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 June 30, 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 August 3, 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)

                                                     June 30,   December 31,
                                                      2001          2000
                                                  --------------------------
ASSETS
CURRENT ASSETS
    Cash and cash equivalents                       $ 17,496     $ 16,859
    Short-term investments                             1,471       12,097
    Accounts receivable, net                          39,924       45,378
    Inventories                                       95,167       87,175
    Prepaid expenses & other current assets           12,820       12,891
                                                    --------     --------
                  TOTAL CURRENT ASSETS               166,878      174,400

Goodwill, net                                         24,353       23,431
Other assets                                          21,597       22,374
Property, plant and equipment, net                   149,835      144,197
                                                    --------     --------
                  TOTAL ASSETS                      $362,663     $364,402
                                                    ========     ========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
    Accounts payable                                $ 27,226     $ 31,101
    Accrued expenses                                  51,310       55,891
    Notes payable                                     31,050       11,698
    Current portion of long-term debt                  3,094        3,713
                                                    --------     --------
                  TOTAL CURRENT LIABILITIES          112,680      102,403

Long-term debt                                       104,367      108,425
Other liabilities                                     58,818       59,868
Noncontrolling interests                              11,920       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                                 76,126       79,663
    Accumulated other comprehensive loss              (5,683)      (5,514)
    Less cost of shares in treasury                  (15,132)     (14,169)
                                                    --------     --------
                                                      74,878       79,547
                                                    --------     --------
                  TOTAL LIABILITIES AND
                  STOCKHOLDERS' EQUITY              $362,663     $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 OPERATIONS (Unaudited)
               (In thousands of dollars, except per share amounts)

<TABLE>
<CAPTION>
                                              Three Months Ended      Six Months Ended
                                              June 30,   July 1,     June 30,    July 1,
                                               2001       2000         2001        2000
                                            ------------------------------------------------
<S>                                           <C>        <C>         <C>         <C>
Net sales                                     $98,060    $102,398    $197,757    $204,843
Interest and other income                         948       1,068       1,269       1,733
                                              -------    --------    --------    --------
                                               99,008     103,466     199,026     206,576
                                              -------    --------    --------    --------
Costs and expenses:
    Cost of products sold                      71,321      73,556     145,706     147,887
    Selling, general and administrative
       expenses                                25,872      27,716      54,688      55,199
    Interest                                    2,730       2,301       5,244       4,439
                                              -------    --------    --------    --------
                                               99,923     103,573     205,638     207,525
                                              -------    --------    --------    --------

LOSS BEFORE INCOME TAXES AND NONCONTROLLING
INTERESTS                                        (915)       (107)     (6,612)       (949)

Credit for income tax benefit                    (316)        (41)     (2,381)       (344)

Noncontrolling interests                          (81)      1,050       1,560       1,939
                                              -------    --------    --------    --------
         NET (LOSS) EARNINGS                  $  (680)   $    984    $ (2,671)   $  1,334
                                              =======    ========    ========    ========
(Loss) earnings per share:

    Basic                                     $  (.20)   $    .28    $   (.77)   $    .38

    Diluted                                   $  (.20)   $    .28    $   (.77)   $    .38

Dividends declared per common share           $  .125    $   .125    $    .25    $    .25
</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>
                                                                 Six Months Ended
                                                               June 30,    July 1,
                                                                 2001        2000
                                                                 ----        ----
<S>                                                            <C>         <C>
OPERATING ACTIVITIES
    Net (loss) earnings                                        $ (2,671)   $  1,334
    Adjustments to reconcile net (loss) earnings to net cash
      used by operating activities:
         Depreciation and amortization                            9,843       8,534
         Deferred income taxes                                   (1,832)     (1,141)
         Accounts and notes receivable                            5,244     (12,952)
         Inventories                                             (8,376)     (7,649)
         Prepaid expenses and other current assets                2,342       1,461
         Accounts payable and accrued expenses                   (9,138)     (3,419)
         Noncontrolling interests                                (1,560)     (1,939)
         Other                                                     (272)       (253)
                                                               --------    --------

      NET CASH USED BY OPERATING ACTIVITIES                      (6,420)    (16,024)

INVESTING ACTIVITIES
    Purchase of short-term investments                           (1,471)     (6,453)
    Maturities of short-term investments                         12,097      19,182
    Investment in property, plant and equipment                 (15,389)    (10,424)
    Proceeds from sale of property, plant and equipment             648
    Purchase of additional partnership interests in K&M          (2,066)     (1,381)
                                                               --------    --------
      NET CASH (USED) PROVIDED BY INVESTING
          ACTIVITIES                                             (6,181)        924

FINANCING ACTIVITIES
    Net short-term borrowings                                    19,284      14,500
    Payments on long-term debt                                   (4,642)     (3,049)
    Purchase of treasury shares                                  (1,066)       (466)
    Dividends paid                                                 (866)       (879)
                                                               --------    --------

      NET CASH PROVIDED BY FINANCING
          ACTIVITIES                                             12,710      10,106
Effect of foreign exchange                                          528         327
                                                               --------    --------

      INCREASE (DECREASE) IN CASH AND CASH
          EQUIVALENTS                                               637      (4,667)

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

      CASH AND CASH EQUIVALENTS AT END OF
          PERIOD                                               $ 17,496    $ 22,618
                                                               ========    ========
</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
                                  June 30, 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 June 30, 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 - Changes in Acounting Principles

In June 1998, the Financial Accounting Standards Board (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 C - Inventories

Inventories at June 30, 2001 and December 31, 2000 consisted of the following
(in thousands):

                                         June 30,    December 31,
                                           2001          2000
                                         ------------------------

           Finished goods                 $68,884       $63,810
           Work-in-process                 11,774         9,764
           Raw materials and supplies      14,509        13,601
                                          -------       -------
                                          $95,167       $87,175
                                          =======       =======


                                       5
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  June 30, 2001

Note D - 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.

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. 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 has provided right-of-return provisions to LDBrinkman in the
termination agreement whereby LDBrinkman may return certain unsold inventory
purchased from Congoleum that meets minimum size and quality requirements.
Therefore, Congoleum has deferred the recognition of revenue for its estimate of
returns of inventory under this right-of-return agreement. Congoleum expects all
obligations under this provision to be satisfied by the end of the third quarter
of 2001.

Of the $7,717,000 in costs incurred during 2000, $2,180,000 remains unpaid as of
June 30, 2001. These amounts are anticipated to be paid by August 15, 2001.

Note E - 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.


                                       6
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  June 30, 2001

Note E - Commitments and Contingencies (continued)

ABI is a co-defendant with many other manufacturers and distributors of
asbestos-containing products in approximately 460 pending claims involving
approximately 1,405 individuals as of June 30, 2001. The claimants allege
personal injury from exposure to asbestos or asbestos-containing products.
Activity related to asbestos claims was as follows:

                                 Six Months Ended      Year Ended
                                   June 30, 2001    December 31, 2000
                                   -------------    -----------------

           Beginning claims              330                63
           New claims                    145               298
           Settlements                    (8)              (11)
           Dismissals                     (7)              (20)
                                         ---               ---
           Ending claims                 460               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 quarter ended June 30, 2001.

With regard to the Olin Corporation ("Olin") site in Wilmington, MA, during the
six month period ending June 30, 2001, ABI has paid Olin $483,000 for the period
from June 1, 2000 to December 31, 2000 and $267,000 for the period January 1,
2001 to March 31, 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 June 30, 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


                                       7
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  June 30, 2001

Note E - Commitments and Contingencies (continued)

such future costs and timing of payments are indeterminable due to such unknown
factors as the 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 potentially responsible party ("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 proceeding 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 disposal at the site,
Congoleum's share was estimated to be approximately 5.5%. At June 30, 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.


                                       8
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  June 30, 2001

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 Congoleum.

Congoleum is one of many defendants in approximately 4,007 pending claims
(including workers' compensation cases) involving approximately 18,305
individuals as of June 30, 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:

                                   Six Months Ended      Year ended
                                    June 30, 2001     December 31, 2000
                                    -------------     -----------------

         Beginning claims               1,754                 670
         New claims                     2,336               1,302
         Settlements                      (23)                (76)
         Dismissals                       (60)               (142)
                                        -----               -----

         Ending claims                  4,007               1,754
                                        =====               =====

The total indemnity costs incurred to settle claims during the six months ending
June 30, 2001 and twelve months ending December 31, 2000 were $0.8 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 June 30, 2001, Congoleum has incurred
asbestos-related claims of $11.1 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 $332. Over 99% of claims
incurred by Congoleum have settled, on average, for amounts less than $101 per
claimant.

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


                                       9
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  June 30, 2001

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. 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.


                                       10
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  June 30, 2001

Note E - Commitments and Contingencies (continued)

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 June 30, 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 June 30, 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.

Note F - Comprehensive Income

The following table presents total comprehensive income for the three months and
six months ended June 30, 2001 and July 1, 2000 (in thousands):

<TABLE>
<CAPTION>
                                                    Three Months Ended            Six Months Ended
                                                  June 30,       July 1,       June 30,       July 1,
                                                    2001          2000           2001          2000
                                                    ----          ----           ----          ----
<S>                                                <C>            <C>          <C>            <C>
Net (loss) earnings                                $(680)         $ 984        $(2,671)       $1,334
Foreign currency translation adjustments             839           (405)          (169)         (493)
                                                   -----          -----        -------        ------

        Total comprehensive income (loss)          $ 159          $ 579        $(2,840)       $  841
                                                   =====          =====        =======        ======
</TABLE>


                                       11
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  June 30, 2001

Note G - Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per
share for the three months and six months ended June 30, 2001 and July 1, 2000
(in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                Three Months Ended   Six Months Ended
                                                June 30,   July 1,  June 30,   July 1,
                                                 2001       2000     2001       2000
                                                 ----       ----     ----       ----
<S>                                             <C>        <C>      <C>        <C>
Numerator:
    Net (loss) earnings                         $  (680)   $  984   $(2,671)   $1,334
                                                =======    ======   =======    ======
Denominator:
    Denominator for basic earnings per share:
      Weighted-average shares                     3,449     3,517     3,469     3,519
    Denominator for diluted earnings
    per share:
      Dilutive employee stock options                          24                  24
                                                -------    ------   -------    ------

      Weighted-average shares and
       assumed conversions                        3,449     3,541     3,469     3,543
                                                =======    ======   =======    ======

Basic (loss) earnings per share                 $  (.20)   $  .28   $  (.77)   $  .38
                                                =======    ======   =======    ======

Diluted (loss) earnings per share               $  (.20)   $  .28   $  (.77)   $  .38
                                                =======    ======   =======    ======
</TABLE>


                                       12
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  June 30, 2001

Note H - 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
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 the mass merchandiser markets. 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                Six Months Ended
                                                       June 30,         July 1,        June 30,          July 1,
                                                         2001            2000            2001             2000
                                                         ----            ----            ----             ----
<S>                                                    <C>              <C>             <C>             <C>
Revenues
Revenues from external customers:
    Flooring products                                  $ 57,227         $ 55,169        $111,991        $111,925
    Tape products                                        21,491           24,825          44,126          47,790
    Jewelry                                               8,934            9,869          19,691          20,204
    Canadian division                                    10,408           12,535          21,949          24,924
                                                       --------         --------        --------        --------
         Total revenues from external
            customers                                    98,060          102,398         197,757         204,843
                                                       --------         --------        --------        --------
Intersegment revenues:
    Flooring products                                        78               94             189             205
    Tape products                                            42                4              70              85
    Jewelry
    Canadian division                                     2,285            1,558           4,110           3,082
                                                       --------         --------        --------        --------
         Total intersegment revenues                      2,405            1,656           4,369           3,372
                                                       --------         --------        --------        --------
                                                        100,465          104,054         202,126         208,215
Reconciling items
    Intersegment revenues                                (2,405)          (1,656)         (4,369)         (3,372)
                                                       --------         --------        --------        --------
         Total consolidated revenues                   $ 98,060         $102,398        $197,757        $204,843
                                                       ========         ========        ========        ========
</TABLE>


                                       13
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  June 30, 2001

Note H - Industry Segments (continued)

<TABLE>
<CAPTION>
          (In thousands)                                  Three Months Ended                Six Months Ended
                                                        June 30,        July 1,       June 30,       July 1,
                                                         2001            2000           2001           2000
                                                         ----            ----           ----           ----
<S>                                                     <C>            <C>            <C>            <C>
Segment (loss) profit
    Flooring products                                   $   62         $(2,891)       $(6,036)       $(5,961)
    Tape products                                          (70)          2,127            551          3,587
    Jewelry                                                (99)             19           (216)           (50)
    Canadian division                                      (93)          1,085            480          2,256
                                                        ------         -------        -------        -------
         Total segment (loss) profit                      (200)            340         (5,221)          (168)

Reconciling items
    Corporate office loss                                 (604)           (422)        (1,280)          (795)
    Intercompany profit                                   (111)            (25)          (111)            14
                                                        ------         -------        -------        -------
       Total consolidated loss before
         income taxes and other items                   $ (915)        $  (107)       $(6,612)       $  (949)
                                                        ======         =======        =======        =======

<CAPTION>
                                                        June 30,       Dec. 31,
                                                          2001           2000
                                                          ----           ----
<S>                                                     <C>              <C>
Segment assets
    Flooring products                                   $237,459         $244,574
    Tape products                                         67,730           53,724
    Jewelry                                               17,573           19,193
    Canadian division                                     30,170           29,858
                                                        --------         --------
         Total segment assets                            352,932          347,349

Reconciling items
    Corporate office assets                               33,238           30,163
    Intersegment accounts receivable                     (23,277)         (12,991)
    Intersegment profit in inventory                        (230)            (119)
                                                        --------         --------
         Total consolidated assets                      $362,663         $364,402
                                                        ========         ========
</TABLE>

Tape product segment assets increased from $53,724 to $67,730 due to capital
expenditures and seasonal increases in inventories and intersegment accounts.


                                       14
<PAGE>

                                    FORM 10-Q

                          PART I. FINANCIAL INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  June 30, 2001

Note I - Pending Adoption of Financial Accounting Standards

In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" ("SFAS No. 141") and SFAS No. 142. 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.


                                       15
<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
                                  June 30, 2001

Results of Operations

Net sales for the second quarter of 2001 were $98.1 million compared to $102.4
million in the second quarter of 2000, a decrease of $4.3 million or 4.2%. Net
sales for the six months of 2001 were $197.8 million, down $7.1 million or 3.5%
from the first half of 2000. Weak economic conditions caused revenues to decline
in all segments except flooring. Year to date flooring segment sales are
essentially flat as sales by Janus have offset declines in sales by Congoleum to
the manufactured housing industry.

Cost of products sold as a percentage of net sales was 72.7% in the second
quarter of 2001 versus 71.8% in the second quarter of 2000. This increase is due
to lower manufacturing volumes and to a lesser extent, a competitive price
environment. These same factors caused cost of products sold in the first six
months of 2001 to increase to 73.7% from 72.2% one year earlier.

Selling, general and administrative expenses as a percentage of sales were 26.4%
in the second quarter of 2001 compared to 27.1% in the second quarter of 2000,
reflecting aggressive cost reduction initiatives undertaken in response to the
economy, particularly at Congoleum. For the six months ended June 30, 2001,
selling, general and administrative expenses as a percentage of sales were
27.7%, up from 26.9% in the first half of 2000, as the largest expense
reductions did not occur until late in the first quarter of 2001.

Interest expense for the three and six months ended June 30, 2001 increased from
comparable year earlier periods due to higher borrowings, primarily related to
the Janus acquisition, and a decrease in the portion of interest capitalized in
connection with capital projects. These factors were partly offset by lower
interest rates.

For the three months ended June 30, 2001, the Company had a net loss of $.7
million versus net earnings of $1.0 million in the same period one year earlier.
All segments except flooring reported losses this year versus income last year.
Flooring showed a slight profit versus a large loss last year. For the first six
months of 2001, the net loss was $2.7 million versus net earnings of $1.3
million in the year earlier period, with all segments reporting weaker results
as a result of the economy.

Liquidity and Capital Resources

Cash and cash equivalents, including short term investments, declined $10.0
million in the first six months of 2001 to $19.0 million, compared with a
decline of $17.4 million in the first six months of 2000. The higher use of cash
was due to increased capital expenditures, lower net income, and higher payments
of accrued expenses, partly offset by increased collections of accounts
receivable.


                                       16
<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
                                  June 30, 2001

Working capital at June 30, 2001 was $54.2 million, down from $72.0 million at
December 31, 2000. The ratio of current assets to current liabilities at June
30, 2001 was 1.5, down from 1.7 at December 31, 2000.

Capital expenditures in the first half of 2001 were $15.4 million. It is
anticipated that capital spending for the full year 2001 will be in the range of
$25 - $26 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 $41.6 million and at Congoleum are $20.0 million. During
the first half of 2001, ABI repurchased $1.1 million of its Common Stock.

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 June 30, 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 June 30, 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.


                                       17
<PAGE>

                                    FORM 10-Q

                           PART II. OTHER INFORMATION
                     AMERICAN BILTRITE INC. AND SUBSIDIARIES
                                  June 30, 2001

The Company does not currently use derivative financial instruments, derivative
commodity instruments or other financial instruments to manage its exposure to
changes in interest rates, foreign currency exchange rates, commodity prices or
equity prices.

Item 4. Submission of Matters to a Vote of Security Holders:

        At the Annual Meeting of Stockholders held on May 8, 2001, the following
        action was taken:

        Three nominees were elected as Class II Directors who will hold office
        until the Annual Meeting of Stockholders in 2004 and until their
        successors are duly elected and qualify.

                                                     Witheld From
         Name                       Votes For        All Nominees

         John C. Garrels III        3,113,554           12,805
         James S. Marcus            3,113,354           13,005
         Roger S. Marcus            3,113,354           13,005

Item 6. Exhibits and Reports on Form 8-K

(a)   Exhibits

      None

(b)   Reports on Form 8-K

      There were no reports on Form 8-K filed for the three months ended June
      30, 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: August 10, 2001                        BY: /s/ Howard N. Feist III
                                                 ----------------------------
                                                 Howard N. Feist III
                                                 Vice President-Finance


                                       18