FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                   Quarterly Report Under Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934

For Quarter Ended September 29, 2001              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, Massachusetts 02481-2097
                    (Address of Principal Executive Offices)
                                 (781) 237-6655
              (Registrant's telephone number, including area code)

                                 Not Applicable
         (Former name, former address and former fiscal year if changed
                               since last report)

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

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date covered by this report.

Title of Each Class                              Outstanding at November 6, 2001
-------------------                              -------------------------------
      Common                                             3,441,585 shares
<PAGE>

                                    FORM 10-Q

PART I.                  Item 1.   FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
                            (In thousands of dollars)

                                                    September 29,   December 31,
                                                        2001            2000
                                                    ----------------------------
ASSETS
CURRENT ASSETS
    Cash and cash equivalents                         $  8,098       $ 16,859
    Short-term investments                               2,704         12,097
    Accounts receivable, net                            56,533         45,378
    Inventories                                         93,458         87,175
    Prepaid expenses & other current assets             13,875         12,891
                                                      --------       --------

                  TOTAL CURRENT ASSETS                 174,668        174,400

Goodwill, net                                           24,013         23,431
Other assets                                            21,761         22,374
Property, plant and equipment, net                     150,080        144,197
                                                      --------       --------
                  TOTAL ASSETS                        $370,522       $364,402
                                                      ========       ========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
    Accounts payable                                  $ 29,370       $ 31,101
    Accrued expenses                                    45,893         55,891
    Notes payable                                       20,725         11,698
    Current portion of long-term debt                       98          3,713
                                                      --------       --------

                  TOTAL CURRENT LIABILITIES             96,086        102,403

Long-term debt                                         126,139        108,425
Other liabilities                                       59,209         59,868
Noncontrolling interests                                12,670         14,159

STOCKHOLDERS' EQUITY
    Common stock, par value $0.01-authorized
       15,000,000 shares, issued 4,607,902 shares           46             46
    Additional paid-in capital                          19,521         19,521
    Retained earnings                                   78,398         79,663
    Accumulated other comprehensive loss                (6,415)        (5,514)
    Less cost of shares in treasury                    (15,132)       (14,169)
                                                      --------       --------
                                                        76,418         79,547
                                                      --------       --------
                  TOTAL LIABILITIES AND
                  STOCKHOLDERS' EQUITY                $370,522       $364,402
                                                      ========       ========

See accompanying notes to consolidated condensed financial statements.


                                       2
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
             CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)
               (In thousands of dollars, except per share amounts)

<TABLE>
<CAPTION>
                                                           Three Months Ended                       Nine Months Ended
                                                   September 29,       September 30,        September 29,      September 30,
                                                        2001                2000                2001                2000
                                                  ---------------------------------------------------------------------------
<S>                                                  <C>                 <C>                  <C>                <C>
Net sales                                            $111,010            $112,685             $308,767           $317,528
Interest and other income                               1,069                 603                2,338              2,336
                                                     --------            --------             --------           --------
                                                      112,079             113,288              311,105            319,864
                                                     --------            --------             --------           --------
Costs and expenses:
    Cost of products sold                              77,633              79,676              223,339            227,563
    Selling, general and administrative
       expenses                                        26,339              24,610               81,027             79,809
    Interest                                            2,831               2,361                8,075              6,800
                                                     --------            --------             --------           --------
                                                      106,803             106,647              312,441            314,172
                                                     --------            --------             --------           --------
    EARNINGS (LOSS) BEFORE INCOME
    TAXES AND NON-CONTROLLING
    INTERESTS                                           5,276               6,641               (1,336)             5,692

Provision (credit) for income taxes                     1,894               2,408                 (487)             2,064

Noncontrolling interests                                 (680)             (1,142)                 880                797
                                                     --------            --------             --------           --------

         NET EARNINGS                                $  2,702            $  3,091             $     31           $  4,425
                                                     ========            ========             ========           ========

Earnings per share:

    Basic                                            $    .79            $   .88              $    .01           $   1.26

    Diluted                                          $    .79            $   .87              $    .01           $   1.25


Dividends declared per common share                  $   .125            $  .125              $   .375           $   .375
</TABLE>

See accompanying notes to consolidated condensed financial statements.


                                       3
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
                            (In thousands of dollars)

<TABLE>
<CAPTION>
                                                                     Nine Months Ended
                                                             September 29,       September 30,
                                                                 2001                2000
                                                            -----------------------------------
<S>                                                            <C>                 <C>
OPERATING ACTIVITIES
    Net earnings                                               $     31            $  4,425
    Adjustments to reconcile net earnings to net cash
      Provided (used) by operating activities:
         Depreciation and amortization                           14,433              12,945
         Accounts and notes receivable                           (9,866)            (16,169)
         Inventories                                             (3,851)              1,323
         Prepaid expenses and other current assets                1,397               1,879
         Deferred Taxes                                          (1,166)             (1,128)
         Accounts payable and accrued expenses                  (11,528)             (9,210)
         Noncontrolling interests                                  (880)               (797)
         Other                                                   (1,540)               (190)
                                                               --------            --------

      NET CASH USED BY OPERATING ACTIVITIES                     (12,970)             (6,922)

INVESTING ACTIVITIES
    Investment in property, plant and equipment                 (20,412)            (15,889)
    Purchase of short-term investments                           (4,175)            (17,535)
    Maturities of short-term investments                         13,568              25,534
    Proceeds from sale of property, plant and equipment             648
    Purchase of assets from Swank, Inc.                          (4,646)
    Purchase of additional partnership interest in K&M           (2,066)             (1,407)
                                                               --------            --------
    NET CASH USED BY INVESTING ACTIVITIES                       (17,083)             (9,297)

FINANCING ACTIVITIES
    Long-term borrowings                                         24,749
    Payments on long-term debt                                  (10,676)             (3,059)
    Net short-term borrowings                                     9,027              15,600
    Purchase of treasury shares                                  (1,066)               (467)
    Dividends paid                                               (1,296)             (1,319)
                                                               --------            --------
      NET CASH PROVIDED BY FINANCING  ACTIVITIES                 20,738              10,755
Effect of foreign exchange                                          554                 720
                                                               --------            --------

      DECREASE IN CASH AND CASH EQUIVALENTS                      (8,761)             (4,744)

Cash and cash equivalents at beginning of period                 16,859              27,285
                                                               --------            --------

      CASH AND CASH EQUIVALENTS AT END OF PERIOD               $  8,098            $ 22,541
                                                               ========            ========
</TABLE>

See accompanying notes to consolidated condensed financial statements.


                                       4
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               September 29, 2001

Note A - Basis of Presentation

The accompanying unaudited consolidated condensed financial statements which
include the accounts of American Biltrite Inc. and its wholly-owned subsidiaries
("ABI") as well as entities over which it has voting control have been prepared
in accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended September 29, 2001 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2001. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2000.

Note B - Pending Adoption of Financial Accounting Standards

In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
141, "Business Combinations" ("SFAS No. 141") and SFAS No. 142 "Goodwill and
Other Intangible Assets." SFAS No. 141 applies to all business combinations
completed after June 30, 2001 and requires the use of the purchase method of
accounting. SFAS No. 141 also establishes new criteria for determining whether
intangible assets should be recognized separately from goodwill. SFAS No. 142 is
effective for fiscal years beginning after December 15, 2001; however, companies
with fiscal yeas beginning after March 15, 2001 may elect to adopt the statement
early. SFAS No. 142 provides that goodwill and intangible assets with indefinite
lives will not be amortized, but rather will be tested for impairment on an
annual basis. SFAS No. 141 is not expected to have a significant impact on the
results of operations or financial position of the Company. SFAS 142 will be
effective for the Company as of January 1, 2002. While the Company has not fully
evaluated the impact of adopting SFAS 142, adoption of this standard is expected
to result in the elimination of approximately $1.4 million of goodwill
amortization expense per year.

In August 2001, Statement of Financial Accounting Standards No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144") was
issued. The Company will adopt SFAS No. 144 effective January 1, 2002 when
adoption is mandatory. Among other things, SFAS No. 144 significantly changes
the criteria that would have to be met to classify an asset as held-for-sale.
This statement supersedes Statement of Financial Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" and the provisions of Accounting Principles Board Opinion 30, "Reporting the
Results of


                                       5
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               September 29, 2001

Note B - Pending Adoption of Financial Accounting Standards (continued)

Operations - Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions" that
relate to reporting the effects of a disposal of a segment of a business. The
Company is currently assessing the impact of adopting SFAS No. 144 on its
consolidated financial statements.

Note C - Changes in Acounting Principles

In June 1998, FASB issued Statement of Financial Accounting Standard No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133, as
amended by SFAS 138), which requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair value. The Company adopted SFAS 133 in the first quarter of fiscal 2001.
Adoption of this pronouncement had no effect on the Company's consolidated
financial position or results of operations.

Note D- Inventories

Inventories at September 29, 2001 and December 31, 2000 consisted of the
following (in thousands):

                                            September 29,   December 31,
                                                2001            2000
                                           ------------------------------

       Finished goods                         $66,619         $63,810
       Work-in-process                         12,075           9,764
       Raw materials and supplies              14,764          13,601
                                              -------         -------
                                              $93,458         $87,175
                                              =======         =======

Note E - Distributor Transition Costs

During the third quarter of 2000, Congoleum Corporation ("Congoleum"), a
consolidated majority owned subsidiary, announced the appointment of Mohawk
Industries, Inc. as a national distributor. At the same time, Congoleum
announced it was terminating its distribution arrangements with LDBrinkman &
Co., who had been its exclusive distributor in much of the southwestern United
States, accounting for 21% of Congoleum's sales in 1999. LDBrinkman & Co.
contested Congoleum's right to terminate its distributor agreement and the
matter went to arbitration in the fourth quarter of 2000. The parties signed a
final settlement agreement in February 2001.


                                       6
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               September 29, 2001

Note E - Distributor Transition Costs (continued)

Congoleum recorded a charge of $7,717,000 in the fourth quarter of 2000 to
provide for the nonrecurring costs associated with the transition. Included in
this charge were certain costs incurred by Congoleum for establishing Mohawk as
a distributor. Congoleum also agreed to subsidize a portion of the costs of
merchandising materials for Mohawk such as samples and displays. Also, included
in the charge are certain termination payments to be made to LDBrinkman pursuant
to the terms of the settlement agreement. Congoleum re-evaluated its allowance
for doubtful accounts in light of this agreement and concluded it should be
reduced by $1,785,000, which was recorded as a credit to bad debt expense in the
fourth quarter of 2000.

Congoleum provided right-of-return provisions to LDBrinkman in the termination
agreement whereby LDBrinkman could return certain unsold inventory purchased
from Congoleum that met minimum size and quality requirements. Therefore,
Congoleum deferred the recognition of revenue for its estimate of returns of
inventory under this right-of-return agreement. All of Congoleum's obligations
under this provision have been satisfied as of September 29, 2001, and the final
resolution of this matter did not have a material impact on the Company's
results of operations for the three or the nine months ended September 29, 2001.

Note F - Commitments and Contingencies

In the ordinary course of its business, ABI and Congoleum become involved in
lawsuits, administrative proceedings, product liability and other matters, as
more fully described below. In some of these proceedings, plaintiffs may seek to
recover large and sometimes unspecified amounts, and the matters may remain
unresolved for several years. On the basis of information furnished by counsel
and others, management does not believe that these matters, individually or in
the aggregate, will have a material adverse effect on their business or
financial condition.

American Biltrite Inc.

ABI records a liability for environmental remediation claims when it becomes
probable that ABI 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.

ABI is a co-defendant with many other manufacturers and distributors of
asbestos-containing products in approximately 463 pending claims involving
approximately 1,410 individuals as of September 29, 2001. The claimants allege
personal injury from exposure to asbestos or asbestos-containing products.
Activity related to asbestos claims was as follows:


                                       7
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               September 29, 2001

Note F - Commitments and Contingencies (continued)

                                    Nine Months Ended      Year Ended
                                    September 29, 2001   December 31, 2000
                                    ------------------   -----------------

      Beginning claims                     330                   63
      New claims                           169                  298
      Settlements                          (13)                 (11)
      Dismissals                           (23)                 (20)
                                           ---                  ---

      Ending claims                        463                  330
                                           ===                  ===

ABI reported in its December 31, 2000 Form 10-K that it has been named as a
Potentially Responsible Party ("PRP") within the meaning of the Federal
Comprehensive Environmental Response Compensation and Liability Act, as amended,
with respect to two sites in two separate states. There have been no new
developments relating to these sites during the three and nine month period
ended September 29, 2001.

With regard to the Olin Corporation ("Olin") site in Wilmington, MA, during the
nine month period ending September 29, 2001, ABI has paid Olin $483,000 for the
period from June 1, 2000 to December 31, 2000 and $272,000 for the period
January 1, 2001 to March 31, 2001 and ABI has been invoiced by Olin $281,000 for
the period April 1, 2001 to June 1, 2001. Olin has estimated that the response
cost for all of 2001 will be $6 million with ABI's allocated share being
$814,000. ABI, in discussion with Olin, has estimated that beyond 2001 the
response costs will be in the range of $16.3 million to $29 million. As of
September 29, 2001, ABI has estimated its share of potential liability for Olin
to be in the range of $3.3 million to $5 million before any recoveries from
insurance.

Congoleum Corporation

Congoleum is subject to federal, state and local environmental laws and
regulations, and certain legal and administrative claims are pending or have
been asserted against Congoleum. Among these claims, Congoleum is a named party
in several actions associated with waste disposal sites, asbestos-related claims
and general liability claims. These actions include possible obligations to
remove or mitigate the effects on the environment of wastes deposited at various
sites, including Superfund sites and certain of Congoleum's owned and previously
owned facilities. The contingencies also include claims for personal injury
and/or property damage. The exact amount of such future costs and timing of
payments are indeterminable due to such unknown factors as the


                                       8
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               September 29, 2001

Note F - Commitments and Contingencies (continued)

magnitude of clean-up costs, the timing and extent of the remedial actions that
may be required, the determination of Congoleum's liability in proportion to
other potentially responsible parties and the extent to which costs may be
recoverable from insurance.

Congoleum records a liability for environmental remediation, asbestos-related
claim costs and general liability claims when a clean-up program or claim
payment becomes probable and the costs can be reasonably estimated. As
assessments and clean-ups progress, these liabilities are adjusted based upon
progress in determining the timing and extent of remedial actions and the
related costs and damages. The extent and amounts of the liabilities can change
substantially due to factors such as the nature or extent of contamination,
changes in remedial requirements and technological improvements. The recorded
liabilities are not discounted for delays in future payments and are not reduced
by the amount of estimated insurance recoveries. Such estimated insurance
recoveries are considered probable of recovery.

Congoleum is named, together with a large number (in most cases, hundreds) of
other companies, as a PRP in pending proceedings under the federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), as amended,
and similar state laws. In two instances, although not named as a PRP, Congoleum
has received a request for information. These pending proceedings currently
relate to seven disposal sites in New Jersey, Pennsylvania, Maryland,
Connecticut and Delaware in which recovery from generators of hazardous
substances is sought for the cost of cleaning up the contaminated waste sites.
Congoleum's ultimate liability in connection with those sites depends on many
factors, including the volume of material contributed to the site, the number of
other PRP's and their financial viability, the remediation methods and
technology to be used and the extent to which costs may be recoverable from
insurance. However, under CERCLA, and certain other laws, as a PRP, Congoleum
can be held jointly and severally liable for all environmental costs associated
with a site.

The most significant exposure to which Congoleum has been named a PRP relates to
a recycling facility site in Elkton, Maryland. Two removal actions were
substantially complete as of December 31, 1998, however the groundwater
remediation phase has not begun and the remedial investigation/feasibility study
related to the groundwater remediation has not been approved. The PRP group is
comprised of approximately 50 companies, substantially all of which are
financially solvent. This group has estimated that future costs of groundwater
remediation would be approximately $26 million. Based on waste allocations
amongst members of the PRP group in proportion to waste disposed at the site,
Congoleum's share was estimated to be approximately


                                       9
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               September 29, 2001

Note F - Commitments and Contingencies (continued)

5.5%. At September 29, 2001, Congoleum believes its probable liability, which
has been recorded in other liabilities, based on present facts and
circumstances, to be approximately $1.5 million. A corresponding insurance
receivable of $1.2 million has been recorded in other noncurrent assets. No
other PRP sites are material on an individual basis.

Congoleum also accrues remediation costs for certain of Congoleum's owned
facilities on an undiscounted basis. Estimated total cleanup costs, including
capital outlays and future maintenance costs for soil and groundwater
remediation are primarily based on engineering studies.

Although the outcome of these matters could result in significant expenses or
judgments, management does not believe based on present facts and circumstances
that their disposition will have a material adverse effect on the financial
position of the Company.

Congoleum is one of many defendants in approximately 4,792 pending claims
(including workers' compensation cases) involving approximately 20,502
individuals as of September 29, 2001, alleging personal injury from exposure to
asbestos or asbestos-containing products. There were 1,754 claims at December
31, 2000 that involved approximately 12,079 individuals. Activity related to
asbestos claims was as follows:

                                    Nine Months Ended       Year ended
                                    September 29, 2001   December 31, 2000
                                    ------------------   -----------------

      Beginning claims                    1,754                  670
      New claims                          3,216                1,302
      Settlements                           (42)                 (76)
      Dismissals                           (136)                (142)
                                          -----                -----

      Ending claims                       4,792                1,754
                                          =====                =====

The total indemnity costs incurred to settle claims during the nine months
ending September 29, 2001 and twelve months ending December 31, 2000 were $1.0
million and $3.9 million, respectively, which were paid by Congoleum's insurance
carriers, as were the related defense costs. Costs per claim vary depending on a
number of factors, including the nature of the alleged exposure and the
jurisdiction where the claim was litigated. As of September 29, 2001, Congoleum
has incurred asbestos-related claims of $11.3 million, to resolve claims of over
33,000 claimants, all of which have been paid by Congoleum's insurance carriers.
The average indemnity cost per resolved claimant is $338. Over 99% of claims
incurred by Congoleum have settled, on average, for amounts less than $93 per
claimant.


                                       10
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               September 29, 2001

Note F - Commitments and Contingencies (continued)

Nearly all claims allege that various diseases were caused by exposure to
asbestos-containing products, including sheet vinyl and resilient tile
manufactured by Congoleum (or, in the workers' compensation cases, exposure to
asbestos in the course of employment with Congoleum). Congoleum discontinued the
manufacture of asbestos-containing sheet vinyl products in 1983 and
asbestos-containing tile products in 1974. 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. Congoleum has issued warnings not to remove
asbestos-containing flooring by sanding or other methods that may cause the
product to become friable.

Congoleum regularly evaluates its estimated liability to defend and resolve
current and reasonably anticipated future asbestos-related claims. It reviews,
among other things, recent and historical settlement and trial results, the
incidence of past and recent claims, the number of cases pending against it, and
asbestos litigation developments that may impact the exposure of Congoleum. One
such development, the declarations of bankruptcy by several companies that are
typically lead defendants in asbestos-related cases, may have negatively
impacted Congoleum's claim experience. The estimates developed are highly
uncertain due to the limitations of the available data and the difficulty of
forecasting the numerous variables that can affect the range of the liability.

During the fourth quarter of fiscal 2000, Congoleum updated its evaluation of
the range of potential defense and indemnity costs for asbestos-related
liabilities and the insurance coverage in place to cover these costs. As a
result of Congoleum's analysis, Congoleum has determined that its range of
probable and estimable losses for asbestos-related claims through the year 2049
is $35.1 million to $161.3 million before considering the effects of insurance
recoveries and before discounting to present value. As discussed previously, it
is very difficult to forecast a liability for Congoleum's ultimate exposure for
asbestos-related claims as there are multiple variables that can affect the
timing, severity, and quantity of claims. Therefore, Congoleum has concluded
that no amount within that range is more likely than any other, and therefore
has determined that the amount of the gross liability it should record for
asbestos-related claims is equal to $35.1 million in accordance with accounting
principles generally accepted in the United States.

For a majority of the period that Congoleum produced asbestos-containing
products, Congoleum purchased primary and excess insurance policies that cover
bodily injury asbestos claims.


                                       11
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               September 29, 2001

Note F - Commitments and Contingencies (continued)

Congoleum believes that it has in excess of $1 billion primary and excess
insurance coverage available as of December 31, 2000 to cover asbestos-related
claims. To date, all claims and defense costs have been paid through insurance
coverage, and Congoleum anticipates that insurance coverage will continue to
cover these costs in the forseeable future.

The same factors that affect developing forecasts of potential defense and
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 possible uncertainties
regarding the legal sufficiency of insurance claims or solvency of insurance
carriers, the method in which losses will be allocated to the various insurance
policies and the years covered by those policies, and how legal and other loss
handling costs will be covered by the insurance policies.

Congoleum has determined, based on its review of its insurance policies and the
advice of legal counsel, that approximately $20 million of the estimated $35
million gross liability is highly probable of recovery. This determination was
made after considering the terms of the available insurance coverage and the
financial viability of the insurance companies. Congoleum believes that the
criteria to offset the estimated gross liability with this probable insurance
recovery, as defined by accounting principles generally accepted in the United
States, have been met. The balance of the estimated gross liability of $15
million has been reflected in the balance sheet as a long-term liability as of
December 31, 2000 and September 29, 2001. Congoleum has also recorded in the
balance sheet an insurance receivable of $7 million that represents an estimate
of probable insurance recoveries that do not qualify for offsetting against the
gross liability. This insurance receivable has been recorded in other long-term
assets as of December 31, 2000 and September 29, 2001.

Since many uncertainties exist surrounding asbestos litigation, Congoleum will
continue to evaluate its asbestos-related estimated liability and corresponding
estimated insurance assets as well as the underlying assumptions used to derive
these amounts. It is reasonably possible that Congoleum's total exposure to
asbestos-related claims may be greater than the recorded liability and that
insurance recoveries may be less than the recorded asset. These uncertainties
may result in Congoleum incurring future charges to income to adjust the
carrying value of recorded liabilities and assets. Congoleum does not believe,
however, that asbestos-related claims will have a material adverse effect on its
financial position or liquidity.


                                       12
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               September 29, 2001

Note G - Long-Term Debt

During the third quarter of 2001, ABI entered into a Note Purchase and Private
Shelf Agreement with Prudential Insurance Company ("Pru Agreement"). Under the
terms of this agreement, ABI borrowed $20 million and used the proceeds to
retire existing long-term and revolving debt. The new notes bear interest at
8.16%, reducing to 7.91% if certain improvements in debt to EBITDA, (as defined)
ratios are attained. Principal is repayable in five annual $4,000,000
installments beginning August 28, 2006. The Pru Agreement contains certain
covenants which include maintenance of minimum current ratio and fixed charge
coverage ratios and net worth levels and maximum debt levels and debt to EBITDA
ratios. It also includes restrictions on certain payments including dividends,
as defined.

During the third quarter of 2001, the Company also entered into a new revolving
credit agreement. This agreement provides for borrowings of up to $30 million
through September 28, 2004, with interest varying based upon the Company's
leverage ratio (as defined). This agreement provides for a commitment fee based
on the average daily unused portion of the commitment which varies depending on
the leverage ratio. This agreement also requires meeting certain tests with
respect to debt to EBITDA, fixed charge coverage, current ratio, and net worth
levels, and includes restrictions on certain payments including dividends and
limitations on capital expenditures.

Note H - Comprehensive Income

The following table presents total comprehensive income for the three months and
nine months ended September 29, 2001 and September 30, 2000 (in thousands):

<TABLE>
<CAPTION>
                                              Three Months Ended          Nine Months Ended
                                             Sept. 29,   Sept. 30,      Sept. 29,   Sept. 30,
                                               2001        2000           2001        2000
                                               ----        ----           ----        ----
<S>                                           <C>         <C>             <C>        <C>
Net earnings                                  $2,702      $3,091          $  31      $4,425
Foreign currency translation adjustments        (732)       (298)          (901)       (791)
                                              ------      ------          -----      ------

        Total comprehensive income (loss)     $1,970      $2,793          $(870)     $3,634
                                              ======      ======          =====      ======
</TABLE>


                                       13
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               September 29, 2001

Note I - Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per
share for the three months and nine months ended September 29, 2001 and
September 30, 2000 (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                        Three Months Ended               Nine Months Ended
                                                   September 29,   September 30,   September 29,   September 30,
                                                       2001            2000            2001            2000
                                                       ----            ----            ----            ----
<S>                                                   <C>            <C>              <C>             <C>
Numerator:
    Net income                                        $2,702         $3,091           $   31          $4,425
                                                      ======         ======           ======          ======
Denominator:
    Denominator for basic earnings per share:
      Weighted-average shares                          3,442          3,517            3,460           3,518
    Denominator for diluted earnings
    per share:
      Dilutive employee stock options                                    21                               23
                                                                     ------                           ------

      Weighted-average shares and
       Assumed conversions                             3,442          3,538            3,460           3,541
                                                      ======         ======           ======          ======

Basic earnings per share                              $  .79         $  .88           $  .01          $ 1.26
                                                      ======         ======           ======          ======

Diluted earnings per share                            $  .79         $  .87           $  .01          $ 1.25
                                                      ======         ======           ======          ======
</TABLE>

Note J - Industry Segments

Description of Products and Services

The Company has four reportable segments: flooring products, tape products,
jewelry and a Canadian division which produces flooring and rubber products.
Congoleum, which manufactures vinyl and vinyl composition floor coverings with
distribution primarily through floor covering distributors, retailers and
contractors for commercial and residential use, represents the majority of the
Company's flooring products segment. During 2000, the Company acquired Janus
Flooring Corporation, which has been included in the flooring products segment


                                       14
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               September 29, 2001

Note J - Industry Segments (continued)

effective October 12, 2000. The tape products segment consists of two production
facilities in the United States and finishing and sales facilities in Belgium,
Singapore and Italy. The tape products segment manufactures paper, film, HVAC,
electrical, shoe and other tape products for use in industrial and automotive
markets. The jewelry segment reflects the results of K&M Associates L.P., a
national costume jewelry supplier to mass merchandiser and department stores.
The Company's Canadian division produces flooring, rubber products, including
materials used by footwear manufacturers, and other industrial products.

<TABLE>
<CAPTION>
Segment Profit and Assets
          (In thousands)                  Three Months Ended      Nine Months Ended
                                         Sept. 29,   Sept. 30,   Sept. 29,   Sept. 30,
                                            2001        2000       2001         2000
                                            ----        ----       ----         ----
<S>                                       <C>         <C>         <C>         <C>
Revenues
Revenues from external customers:
    Flooring products                     $ 59,173    $ 60,891    $171,164    $172,816
    Tape products                           20,508      24,053      64,634      71,843
    Jewelry                                 21,894      15,061      41,585      35,265
    Canadian division                        9,435      12,680      31,384      37,604
                                          --------    --------    --------    --------
          Total revenues from external
          Customers                        111,010     112,685     308,767     317,528
                                          --------    --------    --------    --------
Intersegment revenues:
    Flooring products                           70          88         259         293
    Tape products                               24          22          94         107
    Jewelry
    Canadian division                        1,662       1,210       5,772       4,292
                                          --------    --------    --------    --------
         Total intersegment revenues         1,756       1,320       6,125       4,692
                                          --------    --------    --------    --------
                                           112,766     114,005     314,892     322,220
Reconciling items
    Intersegment revenues                   (1,756)     (1,320)     (6,125)     (4,692)
                                          --------    --------    --------    --------
         Total consolidated revenues      $111,010    $112,685    $308,767    $317,528
                                          ========    ========    ========    ========
</TABLE>


                                       15
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               September 29, 2001

Note J - Industry Segments (continued)

<TABLE>
<CAPTION>
          (In thousands)                   Three Months Ended       Nine Months Ended
                                          Sept. 29,   Sept. 30,   Sept. 29,   Sept. 30,
                                            2001        2000        2001        2000
                                            ----        ----        ----        ----
<S>                                        <C>         <C>         <C>         <C>
Segment profit (loss)
    Flooring products                      $1,452      $2,651      $(4,584)    $(3,310)
    Tape products                             542       1,591        1,093       5,178
    Jewelry                                 3,750       1,797        3,534       1,747
    Canadian division                         (97)        989          383       3,245
                                           ------      ------      -------     -------
         Total segment profit               5,647       7,028          426       6,860

Reconciling items
    Corporate office loss                    (394)       (419)      (1,674)     (1,214)
                                           ------      ------      -------     -------
    Intercompany profit                        23          32          (88)         46
       Total consolidated earnings
       (loss) before income taxes and
       other items                         $5,276      $6,641      $(1,336)    $ 5,692
                                           ======      ======      =======     =======
</TABLE>

                                        September 29,   December 31,
                                             2001           2000
                                             ----           ----
Segment assets
    Flooring products                     $228,283        $244,574
    Tape products                           66,388          53,724
    Jewelry                                 33,386          19,193
    Canadian division                       32,486          29,858
                                          --------        --------
         Total segment assets              360,543         347,349

Reconciling items
    Corporate office assets                 33,028          30,163
    Intersegment accounts receivable       (22,842)        (12,991)
    Intersegment profit in inventory          (207)           (119)
                                          --------        --------
         Total consolidated assets        $370,522        $364,402
                                          ========        ========

Tape product segment assets increased from $53,724 to $66,388 due to capital
expenditures and seasonal increases in inventories and intersegment accounts.
Jewelry product segment assets increased from $19,193 to $33,386 due to seasonal
increases in accounts receivable and inventories and the acquisition of Swank,
Inc. assets.


                                       16
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                               September 29, 2001

Note K - Acquisition

On July 23, 2001, the Company's K&M Associates L.P. operation acquired certain
inventory and receivables from the women's costume jewelry business of Swank,
Inc. for a purchase price of $4.6 million. The Company also entered into or
assumed license agreements with Anne Klein, Anne Klein II and Guess? associated
with the product lines acquired.


                                       17
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
                  Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                               September 29, 2001

Results of Operations

Net sales for the third quarter of 2001 were $111.0 million compared to $112.7
million in the third quarter of 2000, a decrease of $1.7 million or 1.5%. Net
sales for the first nine months of 2001 were $308.8 million, down $8.7 million
or 2.8% from the first nine months of 2000. Weak economic conditions have
resulted in lower revenues in all segments except jewelry. Approximately half
the increase in jewelry segment revenues for the quarter and year-to-date are
due to sales of women's costume jewelry product lines acquired in July 2001,
while the balance of the increase reflects sales of new product designs. The
decrease in flooring product sales was partially offset by the acquisition of
Janus Flooring in the fourth quarter of 2001; excluding Janus, flooring revenues
declined 4.9% for the quarter and 3.8% for the first nine months of 2001.

Gross profits as a percentage of net sales was 30.1% in the third quarter of
2001 versus 29.3% in the third quarter of 2000. This increase was due to the
higher proportion of jewelry segment revenues in the sales mix, which have
relatively higher gross profit margins, together with improvements in
manufacturing efficiency in the flooring segment. These factors more than offset
the lower gross profit margins in the remaining segments resulting from lower
sales and production levels. Gross profits as a percentage of net sales for the
first nine months of 2001 were 27.7% compared to 28.3% in the first nine months
of 2000. This is due to lower manufacturing volumes and the competitive pricing
environment experienced in the first half of the year.

Selling, general and administrative expenses as a percentage of net sales were
23.7% in the third quarter of 2001 compared to 21.8% in the third quarter of
2000. For the first nine months of 2001, selling, general and administrative
expenses as a percentage of net sales were 26.2% versus 25.1% for the first nine
months of 2000. The increase for the three and nine month periods is due to
lower sales, higher expenses for marketing, and a greater proportion of jewelry
in the sales mix.

Interest expense for the three and nine months ended September 29, 2001 was
above comparable year earlier levels due to higher borrowings, primarily related
to the Janus acquisition, and a decrease in the portion of interest expense
capitalized in connection with capital projects.

For the three months ended September 29, 2001, the Company had net earnings of
$2.7 million compared with net earnings of $3.1 million in the same period one
year earlier. Profitability decreased in all segments except jewelry, with the
Canadian division showing a small loss. For the first nine months of 2001 net
earnings were $31 thousand versus $4.4 million in the first nine months of 2000.
Flooring products loss increased, and Tape and Canadian profit declined, more
than offsetting the improved profitability in jewelry.


                                       18
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                               September 29, 2001

Liquidity and Capital Resources

Cash and cash equivalents, including short term investments, declined $18.2
million in the first nine months of 2001 to $10.8 million, compared with a
decline of $12.7 million in the first nine months of 2000. In addition, the
Company borrowed $23.1 million (net of repayments) in the first nine months of
2001, compared with $12.5 million in the first nine months of 2000. The higher
use of cash in 2001 was due to increased capital expenditures, lower net income,
increased working capital, and the acquisition of the inventory and receivables
of Swank, Inc.'s women's costume jewelry business.

Working capital at September 29, 2001 was $78.6 million, up from $72.0 million
at December 31, 2000. The ratio of current assets to current liabilities at
September 29, 2001 was 1.8, up from 1.7 at December 31, 2000.

Capital expenditures in the first nine months of 2001 were $20.4 million. It is
anticipated that capital spending for the full year 2001 will be in the range of
$26 - $27 million.

The Company has recorded provisions which it believes are adequate for
environmental remediation and product-related liabilities, including provisions
for testing for potential remediation of conditions at its own facilities. While
the Company believes its estimate of the future amount of these liabilities is
reasonable, that such amounts will not have a material adverse effect on the
financial position of the Company and that they will be paid over a period of
three to ten years, the actual timing and amount of such payments may differ
significantly from the Company's assumptions. 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 which could have a material
adverse effect on its results of operations or financial position. There can be
no assurances that such costs could be passed along to its customers.

Cash requirements for capital expenditures, working capital, debt service and
the current authorization to repurchase $3.0 million of ABI's Common Stock and
$5.3 million of Congoleum's Common Stock are expected to be financed from
operating activities and borrowings under existing bank lines of credit, which
at ABI are presently $36.5 million and at Congoleum are $20.0 million. During
the first nine months of 2001, ABI repurchased $1.1 million of its Common Stock.


                                       19
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                               September 29, 2001

Item 3.   Quantitative and Qualitative Disclosure About Market Risk

The Company is exposed to changes in prevailing market interest rates affecting
the return on its investments but does not consider this interest rate market
risk exposure to be material to its financial condition or results of
operations. The Company invests primarily in highly liquid debt instruments with
strong credit ratings and short-term (less than one year) maturities. The
carrying amount of these investments approximates fair value due to the
short-term maturities. Substantially all of the Company's outstanding long-term
debt as of September 29, 2001 consisted of indebtedness with a fixed rate of
interest, which is not subject to change based upon changes in prevailing market
interest rates.

The Company operates internationally, principally in Canada, Europe and the Far
East, giving rise to exposure to market risks from changes in foreign exchange
rates. Foreign currency exchange rate movements also affect the Company's
competitive position, as exchange rate changes may affect business practices
and/or pricing strategies of non-U.S. based competitors. For foreign currency
exposures existing at September 29, 2001, a 10% unfavorable movement in currency
exchange rates in the near term would not materially affect ABI's consolidated
operating results, financial position or cash flows.


                                       20
<PAGE>

                                    FORM 10-Q

                           PART II. OTHER INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
                               September 29, 2001

Item 6.  Exhibits and Reports on Form 8-K

(a)   Exhibits

      Any instrument defining the rights of holders of unregistered long-term
      debt of American Biltrite Inc. that does not authorize the issuance of
      debt securities in excess of 10 percent of the total assets of American
      Biltrite Inc. and its subsidiaries on a consolidated basis is not filed as
      an exhibit to this Report. American Biltrite Inc. agrees to furnish a copy
      of each such instrument to the Securities and Exchange Commission upon
      request.

(b)   Reports on Form 8-K

      There were no reports on Form 8-K filed for the three months ended
      September 29, 2001.

                                    SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                  AMERICAN BILTRITE INC.
                                                  ----------------------
                                                       (Registrant)


Date: November 9, 2001                        BY: /s/ Howard N. Feist III
                                                  -----------------------
                                                  Howard N. Feist III
                                                  Vice President-Finance


                                       21