SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                           --------------------------

                                    FORM 10-Q

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934

      For the quarterly period ended March 31, 2002

                                       or

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934

      For the transition period from ________ to _________

                         Commission File Number 1-13612

                              CONGOLEUM CORPORATION
             (Exact name of Registrant as specified in Its Charter)

DELAWARE                                                              02-0398678
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

                             3500 Quakerbridge Road
                                  P.O. Box 3127
                           Mercerville, NJ 08619-0127
          (Address of Principal Executive Offices, including Zip Code)
                        Telephone number: (609) 584-3000
              (Registrant's telephone number, including area code)

      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.

             Class                             Outstanding at April 22, 2002
    ------------------------------          ------------------------------------

      Class A Common Stock                               3,651,190
      Class B Common Stock                               4,608,945


                                  Page 1 of 18
<PAGE>

                              CONGOLEUM CORPORATION

                                      Index

                                                                            Page
                                                                            ----
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements:

               Condensed Consolidated Balance Sheets as of March 31,
               2002 (unaudited) and December 31, 2001........................  3

               Condensed Consolidated Statements of Operations for
               the three months ended March 31, 2002 and 2001 (unaudited)....  4

               Condensed Consolidated Statements of Changes in
               Stockholders' Equity for the year ended December 31,
               2001 and the three months ended March 31, 2002 (unaudited)....  5

               Condensed Consolidated Statements of Cash Flows for
               the three months ended March 31, 2002 and 2001 (unaudited)....  6

               Notes to Unaudited Condensed Consolidated Financial
               Statements ...................................................  7

Item 2. Management's Discussion and Analysis of Financial Condition
               and Results of Operations..................................... 14

Item 3. Quantitative and Qualitative Disclosures About Market Risk........... 16

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.................................................... 17

Item 2. Changes in Securities................................................ 17

Item 3. Defaults Upon Senior Securities...................................... 17

Item 4. Submission of Matters to a Vote of Security Holders.................. 17

Item 5. Other Information.................................................... 17

Item 6. Reports on Form 8-K.................................................. 17

Signatures................................................................... 18


                                       2
<PAGE>

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                              CONGOLEUM CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                       March 31,    December 31,
                                                                          2002         2001
                                                                          ----         ----
                                                                      (Unaudited)
                                                                         (Dollars in thousands)
<S>                                                                     <C>          <C>
ASSETS
Current assets:
    Cash and cash equivalents ........................................  $   7,096    $  15,257
    Short-term investments ...........................................         --        1,416
    Accounts and notes receivable, net ...............................     23,748       17,932
    Inventories ......................................................     58,236       55,782
    Prepaid expenses and other current assets ........................      5,619        6,403
    Deferred income taxes ............................................      4,046        6,375
                                                                        ---------    ---------
       Total current assets ..........................................     98,745      103,165
Property, plant and equipment, net ...................................     95,330       95,904
Goodwill, net ........................................................         --       10,523
Deferred income taxes ................................................        930        1,334
Other assets .........................................................     19,235       18,957
                                                                        ---------    ---------
       Total assets ..................................................  $ 214,240    $ 229,883
                                                                        =========    =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable .................................................  $  18,719    $  17,911
    Accrued expenses .................................................     24,847       29,585
    Accrued taxes ....................................................        358          353
    Deferred income taxes ............................................      3,445        3,597
                                                                        ---------    ---------
       Total current liabilities .....................................     47,369       51,446
Long-term debt .......................................................     99,687       99,674
Other liabilities ....................................................     30,051       30,080
Accrued pension liability ............................................     14,440       14,658
Accrued postretirement benefit obligation ............................      8,810        8,972
                                                                        ---------    ---------
       Total liabilities .............................................    200,357      204,830

STOCKHOLDERS' EQUITY
Class A common stock, par value $0.01 per share; 20,000,000
    shares authorized; 4,736,950 shares issued as of March 31,
    2002 and December 31, 2001 .......................................         47           47
Class B common stock, par value $0.01 per share; 4,608,945
    shares authorized, issued and outstanding as of March 31,
    2002 and December 31, 2001 .......................................         46           46
Additional paid-in capital ...........................................     49,105       49,105
Retained deficit .....................................................    (21,391)     (10,221)
Accumulated minimum pension liability adjustment .....................     (6,111)      (6,111)
                                                                        ---------    ---------
                                                                           21,696       32,866
Less Class A common stock held in Treasury, at cost; 1,085,760
    shares at March 31, 2002 and December 31, 2001 ...................      7,813        7,813
                                                                        ---------    ---------
       Total stockholders' equity ....................................     13,883       25,053
                                                                        ---------    ---------
       Total liabilities and stockholders' equity ....................  $ 214,240    $ 229,883
                                                                        =========    =========
</TABLE>

                   The accompanying notes are an integral part
                     of the condensed financial statements.


                                       3
<PAGE>

                              CONGOLEUM CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                                               March 31,
                                                                          --------------------
                                                                            2002        2001
                                                                          (In thousands, except
                                                                            per share amounts)

<S>                                                                       <C>         <C>
Net sales .............................................................   $ 57,926    $ 51,583
Cost of sales .........................................................     44,065      42,610
Selling, general and administrative expenses ..........................     13,152      13,179
                                                                          --------    --------
    Income (loss) from operations .....................................        709      (4,206)
Other income (expense):
    Interest income ...................................................         57         276
    Interest expense ..................................................     (2,064)     (2,097)
    Other income ......................................................        352         370
                                                                          --------    --------
       Loss before income taxes and cumulative effect of
            accounting change .........................................       (946)     (5,657)
Benefit for income taxes ..............................................       (299)     (1,980)
                                                                          --------    --------
       Net loss before accounting change ..............................       (647)     (3,677)
Cumulative effect of accounting change ................................    (10,523)         --
                                                                          --------    --------

    Net loss ..........................................................   $(11,170)   $ (3,677)
                                                                          ========    ========

       Net loss per common share before cumulative effect of
            accounting change, basic and diluted ......................   $   (.08)   $   (.45)
       Cumulative effect of accounting change .........................      (1.27)         --
                                                                          --------    --------
       Net loss per common share, basic and diluted ...................   $  (1.35)   $   (.45)
                                                                          ========    ========

       Weighted average number of common shares outstanding ...........      8,260       8,260
                                                                          ========    ========
</TABLE>

                   The accompanying notes are an integral part
                     of the condensed financial statements.


                                       4
<PAGE>

                              CONGOLEUM CORPORATION
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                        Common Stock                            Accumulated
                                      par value $0.01   Additional               Minimum
                                      ----------------   Paid-in    Retained  Pension Liability  Treasury             Comprehensive
                                      Class A  Class B   Capital     Deficit    Adjustment        Stock       Total       Loss
                                      -------  -------   -------     -------    ----------        -----       -----       ----

<S>                                    <C>       <C>      <C>       <C>           <C>            <C>         <C>        <C>
Balance, December 31, 2000 ........... $47       $46      $49,105   $ (8,581)     $(3,494)       $(7,813)    $29,310

Minimum pension liability adjustment,
   net of tax benefit of $1,504 ......                                             (2,617)                    (2,617)   $ (2,617)

Net loss .............................                                (1,640)                                 (1,640)     (1,640)
                                                                                                                        --------

Net comprehensive loss ...............                                                                                  $ (4,257)
                                        ----------------------------------------------------------------------------    ========

Balance, December 31, 2001 ...........  47        46       49,105    (10,221)      (6,111)        (7,813)     25,053

Net loss .............................                               (11,170)                                (11,170)   $(11,170)
                                                                                                                        --------

Net comprehensive loss ...............                                                                                  $(11,170)
                                        ----------------------------------------------------------------------------    ========

Balance, March 31, 2002 .............. $47       $46      $49,105   $(21,391)     $(6,111)       $(7,813)    $13,883
                                       ===       ===      =======   ========      =======        =======     =======
</TABLE>

                   The accompanying notes are an integral part
                     of the condensed financial statements.


                                       5
<PAGE>

                              CONGOLEUM CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                                            March 31,
                                                                      --------------------
                                                                         2002        2001
                                                                         (In thousands)

<S>                                                                   <C>         <C>
Cash flows from operating activities:
    Net loss .......................................................  $(11,170)   $ (3,677)
    Adjustments to reconcile net loss to net cash used
      by operating activities:
       Depreciation ................................................     2,647       2,937
       Amortization ................................................       140         204
       Deferred income taxes .......................................     2,581      (1,942)
       Cumulative effect of accounting change ......................    10,523          --
       Changes in certain assets and liabilities:
            Accounts and notes receivable ..........................    (5,816)     (8,118)
            Inventories ............................................    (2,454)     (1,020)
            Prepaid expenses and other current assets ..............       379       1,811
            Accounts payable .......................................       808      (3,777)
            Accrued expenses .......................................    (4,733)       (324)
            Other liabilities ......................................      (409)       (510)
                                                                      --------    --------
               Net cash used by operating activities ...............    (7,504)    (14,416)
                                                                      --------    --------
    Cash flows from investing activities:
       Capital expenditures ........................................    (2,073)     (2,440)
       Purchase of short-term investments ..........................        --      (1,471)
       Maturities of short-term investments ........................     1,416       9,373
                                                                      --------    --------
               Net cash (used) provided by investing activities ....      (657)      5,462
                                                                      --------    --------
Net decrease in cash and cash equivalents ..........................    (8,161)     (8,954)
Cash and cash equivalents:
    Beginning of period ............................................    15,257      12,637
                                                                      --------    --------
    End of period ..................................................  $  7,096    $  3,683
                                                                      ========    ========
</TABLE>

                   The accompanying notes are an integral part
                     of the condensed financial statements.


                                       6
<PAGE>

                              CONGOLEUM CORPORATION
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

      The condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and with Rule 10-01 of Regulation S-X and have
not been audited by the Company's independent accountants. Certain information
and note disclosures normally included in annual financial statements prepared
in accordance with accounting principles generally accepted in the United States
required for complete financial statements have been condensed or omitted in
accordance with the rules and regulations of the Securities and Exchange
Commission. The preparation of condensed financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities and
the reported amounts of revenues and expenses during the reporting period. In
the opinion of management, all adjustments (consisting of normal and recurring
adjustments) considered necessary for a fair presentation of the Company's
financial position have been included. The results of operations for the three
months ended March 31, 2002 are not necessarily indicative of the results to be
expected for a full year. These condensed financial statements should be read in
conjunction with the Company's audited financial statements, which appear in the
Company's Annual Report to Stockholders for the year ended December 31, 2001.

      Based upon the nature of the Company's operations, facilities and
management structure, the Company considers its business to constitute a single
segment for financial reporting purposes.

      Certain amounts appearing in the prior year's financial statements have
been reclassified to conform to the current year's presentation.

2. Changes in Accounting Principles

      In July 2001, the Financial Accounting Standards Board issued SFAS No.
141, "Business Combinations" ("SFAS No. 141") and SFAS No. 142, "Goodwill and
Other Intangible Assets" ("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 years 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. Adoption of SFAS No. 141 did not have an
impact on the results of operations or financial position of Congoleum
Corporation. SFAS No. 142 was effective for the Company as of January 1, 2002.
During the first quarter of 2002, the Company performed a transitional
impairment test of goodwill and concluded that there was an impairment. The
Company compared the implied fair value of goodwill to the carrying value of
goodwill and it was determined that based on the fair value of the Company's
assets and liabilities, there should be no goodwill recorded. Accordingly, the
Company recorded an impairment loss of $10.5 million during


                                       7
<PAGE>

the first quarter of 2002, which has been recorded as a cumulative effect of a
change in accounting principle.

      The impact of the adoption of SFAS 142 on the Company's financial
statements also resulted in the elimination of $108 thousand of goodwill
amortization expense or $.02 per share for the three months ended March 31,
2002.

      The following table reflects consolidated results adjusted as though the
Company's adoption of SFAS 142 occurred as of January 1, 2001:

      (In thousands, except per share amounts)

                                                  For the Three Months Ended
                                                    March 31,     March 31,
                                                      2002           2001
                                                   ----------     ---------

      Net loss before cumulative effect of
          accounting change:
      As reported                                  $ (647)       $ (3,677)
      Goodwill amortization                            --             108
      As adjusted                                  $ (647)       $ (3,569)

      Loss per share before cumulative effect of
          accounting change:
      As reported                                  $ (.08)       $  (0.45)
      Goodwill amortization                            --             .02
      As adjusted                                  $ (.08)       $  (0.43)

      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. Congoleum adopted SFAS No. 144 effective January 1, 2002.
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 superseded
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
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.
Adoption of this pronouncement did not have an effect on the Company's
consolidated financial position or results of operations.

      In November 2001, Emerging Issues Task Force (EITF) issue 01-9,
"Accounting for Consideration Given by a Vendor to a Customer or Reseller of the
Vendor's Products ("EITF 01-9"), was issued. Congoleum adopted EITF 01-9
effective January 1, 2002 as required. This issue addresses the manner in which
companies account for sales incentives to their customers. The Company's current
accounting policies for the recognition of costs related to these programs,
which is to accrue for costs as benefits are earned by the Company's customers,
are already in accordance with the consensus reached in this issue. The Company
has reclassified amounts previously recorded in selling, general and
administrative expense as a reduction in sales. The impact for the first quarter
of


                                       8
<PAGE>

2002 and 2001 was a reduction of sales and of selling, general and
administrative expenses of $1,030 and $1,600, respectively.

3. Inventories

      A summary of the major classifications of inventories stated at the lower
of LIFO cost or market is as follows:

                                                      March 31,   December 31,
      (Dollars in thousands)                            2002         2001
                                                       -------     -------

      Finished goods                                   $45,893     $43,680
      Work-in-process                                    3,988       4,425
      Raw materials and supplies                         8,355       7,677
                                                       -------     -------
                                                       $58,236     $55,782
                                                       =======     =======

4. Loss Per Share

      Net loss per share is calculated by dividing net loss by the weighted
average number of shares of common stock outstanding.

5. Commitments and Contingencies

      The Company is subject to federal, state and local environmental laws and
regulations and certain legal and administrative claims are pending or have been
asserted against the Company. Among these claims, the Company is a named party
in numerous 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 the Company'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 magnitude of
clean-up costs, the timing and extent of the remedial actions that may be
required, the determination of the Company's liability in proportion to other
potentially responsible parties and the extent to which costs may be recoverable
from insurance.

      The Company 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.


                                       9
<PAGE>

      The Company 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, the Company 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. The Company'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, the Company can be held jointly and severally
liable for all environmental costs associated with a site.

      The most significant exposure to which the Company has been named a PRP
relates to a recycling facility site in Elkton, Maryland. The PRP group at this
site is made up of 51 companies, substantially all of which are large
financially solvent entities. 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 estimated that future costs of
groundwater remediation, based on engineering and consultant studies conducted,
would be approximately $26 million. Congoleum's proportionate share, based on
waste disposed at the site, was estimated to be approximately 6.1%.

      The Company also accrues remediation costs for certain of the Company'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.

      The Company is one of many defendants in approximately 9,089 pending
claims (including workers' compensation cases) involving approximately 27,410
individuals as of March 31, 2002, alleging personal injury or death from
exposure to asbestos or asbestos-containing products. There were 6,563 claims at
December 31, 2001 that involved approximately 23,139 individuals. Activity
related to asbestos claims was as follows:

                                            Three months ended    Year ended
                                                March 31,         December 31,
                                                  2002               2001
      --------------------------------------------------------------------------

      Beginning claims.....................       6,563              1,754
      New claims...........................       2,790              5,048
      Settlements..........................         (18)               (40)
      Dismissals...........................        (246)              (199)
      --------------------------------------------------------------------------

      Ending claims........................       9,089              6,563
                                                  =====              =====


                                       10
<PAGE>

      The total indemnity costs incurred to settle claims during the three
months ending March 31, 2002 and twelve months ending December 31, 2001 were
$0.6 million and $1.1 million, respectively, which were paid by the Company'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 March 31, 2002, the
Company has incurred asbestos-related claims of $12.0 million, to resolve claims
of over 33,000 claimants, substantially all of which have been paid by the
Company's insurance carriers. The average indemnity cost per resolved claimant
is $360. Over 99% of claims incurred by the Company have settled, on average,
for amounts less than $100 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 the Company (or, in the workers' compensation cases, exposure to
asbestos in the course of employment with the Company). The Company 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. The Company has issued warnings not to remove
asbestos-containing flooring by sanding or other methods that may cause the
product to become friable.

      The Company 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 the
Company. One such development, the declarations of bankruptcy by several
companies that were typically lead defendants in asbestos-related cases, is
likely to have a negative impact on the Company'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 2001, the Company 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 the Company's analysis, the Company has determined that
its range of probable and estimable undiscounted losses for asbestos-related
claims through the year 2049 is $53.3 million to $195.6 million before
considering the effects of insurance recoveries. As discussed previously, it is
very difficult to forecast a liability for the Company's ultimate exposure for
asbestos-related claims as there are multiple variables that can affect the
timing, severity, and quantity of claims. Therefore, the Company 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 $53.3 million in accordance with accounting
principles generally accepted in the United States.

      During the period that Congoleum produced asbestos-containing products,
the Company purchased primary and excess insurance policies providing in excess
of $1 billion coverage for bodily


                                       11
<PAGE>

injury asbestos claims. To date, substantially all claims and defense costs have
been paid through primary insurance coverage. At March 31, 2002, the Company had
approximately $2.0 million in remaining primary insurance coverage for bodily
injury asbestos claims. Once all primary coverage is exhausted, the Company
expects defense and indemnity costs to be covered by its excess insurance
policies. However, it is likely that the Company will share in these costs. The
first layer of excess insurance policies provides for $135 million in coverage.
Of this layer, approximately 25% to 33% (depending on the method used to
allocate losses) was underwritten by carriers who are presently insolvent. The
Company anticipates that it will have to pay some or all of the portion of costs
for resolving asbestos-related claims that are allocable to such insolvent
carriers, and that it may, in turn, be able to recover a portion of such
payments from the estates or insurance guaranty funds responsible for the
obligations of these carriers.

      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 the financial viability of
some of the insurance companies, the method in which losses will be allocated to
the various insurance policies and the years covered by those policies, how
legal and other loss handling costs will be covered by the insurance policies,
and interpretation of the effect on coverage of various policy terms and limits
and their interrelationships. Congoleum has filed suit regarding insurance
coverage issues against certain of its primary insurance carriers, the carriers
comprising its first layer of excess insurance, state guaranty funds
representing insolvent carriers, and its insurance brokers and has begun
settlement negotiations with several of these parties.

      The Company has determined, based on its review of its insurance policies
and the advice of legal counsel, that approximately $42.5 million of the
estimated $53.3 million gross liability is probable of recovery. This
determination was made after considering the terms of the available insurance
coverage, the financial viability of the insurance companies and the status of
negotiations with its carriers. The Company further believes that the criteria,
as defined by accounting principles generally accepted in the United States, to
offset the estimated gross liability with a portion of the probable insurance
recovery, equal to $35.5 million, have been met. The balance of the estimated
gross liability of $17.8 million has been reflected in the balance sheet as a
long-term liability as of December 31, 2001 and March 31, 2002. The Company has
also recorded in the balance sheet an insurance receivable of $9.6 million that
represents an estimate of probable insurance recoveries that do not qualify for
offsetting against the gross liability and for the probable insurance settlement
of disputed insurance coverage, which is currently estimated to be $2.5 million.
This insurance receivable has been recorded in other long-term assets as of
December 31, 2001 and March 31, 2002.

      Since many uncertainties exist surrounding asbestos litigation, the
Company 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 the Company's total
liability for 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 the Company incurring future charges to income to
adjust the carrying value of recorded liabilities and assets. Additionally,
since the Company has recorded an amount representing the low end of the range
of exposure for asbestos-related claims, it is possible that over time another
amount within the range will be a better estimate of the actual losses. Although
the resolution of these claims is


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<PAGE>

anticipated to take decades, amounts recorded for the liability are not
discounted, and the effect on results of operations in any given year from a
revision to these estimates could be material. Congoleum does not believe,
however, that asbestos-related claims will have a material adverse effect on its
financial position or liquidity.


                                       13
<PAGE>

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


Results of Operations

Three months ended March 31, 2002 as compared to three months ended March 31,
2001.

      Net sales for the first quarter of 2002 were $57.9 million, as compared to
$51.6 million in the first quarter of 2001, an increase of $6.3 million or
12.3%. The increase in sales was primarily attributable to the success of
DuraStone, a product introduced in August 2001. Sales of general line and
manufactured housing sheet products also improved, while sales of promotional
goods declined.

      Gross profit for the first quarter of 2002 was $13.9 million, up $4.9
million from $9.0 million in the first quarter of 2001. Gross profit as a
percent of net sales increased to 23.9% in the first quarter of 2002 from 17.4%
in the first quarter of 2001. The improvement in gross profit was due to
improved plant efficiencies, a reduction in certain raw material costs and the
benefit of higher sales and production levels.

      Selling, general and administrative expenses were $13.2 million in the
first quarter of 2002, relatively unchanged from the first quarter of 2001. As a
percent of net sales, selling, general and administrative expenses were 22.7% in
the first quarter of 2002, as compared to 25.5% in the first quarter of 2001.
Increased 2002 expenses for marketing costs associated with new products and
higher medical benefit costs were offset by the severance expense that was
included in the first quarter of 2001.

      Income from operations for the first quarter of 2002 was $0.7 million, as
compared to a loss of $4.2 million in the first quarter of 2001. Net loss before
an accounting change totaled $0.6 million in the first quarter of 2002 versus
$3.7 million in the same period last year. The Company adopted SFAS No. 142
effective January 1, 2002, which resulted in a non-cash charge of $10.5 million
for goodwill impairment.

      The provision for income taxes for the three months ended March 31, 2002
represents an effective tax rate of 31.6%. This is due to the impact of certain
permanent differences between book and tax income, which have a significant
impact on the annualized effective tax rate at low levels of book income.

Liquidity and Capital Resources

      Cash, cash equivalents and short-term investments declined $9.6 million
for the three months ended March 31, 2002 to $7.1 million. Working capital at
March 31, 2002 was $51.4 million, down from $51.7 million at December 31, 2001.
The ratio of current assets to current liabilities at March 31, 2002 was 2.1
compared to 2.0 at December 31, 2001. The ratio of debt to total capital at
March 31, 2002 was .47 compared to .43 at December 31, 2001. Cash used by
operations was $7.5 million for the first three months of 2002, compared to cash
used by operations of $14.4 million in the first three months of 2001. The
decrease in cash used by operations in the first three months of 2002


                                       14
<PAGE>

versus the first three months of 2001 was primarily due to the improved
operating performance coupled with faster collection of receivables, higher
payables and an income tax refund. This was partially offset by higher
inventories and increased payments of accrued expenses.

      Capital expenditures were $2.1 million for the first three months of 2002.
Total 2002 capital spending is expected to be approximately $10.0 million.

      The Company has recorded what it believes are adequate provisions for
environmental remediation and product-related liabilities, including provisions
for testing for potential remediation of conditions at its own facilities. While
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
five to ten years, the 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.

      In 1998, the Company's Board of Directors approved a new plan to
repurchase up to $5.0 million of the Company's common stock. As of March 31,
2002, the Company had repurchased 777,665 shares of its common stock for an
aggregate cost of $4.3 million pursuant to this plan. The Company is presently
restricted from making further purchases by the terms of its 8 5/8% Senior Note
indenture.

      The Company's principal sources of liquidity are net cash provided by
operating activities and borrowings under its Amended and Restated Financing
Agreement. The Company believes that these sources will be adequate to fund
working capital requirements, debt service payments and planned capital
expenditures through the foreseeable future.

      Some of the information presented in or incorporated by reference in this
report constitutes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Although the Company believes
that its expectations are based on reasonable assumptions, within the bounds of
its knowledge of its business and operations, there can be no assurance that
actual results will not differ materially from its expectations. Factors that
could cause actual results to differ from expectations include: (i) the future
cost and timing of payments associated with and availability of insurance
coverage for asbestos-related personal injury claims, as well as other
environmental, product and general liability claims, (ii) increases in raw
material prices, (iii) increased competitive activity from companies in the
flooring industry, some of which have greater resources and broader distribution
channels than the Registrant, (iv) unfavorable developments in the national
economy or in the housing industry in general, (v) shipment delays, depletion of
inventory and increased production costs resulting from unforeseen disruptions
of operations at any of the Registrant's facilities or distributors, (vi)
changes in distributors of the Company's products.


                                       15
<PAGE>

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 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 March 31,
2002 consisted of indebtedness with a fixed rate of interest which is not
subject to change based upon changes in prevailing market interest rates. Under
its current policies, the company does not 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.


                                       16
<PAGE>

PART II. OTHER INFORMATION

         Item 1. Legal Proceedings: None

         Item 2. Changes in Securities and Use of Proceeds: None

         Item 3. Defaults Upon Senior Securities: None

         Item 4. Submission of Matters to a Vote of Security Holders: None

         Item 5. Other Information: None

         Item 6. Exhibits and Reports on Form 8-K: None


                                       17
<PAGE>

                              CONGOLEUM CORPORATION

                                    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.

                                      CONGOLEUM CORPORATION
                                          (Registrant)


Date: May 9, 2002                     By: /s/ H. N. Feist III
                                          --------------------------------------
                                              (signature)

                                      Howard N. Feist III
                                      Chief Financial Officer
                                      (Principal Financial & Accounting Officer)


                                       18