goods inspection costs were $1.0 million and $918 thousand for 2011 and 2010, respectively.

~~1. Significant Accounting Policies (continued)~~36

~~Selling,~~American ~~General~~Biltrite Inc. and ~~Administrative Expenses~~Subsidiaries

~~Selling,~~Notes ~~general and administrative expenses are charged~~ to ~~income~~Consolidated asFinancial ~~incurred.~~Statements ~~Expenses incurred for promoting and selling products are classified as selling expenses and include such items as advertising, sales commissions and travel. Advertising expense~~ (~~including cooperative advertising~~continued) amounted to $1.2 million and $1.1 million for 2010 and 2009, respectively. General and administrative expenses include such items as officers’ salaries, office supplies, insurance and office rental. In addition, general and administrative expenses include other operating items such as provision for doubtful accounts, professional (accounting and legal) fees, and environmental remediation costs. The Company also records shipping, handling, purchasing and finished goods inspection costs in general and administrative expenses. Shipping and handling costs for the years ended December 31, 2010 and 2009 were $5.1 million and $4.2 million, respectively. Purchasing and finished goods inspection costs were $918 thousand and $944 thousand for 2010 and 2009, respectively.

~~Income~~1. ~~Taxes~~Significant Accounting Policies (continued)

~~The~~Income Company recognizes deferred income taxes based on the expected future tax consequences of differences between the financial statement basis and the tax basis of assets and liabilities, calculated using enacted tax rates in effect for the year in which the differences are expected to be reflected in the tax return.Taxes

The Company ~~reduces~~recognizes ~~its~~ deferred ~~tax~~income ~~assets~~taxes ~~by a valuation allowance if,~~ based ~~upon~~on the ~~weight~~expected offuture ~~available~~tax ~~evidence,~~consequences itof isdifferences ~~more~~between ~~likely~~the ~~than~~financial ~~not~~statement ~~that~~basis ~~some~~and ~~portion~~the ortax ~~all~~basis of ~~the~~ ~~deferred tax~~ assets and ~~will not be realized. Relevant evidence~~liabilities, ~~both~~calculated ~~positive~~using ~~and~~enacted ~~negative,~~tax isrates ~~considered~~ in ~~determining~~effect ~~the need~~ for athe ~~valuation~~year ~~allowance.~~in ~~Information~~which ~~evaluated includes~~ the ~~Company’s~~differences ~~financial~~are ~~position~~expected ~~and~~to ~~results~~be ~~of operations for~~reflected in the ~~current~~tax ~~and preceding years as well as an evaluation of currently available information about future years~~return.

The Company reduces ~~operates~~its ~~within~~deferred ~~multiple~~tax ~~taxing jurisdictions~~assets ~~and~~by ~~could~~a bevaluation ~~subject~~allowance toif, ~~audit~~based inupon ~~these~~the ~~jurisdictions.~~weight ~~These~~of ~~audits~~available ~~can~~evidence, ~~involve~~it ~~complex~~is ~~issues,~~more ~~which~~likely ~~may require~~than annot ~~extended~~that ~~period~~some portion or all of ~~time~~the todeferred ~~resolve~~tax assets will not be realized. Relevant evidence, both positive and ~~may~~negative, ~~cover~~is considered ~~multiple~~in ~~years~~determining the need for a valuation allowance. InInformation evaluated includes the Company’s ~~opinion,~~financial ~~adequate~~position and ~~provisions~~results ~~for~~of ~~income taxes~~operations ~~have~~for ~~been~~the ~~made~~current ~~for~~and ~~all~~preceding years ~~subject~~as towell ~~audit~~as an evaluation of currently available information about future years.

The Company operates ~~recognizes~~within ~~any~~multiple ~~interest~~taxing jurisdictions and ~~penalties~~could be subject to audit in these jurisdictions. These audits can involve complex asissues, awhich ~~component~~may require an extended period of time to resolve and may cover multiple years. In the Company’s opinion, adequate provisions for income ~~tax~~taxes ~~expense~~have been made for all years subject to audit.

39The Company recognizes any interest and penalties as a component of income tax expense.

~~American~~Stock-Based ~~Biltrite Inc. and Subsidiaries~~Compensation

~~Notes~~The Company uses the modified prospective method under the accounting rules for stock-based compensation. Share-based compensation cost is measured at the grant date based on the calculated fair value of the award. The expense is recognized over the employees’ requisite service period, generally the vesting period of the award. The accounting rules also require the related excess tax benefit received upon exercise of stock options or vesting of restricted stock, if any, to ~~Consolidated~~be ~~Financial~~reflected ~~Statements~~in ~~(continued)~~the statement of cash flows as a financing activity rather than an operating activity.

1The Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards. ~~Significant~~The ~~Accounting~~use ~~Policies~~of ~~(continued)~~a Black-Scholes option pricing model requires the input of assumptions determined by management of the Company at the measurement date. These assumptions include the risk-free interest rate, expected dividend yield, volatility factor of the expected market price of the Company’s common stock and the expected life of stock option grants.

~~Stock-Based~~Research and ~~Compensation~~Development Costs

~~The~~Expenditures ~~Company~~relating ~~uses~~to the ~~modified~~development ~~prospective method~~of ~~under~~new ~~the~~products ~~accounting~~are ~~rules~~charged ~~for~~to ~~stock-based~~operations ~~compensation.~~as ~~Share-based~~incurred ~~compensation~~and ~~cost~~amounted isto ~~measured~~$2.0 atmillion ~~the~~and ~~grant date based on the calculated fair value of the award~~$1.7 ~~The~~million ~~expense~~for ~~is recognized over~~ the ~~employees’~~years ~~requisite~~ended ~~service~~December ~~period~~31, ~~generally the~~ ~~vesting~~2011 ~~period~~and ~~of the award. The accounting rules also require the related excess tax benefit received upon exercise of stock options or vesting of restricted stock~~2010, ~~if any, to be reflected in the statement of cash flows as a financing activity rather than an operating activity~~respectively.

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards. The use of a Black-Scholes option pricing model requires the input of assumptions determined by management of the Company at the measurement date. These assumptions include the risk-free interest rate, expected dividend yield, volatility factor of the expected market price of the Company’s common stock and the expected life of stock option grants.37

~~Research and~~American ~~Development~~Biltrite ~~Costs~~Inc. and Subsidiaries

~~Expenditures~~Notes ~~relating~~ to ~~the~~Consolidated ~~development~~Financial ~~of new~~Statements ~~products are charged to operations as incurred and amounted to $1.7 million for each of the years ended December 31, 2010 and 2009.~~(continued)

~~Foreign~~1. ~~Currency~~Significant ~~Translation~~Accounting Policies (continued)

~~The~~Foreign ~~functional~~Currency currency for the Company’s foreign operations is the applicable local currency. Balance sheet accounts of foreign subsidiaries are translated at the current exchange rate, and income statement items are translated at the average exchange rate for the period; resulting translation adjustments are made directly to accumulated other comprehensive income (loss) in stockholders’ equity. Realized exchange gains and losses (immaterial in 2010 and 2009) are included in current operations.Translation

~~Issuances~~The functional currency for the Company’s foreign operations is the applicable local currency. Balance sheet accounts of ~~Stock~~foreign bysubsidiaries ~~Subsidiaries~~are translated at the current exchange rate, and income statement items are translated at the average exchange rate for the period; resulting translation adjustments are made directly to accumulated other comprehensive income (loss) in stockholders’ equity. Realized exchange gains and losses (immaterial in 2011 and 2010) are included in current operations.

~~The~~Issuances ~~Company accounts for issuances~~ of ~~stock~~ Stock by ~~its subsidiaries as capital transactions.~~Subsidiaries

40The Company accounts for issuances of stock by its subsidiaries as capital transactions.

~~American~~Earnings ~~Biltrite~~Per ~~Inc. and Subsidiaries~~Share

~~Notes~~Basic toearnings ~~Consolidated~~per ~~Financial~~share ~~Statements~~have been computed based on the weighted-average number of common shares outstanding during the period. Diluted earnings per share have been computed based upon the weighted-average number of common shares outstanding during the year, adjusted for the dilutive effect of shares issuable upon the exercise of stock options (~~continued~~common stock equivalent) unless their inclusion would be antidilutive. In calculating diluted earnings per share, the dilutive effect of a stock option is computed using the average market price for the period.

12. ~~Significant Accounting Policies (continued)~~Inventories

~~Earnings~~Inventories at ~~Per~~December ~~Share~~31 consisted of the following (in thousands):

Basic earnings per share have been computed based on the weighted-average number of common shares outstanding during the period. Diluted earnings per share have been computed based upon the weighted-average number of common shares outstanding during the year, adjusted for the dilutive effect of shares issuable upon the exercise of stock options (common stock equivalent) unless their inclusion would be antidilutive. In calculating diluted earnings per share, the dilutive effect of a stock option is computed using the average market price for the period.

	2011		2010

Finished goods	$	20,013	$	19,202
Consigned inventory		4,646		5,058
Work-in-process		8,216		8,416
Raw materials and supplies		6,585		5,930

	$	39,460	$	38,606

~~Subsequent~~At ~~Events~~December 31, 2011, domestic inventories determined by the LIFO inventory method amounted to $8.3 million ($8.0 million at December 31, 2010). If the FIFO inventory method, which approximates replacement cost, had been used for these inventories, they would have been $4.0 million and $3.3 million higher at December 31, 2011 and 2010, respectively.

In May 2009, the FASB issued new accounting guidance that establishes general standards of accounting for, and disclosure of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The new accounting guidance was effective for interim and annual periods ending after June 15, 2009. In particular, the new accounting guidance established (i) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. There were no events subsequent to December 31, 2010 that required disclosure under the new accounting standards.38

41American Biltrite Inc. and Subsidiaries

~~American~~Notes ~~Biltrite~~to ~~Inc.~~Consolidated ~~and~~Financial ~~Subsidiaries~~Statements (continued)

~~Notes~~3. toProperty, ~~Consolidated~~Plant ~~Financial~~and ~~Statements (continued)~~Equipment

2.A ~~Inventories~~summary of the major components of property, plant and equipment at December 31 is as follows (in thousands):

Inventories at December 31 consisted of the following (in thousands):

	2011		2010

Land and improvements	$	2,734	$	2,596
Buildings		30,771		31,017
Machinery and equipment		99,506		98,941
Construction-in-progress		941		1,414
		133,952		133,968
Less accumulated depreciation		105,450		104,077

	$	28,502	$	29,891

	2010		2009
Finished goods	$	21,745	$	19,339
Consigned inventory		2,515		1,257
Work-in-process		8,416		7,574
Raw materials and supplies		5,930		4,800
	$	38,606	$	32,970

Depreciation expense amounted to $3.7 million and $3.8 million for the years 2011 and 2010, respectively.

~~At December 31, 2010, domestic inventories determined by the LIFO inventory method amounted to $8~~4.0 ~~million~~Accrued ($6.5 million at December 31, 2009). If the FIFO inventory method, which approximates replacement cost, had been used for these inventories, they would have been $3.3 million and $2.6 million higher at December 31, 2010 and 2009, respectively. During 2009, certain inventory quantities were reduced, which resulted in liquidations of LIFO inventory layers. The liquidations resulted in lower cost of sales of $287 thousand for 2009.Expenses

3.Accrued ~~Property,~~expenses ~~Plant~~at ~~and~~December ~~Equipment~~31 consisted of the following (in thousands):

A summary of the major components of property, plant and equipment at December 31 is as follows (in thousands):

	2011		2010

Accrued advertising and sales promotions	$	3,956	$	4,995
Employee compensation and related benefits		4,633		4,906
Environmental liabilities		869		982
Royalties		756		1,133
Income taxes		104		805
Professional fees		1,038		710
Other		2,974		3,333

	$	14,330	$	16,864

	2010		2009
Land and improvements	$	2,596	$	2,596
Buildings		31,017		30,557
Machinery and equipment		98,941		96,815
Construction-in-progress		1,414		1,056
		133,968		131,024
Less accumulated depreciation		104,077		99,733
	$	29,891	$	31,291

~~Depreciation~~American ~~expense~~Biltrite ~~amounted to $3~~Inc.8 ~~million for each of the years 2010~~ and ~~2009.~~Subsidiaries

42Notes to Consolidated Financial Statements (continued)

~~American Biltrite Inc~~5. ~~and~~Financing ~~Subsidiaries~~Arrangements

~~Notes~~Long-term todebt ~~Consolidated~~and ~~Financial~~notes ~~Statements~~payable under revolving credit facilities at December 31 were as follows (~~continued~~in thousands):

4. Accrued Expenses

	2011		2010

Notes payable (current)	$	8,995	$	4,639

Term loan	$	4,777	$	6,111
Other notes		980		1,227
Total term debt		5,757		7,338
Less current portion		1,458		1,487

Non-current term debt	$	4,299	$	5,851

~~Accrued~~ABI’s ~~expenses~~primary atsources ~~December~~of 31borrowings ~~consisted~~are the ofrevolving credit facility (the ~~following~~“Revolver”) and the term loan (in“Term Loan”) it has with Wachovia Bank, ~~thousands~~National Association (“Wachovia”): pursuant to a loan and security agreement (the “Credit Agreement”). The Credit Agreement was entered into on June 30, 2009, and initial borrowings on the Credit Agreement were used to pay off borrowings from another financial institution and to pay fees and expenses in connection with the refinancing.

	2010		2009
Accrued advertising and sales promotions	$	4,995	$	5,137
Employee compensation and related benefits		4,906		4,326
Environmental liabilities		982		1,118
Royalties		1,133		1,079
Income taxes		805		72
Professional fees		710		850
Other		3,333		3,465
	$	16,864	$	16,047

The Credit Agreement provides ABI and its subsidiaries with (i) a $30.0 million commitment under the Revolver (including a $12 million Canadian revolving credit facility sublimit) and (ii) an $8.0 million Term Loan. The Credit Agreement also provides letter of credit facilities with availability of up to $6.0 million (including a $3.0 million Canadian letters of credit facility sublimit) subject to availability under the Revolver. The maximum amount available for revolving debt borrowings is reduced to the amount of the borrowing base if that amount is lower. The borrowing base is based upon eligible assets of the Company, including accounts receivables and inventory. The Company’s obligations under the Credit Agreement are secured by assets of the Company and its subsidiaries. At December 31, 2011, the Company had $9.0 million and $4.8 million outstanding under the Revolver and Term Loan, respectively, and $11.1 million of additional unused borrowing capacity available under the Revolver. The Term Loan principal is payable in 72 monthly installments of $111 thousand beginning August 1, 2009 and ending on July 1, 2015. All indebtedness under the Credit Agreement, other than the Term Loan, matures on June 30, 2015.

~~5. Financing Arrangements~~40

~~Long-term~~American ~~debt~~Biltrite Inc. and ~~notes payable under revolving credit facilities at December 31 were as follows (in thousands):~~Subsidiaries

	2010		2009
Notes payable (current)	$	4,639	$	4,051
Term loan	$	6,111	$	7,444
Other notes		1,227		1,138
Total term debt		7,338		8,582
Less current portion		1,487		1,448
Non-current term debt	$	5,851	$	7,134

Notes to Consolidated Financial Statements (continued)

~~American Biltrite Inc~~5.’s ~~primary~~Financing ~~sources of~~Arrangements ~~borrowings are the revolving credit facility~~ (~~the “Revolver”~~continued) and the term loan (“Term Loan”) it has with Wachovia Bank, National Association (“Wachovia”) pursuant to a loan and security agreement (the “Credit Agreement”). The Credit Agreement was entered into on June 30, 2009, and initial borrowings on the Credit Agreement were used to pay off borrowings from another financial institution and to pay fees and expenses in connection with the refinancing.

43Interest is payable monthly on borrowings under the Credit Agreement at rates based on a base interest rate plus an applicable margin for each type of loan, which varies depending on whether the loan is based on U.S., Canadian, or Eurodollar rate loans and which ranges from an applicable rate of two hundred basis points over U.S. and Canadian base rates to four hundred basis points over Eurodollar base rates for revolving debt loans and three hundred basis points over U.S. base rates and five hundred basis points over Eurodollar base rates for the Term Loan. The Credit Agreement charges the Company a monthly unused borrowing line fee, at a rate equal to five-eighths of one percent (0.625%) per annum. In addition, the Credit Agreement imposes a monthly letter of credit fee equal to four percent (4%) per annum for unused letter of credit availability. Pursuant to an amendment and extension of the Credit Agreement in February 2012, the interest rate on borrowings, the unused line fee, and letter of credit fee are reduced for periods after June 30, 2012.

~~American~~Pursuant ~~Biltrite~~to ~~Inc.~~the Credit Agreement, payments on the Company’s accounts receivable are deposited in accounts assigned by the Company and ~~Subsidiaries~~the other borrowers to Wachovia and the funds in that account may be used by Wachovia to pay down outstanding borrowings under the Credit Agreement.

~~Notes~~The Credit Agreement contains customary bank covenants, including limitations on incurrence of debt and liens or other encumbrances on assets or properties, sale of assets, making of loans or investments, including paying dividends and redemptions of capital stock, the formation or acquisition of subsidiaries and transactions with affiliates. The Credit Agreement requires the Company and the other borrowers and the guarantors to ~~Consolidated~~maintain, on ~~Financial~~a ~~Statements~~consolidated ~~(continued)~~basis, a minimum fixed charge coverage ratio of 1.0:1.0. Effective June 30, 2012, the Company’s obligation to meet the minimum fixed charge coverage ratio would not apply for any monthly test period during which the Company’s unused available credit under the Credit Agreement does not fall below $3.0 million at any time or below $5.0 million for more than three consecutive days. Prior to June 30, 2012, the Company’s unused available credit must not fall below $6.0 million.

5The Company currently anticipates it will be able to comply with these covenants. ~~Financing~~However, ~~Arrangements~~the ~~(continued)~~Company had to receive covenant waivers on several occasions under its prior credit agreement or enter amendments to that agreement to address failures to satisfy covenants under that prior credit agreement, and it is possible that, in the future, the Company may need to obtain waivers for failures to satisfy its covenants under the Credit Agreement or enter amendments to the Credit Agreement to address any such failures or obtain replacement financing as a result. There can be no assurance the Company would be successful in obtaining any such waiver, entering any such amendment or obtaining any such replacement financing.

The Credit Agreement provides American Biltrite Inc. and its subsidiaries with (i) a $30.0 million commitment under the Revolver (including a $12 million Canadian revolving credit facility sublimit) and (ii) an $8.0 million Term Loan. The Credit Agreement also provides letter of credit facilities with availability of up to $6.0 million (including a $3 million Canadian letter of credit facility sublimit) subject to availability under the Revolver. The Revolver expires on June 30, 2012. The Term Loan principal is payable in 72 monthly installments of $111 thousand beginning August 1, 2009 and ending on July 1, 2015. The maximum amount available for revolving debt borrowings is reduced to the amount of the borrowing base if that amount is lower. The borrowing base is based upon eligible assets of the Company, including accounts receivables and inventory. The Company’s obligations under the Credit Agreement are secured by assets of the Company and its subsidiaries. At December 31, 2010, the Company had $4.6 million and $6.1 million outstanding under the Revolver and Term Loan, respectively, and $13.1 million of additional unused borrowing capacity available under the Revolver.41

~~Interest~~American isBiltrite payable monthly on borrowings under the Credit Agreement at rates based on a base interest rate plus an applicable margin for each type of loan, which varies depending on whether the loan is based on UInc.~~S.,~~ ~~Canadian, or Eurodollar rate loans~~ and which ranges from an applicable rate of two hundred basis points over U.S. and Canadian base rates to four hundred basis points over Eurodollar base rates for revolving debt loans and three hundred basis points over U.S. base rates and five hundred basis points over Eurodollar base rates for the Term Loan. The Credit Agreement charges the Company a monthly unused borrowing line fee, at a rate equal to five-eighths of one percent (0.625%) per annum. In addition, the Credit Agreement imposes a monthly letter of credit fee equal to four percent (4%) per annum for unused letter of credit availability. At December 31, 2010 and 2009, the weighted average interest rate for the Company’s notes payable was 4.79% and 4.76%, respectively, and the weighted average interest rate on the Term Loan was 5.36% and 6.25%, respectively.Subsidiaries

~~The~~Notes Credit Agreement contains customary bank covenants, including limitations on incurrence of debt and liens or other encumbrances on assets or properties, sale of assets, making of loans or investments, including paying dividends and redemptions of capital stock, the formation or acquisition of subsidiaries and transactions with affiliates. The Credit Agreement requires the Company and the other borrowers and the guarantors to ~~maintain, on~~Consolidated aFinancial ~~consolidated~~Statements basis, a minimum fixed charge coverage ratio of 1.0:1.0. The Credit Agreement also requires that the Company and the other borrowers and the guarantors to maintain, on a consolidated basis, a minimum amount of earnings before interest, taxes, depreciation, and amortization, as determined under the Credit Agreement. The Company’s obligation to meet the minimum fixed charge coverage ratio and earnings before interest, taxes, depreciation, and amortization covenants would not apply for any monthly test period during which the Company’s unused available credit under the Credit Agreement was at least $6 million for 30 consecutive days.(continued)

445. Financing Arrangements (continued)

~~American~~Any ~~Biltrite~~waivers, ~~Inc~~amendments and/or replacement financing, if obtained, could result in significant cost to the Company. If an event of default under the Credit Agreement were to occur, the lenders could cease to make borrowings available under the Revolver and ~~Subsidiaries~~require the Company to repay all amounts outstanding under the Credit Agreement. If the Company were unable to repay those amounts due, the lenders could exercise their rights over the collateral, which would likely have a material adverse effect on the Company’s business, results of operations or financial condition.

Other Notes ~~to Consolidated Financial Statements (continued)~~

5In 1998, the Company obtained a loan from a local bank in connection with the acquisition of a building in Singapore. ~~Financing~~The ~~Arrangements~~loan was for 2.7 million Singapore dollars (~~continued~~US $1.5 million at the foreign currency exchange rate in effect when the loan was obtained). The loan, which is secured by a mortgage, is payable in equal installments through 2018. The interest rate is 4.5%, and the loan is secured by the property acquired with the proceeds of the loan.

In March 2010, the Company and Wachovia entered into an amendment of the Credit Agreement. The amendment reduced the minimum required levels of earnings before interest, taxes, depreciation, and amortization under the Credit Agreement, and further provided that meeting such minimums would not be required for any monthly test period during which the Company’s unused available credit under the Credit Agreement was at least $6 million on every day for 30 consecutive days. The Company paid a fee of $30 thousand to Wachovia in connection with this amendment.Interest

~~The~~Interest ~~Company~~paid ~~currently~~on ~~anticipates~~all itoutstanding ~~will~~debt beamounted ~~able~~ to ~~comply~~$839 ~~with~~thousand ~~these~~and ~~covenants~~$926 asthousand ~~revised~~for by2011 the recent amendment. However, the Company had to receive covenant waivers on several occasions under its prior credit agreement or enter amendments to that agreement to address failures to satisfy covenants under that prior credit agreement, and ~~it is possible that~~2010, ~~in the future, the Company may need to obtain waivers for failures to satisfy its covenants under the~~ respectively.

~~Credit~~Future Agreement or enter amendments to the Credit Agreement to address any such failures or obtain replacement financing as a result. There can be no assurance the Company would be successful in obtaining any such waiver, entering any such amendment or obtaining any such replacement financing.Payments

~~Any~~Principal ~~waivers,~~payments ~~amendments~~on ~~and/or replacement financing, if obtained, could result in significant cost to~~ the Company.’s ~~If an event of default under the Credit Agreement were~~long-term todebt ~~occur,~~obligations the lenders could cease to make borrowings available under the Revolver and require the Company to repay all amounts outstanding under the Credit Agreement. If the Company were unable to repay those amounts due, ~~the~~in ~~lenders~~each ~~could~~of ~~have their rights over~~ the ~~collateral~~next ~~exercised,~~five ~~which~~years ~~would~~are ~~likely~~as ~~have~~follows a(in ~~material adverse effect on the Company’s business, results of operations or financial condition.~~thousands):

On June 30, 2009, the Company also entered into accounts receivable financing agreements (the “FGI Financing Agreements”) with Faunus Group International (“FGI”). The FGI Financing Agreements were intended to provide up to a maximum amount outstanding at any time of $4.0 million in net amounts funded based upon an 80% advance rate. Fees under the FGI Financing Agreements included a monthly collateral management fee equal to 0.66% of the average monthly balance of accounts purchased by FGI as well as interest on the daily net funds employed at a rate equal to the greater of (i) 7.0% or (ii) 2.5% above FGI’s prime rate, and were subject to certain minimum monthly amounts. ABI’s ability to borrow funds under the FGI Financing Agreements during 2009 was less than anticipated; at December 31, 2009, the Company had $803 thousand payable to FGI. In January 2010, the Company terminated the FGI Financing Agreements, repaid the outstanding balance, and paid an $80 thousand early termination fee.

2012	$	1,458
2013		1,464
2014		1,470
2015		922
2016		150
2017 and thereafter		293

4542

American Biltrite Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

56. ~~Financing~~Other ~~Arrangements (continued)~~Liabilities

Other ~~Notes~~liabilities at December 31 consisted of the following (in thousands):

In 1998, the Company obtained a loan from a local bank in connection with the acquisition of a building in Singapore. The loan was for 2.7 million Singapore dollars (US $1.5 million at the foreign currency exchange rate in effect when the loan was obtained). The loan, which is secured by a mortgage, is payable in equal installments through 2018. The interest rate is 4.5%, and the loan is secured by the property acquired with the proceeds of the loan.

	2011		2010

Pension benefit obligations	$	10,663	$	6,973
Environmental remediation and product related liabilities		7,931		7,516
Income taxes		640		808
Other		1,241		1,474

	$	20,557	$	16,771

~~Interest~~7. Pension Plans

~~Interest~~The ~~paid~~Company onsponsors ~~all~~several ~~outstanding~~noncontributory defined ~~debt~~benefit ~~amounted to~~pension ~~$926~~plans ~~thousand~~covering most of the Company’s employees. Benefits under the plans are based on years of service and $1employee compensation.0 ~~million~~Amounts ~~for~~funded ~~2010~~annually by the Company are actuarially determined using the projected unit credit and unit ~~2009,~~credit ~~respectively~~methods and are equal to or exceed the minimum required by government regulations.

~~Future~~The ~~Payments~~Company also maintains nonqualified supplemental employee retirement plans (“SERPs”) for certain current and former employees. The aggregate projected benefit obligations of these SERPs was $703 thousand and $648 thousand at December 31, 2011 and 2010, respectively. The plans are unfunded plans, and Company contributions made for benefits paid were $42 thousand in each of the years 2011 and 2010. The Company’s benefit obligation and pension expense related to these SERPs have been included in the tables below.

~~Principal payments on the Company’s long-term debt obligations due in each of the next five years are as follows (in thousands):~~43

2011	$	1,487
2012		1,489
2013		1,496
2014		1,474
2015		924
2016 and thereafter		468

American Biltrite Inc. and Subsidiaries

6.Notes ~~Other~~to ~~Liabilities~~Consolidated Financial Statements (continued)

~~Other~~7. ~~liabilities~~Pension atPlans ~~December 31 consisted of the following~~ (~~in thousands~~continued):

	2010		2009
Pension benefit obligations	$	6,973	$	5,996
Environmental remediation and product related liabilities		7,516		5,570
Income taxes		808		1,273
Other		1,474		1,817
	$	16,771	$	14,656

The tables below summarize the change in the benefit obligation, the change in plan assets, reconciliation to the amounts recognized in the balance sheets for the pension benefits and other benefits plans, and the funded status of the plans. The measurement date for all items set forth below is the last day of the fiscal year presented.

	2011			2010
	(in thousands)
Change in Benefit Obligation:
Benefit obligation at beginning of year	$	32,923		$	28,656
Service cost		862			811
Interest cost		1,835			1,750
Plan participants contributions		198			189
Actuarial (gain) loss		4,305			1,748
Foreign currency exchange rate changes and other		(424	)		1,217
Benefits paid		(1,847	)		(1,448	)

Benefit obligation at end of year	$	37,852		$	32,923

Change in Plan Assets:
Fair value of plan assets at beginning of year	$	27,320		$	24,082
Actual return on plan assets		(115	)		2,325
Employer contribution		1,975			1,330
Plan participants contribution		198			189
Foreign currency exchange rate changes		(384	)		842
Benefits paid		(1,847	)		(1,448	)

Fair value of plan assets at end of year	$	27,147		$	27,320

~~American Biltrite Inc. and Subsidiaries~~44

~~Notes~~American toBiltrite ~~Consolidated~~Inc. ~~Financial~~and ~~Statements (continued)~~Subsidiaries

7.Notes ~~Pension~~to ~~Plans~~Consolidated Financial Statements (continued)

~~The Company sponsors several noncontributory defined benefit pension plans covering most of the Company’s employees~~7. ~~Benefits~~Pension ~~under~~Plans the plans are based on years of service and employee compensation. Amounts funded annually by the Company are actuarially determined using the projected unit credit and unit credit methods and are equal to or exceed the minimum required by government regulations.(continued)

The ~~Company~~weighted-average ~~also~~assumptions ~~maintains~~used ~~nonqualified~~to ~~supplemental employee~~determine ~~retirement~~benefit ~~plans (“SERPs”)~~ obligation for ~~certain~~the ~~current~~pension ~~and~~benefits ~~former~~as ~~employees. The aggregate projected benefit obligations~~ of ~~these SERPs was $648 thousand and $547 thousand at~~ December 31, ~~2010~~2011 and ~~2009,~~2010 ~~respectively. The plans are unfunded plans, and Company contributions made for benefits paid~~ were ~~$42~~as ~~thousand in each of the years 2010 and 2009. The Company’s benefit obligation and pension expense related to these SERPs have been included in the tables below.~~follows:

	2011		2010
Discount rate		4.50% - 5.00%	5.50%
Rate of compensation increase		3.00%	3.00% - 3.50%

	2010			2009
	(in thousands)
Change in Benefit Obligation:
Benefit obligation at beginning of year	$	28,656		$	26,287
Service cost		811			671
Interest cost		1,750			1,647
Plan participants contributions		189			170
Actuarial (gain) loss		1,748			(200	)
Foreign currency exchange rate changes and other		1,217			1,875
Benefits paid		(1,448	)		(1,794	)
Benefit obligation at end of year	$	32,923		$	28,656
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	24,082		$	18,759
Actual return on plan assets		2,325			3,993
Employer contribution		1,330			911
Plan participants contribution		189			170
Foreign currency exchange rate changes		842			2,043
Benefits paid		(1,448	)		(1,794	)
Fair value of plan assets at end of year	$	27,320		$	24,082

The funded status of the plans and the unrecognized amounts included in accumulated other comprehensive loss as of December 31, 2011 and 2010 were as follows (in thousands):

	2011			2010

Unfunded status	$	(10,704	)	$	(5,603	)
Unrecognized net actuarial loss		6,785			728
Unamortized prior service cost		663			800

Net amount recognized	$	(3,256	)	$	(4,075	)

~~American~~The ~~Biltrite~~amounts ~~Inc.~~recorded in the consolidated balance sheets as of December 31, 2011 and ~~Subsidiaries~~2010 were as follows (in thousands):

Notes to Consolidated Financial Statements (continued)

		Pension Benefits
		2011			2010

Other assets (noncurrent)		–		$	1,413
Accrued benefit liability – current	$	(41	)		(44	)
Accrued benefit liability – non-current		(10,663	)		(6,973	)
Accumulated other comprehensive loss		7,448			1,529

Net amount recorded	$	(3,256	)	$	(4,075	)

~~7. Pension Plans (continued)~~45

~~The~~American ~~weighted-average~~Biltrite ~~assumptions~~Inc. ~~used~~and ~~to determine benefit obligation for the pension benefits as of year-end were as follows:~~Subsidiaries

	2010	2009
Discount rate	5.50%	6.00% - 6.25%
Rate of compensation increase	3.00% - 3.50%	3.00% - 3.50%

Notes to Consolidated Financial Statements (continued)

~~The~~7. ~~funded~~Pension ~~status~~Plans ~~of the plans and the unrecognized amounts included in accumulated other comprehensive loss as of December 31, 2010 and 2009 were as follows~~ (~~in thousands~~continued):

	2010			2009
Unfunded status	$	(5,603	)	$	(4,574	)
Unrecognized net actuarial loss		728			(311	)
Unamortized prior service cost		800			884
Net amount recognized	$	(4,075	)	$	(4,001	)

At December 31, 2010, some of the Company’s pension plans had projected benefit obligations (PBO) and accumulated benefit obligations (ABO) in excess of plan assets. The aggregate benefit obligations and fair value of plans assets for plans that were overfunded and underfunded as of December 31, 2011 and 2010 are as follows (in thousands):

The amounts recorded in the consolidated balance sheets as of December 31, 2010 and 2009 were as follows (in thousands):

	2011			2010
Underfunded plans
PBO	$	37,852		$	17,057
Fair value of plan assets		27,147			10,041
Funded status		(10,705	)		(7,016	)
ABO		33,957			15,643
Overfunded plan
PBO		–		$	15,866
Fair value of plan assets		–			17,279
Funded status		–			1,413
ABO		–			14,267
All plans
PBO	$	37,852		$	32,923
Fair value of plan assets		27,147			27,320
Funded status		(10,705	)		(5,603	)
ABO		33,957			29,910

		Pension Benefits
		2010			2009
Other assets (noncurrent)	$	1,413		$	1,422
Accrued benefit liability – current		(44	)		—
Accrued benefit liability – non-current		(6,973	)		(5,996	)
Accumulated other comprehensive loss		1,529			573
Net amount recorded	$	(4,075	)	$	(4,001	)

The components of net periodic benefit cost for the years ended December 31, 2011 and 2010 are as follows (in thousands):

	Pension Benefits
	2011			2010

Service cost	$	862		$	811
Interest cost		1,835			1,750
Expected return on plan assets		(1,878	)		(1,666	)
Amortization of net loss		113			109
Amortization of prior service cost		11			12
Recognized net actuarial (gain) loss		19			(33	)

Net periodic benefit cost	$	962		$	983

~~American Biltrite Inc. and Subsidiaries~~46

~~Notes~~American toBiltrite ~~Consolidated~~Inc. ~~Financial~~and ~~Statements (continued)~~Subsidiaries

7.Notes ~~Pension~~to ~~Plans~~Consolidated Financial Statements (continued)

~~Some of the Company’s pension plans have projected benefit obligations (PBO) and accumulated benefit obligations (ABO) in excess of plan assets~~7. ~~The~~Pension ~~aggregate~~Plans ~~benefit obligations and fair value of plans assets for plans that were overfunded and underfunded as of December 31, 2010 and 2009 are as follows~~ (~~in thousands~~continued):

	2010			2009
Underfunded plans
PBO	$	17,057		$	14,709
Fair value of plan assets		10,041			8,714
Funded status		(7,016	)		(5,995	)
ABO		15,643			13,092
Overfunded plan
PBO	$	15,866		$	13,947
Fair value of plan assets		17,279			15,368
Funded status		1,413			1,421
ABO		14,267			12,937
All plans
PBO	$	32,923		$	28,656
Fair value of plan assets		27,320			24,082
Funded status		(5,603	)		(4,574	)
ABO		29,910			26,029

Changes recognized in Other Comprehensive Income for the years ended December 31, 2011 and 2010 are as follows (in thousands):

The components of net periodic benefit cost for the years ended December 31, 2010 and 2009 are as follows (in thousands):

	2011			2010

Net actual (gain) loss	$	6,023		$	997
Recognized actuarial gain		(19	)		33
Prior service (credit) cost		(113	)		(113	)
Recognized prior service credit		(11	)		(13	)
Foreign exchange		39			52
Total changes recognized in Other Comprehensive Income (before tax effect)	$	5,919		$	956

		Pension Benefits
		2010			2009
Service cost	$	811		$	671
Interest cost		1,750			1,647
Expected return on plan assets		(1,666	)		(1,353	)
Amortization of net loss		109			111
Amortization of prior service cost		12			—
Recognized net actuarial (gain) loss		(33	)		103
Net periodic benefit cost	$	983		$	1,179

The Company’s estimated net loss and prior service cost to be amortized from accumulated other comprehensive loss during 2012 is expected to be $473 thousand and $122 thousand, respectively.

49The weighted-average assumptions used to determine net periodic benefit cost related to the pension benefits were as follows:

American Biltrite Inc. and Subsidiaries

	2011	2010

Discount rate	5.00% - 5.50%	5.75% - 6.25%
Expected long-term return on plan assets	6.75% - 7.00%	6.75% - 7.00%
Rate of compensation increase	3.00%	3.00% - 3.50%

~~Notes~~In developing the overall expected long-term return on plan assets assumption, a building block approach was used in which rates of return in excess of inflation were considered separately for equity securities, debt securities, and other assets. The excess returns were weighted by the representative target allocation and added along with an appropriate rate of inflation to ~~Consolidated~~develop ~~Financial~~the ~~Statements~~overall ~~(continued)~~expected long-term return on plan assets assumption.

~~7. Pension Plans (continued)~~47

~~Changes~~American ~~recognized~~Biltrite inInc. ~~Other Comprehensive Income for the years ended December 31, 2010~~ and ~~2009 are as follows (in thousands):~~Subsidiaries

	2010			2009
Net actual (gain) loss	$	997		$	(2,962	)
Recognized actuarial gain		33			(103	)
Prior service (credit) cost		(113	)		(107	)
Recognized prior service credit		(13	)		(12	)
Foreign exchange		52			(337	)
Total changes recognized in Other Comprehensive Income (before tax effect)	$	956		$	(3,521	)

Notes to Consolidated Financial Statements (continued)

~~The~~7. ~~Company’s~~Pension ~~estimated~~Plans ~~net loss and prior service cost to be amortized from accumulated other comprehensive loss during 2011 is expected to be $73 thousand and $125 thousand, respectively.~~(continued)

~~The~~Plan ~~weighted-average assumptions used to determine net periodic benefit cost related to the pension benefits were as follows:~~Assets

	2010	2009
Discount rate	5.75% - 6.25%	5.75% - 7.50%
Expected long-term return on plan assets	6.75% - 7.00%	7.00%
Rate of compensation increase	3.00% - 3.50%	3.00% - 3.50%

The Company has an investment strategy for its pension plans that emphasizes total return; that is, the aggregate return from capital appreciation and dividend and interest income. The primary investment management objective for the plans’ assets is long-term capital appreciation primarily through investment in equity and debt securities with an emphasis on consistent growth; specifically, growth in a manner that protects each plan’s assets from excessive volatility in market value from year to year. The investment policy takes into consideration the benefit obligations, including timing of distributions. The Company selects professional money managers whose investment policies are consistent with the Company’s investment strategy and monitors their performance against appropriate benchmarks. The Company’s target asset allocation is consistent with the weighted-average allocation at December 31, 2011.

~~In developing the overall expected long-term~~Our ~~return~~defined onbenefit ~~plan~~pension assets ~~assumption,~~are ainvested ~~building~~with ~~block~~the ~~approach~~objective ~~was~~of ~~used~~achieving ina ~~which~~total ~~rates~~rate of return inover ~~excess~~the oflong-term ~~inflation~~that ~~were~~is ~~considered~~sufficient ~~separately~~to ~~for~~fund ~~equity~~future ~~securities,~~pension ~~debt~~obligations. ~~securities,~~Overall ~~and~~investment ~~other~~risk ~~assets.~~is ~~The~~intended ~~excess~~to ~~returns~~be ~~were~~mitigated ~~weighted~~ by ~~the~~maintaining ~~representative~~a ~~target allocation~~diversified ~~and added along with an appropriate rate~~ portfolio of ~~inflation to develop the overall expected long-term return on plan~~ assets ~~assumption~~.

50Investments are stated at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Following is a description of the valuation methodologies used for assets measured at fair value:

~~American~~Money ~~Biltrite~~market ~~Inc.~~funds: ~~and~~Valued ~~Subsidiaries~~at the quoted market price reported on the active market on which the individual funds are traded on the last business day of the year.

~~Notes~~Mutual tofunds: ~~Consolidated~~Valued ~~Financial~~at ~~Statements~~the ~~(continued)~~quoted market prices which represent the net asset value of shares held by the pension plans at year end.

7.Common ~~Pension~~stocks: ~~Plans~~Valued ~~(continued)~~at the quoted market price reported on the active market on which the individual securities are traded on the last business day of the year.

~~Plan~~Government ~~Assets~~agency securities and treasury obligations: Valued at the closing price reported on the active market in which securities similar to those held by the pension plans are traded.

~~The~~Corporate ~~Company~~bonds: ~~has~~Certain ~~an investment strategy for~~corporate ~~its~~bonds ~~pension~~are ~~plans~~based ~~that~~on ~~emphasizes~~yields ~~total~~currently ~~return;~~available ~~that~~on ~~is,~~comparable ~~the~~securities ~~aggregate~~of ~~return~~issuers ~~from~~with ~~capital~~similar ~~appreciation~~credit ~~and~~ratings. ~~dividend~~When ~~and~~quoted ~~interest~~prices ~~income.~~are ~~The~~not ~~primary~~available ~~investment~~for ~~management~~identical ~~objective~~or ~~for~~similar bonds, the ~~plans’~~bond ~~assets~~ is ~~long-term~~valued ~~capital~~under ~~appreciation~~a ~~primarily~~discounted ~~through investment~~cash inflows ~~equity~~approach ~~and~~that ~~debt~~maximizes ~~securities~~observable inputs, ~~with~~such anas ~~emphasis~~current onyields ~~consistent~~of ~~growth;~~similar ~~specifically~~instruments, ~~growth~~but inincludes aadjustments ~~manner~~for ~~that~~certain ~~protects each~~risks ~~plan’s~~that ~~assets~~may ~~from~~not ~~excessive~~be ~~volatility in market value from year to year. The investment policy takes into consideration the benefit obligations~~observable, ~~including timing of distributions. The Company selects professional money managers whose investment policies~~such ~~are~~as ~~consistent~~credit ~~with the Company’s investment strategy~~ and ~~monitors~~liquidity ~~their performance against appropriate benchmarks~~risks. ~~The Company’s target asset allocation is consistent with the weighted-average allocation at December 31, 2010.~~

Our defined benefit pension assets are invested with the objective of achieving a total rate of return over the long-term that is sufficient to fund future pension obligations. Overall investment risk is intended to be mitigated by maintaining a diversified portfolio of assets. 48

~~Investments~~American ~~are~~Biltrite ~~stated at fair value~~Inc. ~~Fair value~~and is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Following is a description of the valuation methodologies used for assets measured at fair value:Subsidiaries

~~Money~~Notes ~~market~~to ~~funds:~~Consolidated ~~Valued~~Financial atStatements ~~the quoted market price reported on the active market on which the individual funds are traded on the last business day of the year.~~(continued)

~~Mutual~~7. ~~funds:~~Pension ~~Valued~~Plans ~~at the quoted market prices which represent the net asset value of shares held by the pension plans at year end.~~(continued)

~~Common~~The ~~stocks:~~accounting ~~Valued~~guidance atfor ~~the~~fair ~~quoted~~value measurements ~~market~~establishes ~~price~~a ~~reported~~three-tier onfair ~~the~~value ~~active~~hierarchy, ~~market on~~ which ~~the~~prioritizes ~~individual securities are traded on~~ the ~~last~~inputs ~~business~~used ~~day~~in ofmeasuring ~~the~~fair ~~year~~value.

51· Level 1 – Quoted prices in active markets for identical assets or liabilities.

~~American~~· ~~Biltrite~~Level ~~Inc.~~2 ~~and~~– ~~Subsidiaries~~Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

~~Notes~~· Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to ~~Consolidated~~the ~~Financial~~fair ~~Statements~~value ~~(continued)~~of the assets or liabilities.

7Plans assets do not include any Level 3 investments. The ~~Pension~~following ~~Plans~~tables ~~(continued)~~set forth by level, within the fair value hierarchy, the assets carried at fair value as of December 31, 2011 and 2010.

Government agency securities and treasury obligations: Valued at the closing price reported on the active market in which securities similar to those held by the pension plans are traded.

	December 31, 2011
	Level 1		Level 2		Total
	(In thousands)

Cash and money market funds	$	239	$	-	$	239	0.9%
Equity mutual funds		7,198		2,163		9,361	34.4
Fixed income mutual funds		2,948		-		2,948	10.9
Common stocks		7,210		-		7,210	26.6
Government agencies		-		1,748		1,748	6.4
Treasury obligations		-		643		643	2.4
Corporate bonds		-		4,998		4,998	18.4

	$	17,595	$	9,552	$	27,147	100.0%

Corporate bonds: Certain corporate bonds are based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar bonds, the bond is valued under a discounted cash flows approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks.

	December 31, 2010
	Level 1		Level 2		Total
	(In thousands)

Cash and money market funds	$	167	$	-	$	167	0.6%
Equity mutual funds		3,290		3,799		7,089	25.9
Fixed income mutual funds		2,967		-		2,967	10.9
Common stocks		9,874		-		9,874	36.1
Government agencies		-		1,890		1,890	6.9
Treasury obligations		-		451		451	1.7
Corporate bonds		-		4,882		4,882	17.9

	$	16,298	$	11,022	$	27,320	100.0%

~~The accounting guidance for fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.~~49

~~· Level 1~~American –Biltrite ~~Quoted~~Inc. ~~prices~~and ~~in active markets for identical assets or liabilities.~~Subsidiaries

~~· Level 2~~Notes –to ~~Inputs~~Consolidated ~~other~~Financial ~~than~~Statements Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.(continued)

~~· Level 3~~7. –Pension ~~Unobservable~~Plans ~~inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.~~(continued)

~~Plans assets do not include any Level 3 investments. The following tables set forth by level, within the fair value hierarchy, the assets carried at fair value as of December 31, 2010 and 2009.~~Contributions

	December 31, 2010
	Level 1		Level 2		Total
	(In thousands)
Cash and money market funds	$	167	$	—	$	167	0.6	%
Equity mutual funds		3,290		3,799		7,089	25.9
Fixed income mutual funds		—		2,967		2,967	10.9
Common stocks		9,874		—		9,874	36.1
Government agencies		—		1,890		1,890	6.9
Treasury obligations		—		451		451	1.7
Corporate bonds		—		4,882		4,882	17.9
	$	13,331	$	13,989	$	27,320	100.0	%

American Biltrite expects to contribute $2.5 million to its pension plans in 2012.

52Estimated Future Benefit Payments

~~American~~The ~~Biltrite~~following ~~Inc~~benefit payments, which reflect future service as appropriate, are expected to be paid. ~~and~~The ~~Subsidiaries~~benefit payments are based on the same assumptions used to measure the Company’s benefit obligation at the end of fiscal 2011.

Notes to Consolidated Financial Statements (continued)

(in thousands)
2012	$	1,686
2013		1,673
2014		1,771
2015		1,826
2016		1,864
2017 - 2021		11,031

7.Defined ~~Pension~~Contribution Plans ~~(continued)~~

	December 31, 2009
	Level 1		Level 2		Total
	(In thousands)
Cash and money market funds	$	143	$	—	$	143	0.6%
Equity mutual funds		2,762		3,303		6,065	25.2
Fixed income mutual funds		—		2,690		2,690	11.2
Common stocks		8,728		—		8,728	36.2
Government agencies		—		2,357		2,357	9.8
Treasury obligations		—		172		172	0.7
Corporate bonds		—		3,927		3,927	16.3
	$	11,633	$	12,449	$	24,082	100.0%

The Company also has three 401(k) defined contribution retirement plans that cover substantially all employees. Eligible employees may contribute up to 15% to 20% of compensation (subject to annual Internal Revenue Code limits) with the Company partially matching contributions. Defined contribution pension expense for the Company was $350 thousand and $372 thousand for the years ended December 31, 2011 and 2010, respectively.

~~Contributions~~50

American Biltrite ~~expects to contribute $1~~Inc.~~7 million~~ toand ~~its pension plans in 2011.~~Subsidiaries

~~Estimated~~Notes ~~Future~~to ~~Benefit~~Consolidated ~~Payments~~Financial Statements (continued)

~~The following benefit payments, which reflect future service as appropriate, are expected to be paid~~8. ~~The~~Commitments ~~benefit~~and ~~payments are based on the same assumptions used to measure the Company’s benefit obligation at the end of fiscal 2010.~~Contingencies

(in thousands)
2011	$	1,689
2012		1,741
2013		1,781
2014		1,828
2015		1,887
2016 - 2020		9,950

Leases

~~Defined~~The ~~Contribution~~Company occupies ~~Plans~~certain warehouse and office space and uses certain equipment and motor vehicles under lease agreements expiring at various dates through 2025. The leases generally require the Company to pay for utilities, insurance, taxes and maintenance, and some contain renewal options. Total rent expense charged to operations was $1.7 million in 2011 and $1.6 million in 2010.

~~The~~Future ~~Company~~minimum ~~also~~payments ~~has~~relating ~~three 401(k) defined contribution retirement plans that cover substantially all employees. Eligible employees may contribute up~~ to ~~15%~~operating toleases ~~20%~~are ofas ~~compensation (subject~~follows to(in ~~annual Internal Revenue Code limits~~thousands) with the Company partially matching contributions. Defined contribution pension expense for the Company was $372 thousand and $361 thousand for the years ended December 31, 2010 and 2009, respectively.:

2012	$	1,143
2013		774
2014		474
2015		366
2016		295
Thereafter		1,811

	$	4,863

~~American~~Royalty ~~Biltrite Inc.~~ and ~~Subsidiaries~~Advertising Commitments

~~Notes~~K&M tomaintains ~~Consolidated~~certain ~~Financial~~license ~~Statements~~arrangements for branded jewelry products. Under the terms of these arrangements, K&M must make minimum royalty and advertising payments based on defined percentages of net sales during the license terms. These arrangements also include guaranteed minimum yearly royalty and advertising payments based either on minimum levels of net sales or fixed payment amounts. At December 31, 2011, the Company’s commitments for minimum royalty and advertising payments were as follows (~~continued~~in thousands):

8. Commitments and Contingencies

2012	$	2,669
2013		2,703
2014		324

	$	5,696

~~Leases~~51

~~The~~American ~~Company~~Biltrite ~~occupies certain warehouse and office space and uses certain equipment and motor vehicles under lease agreements expiring at various dates through 2025~~Inc. ~~The leases generally require the Company to pay for utilities, insurance, taxes~~ and ~~maintenance, and some contain renewal options. Total rent expense charged to operations was $1.6 million in 2010 and $2.0 million in 2009.~~Subsidiaries

~~Future~~Notes ~~minimum payments relating~~ to ~~operating~~Consolidated ~~leases~~Financial ~~are~~Statements ~~as follows~~ (~~in thousands~~continued):

2011	$	1,169
2012		918
2013		635
2014		350
2015		285
Thereafter		2,061
	$	5,418

8. Commitments and Contingencies (continued)

~~Royalty~~Environmental and ~~Advertising~~Other ~~Commitments~~Liabilities

~~K&M~~In ~~maintains~~the ~~certain license arrangements~~ordinary ~~for~~course ~~branded~~of ~~jewelry~~its ~~products.~~business, ~~Under~~ the ~~terms~~Company ofbecomes ~~these~~involved ~~arrangements~~in lawsuits, ~~K&M~~administrative ~~must~~proceedings, ~~make~~product ~~minimum~~liability ~~royalty~~ and ~~advertising~~other ~~payments~~matters. ~~based~~In onsome ~~defined percentages~~ of ~~net~~these ~~sales~~proceedings, ~~during~~plaintiffs ~~the~~may ~~license~~seek ~~terms.~~to ~~These~~recover ~~arrangements~~large ~~also include guaranteed minimum yearly royalty~~ and ~~advertising~~sometimes ~~payments~~unspecified ~~based either on minimum levels of net sales or fixed payment~~ amounts~~. At December 31~~, ~~2010,~~and the ~~Company’s~~matters may remain ~~commitments~~unresolved for ~~minimum~~several ~~royalty~~years. ~~and advertising payments were as follows (in thousands):~~

2011	$	2,590
2012		2,588
2013		2,475
	$	7,653

The Company records a liability for environmental remediation claims when it becomes probable that the Company will incur costs relating to a clean-up program or will have to make claim payments and the costs or payments can be reasonably estimated. As assessments are revised and clean-up programs progress, these liabilities are adjusted to reflect such revisions and progress.

54The following table summarizes American Biltrite’s recorded assets and liabilities for environmental, asbestos and other contingencies:

American Biltrite Inc. and Subsidiaries

	December 31
	2011				2010
	Liability		Receivable		Liability		Receivable
	(In thousands)
Environmental liabilities
Accrued expenses	$	658			$	771
Other liabilities, non-current		7,931				7,516
Other assets, non-current		-	$	3,308		-	$	3,192
		8,589		3,308		8,287		3,192
Asbestos product liability
Asbestos-related liabilities, non-current		17,700		-		17,700		-
Insurance for asbestos-related liabilities, non-current		-		17,646		-		17,646
		17,700		17,646		17,700		17,646

Other
Other liabilities, current		211		-		211		-
Other liabilities, non-current		421		-		632		-
		632		-		843		-

	$	26,921	$	20,954	$	26,830	$	20,838

~~Notes to Consolidated Financial Statements (continued)~~52

8. American ~~Commitments~~Biltrite Inc. and ~~Contingencies (continued)~~Subsidiaries

~~Environmental~~Notes ~~and~~to ~~Other~~Consolidated ~~Liabilities~~Financial Statements (continued)

~~In the ordinary course of its business, the Company becomes involved in lawsuits, administrative proceedings, product liability and other matters~~8. InCommitments ~~some of these proceedings, plaintiffs may seek to recover large~~ and ~~sometimes~~Contingencies ~~unspecified amounts, and the matters may remain unresolved for several years.~~(continued)

~~The~~ABI ~~Company~~is ~~records~~ a ~~liability~~co-defendant ~~for~~with ~~environmental~~many other manufacturers ~~remediation~~and ~~claims~~distributors ~~when~~of itasbestos ~~becomes~~containing ~~probable~~products ~~that~~in ~~the~~approximately ~~Company~~1,338 ~~will~~pending ~~incur~~claims ~~costs~~involving ~~relating~~approximately to1,884 aindividuals as ~~clean-up~~of ~~program~~December or31, ~~will~~2011. ~~have~~These claims relate to ~~make claim~~products ~~payments~~of ~~and~~ABI’s ~~the~~former ~~costs~~tile ordivision, ~~payments~~which ~~can~~ABI becontributed ~~reasonably~~to ~~estimated~~Congoleum in 1993. AsThe ~~assessments~~claimants ~~are~~allege ~~revised~~personal ~~and~~injury ~~clean~~or death from exposure to asbestos or asbestos-upcontaining ~~programs~~products. ~~progress,~~Activity ~~these~~related ~~liabilities~~to ~~are~~asbestos ~~adjusted~~claims toduring ~~reflect~~the ~~such~~years ~~revisions~~ended December 31, 2011 and ~~progress.~~2010 was as follows:

The following table summarizes American Biltrite’s recorded assets and liabilities for environmental, asbestos and other contingencies:

	2011			2010

Claims at January 1		1,261			1,193
New claims		356			304
Settlements		(34	)		(29	)
Dismissals		(245	)		(207	)

Claims at December 31		1,338			1,261

	December 31
	2010				2009
	Liability		Receivable		Liability		Receivable
	(In thousands)
Environmental liabilities
Accrued expenses	$	771			$	907
Other liabilities, non-current		7,516				5,570
Other assets, non-current		—	$	3,192		—	$	2,498
		8,287		3,192		6,477		2,498
Asbestos product liability
Asbestos-related liabilities, non-current		17,700		—		17,700		—
Insurance for asbestos-related liabilities, non-current		—		17,646		—		17,646
		17,700		17,646		17,700		17,646
Other
Other liabilities, current		211		—		211		—
Other liabilities, non-current		632		—		843		—
		843		—		1,054		—
	$	26,830	$	20,838	$	25,231	$	20,144

ABI has primary and multiple excess layers of insurance coverage for asbestos claims. The total indemnity costs incurred to settle claims were approximately $5.1 million in 2011 and $4.6 million in 2010 all of which were paid by ABI’s umbrella insurance carriers in the respective years, as were the related defense costs. In June 2008, ABI’s primary layer insurance carriers advised ABI that coverage limits under the February 1996 coverage-in-place agreement had exhausted. In August 2008, ABI and its applicable first-layer excess umbrella carriers reached an understanding on the coverage under ABI’s applicable first-layer excess umbrella policies (the “Umbrella Coverage”), including defense and indemnity obligations, allocation of claims to specific policies, and other matters. There was no gap in coverage following the exhaustion of the primary layer insurance coverage.

55In addition to coverage available under the Umbrella Coverage, ABI has additional excess liability insurance policies that should provide further coverage if and when limits of certain policies within the Umbrella Coverage exhaust. While ABI expects the Umbrella Coverage will result in the substantial majority of defense and indemnity costs for asbestos claims against ABI being paid by its insurance carriers for the foreseeable future, ABI may incur uninsured costs related to asbestos claims, and those costs could be material. If ABI were to incur significant uninsured costs for asbestos claims, or its insurance carriers failed to fund insured costs for asbestos claims, such costs could have a material adverse impact on its liquidity, financial condition and results of operations.

~~American Biltrite Inc. and Subsidiaries~~53

~~Notes~~American toBiltrite ~~Consolidated~~Inc. ~~Financial~~and ~~Statements (continued)~~Subsidiaries

8.Notes ~~Commitments~~to ~~and~~Consolidated ~~Contingencies~~Financial Statements (continued)

ABI is a co-defendant with many other manufacturers and distributors of asbestos containing products in approximately 1,261 pending claims involving approximately 1,807 individuals as of December 31, 20108. ~~These~~Commitments claims relate to products of ABI’s former tile division, which ABI contributed to Congoleum in 1993. The claimants allege personal injury or death from exposure to asbestos or asbestos-containing products. Activity related to asbestos claims during the years ended December 31, 2010 and ~~2009~~Contingencies ~~was as follows:~~(continued)

	2010			2009
Claims at January 1		1,193			1,269
New claims		304			240
Settlements		(29	)		(25	)
Dismissals		(207	)		(291	)
Claims at December 31		1,261			1,193

In general, governmental authorities have determined that asbestos-containing sheet and tile products are nonfriable (i.e., cannot be crumbled by hand pressure) because the asbestos was encapsulated in the products during the manufacturing process. Thus, governmental authorities have concluded that these products do not pose a health risk when they are properly maintained in place or properly removed so that they remain nonfriable. The Company has issued warnings not to remove asbestos-containing flooring by sanding or other methods that may cause the product to become friable. The Company estimates its liability for indemnity to resolve current and reasonably anticipated future asbestos-related claims (not including claims asserted against Congoleum), based upon a strategy to vigorously defend against and strategically settle those claims on a case-by-case basis in the normal course of business. Factors such as recent and historical settlement and trial results, the court dismissal rate of claims, the incidence of past and recent claims, the number of cases pending against it and asbestos litigation developments that may impact the exposure of the Company were considered in performing these estimates. Changes in factors could have a material impact on the Company’s liability. The estimate is sensitive to changes in the mesothelioma acceptance rate. For example, if the calibration window is shifted to the 2004 to 2008 calibration period, the mesothelioma acceptance rate decreases by 1.2% to 4.6%, and this reduces the liability in the low estimate by about 20% (assuming all other variables remain constant).

~~ABI~~The ~~has~~Company ~~primary~~utilized ~~and~~an ~~multiple~~actuarial ~~excess~~study ~~layers~~in 2009 to assist it in developing estimates of ~~insurance~~the ~~coverage~~Company’s potential liability for resolving present and possible future asbestos claims. ~~The~~Projecting ~~total~~future ~~indemnity~~asbestos claim costs ~~incurred~~requires toestimating ~~settle~~numerous ~~claims~~variables ~~were~~that ~~approximately~~are ~~$4.6~~extremely ~~million~~difficult to inpredict, ~~2010~~including ~~and~~the ~~$5.7~~incidence ~~million~~of inclaims, ~~2009~~the ~~all~~disease ofthat ~~which~~may ~~were~~be ~~paid~~alleged by ~~ABI’s~~future ~~umbrella~~claimants, ~~insurance~~future ~~carriers~~settlement inand ~~the~~trial ~~respective~~results, future ~~years~~court dismissal rates for claims, asand possible asbestos legislation developments. Furthermore, any predictions with respect ~~were~~to these variables are subject to even greater uncertainty as the ~~related~~projection ~~defense~~period ~~costs~~lengthens. In ~~June~~light ~~2008~~of these inherent uncertainties, the ~~ABI’s~~Company ~~primary~~believes ~~layer~~that ~~insurance~~six ~~carriers~~years ~~advised~~is ~~ABI~~the most reasonable period over which to include future claims that ~~coverage~~may ~~limits~~be ~~under~~brought against the ~~February~~Company ~~1996~~for ~~coverage-in-place~~recognizing ~~agreement~~a ~~had~~reserve ~~exhausted~~for future costs. InDue ~~August~~to ~~2008,~~the ~~ABI~~numerous variables and ~~its~~uncertainties, ~~applicable~~the ~~first-layer~~Company ~~excess~~does ~~umbrella~~not believe ~~carriers~~that ~~reached~~reasonable anestimates ~~understanding~~can onbe ~~the~~developed ~~coverage~~of ~~under~~liabilities ~~ABI’s~~for ~~applicable~~claims ~~first-layer~~beyond ~~excess~~a ~~umbrella~~six ~~policies~~year (horizon using the ~~“Umbrella Coverage”),~~2009 ~~including~~data. ~~defense~~The ~~and~~Company did ~~indemnity~~not ~~obligations,~~obtain ~~allocation~~an ofactuarial ~~claims~~study toin ~~specific~~2010 ~~policies,~~or ~~and~~2011 ~~other~~because ~~matters.~~there ~~There was~~were no ~~gap~~significant changes in ~~coverage~~factors ~~following~~during ~~the~~those ~~exhaustion~~years. The Company will continue to evaluate its range of ~~the~~future ~~primary~~exposure, ~~layer~~and the related insurance coverage available, and when appropriate, record future adjustments to those estimates, which could be material.

InThe ~~addition to coverage available under the~~estimated ~~Umbrella~~range ~~Coverage,~~of ~~ABI has additional excess~~ liability ~~insurance~~for ~~policies~~settlement ~~that~~of ~~should~~current ~~provide~~claims ~~further~~pending ~~coverage if~~ and ~~when~~claims ~~limits of~~anticipated ~~certain~~to ~~policies~~be ~~within~~filed ~~the~~in ~~Umbrella Coverage exhaust. While ABI expects~~ the ~~Umbrella~~next ~~Coverage~~six ~~will~~years, ~~result in the substantial~~excluding ~~majority of~~ defense ~~and indemnity~~ costs, ~~for~~was ~~asbestos~~$17.7 ~~claims~~million ~~against~~to ~~ABI~~$62.0 ~~being~~million ~~paid~~as byof ~~its~~December ~~insurance carriers for the foreseeable future~~31, ~~ABI~~2011. ~~may~~The ~~incur~~Company ~~uninsured~~believes ~~costs~~no ~~related~~amount towithin ~~asbestos~~this ~~claims,~~range ~~and those costs could be material. If ABI were to incur significant~~is ~~uninsured~~more ~~costs~~likely ~~for~~than ~~asbestos~~any ~~claims~~other, orand ~~its~~accordingly ~~insurance~~has ~~carriers~~recorded ~~failed~~a toliability ~~fund~~of ~~insured~~$17.7 ~~costs~~million ~~for~~in ~~asbestos~~its ~~claims,~~financial ~~such~~statements ~~costs could~~which ~~have~~represents athe ~~material~~minimum ~~adverse~~probable ~~impact~~and onreasonably ~~its~~estimable ~~liquidity,~~amount ~~financial~~for ~~condition~~the ~~and~~future ~~results~~liability ofat ~~operations~~the present time.

5654

American Biltrite Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

8. Commitments and Contingencies (continued)

InThe ~~general,~~Company also ~~governmental~~believes ~~authorities have determined~~ that ~~asbestos-containing~~based ~~sheet~~on ~~and~~this ~~tile~~liability ~~products are nonfriable (i.e.~~estimate, ~~cannot~~the becorresponding ~~crumbled~~amount byof ~~hand~~insurance ~~pressure)~~probable ~~because~~of ~~the~~recovery ~~asbestos~~is ~~was~~$17.6 ~~encapsulated~~million inat ~~the~~December ~~products~~31, ~~during~~2011, ~~the~~which ~~manufacturing~~has ~~process.~~been ~~Thus,~~included ~~governmental~~in ~~authorities~~other ~~have~~assets. ~~concluded~~The same factors that ~~these~~affect ~~products~~developing doforecasts ~~not~~of ~~pose~~potential aindemnity ~~health~~costs ~~risk~~for ~~when~~asbestos-related ~~they~~liabilities ~~are~~also ~~properly~~affect ~~maintained~~estimates inof ~~place~~the ortotal ~~properly~~amount ~~removed~~of so insurance that ~~they~~is ~~remain~~probable ~~nonfriable.~~of ~~The~~recovery, ~~Company has~~as ~~issued~~do ~~warnings~~a ~~not~~number toof ~~remove~~additional ~~asbestos-containing~~factors. ~~flooring~~These byadditional ~~sanding~~factors orinclude ~~other~~the ~~methods~~financial ~~that~~viability ~~may~~of some ~~cause~~of the ~~product~~insurance tocompanies, ~~become friable.~~the ~~The~~method ~~Company~~in ~~estimates~~which ~~its~~losses ~~liability~~will ~~for~~be ~~indemnity~~allocated to ~~resolve~~the ~~current~~various ~~and~~insurance ~~reasonably~~policies ~~anticipated~~and ~~future~~the ~~asbestos-related~~years covered ~~claims~~by ~~(not~~those ~~including claims asserted against Congoleum)~~policies, ~~based~~how ~~upon~~legal aand ~~strategy~~other toloss ~~vigorously~~handling ~~defend~~costs ~~against~~will ~~and~~be ~~strategically settle~~covered ~~those~~by ~~claims~~the oninsurance apolicies, ~~case-by-case~~interpretation ~~basis~~of in the ~~normal~~effect on ~~course~~coverage of ~~business.~~various ~~Factors~~policy ~~such~~terms ~~as recent~~ and ~~historical~~limits ~~settlement~~ and ~~trial~~their ~~results~~interrelationships, and the ~~court~~continuing ~~dismissal~~solvency ~~rate~~ of ~~claims,~~various ~~the~~insurance ~~incidence~~companies. These ofamounts ~~past~~were ~~and~~based ~~recent~~on ~~claims,~~currently ~~the~~known ~~number~~facts ofby ~~cases~~ABI ~~pending against it~~ and ~~asbestos~~a ~~litigation~~number ~~developments~~of ~~that~~assumptions. ~~may~~However, ~~impact~~projecting future ~~the~~events, ~~exposure~~such ofas the ~~Company~~number ~~were~~of ~~considered~~new inclaims ~~performing~~to ~~these~~be ~~estimates. Changes~~filed ineach ~~factors~~year, ~~could have a material impact on~~ the ~~Company’s~~average ~~liability.~~cost ~~The~~of ~~estimate~~disposing isof ~~sensitive~~each tosuch ~~changes~~claim, inand the ~~mesothelioma~~ ~~acceptance~~continuing ~~rate.~~solvency ~~For~~of ~~example,~~various ifinsurance ~~the~~companies, ~~calibration~~as ~~window~~well isas ~~shifted~~numerous byuncertainties ~~two~~surrounding ~~years~~asbestos tolegislation ~~the~~in ~~2004 to 2008 calibration period,~~ the ~~mesothelioma~~United ~~acceptance~~States, ~~rate~~could ~~decreases~~cause bythe ~~1.2%~~actual toliability ~~4.6%,~~ and ~~this~~insurance ~~reduces~~recoveries ~~the~~for ~~liability in~~ the ~~low~~Company ~~estimate~~to bybe ~~about~~higher ~~20%~~or ~~(assuming~~lower ~~all~~than ~~other variables~~those ~~remain~~projected ~~constant)~~or recorded.

~~The~~There ~~Company~~can ~~utilized~~be anno ~~actuarial~~assurance ~~study~~that ~~in 2009 to assist it in developing estimates of~~ the Company’s accrued ~~potential~~asbestos ~~liability~~liabilities ~~for~~will ~~resolving~~approximate ~~present~~its ~~and~~actual ~~possible future~~ asbestos-related ~~claims.~~settlement ~~Projecting future asbestos claim~~ costs, ~~requires~~or ~~estimating numerous variables~~ that ~~are~~it ~~extremely~~will ~~difficult~~receive ~~to predict, including~~ the ~~incidence of claims, the disease that may be alleged by future claimants, future settlement and trial results,~~insurance ~~future~~recoveries ~~court~~which ~~dismissal~~it ~~rates~~has ~~for claims, and possible asbestos legislation developments~~accrued. ~~Furthermore,~~The ~~any predictions with respect to these variables are subject to even greater uncertainty as the projection period lengthens. In light of these inherent uncertainties, the~~ Company believes that ~~six~~it ~~years~~ is ~~the~~reasonably ~~most~~possible ~~reasonable period over which to include future claims~~ that ~~may~~it bewill ~~brought~~incur ~~against the~~charges ~~Company~~ for ~~recognizing~~resolution of aasbestos ~~reserve~~claims ~~for~~in the future, ~~costs.~~which ~~Due~~could toexceed the ~~numerous~~Company’s ~~variables~~existing ~~and~~reserves. ~~uncertainties,~~The ~~the~~ Company’s ~~does~~strategy ~~not believe~~remains ~~that~~to ~~reasonable~~vigorously ~~estimates~~defend ~~can~~against beand ~~developed~~strategically ofsettle ~~liabilities~~its ~~for~~asbestos claims ~~beyond~~on a ~~six~~case-by-case ~~year horizon using the 2009 data~~basis. The Company ~~did~~ ~~not~~believes ~~obtain~~it anhas substantial ~~actuarial~~insurance ~~study~~coverage ~~in 2010 because there were no significant changes in factors during the year. The Company will continue~~ to ~~evaluate~~mitigate ~~its range of~~ future ~~exposure,~~costs ~~and the~~ related ~~insurance coverage available, and when appropriate, record future adjustments~~ to ~~those~~these ~~estimates, which could be material~~matters.

~~The~~ABI ~~estimated~~has ~~range~~been ofnamed ~~liability~~as ~~for~~a ~~settlement~~Potentially Responsible ofParty ~~current~~(“PRP”) ~~claims~~within ~~pending~~the ~~and~~meaning ~~claims~~of ~~anticipated~~that toterm beunder ~~filed in~~ the ~~next~~Federal ~~six~~Comprehensive ~~years,~~Environmental ~~excluding~~Response ~~defense~~Compensation ~~costs, was $17.7 million~~and toLiability ~~$62.0~~Act, ~~million~~ as ofamended ~~December 31~~(“CERCLA”), ~~2010.~~with ~~The~~respect ~~Company~~to ~~believes~~seven nosites ~~amount~~located ~~within this range is more likely than any other, and accordingly has recorded a liability of $17.7 million~~ in ~~its~~six ~~financial~~separate ~~statements~~states ~~which represents~~ (the ~~minimum probable~~“CERCLA ~~and reasonably estimable amount for the future liability at the present time~~Sites”).

57At one of the seven sites, which is located in Southington, Connecticut, (the “Southington Site”), an ABI subsidiary (“Ideal”) is named as a PRP. At the Southington Site, Ideal is considered a performing party. In 2008, Ideal agreed to a settlement that required it to pay $671 thousand for remediation of this site. While Ideal did not receive a release from future obligations relating to the Southington Site, it is not anticipated that any further assessments will be made against Ideal any time in the foreseeable future. Under a preexisting agreement between ABI and a former owner of ABI assets, The Biltrite Corporation (“TBC”), which agreement provides for the allocation of certain environmental costs between ABI and TBC (the “TBC Agreement”) relating to certain current and former assets of ABI, TBC reimbursed Ideal for 37.5% of that settlement amount.

~~American Biltrite Inc. and Subsidiaries~~55

~~Notes~~American toBiltrite ~~Consolidated~~Inc. ~~Financial~~and ~~Statements (continued)~~Subsidiaries

8.Notes ~~Commitments~~to ~~and~~Consolidated ~~Contingencies~~Financial Statements (continued)

~~The Company also believes that based on this liability estimate, the corresponding amount of insurance probable of recovery is $17~~8.6 ~~million at~~Commitments December 31, 2010, which has been included in other assets. The same factors that affect developing forecasts of potential indemnity costs for asbestos-related liabilities also affect estimates of the total amount of insurance that is probable of recovery, as do a number of additional factors. These additional factors include the financial viability of some of the insurance companies, the method in which losses will be allocated to the various insurance policies and ~~the~~Contingencies years covered by those policies, how legal and other loss handling costs will be covered by the insurance policies, interpretation of the effect on coverage of various policy terms and limits and their interrelationships, and the continuing solvency of various insurance companies. These amounts were based on currently known facts by ABI and a number of assumptions. However, projecting future events, such as the number of new claims to be filed each year, the average cost of disposing of each such claim, and the continuing solvency of various insurance companies, as well as numerous uncertainties surrounding asbestos legislation in the United States, could cause the actual liability and insurance recoveries for the Company to be higher or lower than those projected or recorded. (continued)

~~There~~At ~~can~~another site, beABI, notogether ~~assurance~~with ~~that~~a ~~the~~number ~~Company’s accrued~~of ~~asbestos~~other ~~liabilities~~named ~~will~~PRPs, ~~approximate~~entered ~~its~~a ~~actual~~consent ~~asbestos-related~~decree ~~settlement~~and ~~costs~~site remediation agreement (the “Agreements”) in September 1996, orwhich, ~~that~~without itadmission ~~will~~of ~~receive~~liability by the ~~insurance recoveries~~PRPs, ~~which~~requires itremediation ~~has~~of ~~accrued.~~the ~~The~~Interstate Leeds Company ~~believes~~(“ILCO”) Superfund ~~that~~site itlocated isin ~~reasonably~~Leeds, ~~possible~~Alabama ~~that~~(the it“ILCO ~~will~~Site”). ~~incur~~The ~~charges~~currently ~~for~~estimated ~~resolution~~ aggregate future cost of ~~asbestos~~remediation and ~~claims~~associated intransactional costs at the ~~future,~~ILCO ~~which~~Site ~~could~~ranges ~~exceed~~from ~~the~~$4.5 ~~Company’s~~million ~~existing~~to ~~reserves~~$6.4 ~~The~~million. ~~Company~~Pursuant to a final allocation among consent decree participants, ABI’s ~~strategy~~share ~~remains~~of the currently estimated future remediation costs range from approximately $272 thousand to ~~vigorously~~$390 ~~defend~~thousand. ~~against~~These estimates consider commitments from de minimis and ~~strategically~~de ~~settle~~maximus settlors, the City of Leeds and its ~~asbestos~~insurers, ~~claims~~amounts oncurrently held in an escrow fund, a ~~case-by-case~~RCRA ~~basis.~~Closure ~~The~~Fund ~~Company~~refund, ~~believes~~bankrupt itPRP’s ~~has~~and TBC’s share ~~substantial~~of ~~insurance~~those ~~coverage~~costs, which pursuant to ~~mitigate~~the TBC Agreement is 37.5% of those remediation costs incurred by ABI. A substantial share of ABI’s future remediation costs ~~related~~with respect to ~~these~~the ~~matters~~ILCO Site will be payable over the next one to five years.

ABI is involved in two United States Environmental Protection Agency (“EPA”) sites in Georgia. At one of the EPA sites, ABI has been named asalong awith ~~Potentially~~seven ~~Responsible~~other PRPs ~~Party~~with respect to a site in Atlanta, Georgia involving three neighborhoods (“~~PRP~~Atlanta Site”) where properties within the boundaries ~~meaning~~ of ~~that~~the ~~term~~Atlanta ~~under~~Site contains lead in the ~~Federal~~surface ~~Comprehensive~~soil ~~Environmental~~in ~~Response~~concentrations ~~Compensation~~that ~~and~~exceed the EPA’s residential lead ~~Liability~~screening ~~Act,~~level. asThe ~~amended~~EPA has requested that ABI enter an Administrative Order on Consent (“~~CERCLA~~AOC”),. ABI has reviewed the EPA notification letter and the AOC and is assessing its responsibility with respect to ~~seven~~the Atlanta ~~sites~~Site ~~located~~and whether it is in ~~six~~ABI’s ~~separate~~interest ~~states~~to enter the consent order. The former owners have entered an AOC and will remediate the Atlanta Site and seek contribution from the other PRPs. At the other site, which is in Fulton County (together with the Atlanta Site, the “~~CERCLA~~ Georgia Sites”), a former smelting and refinery site, ABI has not entered into any negotiations with other PRP’s or the site owner. ABI believes, based upon current information available, that its liability at the Georgia Sites will not be material. Pursuant to the TBC Agreement, TBC is liable for 37.5% of the remediation costs incurred by ABI at the Georgia Sites.

AtA ~~one~~lawsuit ofwas ~~the seven sites, which is located~~brought inby ~~Southington,~~Olin ~~Connecticut,~~Corporation (~~the~~ “~~Southington Site~~Olin”), ~~an ABI subsidiary (“Ideal”) is named as a PRP. At~~ the ~~Southington~~present ~~Site,~~owner ~~Ideal~~of ~~is considered~~ a ~~performing~~former ~~party.~~chemical Inplant ~~2008, Ideal agreed to a settlement that required it to pay $671 thousand for remediation of this~~ site. ~~While~~in ~~Ideal~~Wilmington, ~~did~~Massachusetts ~~not receive a release from future obligations relating to~~ (the ~~Southington~~“Olin Site”), itin is1993 ~~not~~in ~~anticipated~~the ~~that~~Federal ~~any~~District ~~further~~Court ~~assessments~~of ~~will~~Massachusetts, beagainst ~~made~~ABI ~~against~~and ~~Ideal~~three ~~any~~other ~~time~~defendants, inwhich ~~the~~alleged ~~foreseeable~~that ABI ~~future.~~and ~~Under~~the ~~a preexisting~~three ~~agreement~~other ~~between~~defendants ~~ABI~~were ~~and~~liable for a ~~former~~portion ~~owner~~ of ~~ABI~~the ~~assets,~~soil ~~The~~and ~~Biltrite~~groundwater ~~Corporation~~response ~~(“TBC”),~~and ~~which~~remediation ~~agreement provides~~costs ~~for~~at the Olin ~~allocation~~Site. ofA ~~certain~~wholly-owned ~~environmental~~subsidiary ~~costs~~of ~~between~~ ABI owned and ~~TBC~~operated (the ~~“TBC~~Wilmington ~~Agreement”)~~plant ~~relating~~from 1959 to ~~certain current~~1964 and ~~former~~for ~~assets~~approximately one ofmonth ~~ABI~~during 1964, ~~TBC~~ABI ~~reimbursed~~held ~~Ideal~~title ~~for~~to ~~37.5%~~the ofproperty ~~that settlement amount~~directly.

5856

American Biltrite Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

8. Commitments and Contingencies (continued)

AtIn ~~another site~~2000, ABI, ~~together~~and ~~with~~TBC ~~a number of other named PRPs,~~ entered into a ~~consent~~settlement ~~decree and site remediation~~ agreement ~~(the~~with ~~“Agreements”)~~Olin inthat ~~September~~resolved ~~1996, which,~~all ~~without~~claims ~~admission~~and ofcounterclaims ~~liability~~among by the ~~PRPs,~~parties. ~~requires~~Under ~~remediation~~the terms of the ~~Interstate Leeds Company (“ILCO”) Superfund site located in Leeds~~agreement, ~~Alabama~~ABI ~~(the “ILCO Site”). The currently estimated aggregate future cost of remediation~~ and ~~associated~~ ~~transactional~~TBC ~~costs~~together atpaid ~~the~~Olin ~~ILCO Site ranges from~~ $~~3.6 million to $~~4.41 million. ~~Pursuant~~in tosettlement aof ~~final~~their ~~allocation~~share ~~among consent~~of ~~decree participants, ABI~~Olin’s ~~share~~$18.0 million of ~~the~~alleged ~~currently~~past ~~estimated~~response ~~future remediation~~ costs ~~range~~incurred ~~from~~through ~~approximately~~December ~~$189 thousand~~31, ~~to $229 thousand~~1998. ~~These~~ABI ~~estimates~~and ~~consider~~TBC ~~commitments~~also ~~from~~agreed deto ~~minimis~~reimburse ~~and~~Olin defor ~~maximus~~21.7% ~~settlors, the City~~ of ~~Leeds and~~Olin’s ~~its~~response ~~insurers,~~costs ~~amounts~~incurred ~~currently~~at ~~held~~the insite anafter ~~escrow~~January ~~fund~~1, a1999, ~~RCRA~~plus ~~Closure~~an ~~Fund~~annual ~~refund,~~reimbursement ~~bankrupt~~of ~~PRP’s~~$100 ~~and~~thousand ~~TBC~~for Olin’s ~~share~~internal ~~of those~~ costs,. ~~which~~Pursuant ~~pursuant~~ to the TBC Agreement, TBC is liable for 37.5% of ~~those~~the ~~remediation~~ costs that may be incurred by ABI. Aand ~~substantial~~TBC ~~share~~in ofconnection with ~~ABI’s~~this ~~future~~lawsuit ~~remediation~~and ~~costs~~37.5% ~~with~~of ~~respect to~~ the ~~ILCO~~amounts ~~Site~~due ~~will~~under ~~be payable over~~ the ~~next~~settlement ~~one~~agreement towith ~~five years~~Olin.

~~ABI~~Additional expenditures, isprincipally ~~involved~~consisting inof ~~two~~remediation ~~United~~and ~~States~~oversight ~~Environmental Protection~~costs, ~~Agency~~will ~~(“EPA”)~~be ~~sites~~required into ~~Georgia.~~remediate ~~At one of~~ the ~~EPA~~Olin ~~sites,~~Site. ~~ABI~~Olin has estimated ~~been~~that ~~named~~the ~~along~~total ~~with~~response ~~seven~~costs ~~other~~for ~~PRPs with~~2012 ~~respect~~will tobe aapproximately ~~site~~$3.1 inmillion. ~~Atlanta,~~ABI ~~Georgia~~has ~~involving~~estimated ~~three~~total ~~neighborhoods~~costs, ~~(“Atlanta~~including ~~Site”) where properties within the~~for ~~boundaries~~2012, ofto ~~the~~be ~~Atlanta Site contains lead~~ in the ~~surface~~range ~~soil~~of in$23.7 ~~concentrations~~million ~~that~~to ~~exceed~~$42.8 ~~the EPA’s residential lead screening level~~million. ~~The~~As ~~EPA~~of ~~has~~December ~~requested~~31, ~~that~~2011, ABI ~~enter~~has anestimated ~~Administrative~~its ~~Order~~potential ~~on Consent (“AOC”). ABI has reviewed~~liability ~~the~~to ~~EPA~~Olin ~~notification~~to ~~letter~~be ~~and~~in the ~~AOC~~range ~~and~~of is$5.5 ~~assessing~~million ~~its~~to ~~responsibility~~$9.7 ~~with~~million ~~respect~~after toallocation for the ~~Atlanta~~annual ~~Site~~reimbursement ~~and~~of ~~whether~~$100 itthousand ~~is in~~for ~~ABI~~Olin’s internal ~~interest~~costs ~~to enter the consent order. The former owners have entered an AOC~~ and ~~will~~before ~~remediate~~any ~~the~~recoveries ~~Atlanta~~from ~~Site~~insurance and ~~seek~~ ~~contribution from the other PRPs~~TBC. AtCosts ~~the~~are ~~other~~expected ~~site,~~to ~~which~~be ispaid inover ~~Fulton~~approximately ~~County (together with~~ the ~~Atlanta~~next ~~Site, the “Georgia~~ten ~~Sites”), a former smelting and refinery site, ABI has not entered into any negotiations with other PRP’s or the site owner~~years. ~~ABI~~In ~~believes,~~January ~~based upon current information available~~2006, ~~that its liability at~~ the ~~Georgia~~EPA ~~Sites~~assumed ~~will not be material. Pursuant to~~ the ~~TBC~~responsibility ~~Agreement, TBC is liable~~ for ~~37.5%~~the oversight of the ~~remediation~~Olin ~~costs~~Site ~~incurred~~from bythe ~~ABI~~Massachusetts atDepartment of ~~the~~Environmental ~~Georgia Sites~~Protection.

AThe ~~lawsuit~~State ~~was~~of ~~brought by~~Maine ~~Olin~~Department ~~Corporation~~of Environmental Protection (“~~Olin~~Maine DEP”) has put Miller Industries, Inc., (“Miller”) the present owner of a former ~~chemical~~sheet vinyl plant ~~site~~ in ~~Wilmington~~Lisbon Falls, ~~Massachusetts~~Maine, ~~(the~~on ~~“Olin Site”),~~notice into ~~1993~~clean inup ~~the~~a ~~Federal~~dumpsite ~~District~~where ~~Court~~there is exposed asbestos from sheet vinyl waste along with other hazardous substances. In September of ~~Massachusetts~~2005, ~~against~~a ~~ABI~~lawsuit ~~and~~was ~~three~~brought ~~other~~by ~~defendants~~Miller against ABI, which alleged that ABI and one ~~the three~~ other ~~defendants~~named defendant were liable for costs to clean up a ~~portion~~dumpsite (“Parcel A”) and a second parcel of land (“Parcel B”), which is alleged to contain polychlorinated biphenyls (“PCB’s”) in the soil. ~~and~~The ~~groundwater~~lawsuit, ~~response~~captioned Miller ~~and~~Industries, ~~remediation~~Inc. ~~costs~~v atAmerican Biltrite Inc. et al, was filed on September 22, 2005 in the ~~Olin~~ ~~Site~~Androscoggin Superior Court of Maine. Miller Awas ~~wholly~~seeking indemnification or contribution from ABI for the clean-~~owned~~up ~~subsidiary~~of both parcels of ~~ABI~~land ~~owned~~(together, ~~and~~the ~~operated~~“Maine Sites”). The lawsuit was dismissed by the ~~Wilmington~~Superior ~~plant~~Court ~~from~~of ~~1959~~Maine toon ~~1964~~February ~~and~~3, 2006 for ~~approximately~~lack of subject matter jurisdiction ~~one~~and ~~month~~failure ~~during~~to ~~1964~~state a claim upon which relief can be granted. In January 2006, ABI ~~held~~was ~~title~~notified by the Maine DEP that it is a PRP as to both Parcel A and Parcel B. Subsequently, Parcel B was named an EPA site. Prior to the ~~property~~commencement ~~directly~~of the lawsuit by Miller, ABI had been investigating and reviewing the condition of Parcel A and its potential liability for its share of any clean-up costs. Miller replaced its environmental consultant with a new environmental consultant in 2010. This consultant provided the parties with new information as to the

5957

American Biltrite Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

8. Commitments and Contingencies (continued)

Inestimated ~~2000,~~cost ~~ABI~~to ~~and~~clean ~~TBC~~up ~~entered~~Parcel ~~into~~A. ~~a settlement~~Based ~~agreement~~upon ~~with~~this ~~Olin~~new ~~that~~information, ~~resolved~~ABI ~~all~~believes ~~claims~~that ~~and counterclaims among~~ the ~~parties.~~cost ~~Under the terms~~ of ~~the~~site ~~agreement~~investigation, ~~ABI~~remediation, maintenance and ~~TBC~~monitoring at the site ~~together~~will ~~paid~~be ~~Olin~~between approximately $43.14 million inand ~~settlement~~$5.7 ofmillion. ~~their~~ABI ~~share~~has ofbeen ~~Olin’s~~advised ~~$18.0~~by ~~million~~Miller ofthat ~~alleged~~the ~~past~~clean-up ~~response~~for ~~costs~~Parcel ~~incurred~~B has ~~through~~been ~~December~~completed ~~31,~~under ~~1998~~budget. ABI ~~and~~has ~~TBC~~been ~~also~~assessing ~~agreed~~the topotential ~~reimburse~~availability ~~Olin~~of ~~for~~insurance ~~21.7%~~coverage offor ~~Olin’s~~such ~~response~~ costs. ~~incurred~~ABI is not at ~~the~~this ~~site after~~time ~~January~~able 1,to ~~1999,~~determine ~~plus~~what anits ~~annual~~potential ~~reimbursement~~liability ofwill ~~$100~~be ~~thousand~~with ~~for~~regard ~~Olin’s~~to ~~internal~~the ~~costs.~~Maine ~~Pursuant~~Sites tosince ~~the~~ABI ~~TBC~~has ~~Agreement,~~neither accepted ~~TBC~~nor isnegotiated ~~liable~~its ~~for~~allocable ~~37.5%~~share of the costs ~~that~~with ~~may~~Miller. bePursuant ~~incurred~~to bythe ~~ABI~~TBC ~~and~~Agreement, TBC inis ~~connection~~liable ~~with~~for ~~this lawsuit and~~ 37.5% of ~~the~~costs ~~amounts~~these ~~due~~incurred ~~under~~by ~~the~~ABI ~~settlement~~for ~~agreement~~the ~~with~~Maine ~~Olin~~Sites.

~~Additional~~The ~~expenditures,~~Company has ~~principally~~been ~~consisting~~ placed on notice by a group of ~~remediation~~four ~~and~~companies ~~oversight~~that ~~costs,~~entered ~~will~~into bea ~~required~~settlement toagreement ~~remediate~~with the ~~Olin~~EPA ~~Site.~~agreeing ~~Olin~~to ~~has~~fund ~~estimated~~and carry ~~that~~out a time critical remedial action (the ~~total~~“Ward ~~response~~Performing ~~costs for~~Parties”) ~~2011~~that ~~will~~it beis ~~approximately~~a ~~$3.7~~potential ~~million.~~responsible ~~ABI~~party of ~~has~~a ~~estimated~~claim ~~total~~at ~~costs,~~the ~~including~~Ward ~~for~~Transformer ~~2011~~Superfund Site in Raleigh, toNorth beCarolina (the “Ward Site”). There are three areas in the ~~range~~Ward ofSite ~~$22.8~~which ~~million~~ are to ~~$42.8~~be ~~million~~remediated in two phases. AsABI ofis ~~December~~to ~~31,~~be ~~2010,~~treated ~~ABI~~as ~~has~~a ~~estimated~~de ~~its~~minimis ~~potential~~party ~~liability~~at tothis ~~Olin~~site. toA bePhase inI settlement offer was made by the ~~range~~Ward ofPerforming ~~$5.4~~Parties ~~million~~ to $9the named PRPs for this site.7 ~~million~~ABI ~~after~~accepted ~~allocation~~the settlement offer that provided for ~~the~~payment ~~annual~~by ~~reimbursement~~ABI of $~~100~~69 thousand for ~~Olin’s~~remediation ~~internal~~ costs. ~~and~~The ~~before~~Company ~~any~~expects ~~recoveries from~~a ~~insurance~~Phase ~~and~~II ~~TBC.~~settlement ~~Costs~~offer ~~are~~to ~~expected~~be made to beit, ~~paid~~but it ~~over~~does ~~approximately~~not ~~the~~currently ~~next~~know ~~ten~~what ~~years.~~amount Inany ~~January~~such ~~2006,~~settlement ~~the~~offer ~~EPA~~would ~~assumed~~seek ~~the responsibility~~from ~~for~~ABI. Pursuant to the ~~oversight~~TBC Agreement, TBC is liable for 37.5% of ~~the~~these ~~Olin~~remediation ~~Site~~costs, ~~from~~incurred ~~the~~by ~~Massachusetts~~ABI ~~Department~~for ofthe ~~Environmental~~Ward ~~Protection~~Site.

~~The~~ABI ~~State~~has ofmade demands ~~Maine~~against ~~Department~~its ofinsurance ~~Environmental Protection~~carriers ~~(“Maine~~to ~~DEP”)~~provide ~~has~~defense ~~put~~and ~~Miller~~indemnity ~~Industries,~~for ~~Inc,~~ABI’s ~~(“Miller”)~~liabilities at the ~~present~~CERCLA ~~owner~~Sites ofand ~~a former sheet~~the ~~vinyl~~state-supervised ~~plant~~sites in ~~Lisbon Falls,~~ Maine, onas ~~notice~~well toas ~~clean~~the upOlin aSite ~~dumpsite~~with ~~where~~respect ~~there~~to isthe ~~exposed~~previous ~~asbestos~~supervision ~~from~~of ~~sheet~~that ~~vinyl~~site ~~waste~~by ~~along~~the Massachusetts ~~with~~Department ~~other~~of ~~hazardous~~Environmental ~~substances~~Protection. InAn ~~September~~agreement ~~of 2005, a lawsuit~~ was ~~brought~~executed by ~~Miller against~~ ABI, ~~which alleged that ABI~~ and ~~one~~ ~~other~~its ~~named~~carriers ~~defendant~~regarding ~~were~~the ~~liable~~payment ~~for costs to clean up a dumpsite (“Parcel A”) and a second parcel~~ of ~~land~~the ~~(“Parcel~~defense ~~B”),~~costs ~~which~~for ~~is alleged to contain polychlorinated biphenyls (“PCB’s”) in~~ the ~~soil.~~Olin ~~The lawsuit, captioned Miller Industries, Inc~~Site. vABI ~~American~~has ~~Biltrite~~reached ~~Inc.~~agreements etwith ~~al,~~four ~~was~~of ~~filed~~its oninsurance ~~September~~carriers ~~22,~~whereby ~~2005 in~~ the ~~Androscoggin~~carriers ~~Superior~~have ~~Court~~reimbursed ofthe Company ~~Maine~~$6. ~~Miller~~5 ~~was~~million ~~seeking indemnification or contribution from ABI~~ for ~~the~~past ~~clean-up~~and ofcurrent ~~both~~environmental ~~parcels~~claims ofand ~~land~~ABI ~~(together,~~shared ~~the “Maine Sites”)~~37.5% ~~The~~of ~~lawsuit was dismissed by~~ the ~~Superior~~amount ~~Court~~ of ~~Maine~~that onreimbursement ~~February~~with ~~3, 2006 for lack of subject matter jurisdiction~~TBC ~~and~~pursuant ~~failure~~ to ~~state~~the aTBC ~~claim upon which relief can be granted~~Agreement. InIncluded ~~January~~in ~~2006,~~this ~~ABI~~insurance ~~was~~reimbursement ~~notified by the Maine DEP that it~~ is a ~~PRP~~ aspayment toof ~~both Parcel A and Parcel B~~$4.6 ~~Subsequently,~~million ~~Parcel~~by Bone ~~was~~carrier ~~named~~in ~~an EPA site~~December 2005. ~~Prior~~Another tocarrier ~~the~~has ~~commencement~~agreed ofto ~~the~~reimburse ~~lawsuit by Miller, ABI had been investigating and reviewing~~ the ~~condition~~Company ~~of Parcel A and its potential liability~~ for ~~its~~2.5% ~~share~~ of ~~any~~the ~~clean-up costs.~~Company’s ~~Miller~~liabilities ~~replaced~~regarding ~~its~~the ~~environmental~~future ~~consultant with a new~~ environmental ~~consultant in 2010. This consultant provided the parties~~ ~~with~~expenses ~~new~~related ~~information as~~ to the ~~estimated~~Olin ~~cost~~Site, to$159 ~~clean~~thousand upof ~~Parcel~~which A.was ~~Based~~reimbursed ~~upon~~through ~~this~~December ~~new information~~31, ~~ABI~~2011 ~~believes~~and ~~that~~37.5% ~~the cost~~ of ~~site investigation, remediation, maintenance and monitoring at~~ the ~~site~~amount ~~will~~of ~~be between approximately $3.4 million and $5.7~~that ~~million.~~reimbursement ~~ABI~~was ~~has~~shared ~~been~~with ~~advised~~TBC bypursuant ~~Miller~~to ~~that~~ the ~~clean-up~~TBC ~~for Parcel B has been completed under budget~~Agreement. ABI ~~has~~and ~~been~~one ~~assessing the potential availability~~ of ~~insurance coverage for such costs. ABI is not at this time able to determine what~~ its ~~potential~~insurance ~~liability will~~carriers becontinue ~~with regard~~ to ~~the~~discuss ~~Maine Sites since~~ ABI ~~has neither accepted nor negotiated its allocable share of the costs with Miller.~~’s ~~Pursuant~~remaining todemands ~~the~~for ~~TBC~~insurance ~~Agreement,~~coverage ~~TBC is liable~~ for ~~37.5% of costs~~ these ~~incurred by ABI for the Maine Sites~~sites.

6058

American Biltrite Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

8. Commitments and Contingencies (continued)

~~The~~ABI’s ~~Company~~ultimate ~~has~~liability ~~been~~and ~~placed on notice by a~~funding ~~group~~obligations ofin ~~four~~connection ~~companies that entered into a settlement agreement~~ with the ~~EPA~~CERCLA ~~agreeing~~Sites todepends ~~fund~~on ~~and~~many ~~carry~~factors, ~~out~~including ~~a time critical remedial action (~~the ~~“Ward~~volume ~~Performing Parties”) that it is a potential responsible party~~ of amaterial ~~claim~~contributed atto the ~~Ward Transformer Superfund Site in Raleigh~~site, ~~North Carolina (~~ the ~~“Ward~~number ~~Site”).~~of ~~There~~other ~~are~~PRPs ~~three~~and ~~areas~~their infinancial viability, the ~~Ward~~remediation ~~Site~~methods ~~which~~and ~~are~~technology to be ~~remediated~~ inused ~~two~~and ~~phases.~~the ~~ABI~~extent is to ~~be treated as a de minimis party at this site. A Phase I settlement offer was made by the Ward~~which ~~Performing~~costs ~~Parties~~may tobe ~~the~~recoverable ~~named~~from ~~PRPs for this site~~insurance. ~~ABI~~However, ~~accepted~~under ~~the~~CERCLA ~~settlement~~and ~~offer~~certain ~~that~~other ~~provided~~laws, ~~for payment by~~ ABI, ofas ~~$69 thousand for remediation costs. The Company expects~~ a ~~Phase~~PRP, IIcan ~~settlement offer to~~ be ~~made~~held tojointly ~~it,~~and ~~but it does not currently know what amount~~severally ~~any such settlement offer would seek from ABI. Pursuant to the TBC Agreement, TBC is~~ liable for ~~37.5%~~all ofenvironmental ~~these remediation~~ costs~~, incurred~~ byassociated ~~ABI~~with ~~for~~a ~~the Ward Site~~site.

~~ABI~~In ~~has~~connection ~~made~~with ~~demands~~the ~~against~~transfer ~~its~~of ~~insurance carriers to provide defense and indemnity for~~ ABI’s Trenton, ~~liabilities~~NJ attile ~~the~~plant ~~CERCLA~~to ~~Sites~~Congoleum ~~and the state-supervised sites~~ in ~~Maine as~~1993, ~~well as~~ the ~~Olin~~Company ~~Site~~entered ~~with~~an ~~respect~~administrative toconsent ~~the~~order ~~previous~~with ~~supervision of that site by~~ the ~~Massachusetts~~New ~~Department~~Jersey Department of Environmental Protection. An(“NJDEP”) ~~agreement~~for ~~was~~any ~~executed~~environmental byremediation ~~ABI and its carriers regarding~~ the ~~payment~~state ofmay ~~the~~require ~~defense~~at ~~costs~~that ~~for the Olin Site~~location. ~~ABI~~Pursuant ~~has~~to ~~reached~~the ~~agreements~~contribution ~~with~~in ~~four~~1993 of ~~its insurance carriers whereby~~ the ~~carriers have reimbursed the~~ Company’s ~~$6.5~~former ~~million~~tile ~~for~~division ~~past and~~to ~~current~~Congoleum, ~~environmental~~Congoleum ~~claims~~assumed ~~and~~liability ~~ABI~~for ~~shared 37.5% of~~ the ~~amount~~ cost of ~~that~~cleaning ~~reimbursement~~up ~~with~~the ~~TBC~~site. ~~pursuant~~NJDEP torequired the ~~TBC~~Company ~~Agreement. Included~~to inestablish ~~this~~a ~~insurance~~Remediation ~~reimbursement~~Trust isFund ~~a payment~~ of $~~4.6~~349 ~~million~~thousand byas ~~one~~a ~~carrier~~financial ~~in December 2005. Another carrier has agreed~~assurance ~~to reimburse the Company~~ for ~~2.5%~~meeting ofits ~~the~~funding ~~Company’s~~obligation ~~liabilities~~at ~~regarding~~that ~~the~~location. ~~future~~Even ~~environmental~~with ~~expenses~~this ~~related~~financial assurance to ~~the Olin Site~~NJDEP, ~~$141~~the ~~thousand~~Company ofstill ~~which~~remains ~~was~~contingently liable ~~reimbursed~~in ~~through December 31, 2010 and 37.5% of~~ the ~~amount~~event of that ~~reimbursement~~Congoleum ~~was~~fails ~~shared with TBC pursuant~~ to ~~the~~perform ~~TBC~~or ~~Agreement.~~fund ~~ABI~~any ~~and~~required ~~one~~remediation ofrelating ~~its insurance carriers continue~~ to ~~discuss~~this ~~ABI’s remaining demands for insurance coverage for these sites~~site.

~~ABI’s~~The ~~ultimate~~outcome ~~liability and funding obligations in connection with the CERCLA Sites depends on many factors, including the volume~~ of ~~material~~these ~~contributed~~matters tocould ~~the~~result ~~site,~~in ~~the~~significant ~~number~~expenses ofincurred ~~other~~by, ~~PRPs~~or ~~and~~judgments ~~their~~assessed ~~financial viability~~against, the ~~remediation~~Company, ~~methods~~which ~~and~~could ~~technology~~have toa bematerial ~~used~~adverse ~~and~~effect ~~the~~on ~~extent to which~~the ~~costs may be recoverable from insurance. However~~business, ~~under~~results ~~CERCLA~~of ~~and~~operations ~~certain other laws, ABI, as a PRP, can be held jointly~~ and ~~severally liable~~financial ~~for~~position ~~all~~of ~~environmental~~the ~~costs associated with a site~~Company.

61As of December 31, 2011 and 2010, ABI recorded each year a reserve of $8.6 million and $8.3 million, respectively, which represent probable and reasonably estimable amounts to cover the anticipated remediation costs described above based on facts and circumstances known to the Company. The Company has also recorded a receivable of $3.3 million and $3.2 million as of December 31, 2011 and 2010, respectively, for ABI’s estimable and probable recoveries for the contingencies described above. These projects tend to be long-term in nature, and these assumptions are subject to refinement as facts change. As a result, it is possible that the Company may need to revise its recorded liabilities and receivables for environmental costs in future periods resulting in potentially material adjustments to the Company’s earnings in future periods. The Company closely monitors existing and potential environmental matters to consider the reasonableness of its estimates and assumptions.

~~American Biltrite Inc. and Subsidiaries~~Other

~~Notes~~In the ordinary course of its business, ABI may become involved in lawsuits, administrative proceedings, product liability and other matters. In some of these proceedings, plaintiffs may seek to ~~Consolidated~~recover ~~Financial~~large ~~Statements~~and ~~(continued)~~sometimes unspecified amounts, and the matters may remain unresolved for several years.

~~8. Commitments and Contingencies (continued)~~59

InAmerican ~~connection~~Biltrite with the transfer of ABI’s Trenton, NJ tile plant to Congoleum in 1993, the Company entered an administrative consent order with the New Jersey Department of Environmental Protection for any environmental remediation the state may require at that locationInc. ~~Pursuant~~and to the contribution in 1993 of the Company’s former tile division to Congoleum, Congoleum assumed liability for the cost of cleaning up the site. Congoleum has established a remediation trust fund of $100 thousand as financial assurance for certain remediation funding obligations. The Company remains contingently liable in the event that Congoleum fails to perform or fund any required remediation relating to this site.Subsidiaries

~~The~~Notes ~~outcome~~to ofConsolidated ~~these~~Financial ~~matters~~Statements could result in significant expenses incurred by, or judgments assessed against, the Company, which could have a material adverse effect on the business, results of operations and financial position of the Company.(continued)

~~As of December 31, 2010 and 2009, ABI recorded a reserve of $8~~9.3 ~~million~~Income and $6.5 million, respectively, which represent probable and reasonably estimable amounts to cover the anticipated remediation costs described above based on facts and circumstances known to the Company. The Company has also recorded a receivable of $3.2 million and $2.5 million as of December 31, 2010 and 2009, respectively, for ABI’s estimable and probable recoveries for the contingencies described above. These projects tend to be long-term in nature, and these assumptions are subject to refinement as facts change. As a result, it is possible that the Company may need to revise its recorded liabilities and receivables for environmental costs in future periods resulting in potentially material adjustments to the Company’s earnings in future periods. The Company closely monitors existing and potential environmental matters to consider the reasonableness of its estimates and assumptions.Taxes

~~Other~~The Company is subject to income taxes in the United States and certain foreign jurisdictions. Judgment is required in determining the consolidated provision for income taxes and recording the related assets and liabilities.

InThe ~~the~~components ~~ordinary course~~ of ~~its~~(loss) ~~business,~~income ~~ABI~~from continuing ~~may~~operations ~~become~~before ~~involved~~the inprovision ~~lawsuits,~~for ~~administrative~~(benefit ~~proceedings,~~from) ~~product~~income ~~liability~~taxes and other ~~matters.~~items Infor ~~some~~the ofyears ~~these~~ended ~~proceedings~~December 31, ~~plaintiffs~~ ~~may~~2011 ~~seek to recover large~~ and ~~sometimes~~2010 were ~~unspecified~~as ~~amounts,~~follows ~~and~~(in ~~the matters may remain unresolved for several years.~~thousands):

	2011			2010

Domestic	$	(3,512	)	$	3,548
Foreign		2,045			610

	$	(1,467	)	$	4,158

~~American~~Significant ~~Biltrite~~components ~~Inc.~~of the (benefit from) provision for income taxes for the years ended December 31, 2011 and ~~Subsidiaries~~2010 were as follows (in thousands):

Notes to Consolidated Financial Statements (continued)

	2011			2010
Current:
Federal	$	(685	)	$	512
Foreign		218			769
State		10			315
Total current		(457	)		1,596

Deferred:
Federal		–			–
Foreign		643			(1,724	)
State		–			–
Total deferred		643			(1,724	)
	$	186		$	(128	)

~~9. Income Taxes~~60

~~The~~American ~~Company~~Biltrite ~~is subject to income taxes in the United States and certain foreign jurisdictions~~Inc. ~~Judgment is required in determining the consolidated provision for income taxes~~ and ~~recording the related assets and liabilities.~~Subsidiaries

~~The~~Notes ~~components~~to ofConsolidated ~~income~~Financial ~~(loss)~~Statements ~~from continuing operations before the provision for~~ (~~benefit from~~continued) ~~income taxes and other items for the years ended December 31, 2010 and 2009 were as follows (in thousands):~~

	2010		2009
Domestic	$	3,548	$	(3,751	)
Foreign		610		37
	$	4,158	$	(3,714	)

9. Income Taxes (continued)

~~Significant~~The ~~components~~reconciliation of ~~the~~income ~~provision~~tax ~~for~~provision (benefit ~~from~~) ~~income~~computed ~~taxes~~at the U.S. federal statutory tax rate to the effective tax rate of the Company’s tax provision (benefit) for the years ended December 31, ~~2010~~2011 and ~~2009~~2010 ~~were~~was as follows ~~(in thousands)~~:

	2010				2009
		2011				2010
Current:
U.S. statutory rate			(34.0	)%			34.0%
Federal	$	512			$	(214	)
State income taxes, net of federal benefits			(14.5	)			3.7
Foreign		769				164
Foreign tax rate difference			(2.5	)			(6.4	)
State		315				112
Tax credits			(19.2	)			(9.9	)
Total current		1,596				62
Valuation allowance			82.4				(55.7	)
Deferred:
Change in tax liability reserves			3.3				14.6
Federal		—				—
Expired net operating losses			1.4				17.1
Foreign		(1,724	)			—
Other			(4.2	)			(0.5	)
State		—				—
Effective tax rate			12.7%				(3.1	)%
Total deferred		(1,724	)			—
	$	(128	)		$	62

6361

American Biltrite Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

9. Income Taxes (continued)

~~The~~Deferred ~~reconciliation~~income oftaxes ~~income~~reflect the net tax ~~(benefit)~~effects ~~provision~~of ~~computed~~temporary atdifferences between the ~~U.S.~~carrying ~~federal~~amounts ~~statutory~~of ~~tax~~assets ~~rate~~and toliabilities for financial reporting purposes and the ~~effective~~amounts used for income tax ~~rate~~purposes. Significant components of the Company’s deferred tax ~~(benefit)~~assets ~~provision for~~and ~~the~~liabilities ~~years~~as ~~ended~~of December 31, ~~2010~~2011 and ~~2009~~2010 ~~was~~were as follows (in thousands):

	2010				2009
		2011				2010
U.S. statutory rate		34.0%				(34.0	)%
Deferred tax assets:
State income taxes, net of federal benefits		3.7				(6.6	)
Inventory		$	512			$	448
Foreign tax rate difference		(6.4	)			(0.3	)
Investments			3,300				3,682
Tax credits		(9.9	)			(25.0	)
Accruals and reserves			1,635				1,642
Non-deductible items		(2.0	)			25.5
Environmental reserves			2,479				2,404
Valuation allowance		(55.7	)			41.0
Postretirement benefit obligations			4,325				2,814
Change in tax liability reserves		14.6				—
Depreciation and amortization			873				1,098
Expired net operating losses		17.1				5.3
Net operating losses and credit carryforwards			3,397				2,150
Other		1.5				(4.2	)
Total deferred tax assets			16,521				14,238
Effective tax rate		(3.1	)%			1.7%
Less valuation allowance			(12,537	)			(9,951	)
Net deferred tax assets			3,984				4,287
Deferred tax liabilities:
Depreciation and amortization			2,444				2,514
Postretirement benefit obligations			–				297
Total deferred tax liabilities			2,444				2,811
Net deferred tax asset		$	1,540			$	1,476

64As of December 31, 2011, the Company had state net operating loss (“NOL”) carryforwards of $10.4 million and U.S. federal and state tax credit carryforwards of $1.4 million. The Company’s NOL’s and credit carryforwards have already begun to expire and will continue to expire through 2031. As of December 31, 2011, the Company had foreign NOL carryforwards of $4.2 million, which do not expire. Due to the uncertainty surrounding the realization of the Company’s domestic deferred tax assets and as a result of cumulative losses from its U.S. operations in recent years, the Company has provided a full valuation allowance against the Company’s domestic deferred tax assets. The valuation allowance related to these domestic deferred tax assets increased by $2.6 million during 2011.

~~American Biltrite Inc. and Subsidiaries~~62

~~Notes~~American toBiltrite ~~Consolidated~~Inc. ~~Financial~~and ~~Statements (continued)~~Subsidiaries

9.Notes ~~Income~~to ~~Taxes~~Consolidated Financial Statements (continued)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes9. ~~Significant~~Income ~~components~~Taxes ~~of the Company’s deferred tax assets and liabilities as of December 31, 2010 and 2009 were as follows~~ (~~in thousands~~continued):

	2010			2009
Deferred tax assets:
Inventory	$	448		$	195
Investments		3,682			3,652
Accruals and reserves		1,642			1,993
Environmental reserves		2,404			2,056
Postretirement benefit obligations		2,814			2,572
Depreciation and amortization		1,098			658
Net operating losses and credit carryforwards		2,150			3,838
Total deferred tax assets		14,238			14,964
Less valuation allowance		(9,951	)		(11,889	)
Net deferred tax assets		4,287			3,075
Deferred tax liabilities:
Depreciation and amortization		2,514			2,940
Postretirement benefit obligations		297			312
Other		—			135
Total deferred tax liabilities		2,811			3,387
Net deferred tax asset (liability)	$	1,476		$	(312	)

The Company did not recognize any taxes in connection with the loss of its ownership interest in Congoleum (see Note 1), with the exception of a $55 thousand benefit that offset a 2007 capital gain. Such a loss is a capital loss, which can only be realized against capital gains. A benefit for the capital loss can be carried back for three years and carried forward for five years; however, the Company does not expect it will have any additional capital gains before the tax benefit from this loss expires. Consequently, a full valuation allowance has been recorded against the deferred tax asset.

As of December 31, 2010, the Company ~~had state~~reversed ~~net~~the ~~operating~~valuation ~~loss~~allowance ~~(“NOL”)~~previously ~~carryforwards~~maintained ofagainst ~~$7.7~~the ~~million~~AB ~~and~~Canada ~~U.S.~~net ~~federal~~deferred ~~and state~~ tax ~~credit carryforwards of $482 thousand~~assets. The Company’s ~~NOL’s~~assessment ~~and~~was based ~~credit~~upon ~~carryforwards~~its ~~have~~cumulative ~~already~~history ~~begun~~of toearnings ~~expire~~before ~~and~~taxes ~~will~~for ~~continue~~financial toreporting ~~expire~~purposes ~~through 2029.~~over Asa ofthree ~~December~~year ~~31,~~period ~~2010,~~and ~~the~~an ~~Company~~assessment of ~~had~~its ~~foreign~~expected ~~NOL~~future ~~carryforwards~~results of ~~$3.0~~operations ~~million,~~for ~~which~~the doCanadian ~~not~~operations ~~expire.~~as ~~Due~~of toDecember ~~the~~31, ~~uncertainty surrounding~~2010. ~~the~~As ~~realization~~a ofresult, the Company’s ~~domestic~~recognized net deferred tax assets ~~and as a result~~ of ~~cumulative~~$1.5 ~~losses~~million ~~from~~for ~~its~~AB UCanada.~~S. operations~~ inAs ~~recent~~of ~~years~~December 31, ~~the~~2011, ~~Company~~AB ~~has provided a full valuation allowance against the Company~~Canada’s ~~domestic~~net deferred tax ~~assets.~~ ~~The valuation allowance related to these domestic deferred tax~~ assets ~~increased~~remained at by $~~784~~1.5 ~~thousand during 2010~~million.

65Through December 31, 2011, the Company has not provided U.S. income taxes on approximately $21.3 million of unremitted foreign earnings because such earnings are intended to be indefinitely reinvested outside the U.S. It is not practical to estimate the amount of income taxes payable on the earnings that are indefinitely reinvested in foreign operations.

~~American~~During ~~Biltrite~~the ~~Inc~~year ended December 31, 2010, the Company increased its liability for unrecognized tax benefits by $449 thousand for uncertain tax positions taken in 2010 and prior years. No adjustments were required during 2011. The Company also recorded additional interest and ~~Subsidiaries~~penalty expense of approximately $48 thousand and $184 thousand during 2011 and 2010, respectively, in connection with uncertain tax positions. As of December 31, 2011 and 2010, the Company had $419 thousand and $774 thousand of interest and penalties accrued, respectively. If the tax benefits are ultimately recognized, the effective tax rates in any future periods would be favorably affected by approximately $709 thousand. In addition, it is reasonably possible that during the next twelve month period, the Company’s liability for unrecognized tax benefits could decrease anywhere between zero and approximately $69 thousand relating to the settlement of audits.

~~Notes to Consolidated Financial Statements (continued)~~63

9.American ~~Income~~Biltrite ~~Taxes~~Inc. ~~(continued)~~and Subsidiaries

~~The~~Notes ~~Company~~to ~~did~~Consolidated ~~not~~Financial ~~recognize~~Statements any taxes in connection with the loss of its ownership interest in Congoleum. Such a loss is a capital loss, which can only be realized against capital gains. A benefit for the capital loss can be carried forward for five years; however, the Company does not expect it will have any capital gains before the tax benefit from this loss expires. Consequently, a full valuation allowance has been recorded against the deferred tax asset.(continued)

~~As of December 31, 2010, AB Canada had NOL’s in the amount of $844 thousand, which will expire if unused in 2014 and 2015~~9. AsIncome ofTaxes December 31, 2010, the Company reversed the valuation allowance previously maintained against the AB Canada net deferred tax assets. The Company’s assessment was based upon its cumulative history of earnings before taxes for financial reporting purposes over a three year period and an assessment of its expected future results of operations for the Canadian operations as of December 31, 2010. As a result, the Company recognized net deferred tax assets of $1.5 million for AB Canada. As of December 31, 2009, AB Canada had a net deferred tax liability of $312 thousand as it maintained a full valuation allowance against its deferred tax assets. AB Canada’s valuation allowance decreased by $2.7 million during 2010.(continued)

~~The~~A ~~Company’s~~reconciliation ~~consolidated~~of ~~valuation~~ the allowance ~~decreased~~for byuncertain ~~$1.9~~tax ~~million~~positions ~~during~~for the years ended December 31, 2011 and 2010. is as follows (in thousands):

Through December 31, 2010, the Company has not provided U.S. income taxes on approximately $19.9 million of unremitted foreign earnings because such earnings are intended to be indefinitely reinvested outside the U.S. It is not practical to estimate the amount of income taxes payable on the earnings that are indefinitely reinvested in foreign operations.

	2011		2010

Balance at January 1	$	1,559	$	1,110
Increase (decrease) for tax positions taken during a prior year		–		401
Increase (decrease) for tax positions taken during the current year		–		48
Decreases relating to settlements		–		–
Decrease resulting from the expiration of the statute of limitations		–		–

Balance at December 31	$	1,559	$	1,559

InThe ~~2007, the~~ Company’s ~~adopted~~federal ~~the~~and ~~accounting~~state income ~~rules~~tax ~~for~~returns ~~the~~are ~~accounting~~subject ofto ~~uncertain~~examination for all tax ~~positions~~years infrom ~~accordance~~2005 ~~with~~to ~~U.S.~~the ~~GAAP~~present. ~~During~~However, the tax years ~~ended~~in ~~December~~which ~~31,~~losses ~~2010 and~~arose ~~2009,~~may ~~the~~be ~~Company~~subject ~~increased~~to ~~(decreased)~~audit ~~its~~when ~~liability~~such ~~for~~NOL ~~unrecognized~~and tax ~~benefits~~credit bycarryforwards ~~$449~~are ~~thousand~~utilized to offset taxable income and ~~$(279)~~tax ~~thousand,~~liabilities ~~respectively,~~in ~~for~~future ~~uncertain~~periods. ~~tax~~During ~~positions~~2010, ~~taken~~AB inCanada was audited by the ~~current~~Canadian ~~and~~Revenue ~~prior~~Authority (“CRA”) for the years ending 2002 through 2007. ~~The~~In ~~Company~~January ~~also~~2011, ~~recorded~~the ~~additional~~CRA ~~interest~~notified ~~and~~AB ~~penalty~~Canada ~~expense~~that certain amounts related to the Company’s management fees and AB Canada’s net operating loss carryforwards of ~~approximately~~a ~~$184~~discontinued ~~thousand~~operation ~~and~~will ~~$31~~be ~~thousand~~disallowed. ~~during~~In ~~2010~~May and ~~2009,~~June ~~respectively~~2011, inAB ~~connection~~Canada received ~~with~~formal ~~uncertain~~assessments ~~tax~~for ~~positions~~2002 through 2007. As ofIn ~~December~~June 312011, ~~2010~~AB ~~and~~Canada ~~2009~~filed notices of objection to the assessments; however, as required by the ~~Company~~CRA, ~~had~~AB ~~$774~~Canada ~~thousand~~also ~~and~~made ~~$590~~a ~~thousand~~minimum payment of ~~interest~~$2.1 ~~and~~million. ~~penalties~~The ~~accrued,~~Company ~~respectively. If~~intends ~~the~~to ~~tax~~vigorously ~~benefits~~defend ~~are~~its ~~ultimately~~positions. The ~~recognized,~~Company’s ~~the~~estimate ~~effective~~of ~~tax~~its ~~rates~~potential inliability ~~any~~is ~~future~~included ~~periods~~in ~~would~~its beallowance ~~favorably~~for ~~affected~~uncertain bytax ~~approximately~~positions; however, the ~~$2.0~~outcome ~~million.~~of Inthe ~~addition,~~CRA itaudit is ~~reasonably~~uncertain ~~possible~~and ~~that~~therefore, ~~during~~the impact on the ~~next~~financial ~~twelve~~position ~~month~~and ~~period,~~results of operations of the Company’s cannot ~~liability~~be ~~for unrecognized~~fully ~~tax~~determined. ~~benefits~~If ~~could~~the ~~decrease~~CRA ~~anywhere~~positions ~~between~~are ~~zero~~sustained ~~and~~in ~~approximately~~full, the Company would recognize additional tax expense of approximately $13.16 million ~~relating~~plus tointerest ~~the~~and ~~settlement~~penalties offor ~~audits~~these years.

66During 2011 and 2010, the Company made payments for income taxes of $3.1 million and $1.3 million, respectively.

~~American Biltrite Inc. and Subsidiaries~~64

~~Notes~~American toBiltrite ~~Consolidated~~Inc. ~~Financial~~and ~~Statements (continued)~~Subsidiaries

9.Notes ~~Income~~to ~~Taxes~~Consolidated Financial Statements (continued)

A10. ~~reconciliation~~Other ofComprehensive ~~the~~Income ~~allowance for uncertain tax positions for the years ended December 31, 2010 and 2009 is as follows~~ (~~in thousands~~Loss):

	2010		2009
Balance at January 1	$	1,110	$	1,389
Increase (decrease) for tax positions taken during a prior year		401		(41	)
Increase (decrease) for tax positions taken during the current year		48		(15	)
Decreases relating to settlements		—		(223	)
Decrease resulting from the expiration of the statute of limitations		—		—
Balance at December 31	$	1,559	$	1,110

The Company records unrealized gains and losses on foreign currency translation adjustments and changes in pension liabilities in other comprehensive income. Components of other comprehensive income (loss) for the years ended December 31, 2011 and 2010 were as follows (in thousands):

The Company’s federal and state income tax returns are subject to examination for all tax years from 2005 to the present. However, the tax years in which losses arose may be subject to audit when such NOL and tax credit carryforwards are utilized to offset taxable income and tax liabilities in future periods. AB Canada is currently under audit by the Canadian Revenue Authority (“CRA”) for the years ending 2002 through 2007. In January 2011, the CRA notified AB Canada that certain amounts related to the Company’s management fees and net operating loss carryforwards of a discontinued operation will be disallowed. If the CRA positions are sustained in full, the Company’s tax liability would increase by approximately $3.6 million plus interest and penalties for these years. While AB Canada has not yet received a formal assessment from the CRA, the Company intends to vigorously defend its positions. The Company’s estimate of its potential liability is included in its allowance for uncertain tax positions; however, the outcome of this audit is uncertain and therefore, the impact on the financial position and results of operations of the Company cannot be fully determined.

	2011			2010

Foreign currency translation adjustments	$	(413	)	$	997
Defined benefits plan adjustments		(5,259	)		(719	)
Deconsolidation of Congoleum		–			37,127
Net change in accumulated other comprehensive income	$	(5,672	)	$	37,405

During ~~2010~~2011 and ~~2009~~2010, the Company ~~made payments~~recorded ~~for~~unrealized ~~income~~losses ~~taxes~~and gains, respectively, as a result of $1changes in the exchange rates used to convert Canadian dollars to U.3S. dollars. ~~million~~The exchange rates used to translate the Canadian division’s balance sheets as of December 31, 2011 and ~~$270~~2010 ~~thousand~~were approximately 2% lower and 5% higher, respectively, than the exchange rate used for the prior year end.

67During 2011 and 2010, the Company recorded a net adjustment of $5.3 million and $719 thousand, respectively, to accumulated other comprehensive income (“AOCI”) as a result of changes in the funded status of the pension plans of the continuing operations (see Note 7).

The deconsolidation of Congoleum in July 2010 resulted in the elimination from American Biltrite’s ~~Inc~~consolidated stockholders’ equity of the accumulated deficit attributed to Congoleum, $37.1 million of which was recorded against accumulated other comprehensive income for prior period pension and ~~Subsidiaries~~other benefit plans adjustments (see Note 1).

~~Notes~~As toof ~~Consolidated~~December ~~Financial~~31, ~~Statements~~2011 and 2010, the components of accumulated other comprehensive loss, net of taxes and noncontrolling interests, were as follows (~~continued~~in thousands):

10. Other Comprehensive Income

	2011			2010

Foreign currency translation adjustments	$	2,897		$	3,310
Pension liability		(10,252	)		(4,993	)

	$	(7,355	)	$	(1,683	)

The Company records unrealized gains or losses on foreign currency translation adjustments and changes in pension liabilities in other comprehensive income. Components of other comprehensive income (loss) for the years ended December 31, 2010 and 2009 were as follows (in thousands):65

	2010			2009
Foreign currency translation adjustments	$	997		$	2,699
Defined benefits plan adjustments
Continuing operations		(719	)		3,521
Discontinued operation		—			14,429
Noncontrolling interest		—			(6,487	)
Deconsolidation of Congoleum		37,127			—
Net change in accumulated other comprehensive income	$	37,405		$	14,162

American Biltrite Inc. and Subsidiaries

~~During~~Notes ~~2010 and 2009, the Company recorded unrealized gains as a result of increases in the exchange rates used~~ to ~~convert~~Consolidated ~~Canadian~~Financial ~~dollars~~Statements to U.S. dollars. The exchange rates used to translate the Canadian division’s balance sheets as of December 31, 2010 and 2009 were approximately 5% and 16% higher, respectively, than the exchange rate used for the prior year end.(continued)

~~During 2010 and 2009, the Company recorded a net adjustment of $719 thousand and $3~~11.5 ~~million,~~Income ~~respectively, to accumulated other comprehensive income~~ (~~“AOCI”~~Loss) as aPer result of changes in the funded status of the pension plans of the continuing operations (see Note 7). For the year ended December 31, 2009, the Company also recorded an adjustment of $14.4 million to AOCI for the change in the funded status of Congoleum’s pension and other benefit plans. In accordance with the adoption of new accounting rules for noncontrolling interests effective January 1, 2009, the Company recognized the noncontrolling interest in Congoleum’s adjustment of $14.4 million.Share

The ~~deconsolidation~~following oftable ~~Congoleum~~sets inforth ~~July~~the ~~2010~~computation ~~resulted~~of inbasic ~~the~~and ~~elimination~~diluted ~~from~~loss ~~American~~per ~~Biltrite’s~~share ~~consolidated~~for ~~stockholders’ equity of~~ the ~~accumulated~~years ~~deficit~~ended ~~attributed to~~December ~~Congoleum~~31, ~~$37.1~~2011 ~~million~~and of2010 ~~which~~(in ~~was~~thousands, ~~recorded~~except ~~against~~share ~~accumulated other comprehensive income for prior period pension~~ and ~~other benefit~~per ~~plans adjustments.~~share amounts):

	2011			2010
Numerator:
Net (loss) income of continuing operations	$	(1,654	)	$	4,231
Net income of discontinued operation		–			52,938

Net (loss) income attributable to controlling interests	$	(1,654	)	$	57,169
Denominator:
Basic income per share: Weighted-average shares		3,444,762			3,441,431
Dilutive employee stock options		–			4,611
Diluted income per share: Adjusted weighted-average shares and assumed conversions		3,444,762			3,446,042

Net (loss) income per share attributable to controlling interests
Basic
Continuing operations	$	(0.48	)	$	1.23
Discontinued operation		–			15.38

	$	(0.48	)	$	16.61
Diluted
Continuing operations	$	(0.48	)	$	1.23
Discontinued operation		–			15.36

	$	(0.48	)	$	16.59

~~American~~For ~~Biltrite~~the ~~Inc.~~year ~~and~~ended ~~Subsidiaries~~December 31, 2011, 46,034 shares of dilutive employee stock options were excluded from the Company’s diluted earnings per share calculation because their inclusion would be anti-dilutive.

~~Notes to Consolidated Financial Statements (continued)~~66

~~10.~~American ~~Other~~Biltrite ~~Comprehensive~~Inc. ~~Income~~and ~~(continued)~~Subsidiaries

AsNotes ofto ~~December~~Consolidated ~~31,~~Financial ~~2010~~Statements ~~and 2009, the components of accumulated other comprehensive loss, net of taxes and noncontrolling interests, were as follows~~ (~~in thousands~~continued):

	2010			2009
Foreign currency translation adjustments	$	3,310		$	2,313
Pension liability		(4,993	)		(41,401	)
	$	(1,683	)	$	(39,088	)

12. Stock Option Plans

11ABI maintains a stock award and incentive plan which permits the issuance of options, stock appreciation rights (“SARs”), limited SARs, restricted stock, restricted stock units and other stock-based awards of ABI to selected employees and independent contractors of the Company. ~~Income~~Under the terms of the stock award and incentive plan, options granted may be either nonqualified or incentive stock options and the exercise price may not be less than the fair market value of a share on the date of grant (~~Loss~~as determined under the plan), ~~Per~~as ~~Share~~determined by the Committee. SARs and limited SARs granted in tandem with an option shall be exercisable only to the extent the underlying option is exercisable and the exercise price shall be equal to the exercise price of the underlying option. In addition, the Committee may grant restricted stock to participants of the plan. No SARs or restricted stock have been granted under the plan since its adoption. Other than the restrictions that limit the sale and transfer of restricted stock granted under the plan, recipients of restricted stock granted under the plan generally are entitled to all the rights of a stockholder.

The ~~following~~Company ~~table~~also ~~sets~~maintains ~~forth~~a ~~the~~stock ~~computation~~award plan for non-employee directors, which permits the issuance of ~~basic~~options ~~and~~to ~~diluted~~purchase ~~loss~~up ~~per~~to ~~share~~100,000 ~~for~~shares of ABI common stock by non-employee directors. Under the ~~years~~terms ~~ended~~of ~~December~~the 31plan, ~~2010~~options granted are nonqualified and ~~2009~~are issued at a price equal to 100% of fair market value at the date of grant (inas ~~thousands~~determined under the plan). On July 1st of each year, ~~except~~ABI grants ~~share~~options ~~and~~to ~~per~~each ~~share~~of its non-employee directors. Options granted under the plan are exercisable six months after the ~~amounts):~~date of grant.

	2010		2009
Numerator:
Net income (loss) of continuing operations	$	4,231	$	(3,859	)
Net income (loss) of discontinued operation		52,938		(8,349	)
Net income (loss) attributable to controlling interests	$	57,169	$	(12,208	)
Denominator:
Basic income per share: Weighted-average shares		3,441,431		3,441,546
Dilutive employee stock options		4,611		—
Diluted income per share: Adjusted weighted-average shares and assumed conversions		3,446,042		3,441,546
Net income (loss) per share attributable to controlling interests
Basic
Continuing operations	$	1.23	$	(1.12	)
Discontinued operation		15.38		(2.43	)
	$	16.61	$	(3.55	)
Diluted
Continuing operations	$	1.23	$	(1.12	)
Discontinued operation		15.36		(2.43	)
	$	16.59	$	(3.55	)

On July 1, 2011, July 1, 2010 and August 10, 2010, 3,000, 3,000 and 1,000 options were granted to the Company’s non-employee directors, respectively. The weighted-average grant date fair value of the options was $5.13, $1.95 and $1.69, respectively. The fair value of the options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions for 2011 and 2010: risk-free interest rate of 3.62%, expected dividend yield of zero percent for each of the two years, volatility factor of the expected market price of the Company’s common stock of 44.3%, and a weighted-average expected life of the options of seven and one-half years. The options granted vested or will vest six months from the grant dates. During 2011 and 2010, ABI recognized expense of $8 thousand and $6 thousand, respectively, for these options.

6967

American Biltrite Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

12. Stock Option Plans (continued)

~~ABI~~The ~~maintains~~total afair ~~stock~~value ~~award and incentive plan which permits the issuance~~ of ~~options, stock appreciation rights (“SARs”), limited SARs, restricted stock, restricted stock units and other stock-based awards of~~ ABI ~~to selected employees and independent contractors of the Company. Under the terms of the stock award and incentive plan,~~ options ~~granted~~that ~~may be either nonqualified or incentive stock options and the exercise price~~vested ~~may~~during ~~not~~2011 ~~be less than the fair market value of a share on the date of grant (as determined under the plan), as determined by the Committee. SARs~~ and ~~limited~~2010 ~~SARs~~was ~~granted~~$176 inthousand ~~tandem with an option shall be exercisable only to the extent the underlying option is exercisable~~ and ~~the~~$172 ~~exercise price shall be equal to the exercise price of the underlying option. In addition~~thousand, ~~the Committee may grant restricted stock to participants of the plan~~respectively. No SARs or restricted stock have been granted under the plan since its adoption. Other than the restrictions that limit the sale and transfer of restricted stock granted under the plan, recipients of restricted stock granted under the plan generally are entitled to all the rights of a stockholder.

The ~~Company~~following ~~also~~tables ~~maintains~~summarize ~~a stock award plan~~information ~~for~~about ~~non-employee directors, which permits the issuance of options to purchase up to 100,000 shares of~~ ABI’s ~~common~~ stock ~~by non-employee directors. Under the terms of the plan,~~ options granted are nonqualified and are issued at a price equal to 100% of fair market value at the date of grant (as determined under the plan). On July 1st of each year, ABI grants options to each of its non-employee directors. Options granted under the plan are exercisable six months after the date of grant.:

On November 16, 2009, ABI granted 6,000 options to certain employees of ABI under its employee stock option plan. The weighted-average grant date fair value of the options was $0.81. The fair value of the options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rate of 3.46%, expected dividend yield of zero percent, volatility factor of the expected market price of the Company’s common stock of 46.5%, and a weighted-average expected life of the options of seven years. The options vest 20% on the anniversary of the grant date for five years. The Company recognizes compensation expense ratably over the vesting period. During 2010 and 2009, ABI recognized stock compensation expense of $192 thousand and $197 thousand, respectively, for employee options.

	2011					2010
	Shares			Weighted- Average Exercise Price		Shares			Weighted- Average Exercise Price

Outstanding at beginning of year		488,500		$	7.88		536,500		$	8.14
Granted		3,000			9.68		4,000			3.64
Exercised		(30,300	)		6.50		-			-
Expired		(3,000	)		14.00		(19,000	)		13.85
Forfeited		(5,000	)		7.76		(33,000	)		8.12

Outstanding at end of year		453,200			7.94		488,500			7.88

Options exercisable at end of year		353,200		$	8.39		337,800		$	8.62
Available for grant at end of year		399,520					394,520

OnAt ~~July~~December 131, ~~and August 10~~2011, ~~2010 and July 1, 2009, 3,000, 1,000 and 3,500 options were granted to~~ the Company’s ~~non-employee directors, respectively.~~stock ~~The~~price ~~weighted-average~~closed ~~grant~~at ~~date fair value of the options was~~ $14.~~95, $1~~80.88 ~~and~~Based ~~$0.71,~~on ~~respectively.~~this ~~The~~stock fair value of the options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions for 2010 and 2009: risk-free interest rate of 3.62%price, ~~expected dividend yield of zero percent for each of~~ the ~~two~~aggregate ~~years,~~intrinsic ~~volatility factor~~values of the ~~expected market price of the~~ Company’s ~~common~~outstanding stock ~~of 44.3%, and a weighted-average expected life of the~~ options ~~of seven~~ and ~~one-half~~vested ~~years.~~stock ~~The~~ options ~~granted~~at ~~vested~~December ~~or will vest six months from the grant dates. During 2010 and 2009~~31, ~~ABI~~2011 ~~recognized~~were ~~expense of~~ $638 thousand and $226 thousand, respectively.

Range of Exercise Price	Outstanding at December 31, 2011		Weighted- Average Exercise Price		Exercisable at December 31, 2011		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)

$ 1.34 - $ 4.75		25,500	$	3.29		18,700	$	3.41		7.3
$ 6.50 - $ 9.80		419,200	$	8.15		326,000	$	8.59		4.2
$10.97 - $12.00		8,500	$	11.52		8,500	$	11.52		2.6

~~American Biltrite Inc. and Subsidiaries~~68

~~Notes~~American toBiltrite ~~Consolidated~~Inc. ~~Financial~~and ~~Statements (continued)~~Subsidiaries

~~12.~~Notes ~~Stock~~to ~~Option~~Consolidated ~~Plans~~Financial Statements (continued)

~~The~~12. ~~total~~Stock ~~fair~~Option ~~value~~Plans ~~of ABI options that vested during 2010 and 2009 was $172 thousand and $184 thousand, respectively.~~(continued)

~~The~~Stock ~~following~~option ~~tables~~information ~~summarize~~related ~~information~~to nonvested ~~about~~shares for ABI’s stock ~~options~~option plans for the year ended December 31, 2011 was as follows:

	2010					2009
	Shares			Weighted- Average Grant Date Fair Value
	Shares			Weighted- Average Exercise Price		Shares			Weighted- Average Exercise Price
Nonvested at December 31, 2010		150,700		$	3.32
Outstanding at beginning of year		536,500		$	8.14		535,500		$	8.39
Granted		3,000			5.13
Granted		4,000			3.64		9,500			1.47
Vested		(50,700	)		3.26
Exercised		—			—		—			—
Forfeited		(3,000	)		3.49
Expired		(19,000	)		13.85		(6,000	)		20.50
Nonvested at December 31, 2011		100,000		$	3.40
Forfeited		(33,000	)		8.12		(2,500	)		7.76
Outstanding at end of year		488,500			7.88		536,500			8.14
Options exercisable at end of year		337,800		$	8.62		325,000		$	9.38
Available for grant at end of year		394,520					346,520

AtThe ~~December~~compensation ~~31,~~expense ~~2010,~~ the Company’s ~~stock~~will recognize ~~price~~from ~~closed~~January at2012 ~~$7.02.~~through ~~Based~~December on2014 ~~this~~is ~~stock~~approximately ~~price,~~$340 ~~the~~thousand ~~aggregate~~with ~~intrinsic~~respect ~~values~~to of the ~~Company’s~~nonvested ~~outstanding stock~~ options ~~and~~ ~~vested~~outstanding ~~stock~~as ~~options at~~ of December 31, ~~2010~~2011, ~~were~~assuming ~~$211~~those ~~thousand~~options ~~and~~vest ~~$91~~in ~~thousand,~~accordance ~~respectively~~with their terms.

Range of Exercise Price	Outstanding at December 31, 2010		Weighted- Average Exercise Price		Exercisable at December 31, 2010		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Life (Years)
$ 1.34 - $ 4.75		25,500	$	3.29		11,900	$	3.37		8.3
$ 6.50 - $ 9.80		451,500	$	8.03		314,400	$	8.69		5.3
$10.97 - $14.00		11,500	$	12.17		11,500	$	12.17		2.8

Upon exercise of stock options, ABI issue shares from its treasury stock.

~~Stock~~13. ~~option~~Industry ~~information related to nonvested shares for ABI’s stock option plans for the year ended December 31, 2010 was as follows:~~Segments

	Shares			Weighted- Average Grant Date Fair Value
Nonvested at December 31, 2009		211,500		$	3.33
Granted		4,000			1.88
Vested		(53,600	)		3.21
Forfeited		(11,200	)		3.49
Nonvested at December 31, 2010		150,700		$	3.32

The Company has three segments for financial reporting purposes: the tape division, jewelry and a Canadian division. The tape division segment manufactures paper, film, HVAC, electrical, shoe and other tape products for use in industrial and automotive markets in two production facilities in the United States, and in finishing and sales facilities in Belgium and Singapore. The jewelry segment consists of the Company's subsidiary K&M Associates L.P., a national costume jewelry supplier to mass merchandisers and department stores. The Company's Canadian division, its wholly-owned subsidiary American Biltrite (Canada) Ltd., produces flooring, rubber and other industrial products. The Company’s continuing operations is comprised of the three reportable segments.

71Prior to July 1, 2010, the Company had a flooring segment, which consisted of Congoleum, a manufacturer of resilient floor coverings. On July 1, 2010, Congoleum’s plan of reorganization became effective and, consequently, ABI’s ownership interest in Congoleum was cancelled by operation of that plan (see Notes 1 and 14). In the accompanying consolidated financial statements, the historical results of Congoleum have been reported as a discontinued operation.

~~American Biltrite Inc. and Subsidiaries~~69

~~Notes~~American toBiltrite ~~Consolidated~~Inc. ~~Financial~~and ~~Statements (continued)~~Subsidiaries

~~12.~~Notes ~~Stock~~to ~~Option~~Consolidated ~~Plans~~Financial Statements (continued)

~~The~~13. ~~compensation~~Industry ~~expense~~Segments the Company will recognize from January 2011 through December 2014 is approximately $405 thousand with respect to the nonvested options outstanding as of December 31, 2010, assuming those options vest in accordance with their terms.(continued)

~~Upon~~Net ~~exercise~~sales and segment profit provided below relate to the segments of ~~stock~~the ~~options~~continuing operations. Intersegment net sales reported below were sales made by the tape and Canadian divisions to Congoleum for the six months ended June 30, ~~ABI~~2010. ~~issue~~Subsequent ~~shares~~to June 30, 2010, the Tape and Canadian divisions continued ~~from~~to ~~its~~sell ~~treasury~~products ~~stock~~to reorganized Congoleum. Net sales to reorganized Congoleum recorded by the Tape Division and AB Canada subsequent to June 30, 2010, through December 31, 2010, totaled $637 thousand and $1.2 million, respectively. During 2011, the Tape Division and AB Canada recorded net sales to reorganized Congoleum of $207 thousand and $2.3 million, respectively.

~~13.~~Reportable ~~Industry~~segments ~~Segments~~are business units that offer different products and are each managed separately.

~~The~~Costs ~~Company~~specific ~~has~~to ~~three segments for financial reporting purposes: the tape division, jewelry and~~ a ~~Canadian division. The tape division~~ segment ~~manufactures paper~~, ~~film,~~such ~~HVAC,~~as pension ~~electrical~~expense, ~~shoe~~are ~~and~~charged ~~other~~to ~~tape~~the ~~products~~segment. ~~for~~Certain ~~use~~Corporate inoffice ~~industrial~~expenses ~~and~~are ~~automotive~~allocated ~~markets~~to incertain ~~two~~segments ~~production~~based ~~facilities~~on inresources ~~the United~~allocated. ~~States,~~Significant ~~and~~assets ~~in finishing and sales facilities in Belgium and Singapore. The jewelry segment consists~~ of the ~~Company's~~Corporate ~~subsidiary K&M~~office ~~Associates~~include ~~L.P.~~cash, ainsurance ~~national~~assets ~~costume~~related ~~jewelry supplier~~ to ~~mass~~accrued ~~merchandisers~~liabilities, and ~~department~~deferred ~~stores.~~tax assets. The ~~Company's~~accounting ~~Canadian division,~~policies ~~its~~of ~~wholly-owned~~the ~~subsidiary~~reportable ~~American~~segments ~~Biltrite~~are ~~(Canada)~~the ~~Ltd.,~~same ~~produces~~as ~~flooring,~~those ~~rubber~~described ~~and~~in ~~other~~the ~~industrial~~summary ~~products. The Company’s continuing operations is comprised~~ of ~~the~~significant ~~three~~accounting ~~reportable segments~~policies.

Prior to July 1, 2010, the Company had a flooring segment, which consisted of Congoleum, a manufacturer of resilient floor coverings. On July 1, 2010, Congoleum’s plan of reorganization became effective and, consequently, ABI’s ownership interest in Congoleum was cancelled by operation of that plan (see Notes 1 and 14). In the accompanying consolidated financial statements, the historical results of Congoleum have been reported as a discontinued operation. Net sales and segment profit provided below relate to the segments of the continuing operations. Intersegment ~~net~~ sales ~~reported below were sales made by the tape~~ and ~~Canadian~~transfers ~~divisions~~are ~~to Congoleum for the six months ended~~recorded ~~June~~at ~~30,~~cost ~~2010~~plus ~~and~~an ~~the~~agreed ~~year~~upon ~~ended~~intercompany ~~December~~profit ~~31,~~on ~~2009.~~intersegment ~~Subsequent to June 30, 2010, the Tape and Canadian divisions continued to sell products to reorganized Congoleum. Net~~ sales ~~made~~or ~~by ABI to reorganized Congoleum for the six months ended December 31, 2010 totaled $1~~transfers.~~9 million and have been included in net sales to external customers.~~

Reportable segments are business units that offer different products and are each managed separately.

	Years ended December 31
	2011		2010
	(In thousands)
Revenues:
Tape products	$	101,158	$	98,740
Jewelry		45,749		49,223
Canadian division		61,826		56,433
		208,733		204,396
Sales to Congoleum through June 30, 2010
Tape products		–		(1,248	)
Canadian division		–		(1,520	)
		–		(2,768	)

Total consolidated net revenues	$	208,733	$	201,628

Costs specific to a segment, such as pension expense, are charged to the segment. Certain Corporate office expenses are allocated to certain segments based on resources allocated. Significant assets of the Corporate office include cash, insurance assets related to accrued liabilities, and deferred tax assets. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.70

72American Biltrite Inc. and Subsidiaries

~~American~~Notes ~~Biltrite~~to ~~Inc.~~Consolidated ~~and~~Financial ~~Subsidiaries~~Statements (continued)

~~Notes~~13. toIndustry ~~Consolidated~~Segments ~~Financial Statements~~ (continued)

13Approximately 52% and 51% of the Canadian division’s revenues from external customers were for flooring products for 2011 and 2010, respectively. The ~~Industry~~remaining ~~Segments~~revenues ~~(continued)~~from the Canadian division’s external customers were from sale of rubber and other industrial products.

Intersegment sales and transfers are recorded at cost plus an agreed upon intercompany profit on intersegment sales or transfers.

	Years ended December 31
	2011		2010
	(In thousands)
Interest expense
Tape products	$	55	$	78
Jewelry		333		370
Canadian division		111		92
Total segment interest expense		499		540
Corporate		336		382

Total consolidated interest expense	$	835	$	922

	Years ended December 31
Depreciation and amortization expense
	2010				2009
Tape products		$	1,990			$	2,044
	(In thousands)
Jewelry			365				353
Revenues:
Canadian division			1,384				1,494
Tape products	$	98,740			$	75,603
Total segment depreciation and amortization			3,739				3,891
Jewelry		49,223				51,919
Corporate			604				603
Canadian division		56,433				48,080
Total consolidated depreciation and amortization		$	4,343			$	4,494
		204,396				175,602
Segment (loss) profit
Sales to Congoleum through June 30, 2010
Tape products		$	(3,814	)		$	(660	)
Tape products		(1,248	)			—
Jewelry			341				3,538
Canadian division		~~(1,520~~	)2,080			~~(2,594~~	)1,591
		(2,768	)			(2,594	)
Total segment (loss) profit			(1,393	)			4,469
Total consolidated net revenues	$	201,628			$	173,008
Reconciling items
Corporate expenses			(74	)			(240	)
Intercompany loss			-–				(71	)
Total consolidated (loss) profit from continuing operations before income taxes and other items		$	(1,467	)		$	4,158

Approximately 51% and 55% of the Canadian division’s revenues from external customers were for flooring products for 2010 and 2009, respectively. The remaining revenues from the Canadian division’s external customers were from sale of rubber and other industrial products.71

	Years ended December 31
	2010		2009
	(In thousands)
Interest expense
Tape products	$	78	$	132
Jewelry		370		526
Canadian division		92		104
Total segment interest expense		540		762
Corporate		382		315
Total consolidated interest expense	$	922	$	1,077

American Biltrite Inc. and Subsidiaries

~~For~~Notes ~~the~~to ~~years~~Consolidated ~~ended~~Financial ~~December~~Statements ~~31, 2010 and 2009, the Company recorded interest income of $6 thousand and $13 thousand, respectively.~~(continued)

7313. Industry Segments (continued)

~~American~~Segment ~~Biltrite~~profit ~~Inc.~~or ~~and~~loss ~~Subsidiaries~~is before income tax expense or benefit.

Notes to Consolidated Financial Statements (continued)

	December 31
	2011			2010
	(In thousands)
Segment assets
Tape products	$	42,011		$	43,894
Jewelry		17,954			17,914
Canadian division		33,406			34,290
Total segment assets		93,371			96,098
Reconciling items
Corporate assets		28,978			30,652
Intersegment accounts receivable		(1,949	)		(3,520	)
Intersegment profit in inventory		–			–
Intersegment other asset		–			–

Total consolidated assets	$	120,400		$	123,230

13. Industry Segments (continued)

	Years Ended December 31
	2011		2010
	(In thousands)
Additions to long-lived assets
Tape products	$	1,044	$	714
Jewelry		479		246
Canadian division		1,046		1,041

Total additions to long-lived assets	$	2,569	$	2,001

	Years ended December 31
	2010			2009
	(In thousands)
Depreciation and amortization expense
Tape products	$	2,044		$	2,024
Jewelry		353			366
Canadian division		1,494			1,440
Total segment depreciation and amortization		3,891			3,830
Corporate		603			486
Total consolidated depreciation and amortization	$	4,494		$	4,316
Segment (loss) profit
Tape products	$	(660	)	$	(4,370	)
Jewelry		3,538			1,637
Canadian division		1,591			349
Total segment (loss) profit		4,469			(2,384	)
Reconciling items
Corporate expenses		(240	)		(1,377	)
Intercompany (loss) profit		(71	)		47
Total consolidated loss from continuing operations before income taxes and other items	$	4,158		$	(3,714	)

~~Segment~~American ~~profit~~Biltrite orInc. ~~loss~~and ~~is before income tax expense or benefit.~~Subsidiaries

	December 31
	2010			2009
	(In thousands)
Segment assets
Tape products	$	43,894		$	42,279
Jewelry		17,914			16,316
Canadian division		34,290			28,656
Total segment assets		96,098			87,251
Reconciling items
Corporate assets		30,652			29,611
Intersegment accounts receivable		(3,520	)		(2,765	)
Intersegment profit in inventory		—			(42	)
Intersegment other asset		—			(109	)
Total consolidated assets	$	123,230		$	113,946

Notes to Consolidated Financial Statements (continued)

7413. Industry Segments (continued)

American Biltrite Inc. and Subsidiaries

	December 31
	2011		2010
	(In thousands)
Long-lived assets by area
United States	$	39,914	$	41,196
Canada		12,617		12,681
Europe		525		593
Asia		1,891		1,867

Total long-lived assets	$	54,947	$	56,337

		Years Ended December 31
		2011		2010
		(In thousands)
Revenues from external customers
United States	$	122,380	$	123,056
Canada		32,226		29,600
Mexico		4,915		3,610
Europe		21,662		19,823
Asia		25,189		22,990
Other		2,361		2,549

Total revenues from external customers	$	208,733	$	201,628

~~Notes~~Revenues are attributed to ~~Consolidated~~regions ~~Financial~~based ~~Statements~~on ~~(continued)~~the location of customers.

~~13. Industry Segments (continued)~~73

	Years Ended December 31
	2010		2009
	(In thousands)
Additions to long-lived assets
Tape products	$	714	$	939
Jewelry		246		47
Canadian division		1,041		694
Total additions to long-lived assets	$	2,001	$	1,680
		December 31
		2010		2009
		(In thousands)
Long-lived assets by area
United States	$	41,196	$	42,351
Canada		12,681		11,676
Europe		593		779
Asia		1,867		1,867
Total long-lived assets	$	56,337	$	56,673
		Years Ended December 31
		2010		2009
		(In thousands)
Revenues from external customers
United States	$	123,056	$	108,339
Canada		29,600		24,516
Mexico		3,610		2,233
Europe		19,823		19,454
Asia		22,990		16,277
Other		2,549		2,189
Total revenues from external customers	$	201,628	$	173,008

American Biltrite Inc. and Subsidia

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