10-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

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

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

Commission File Number 1-4773

AMERICAN BILTRITE INC.

(Exact name of registrant as specified in its charter)

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

57 River Street

Wellesley Hills, MA 02481-2097

(Address of Principal Executive Offices)

(781) 237-6655

(Registrant’s telephone number, including area code)

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

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

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES [X] NO [ ]

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

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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

The aggregate market value of the registrant’s common stock held by non-affiliates as of June 30, 2011 was $14.2 million.

The number of shares of the registrant’s common stock, par value $.01 per share, outstanding as of March 16, 2012 was 3,447,142.

Documents Incorporated by Reference – None.

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

EXPLANATORY NOTE

American Biltrite Inc. is filing this Amendment No. 1 to its Annual Report on Form 10-K for the year ended December 31, 2011 (the “Original Filing”), which was filed with the Securities and Exchange Commission on March 29, 2012, for the sole purpose of furnishing corrected XBRL Interactive Data Files (“XBRL Files”). Due to an error by a third party financial printer, the XBRL Files furnished with the Original Filing contained inaccuracies in the financial statement headers preceding the Company’s Consolidated Balance Sheet, Statements of Operations and Statements of Cash Flow. Part IV, Item 15. Exhibits, Financial Statement Schedules of the Original Filing has been amended and restated in its entirety to include as exhibits corrected XBRL Files. Furthermore, pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Form 10-K/A contains new certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, which are attached hereto. Because no financial statements have been included in this Form 10-K/A and this Form 10-K/A does not contain or amend any disclosure with respect to Items 307 and 308 of Regulation S-K, paragraphs 3, 4 and 5 of the certifications have been omitted.

Except as described above, no other changes have been made to the Original Filing, and this Form 10-K/A does not modify, amend or update in any way any of the financial or other information contained in the Original Filing. This Form 10-K/A does not reflect events that may have occurred subsequent to the filing date of the Original Filing.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The exhibits required to be included in this Amendment No. 1 are attached as indicated in the Exhibit Index beginning on page 4 of this Amendment No. 1. Page numbers provided below refer to pages of the original Form 10-K. The financial statements required to be filed in the Company’s Annual Report on Form 10-K were included under Item 8 of the original Form 10-K.

(a) List of Financial Statements and Financial Statement Schedules

(1) The following consolidated financial statements of American Biltrite Inc. and its subsidiaries are included in Item 8 of the original Form 10-K:

Consolidated Balance Sheets – December 31, 2011 and 2010, pages 26 & 27

Consolidated Statements of Operations – Years ended December 31, 2011 and 2010, page 28

Consolidated Statements of Cash Flows – Years ended December 31, 2011 and 2010, page 29

Consolidated Statements of Stockholders’ Equity (Deficit) – Years ended December 31, 2011 and 2010, page 30

Notes to Consolidated Financial Statements, pages 31 through 75

(2) The following financial statement schedule is included in Item 15(c)

SCHEDULE II - Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

(3) Listing of Exhibits

The listing of exhibits required under this item is incorporated herein by reference to pages 105 through 110 of the original Form 10-K.

(b) Exhibits: The required exhibits are filed herewith or incorporated by reference following the required Exhibit Index.

(c) Financial Statement Schedule: The required consolidated financial statement schedule is included on page 103 of the original Form 10-K.

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SIGNATURE

Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:   April 10, 2012	by:   /s/ Howard N. Feist III
	Howard N. Feist III, Vice President Finance and Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
3 (1) I	Restated Certificate of Incorporation
3 (2) III	By-Laws, amended and restated as of November 7, 2008
4 (1) *	Form of stock certificate
10 (1) IV, II	1993 Stock Award and Incentive Plan as Amended and Restated as of    March 4, 1997
10 (2) VI	First Amendment to the1993 Stock Award and Incentive Plan as Amended and Restated as of March 4, 1997
10 (3) V	K&M Associates L.P. Amended and Restated Agreement of Limited Partnership
10 (4) VII	Amendment No. 1 to Amended and Restated Agreement of Limited Partnership of K&M Associates L.P., dated as of January 1, 2006
10 (5) XVIII	Amendment No. 2 to Amended and Restated Agreement of Limited Partnership of K&M Associates L.P., dated December 22, 2010
10 (6) I, II	Split-Dollar Agreement dated as of December 20, 1996 by and between American Biltrite Inc. and The Richard G. Marcus Irrevocable Insurance Trust of 1990 Dated June 1, 1990
10 (7) I, II	Description of Supplemental Retirement Benefits for Gilbert K. Gailius
10 (8) VIII	American Biltrite 1999 Stock Option Plan for Non-Employee Directors (as in effect prior to the Amended and Restated 1999 Stock Option Plan for Non-Employee Directors)
10 (9) VI	American Biltrite Amended and Restated 1999 Stock Option Plan for Non-Employee Directors
10 (10) IX, II	Description of Employment Arrangement for Gilbert K. Gailius
10 (11) X, II	Split-Dollar Agreement dated as of November 20, 2000 by and between American Biltrite Inc. and Howard N. Feist III

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Exhibit No.	Description
10 (12) XI	Loan and Security Agreement dated June 30, 2009, by and among American Biltrite Inc., Ideal Tape Co., Inc., K&M Associates L.P., American Biltrite (Canada) LTD., Ocean State Jewelry, Inc., Majestic Jewelry, Inc., 425 Dexter Associates, L.P., American Biltrite Far East, Inc. and Wachovia Bank, National Association, a national banking association, in its capacity as issuing bank, and Wachovia Bank, National Association, a national banking association, in its capacity as agent and the other lenders from time to time party thereto
10 (13) XII	Form of Stock Option Agreement for American Biltrite Inc.'s 1993 Stock Award and Incentive Plan, as amended and restated as of March 4, 1997 (for awards issued under the plan prior to March 17, 2008)
10 (14) VI	Form of Stock Option Agreement for American Biltrite Inc.'s 1993 Stock Award and Incentive Plan, as amended and restated as of March 4, 1997 (for awards issued under the plan on and after March 17, 2008)
10 (15) XII	Form of Stock Option Agreement for American Biltrite Inc.'s 1999 Stock Option Plan for Non-Employee Directors (for awards issued under the plan prior to March 31, 2008)
10 (16) VI	Form of Stock Option Agreement for American Biltrite Inc.'s 1999 Stock Option Plan for Non-Employee Directors (for awards issued under the plan on or after March 31, 2008)
10 (17) XIX	First Amendment to the Loan and Security Agreement dated as July 15, 2009, among American Biltrite Inc., Ideal Tape Co., Inc., K&M Associates L.P., American Biltrite (Canada) Ltd., Ocean State Jewelry, Inc., Majestic Jewelry, Inc., 425 Dexter Associates, L.P., American Biltrite Far East, Inc. and Wachovia Bank, National Association, a national banking association, in its capacity as issuing bank, and Wachovia Bank, National Association, a national banking association, in its capacity as agent, and the other lenders from time to time party thereto
10 (18) XVI	Amendment No. 2 to Loan and Security Agreement, dated as of March 15, 2010, among American Biltrite Inc., Ideal Tape Co., Inc., K&M Associates L.P., American Biltrite (Canada) Ltd., Ocean State Jewelry, Inc., Majestic Jewelry, Inc., 425 Dexter Associates, L.P., American Biltrite Far East, Inc. and Wachovia Bank, National Association, a national banking association, in its capacity as issuing bank, and Wachovia Bank, National Association, a national banking association, in its capacity as agent, and the other lenders from time to time party thereto

5

Exhibit No.	Description
10 (19) XXI	Amendment No. 3 to Loan and Security Agreement, dated as of May 27, 2011, among American Biltrite Inc., Ideal Tape Co., Inc., K&M Associates L.P., American Biltrite (Canada) Ltd., Ocean State Jewelry, Inc., Majestic Jewelry, Inc., 425 Dexter Associates, L.P., American Biltrite Far East, Inc. and Wells Fargo Bank, National Association, successor by merger to Wachovia Bank, National Association, in its capacity as agent and for other lenders from time to tome party thereto
10 (20) *	Amendment No. 4 to Loan and Security Agreement, dated as of November 22, 2011 among American Biltrite Inc., Ideal Tape Co., Inc., K&M Associates L.P., American Biltrite (Canada) Ltd., Ocean State Jewelry, Inc., Majestic Jewelry, Inc., 425 Dexter Associates, L.P., American Biltrite Far East, Inc. and Wells Fargo Bank, National Association, successor by merger to Wachovia Bank, National Association, in its capacity as agent and for other lenders from time to tome party thereto
10 (21) *	Amendment No. 5 to Loan and Security Agreement, dated as of February 13, 2012, among American Biltrite Inc., Ideal Tape Co., Inc., K&M Associates L.P., American Biltrite (Canada) Ltd., Ocean State Jewelry, Inc., Majestic Jewelry, Inc., 425 Dexter Associates, L.P., American Biltrite Far East, Inc. and Wells Fargo Bank, National Association, successor by merger to Wachovia Bank, National Association, in its capacity as agent and for other lenders from time to tome party thereto
10 (22) XVII	Management Services and Commercial Agreement, dated as of July 1, 2010, by and between American Biltrite Inc. and Congoleum Corporation
10 (23) XIII	Response Cost Sharing And Alternative Dispute Resolution Agreement, dated as of May 21, 2007, by American Biltrite Inc. and Miller Industries, Inc.
21 (1) *	Subsidiaries of the Registrant (including each subsidiary's jurisdiction of incorporation or organization and the name under which each subsidiary does business)
31 (1) **	Certification of the Chief Executive Officer of the Registrant Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
31 (2) **	Certification of the Chief Financial Officer of the Registrant Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

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Exhibit No.	Description
32 *	Certification of the Chief Executive Officer and the Chief Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99 (1) XIV	Settlement and Policy Buyback Agreement and Release, dated as of April 25, 2006, by and among Congoleum Corporation, the Plan Trust, American Biltrite Inc. and Travelers Casualty and Surety Co., formerly known as The Aetna Casualty and Surety Company, and St. Paul Fire and Marine Insurance Company
99 (2) XV	Letter Agreement, dated as of March 18, 2008, amending the Settlement and Policy Buyback Agreement and Release, dated as of April 25, 2006, by and among Congoleum Corporation, the Plan Trust, American Biltrite Inc. and Travelers Casualty and Surety Co., formerly known as The Aetna Casualty and Surety Company, and St. Paul Fire and Marine Insurance Company
99 (3) XX	Fourth Amended Joint Plan of Reorganization of Congoleum Corporation et al., dated March 11, 2010, as modified, as confirmed by the United States District Court for the District of New Jersey
99 (4) XXII	Press release reporting the voluntary delisting of the Company’s common stock from the NYSE Amex and the voluntary deregistration of the Common Stock
101.INS **	XBRL Instance Document
101.SCH **	XBRL Taxonomy Extension Schema Document
101.CAL **	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB **	XBRL Taxonomy Extension Label Linkbase Document
101.PRE **	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF **	XBRL Taxonomy Extension Definition Linkbase Document

_____________________________________________________________

*	Exhibit filed with the original Form 10-K
**	Furnished herewith

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	Attached as Exhibits 101 to this Amendment No. 1 on Form 10-K/A are the following financial statements from the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, (iv) Consolidated Statements of Stockholders’ Equity (Deficit), and (v) Notes to Consolidated Financial statements tagged as blocks of text.
	The XBRL related information in Exhibits 101 to this Amendment No. 1 on Form 10-K/A shall not be deemed “filed” or a part of a registration statement or prospectus for the purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and is not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of those sections.
I	Incorporated by reference to the exhibits to the Company's Annual Report on Form 10-K for the year ended December 31, 1996  (1-4773)
II	Compensatory plans required to be filed as exhibits pursuant to Item 15 of     Form 10-K
III	Incorporated by reference to the exhibits to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2007
IV	Incorporated by reference to the exhibits to the Company's Quarterly Report on Form 10-Q for the quarter ended June 28, 1997  (1-4773)
V	Incorporated by reference to  the exhibits to the Company's Annual Report on Form 10-K for the year ended December 31, 1995  (1-4773)
VI	Incorporated by reference to the exhibits to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008
VII	Incorporated by reference to the exhibits to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006
VIII	Incorporated by reference to the exhibits to the Company's Quarterly Report on Form 10-Q for the quarter ended July 3, 1999
IX	Incorporated by reference to the exhibits to the Company's Annual Report on Form 10-K for the year ended December 31, 1999
X	Incorporated by reference to the exhibits to the Company's Annual Report on Form 10-K for the year ended December 31, 2000
XI	Incorporated by reference to the exhibits to the Company's  Current  Report  on  Form 8-K filed on July 7, 2009

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XII	Incorporated by reference to the exhibits to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005
XIII	Incorporated by reference to the exhibits to the Company's Current Report on Form 8-K filed on May 21, 2007
XIV	Incorporated by reference to the exhibits to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2006
XV	Incorporated by reference to the exhibits to the Company's Annual Report on Form 10-K for the year ended December 31, 2007
XVI	Incorporated by reference to the exhibits to the Company's Current Report on Form 8-K filed on March 18, 2010
XVII	Incorporated by reference to the exhibits to the Company's Current Report on Form 8-K filed on July 8, 2010
XVIII	Incorporated by reference to the exhibits to the Company's Current Report on Form 8-K filed on December 23, 2010
XIX	Incorporated by reference to the exhibits to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009
XX	Incorporated by reference to the Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on June 11, 2010
XXI	Incorporated by reference to the exhibits to the Company's Current Report on Form 8-K filed on June 6, 2011
XXII	Incorporated by reference to the exhibits to the Company's Current Report on Form 8-K filed on January 9, 2012

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EX-31

Exhibit 31 (1)

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Roger S. Marcus, certify that:

1. I have reviewed this Amendment No. 1 on Form 10-K/A of American Biltrite Inc.; and

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

Date:   April 10, 2012	by:   /s/ Roger S. Marcus
	Roger S. Marcus, Chairman of the Board, Chief Executive Officer and Director

EX-31

Exhibit 31 (2)

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Howard N. Feist III, certify that:

1. I have reviewed this Amendment No. 1 on Form 10-K/A of American Biltrite Inc.; and

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

Date:   April 10, 2012	by:   /s/ Howard N. Feist III
	Howard N. Feist III, Vice President Finance and Chief Financial Officer

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Consolidated Statements of Stockholders’ Equity (Deficit) (Parenthetical) (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Statement of Stockholders' Equity [Abstract]
Shares of treasury stock purchased		174
Weighted average purchase price per share		$ 3.5
Exercise of stock options, shares	30,300

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Consolidated Statements of Stockholders' Equity (Deficit) (USD $) In Thousands, unless otherwise specified	Common Stock	Additional Paid-In Capital	Treasury Stock	Retained Earnings (Deficit)	Accumulated Other Comprehensive Loss	Total Stockholders’ Equity (Deficit) of Controlling Interests	Noncontrolling Interests	Total
Beginning balance at Dec. 31, 2009	$ 46	$ 19,950	$ (15,132)	$ (10,400)	$ (39,088)	$ (44,624)	$ 639	$ (43,985)
Comprehensive income (loss)
Net income (loss) from continuing operations				4,231		4,231	55	4,286
Net income from discontinued operations				52,938		52,938		52,938
Foreign currency translation adjustments					997	997		997
Defined benefit plans adjustment					(719)	(719)		(719)
Total comprehensive income (loss)						57,447	55	57,502
Stock compensation		198				198		198
Purchase of treasury stock, 174 shares, weighted average purchase price of $3.50 per share			(1)			(1)		(1)
Taxes payable adjustment for noncontrolling interests							17	17
K&M distribution							(98)	(98)
Accumulated other comprehensive loss, decrease from deconsolidation of Congoleum					37,127	37,127		37,127
Noncontrolling interest, increase from deconsolidation of Congoleum							329	329
Ending balance at Dec. 31, 2010	46	20,148	(15,133)	46,769	(1,683)	50,147	942	51,089
Comprehensive income (loss)
Net income (loss) from continuing operations				(1,654)		(1,654)	1	(1,653)
Foreign currency translation adjustments					(413)	(413)		(413)
Defined benefit plans adjustment					(5,259)	(5,259)		(5,259)
Total comprehensive income (loss)						(7,326)	1	(7,325)
Stock compensation		164				164		164
Exercise of stock options (30,300 shares)		(196)	175			(21)		(21)
Ending balance at Dec. 31, 2011	$ 46	$ 20,116	$ (14,958)	$ 45,115	$ (7,355)	$ 42,964	$ 943	$ 43,907

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 979	$ 867
Short-term investments	2,400	2,400
Accounts receivable, less allowances for doubtful accounts and discounts of $1,842 in 2011 and $1,792 in 2010	20,087	21,887
Inventories	39,460	38,606
Income taxes	217	631
Prepaid expense & other current assets	2,310	2,502
Total current assets	65,453	66,893
Property, plant & equipment, net	28,502	29,891
Other assets:
Insurance for asbestos-related liabilities	17,646	17,646
Other assets	8,799	8,800
Total other assets	26,445	26,446
Total assets	120,400	123,230
Current liabilities:
Accounts payable	9,154	8,829
Accrued expenses	14,330	16,864
Notes payable	8,995	4,639
Current portion of long-term debt	1,458	1,487
Total current liabilities	33,937	31,819
Long-term debt, less current portion	4,299	5,851
Asbestos-related liabilities	17,700	17,700
Other liabilities	20,557	16,771
Total liabilities	76,493	72,141
Stockholders' equity
Common stock, par value $.01, authorized 15,000,000 shares, issued 4,607,902 shares	46	46
Additional paid-in capital	20,116	20,148
Less cost of 1,160,760 and 1,166,545 shares of common stock in treasury at December 31, 2011 and 2010, respectively	(14,958)	(15,133)
Retained earnings	45,115	46,769
Accumulated other comprehensive loss	(7,355)	(1,683)
Total stockholders' equity of controlling interests	42,964	50,147
Noncontrolling interests	943	942
Total stockholders' equity	43,907	51,089
Total liabilities and stockholders' equity	$ 120,400	$ 123,230

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Operating activities
Net (loss) income	$ (1,653)	$ 57,224
Net income of discontinued operation, net of noncontrolling interests (including gain on deconsolidation of $53,565 in 2010)		(52,938)
Net (loss) income from continuing operations	(1,653)	4,286
Adjustments to reconcile net loss income from continuing operations to net cash provided (used) by operating activities:
Depreciation and amortization	4,343	4,494
Provision for doubtful accounts	2,447	2,768
Stock compensation expense	164	198
Deferred taxes	643	(1,724)
Change in operating assets and liabilities:
Accounts and notes receivable	(917)	(5,642)
Inventories	(1,352)	(5,133)
Prepaid expenses and other assets	181	(189)
Accounts payable and accrued expenses	(1,300)	2,614
Income taxes	(1,095)
Other	(1,998)	1,108
Net cash (used) provided by operating activities	(537)	2,780
Investing activities
Investments in property, plant and equipment	(2,569)	(2,001)
Purchase of short-term investments	(4,800)	(4,800)
Proceeds from sale of short-term investments	4,800	4,800
Net cash used in investing activities	(2,569)	(2,001)
Financing activities
Net short-term borrowings (repayments)	4,402	538
Payments on long-term debt	(1,581)	(1,244)
Proceeds from exercise of stock options	2
Purchase of treasury stock		(1)
Net cash provided (used) in financing activities	2,823	(707)
Effect of foreign exchange rate changes on cash	395	393
Net increase in cash	112	465
Cash and cash equivalents at beginning of year	867	402
Cash and cash equivalents of continuing operations at end of year	$ 979	$ 867

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Industry Segments

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Industry Segments

13. Industry Segments

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

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

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

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

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

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

	Years ended December 31
	2011		2010
	(In thousands)
Revenues:
Tape products	$	101,158	$	98,740
Jewelry		45,749		49,223
Canadian division		61,826		56,433
		208,733		204,396
Sales to Congoleum through June 30, 2010
Tape products		–		(1,248	)
Canadian division		–		(1,520	)
		–		(2,768	)
Total consolidated net revenues	$	208,733	$	201,628

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

	Years ended December 31
	2011		2010
	(In thousands)
Interest expense
Tape products	$	55	$	78
Jewelry		333		370
Canadian division		111		92
Total segment interest expense		499		540
Corporate		336		382
Total consolidated interest expense	$	835	$	922

Depreciation and amortization expense
Tape products	$	1,990		$	2,044
Jewelry		365			353
Canadian division		1,384			1,494
Total segment depreciation and amortization		3,739			3,891
Corporate		604			603
Total consolidated depreciation and amortization	$	4,343		$	4,494
Segment (loss) profit
Tape products	$	(3,814	)	$	(660	)
Jewelry		341			3,538
Canadian division		2,080			1,591
Total segment (loss) profit		(1,393	)		4,469
Reconciling items
Corporate expenses		(74	)		(240	)
Intercompany loss		-–			(71	)
Total consolidated (loss) profit from continuing operations  before income taxes and other items	$	(1,467	)	$	4,158

Segment profit or loss is before income tax expense or benefit.

	December 31
	2011			2010
	(In thousands)
Segment assets
Tape products	$	42,011		$	43,894
Jewelry		17,954			17,914
Canadian division		33,406			34,290
Total segment assets		93,371			96,098
Reconciling items
Corporate assets		28,978			30,652
Intersegment accounts receivable		(1,949	)		(3,520	)
Intersegment profit in inventory		–			–
Intersegment other asset		–			–
Total consolidated assets	$	120,400		$	123,230

	Years Ended December 31
	2011		2010
	(In thousands)
Additions to long-lived assets
Tape products	$	1,044	$	714
Jewelry		479		246
Canadian division		1,046		1,041
Total additions to long-lived assets	$	2,569	$	2,001

	December 31
	2011		2010
	(In thousands)
Long-lived assets by area
United States	$	39,914	$	41,196
Canada		12,617		12,681
Europe		525		593
Asia		1,891		1,867
Total long-lived assets	$	54,947	$	56,337
		Years Ended December 31
		2011		2010
		(In thousands)
Revenues from external customers
United States	$	122,380	$	123,056
Canada		32,226		29,600
Mexico		4,915		3,610
Europe		21,662		19,823
Asia		25,189		22,990
Other		2,361		2,549
Total revenues from external customers	$	208,733	$	201,628

Revenues are attributed to regions based on the location of customers.

XML

Quarterly Financial Information (Unaudited)

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Quarterly Financial Information (Unaudited)

15. Quarterly Financial Information (Unaudited)

	First Quarter			Second Quarter			Third Quarter		Fourth Quarter
	(In thousands, except per share amounts)
2011
Net sales	$	53,873		$	51,241		$	52,524	$	51,095
Gross profit		13,106			11,559			12,359		11,718
Net income (loss)
Continuing operations		485			(519	)		83		(1,703	)
Discontinued operation		–			–			–		–
Net income (loss) attributable to controlling interest		485			(519	)		83		(1,703	)
Net income (loss) attributable to controlling interest per share:
Basic
Continuing operations	$	0.14		$	(0.15	)	$	0.02	$	(0.49	)
Discontinued operation		–			–			–		–
	$	0.14		$	(0.15	)	$	0.02	$	(0.49	)
Diluted
Continuing operations	$	0.14		$	(0.15	)	$	0.02	$	(0.49	)
Discontinued operation		–			–			–		–
	$	0.14		$	(0.15	)	$	0.02	$	(0.49	)
2010
Net sales	$	46,631		$	50,160		$	53,758	$	51,079
Gross profit		12,532			13,422			14,036		12,729
Net (loss) income
Continuing operations		(648	)		606			2,043		2,230
Discontinued operation		(78	)		(549	)		53,565		–
Net (loss) income attributable to controlling interest		(726	)		57			55,608		2,230
Net (loss) income attributable to controlling interest per share:
Basic
Continuing operations	$	(0.19	)	$	0.18		$	0.59	$	0.65
Discontinued operation		(0.02	)		(0.16	)		15.57		–
	$	(0.21	)	$	0.02		$	16.16	$	0.65
Diluted
Continuing operations	$	(0.19	)	$	0.18		$	0.59	$	0.65
Discontinued operation		(0.02	)		(0.16	)		15.54		–
	$	(0.21	)	$	0.02		$	16.13	$	0.65

The deconsolidation of Congoleum in July 2010 resulted in the elimination from American Biltrite’s consolidated stockholders’ equity of the accumulated deficit attributed to Congoleum, $37.1 million of which was recorded against accumulated other comprehensive income for prior period pension adjustments and $53.6 million was recorded as a gain from deconsolidation in net income of discontinued operation.

XML

Consolidated Statements of Cash Flows (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Statement of Cash Flows [Abstract]
Gain on deconsolidation		$ 53,565

XML

Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Statement of Financial Position [Abstract]
Allowance for doubtful accounts and discounts	$ 1,842	$ 1,792
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized shares	15,000,000	15,000,000
Common stock, issued shares	4,607,902	4,607,902
Shares of common stock in treasury	1,160,760	1,166,545

XML

Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Commitments and Contingencies

8. Commitments and Contingencies

Leases

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

Future minimum payments relating to operating leases are as follows (in thousands):

2012	$	1,143
2013		774
2014		474
2015		366
2016		295
Thereafter		1,811
	$	4,863

Royalty and Advertising Commitments

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

2012	$	2,669
2013		2,703
2014		324
	$	5,696

Environmental and Other Liabilities

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

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

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

	December 31
	2011				2010
	Liability		Receivable		Liability		Receivable
	(In thousands)
Environmental liabilities
Accrued expenses	$	658			$	771
Other liabilities, non-current		7,931				7,516
Other assets, non-current		-	$	3,308		-	$	3,192
		8,589		3,308		8,287		3,192
Asbestos product liability
Asbestos-related liabilities, non-current		17,700		-		17,700		-
Insurance for asbestos-related liabilities, non-current		-		17,646		-		17,646
		17,700		17,646		17,700		17,646
Other
Other liabilities, current		211		-		211		-
Other liabilities, non-current		421		-		632		-
		632		-		843		-
	$	26,921	$	20,954	$	26,830	$	20,838

ABI is a co-defendant with many other manufacturers and distributors of asbestos containing products in approximately 1,338 pending claims involving approximately 1,884 individuals as of December 31, 2011. These claims relate to products of ABI’s former tile division, which ABI contributed to Congoleum in 1993. The claimants allege personal injury or death from exposure to asbestos or asbestos-containing products. Activity related to asbestos claims during the years ended December 31, 2011 and 2010 was as follows:

	2011			2010
Claims at January 1		1,261			1,193
New claims		356			304
Settlements		(34	)		(29	)
Dismissals		(245	)		(207	)
Claims at December 31		1,338			1,261

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

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

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

The Company utilized an actuarial study in 2009 to assist it in developing estimates of the Company’s potential liability for resolving present and possible future asbestos claims. Projecting future asbestos claim costs requires estimating numerous variables that are extremely difficult to predict, including the incidence of claims, the disease that may be alleged by future claimants, future settlement and trial results, future court dismissal rates for claims, and possible asbestos legislation developments. Furthermore, any predictions with respect to these variables are subject to even greater uncertainty as the projection period lengthens. In light of these inherent uncertainties, the Company believes that six years is the most reasonable period over which to include future claims that may be brought against the Company for recognizing a reserve for future costs. Due to the numerous variables and uncertainties, the Company does not believe that reasonable estimates can be developed of liabilities for claims beyond a six year horizon using the 2009 data. The Company did not obtain an actuarial study in 2010 or 2011 because there were no significant changes in factors during those years. The Company will continue to evaluate its range of future exposure, and the related insurance coverage available, and when appropriate, record future adjustments to those estimates, which could be material.

The estimated range of liability for settlement of current claims pending and claims anticipated to be filed in the next six years, excluding defense costs, was $17.7 million to $62.0 million as of December 31, 2011. The Company believes no amount within this range is more likely than any other, and accordingly has recorded a liability of $17.7 million in its financial statements which represents the minimum probable and reasonably estimable amount for the future liability at the present time.

The Company also believes that based on this liability estimate, the corresponding amount of insurance probable of recovery is $17.6 million at December 31, 2011, which has been included in other assets. The same factors that affect developing forecasts of potential indemnity costs for asbestos-related liabilities also affect estimates of the total amount of insurance that is probable of recovery, as do a number of additional factors. These additional factors include the financial viability of some of the insurance companies, the method in which losses will be allocated to the various insurance policies and the years covered by those policies, how legal and other loss handling costs will be covered by the insurance policies, interpretation of the effect on coverage of various policy terms and limits and their interrelationships, and the continuing solvency of various insurance companies. These amounts were based on currently known facts by ABI and a number of assumptions. However, projecting future events, such as the number of new claims to be filed each year, the average cost of disposing of each such claim, and the continuing solvency of various insurance companies, as well as numerous uncertainties surrounding asbestos legislation in the United States, could cause the actual liability and insurance recoveries for the Company to be higher or lower than those projected or recorded.

There can be no assurance that the Company’s accrued asbestos liabilities will approximate its actual asbestos-related settlement costs, or that it will receive the insurance recoveries which it has accrued. The Company believes that it is reasonably possible that it will incur charges for resolution of asbestos claims in the future, which could exceed the Company’s existing reserves. The Company’s strategy remains to vigorously defend against and strategically settle its asbestos claims on a case-by-case basis. The Company believes it has substantial insurance coverage to mitigate future costs related to these matters.

ABI has been named as a Potentially Responsible Party (“PRP”) within the meaning of that term under the Federal Comprehensive Environmental Response Compensation and Liability Act, as amended (“CERCLA”), with respect to seven sites located in six separate states (the “CERCLA Sites”).

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

At another site, ABI, together with a number of other named PRPs, entered a consent decree and site remediation agreement (the “Agreements”) in September 1996, which, without admission of liability by the PRPs, requires remediation of the Interstate Leeds Company (“ILCO”) Superfund site located in Leeds, Alabama (the “ILCO Site”). The currently estimated aggregate future cost of remediation and associated transactional costs at the ILCO Site ranges from $4.5 million to $6.4 million. Pursuant to a final allocation among consent decree participants, ABI’s share of the currently estimated future remediation costs range from approximately $272 thousand to $390 thousand. These estimates consider commitments from de minimis and de maximus settlors, the City of Leeds and its insurers, amounts currently held in an escrow fund, a RCRA Closure Fund refund, bankrupt PRP’s and TBC’s share of those costs, which pursuant to the TBC Agreement is 37.5% of those remediation costs incurred by ABI. A substantial share of ABI’s future remediation costs with respect to the ILCO Site will be payable over the next one to five years.

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

A lawsuit was brought by Olin Corporation (“Olin”), the present owner of a former chemical plant site in Wilmington, Massachusetts (the “Olin Site”), in 1993 in the Federal District Court of Massachusetts, against ABI and three other defendants, which alleged that ABI and the three other defendants were liable for a portion of the soil and groundwater response and remediation costs at the Olin Site. A wholly-owned subsidiary of ABI owned and operated the Wilmington plant from 1959 to 1964 and for approximately one month during 1964, ABI held title to the property directly.

In 2000, ABI and TBC entered into a settlement agreement with Olin that resolved all claims and counterclaims among the parties. Under the terms of the agreement, ABI and TBC together paid Olin $4.1 million in settlement of their share of Olin’s $18.0 million of alleged past response costs incurred through December 31, 1998. ABI and TBC also agreed to reimburse Olin for 21.7% of Olin’s response costs incurred at the site after January 1, 1999, plus an annual reimbursement of $100 thousand for Olin’s internal costs. Pursuant to the TBC Agreement, TBC is liable for 37.5% of the costs that may be incurred by ABI and TBC in connection with this lawsuit and 37.5% of the amounts due under the settlement agreement with Olin.

Additional expenditures, principally consisting of remediation and oversight costs, will be required to remediate the Olin Site. Olin has estimated that the total response costs for 2012 will be approximately $3.1 million. ABI has estimated total costs, including for 2012, to be in the range of $23.7 million to $42.8 million. As of December 31, 2011, ABI has estimated its potential liability to Olin to be in the range of $5.5 million to $9.7 million after allocation for the annual reimbursement of $100 thousand for Olin’s internal costs and before any recoveries from insurance and TBC. Costs are expected to be paid over approximately the next ten years. In January 2006, the EPA assumed the responsibility for the oversight of the Olin Site from the Massachusetts Department of Environmental Protection.

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

estimated cost to clean up Parcel A. Based upon this new information, ABI believes that the cost of site investigation, remediation, maintenance and monitoring at the site will be between approximately $3.4 million and $5.7 million. ABI has been advised by Miller that the clean-up for Parcel B has been completed under budget. ABI has been assessing the potential availability of insurance coverage for such costs. ABI is not at this time able to determine what its potential liability will be with regard to the Maine Sites since ABI has neither accepted nor negotiated its allocable share of the costs with Miller. Pursuant to the TBC Agreement, TBC is liable for 37.5% of costs these incurred by ABI for the Maine Sites.

The Company has been placed on notice by a group of four companies that entered into a settlement agreement with the EPA agreeing to fund and carry out a time critical remedial action (the “Ward Performing Parties”) that it is a potential responsible party of a claim at the Ward Transformer Superfund Site in Raleigh, North Carolina (the “Ward Site”). There are three areas in the Ward Site which are to be remediated in two phases. ABI is to be treated as a de minimis party at this site. A Phase I settlement offer was made by the Ward Performing Parties to the named PRPs for this site. ABI accepted the settlement offer that provided for payment by ABI of $69 thousand for remediation costs. The Company expects a Phase II settlement offer to be made to it, but it does not currently know what amount any such settlement offer would seek from ABI. Pursuant to the TBC Agreement, TBC is liable for 37.5% of these remediation costs, incurred by ABI for the Ward Site.

ABI has made demands against its insurance carriers to provide defense and indemnity for ABI’s liabilities at the CERCLA Sites and the state-supervised sites in Maine as well as the Olin Site with respect to the previous supervision of that site by the Massachusetts Department of Environmental Protection. An agreement was executed by ABI and its carriers regarding the payment of the defense costs for the Olin Site. ABI has reached agreements with four of its insurance carriers whereby the carriers have reimbursed the Company $6.5 million for past and current environmental claims and ABI shared 37.5% of the amount of that reimbursement with TBC pursuant to the TBC Agreement. Included in this insurance reimbursement is a payment of $4.6 million by one carrier in December 2005. Another carrier has agreed to reimburse the Company for 2.5% of the Company’s liabilities regarding the future environmental expenses related to the Olin Site, $159 thousand of which was reimbursed through December 31, 2011 and 37.5% of the amount of that reimbursement was shared with TBC pursuant to the TBC Agreement. ABI and one of its insurance carriers continue to discuss ABI’s remaining demands for insurance coverage for these sites.

ABI’s ultimate liability and funding obligations in connection with the CERCLA Sites depends on many factors, including the volume of material contributed to the site, the number of other PRPs 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, ABI, as a PRP, can be held jointly and severally liable for all environmental costs associated with a site.

In connection with the transfer of ABI’s Trenton, NJ tile plant to Congoleum in 1993, the Company entered an administrative consent order with the New Jersey Department of Environmental Protection (“NJDEP”) for any environmental remediation the state may require at that location. Pursuant to the contribution in 1993 of the Company’s former tile division to Congoleum, Congoleum assumed liability for the cost of cleaning up the site. NJDEP required the Company to establish a Remediation Trust Fund of $349 thousand as a financial assurance for meeting its funding obligation at that location. Even with this financial assurance to NJDEP, the Company still remains contingently liable in the event that Congoleum fails to perform or fund any required remediation relating to this site.

The outcome of these matters could result in significant expenses incurred by, or judgments assessed against, the Company, which could have a material adverse effect on the business, results of operations and financial position of the Company.

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

Other

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

XML

Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2011	Mar. 16, 2012	Jun. 30, 2011
Document And Entity Information
Entity Registrant Name	American Biltrite Inc
Entity Central Index Key	0000004611
Document Type	10-K
Document Period End Date	Dec. 31, 2011
Amendment Flag	true
AmendmentDescription	American Biltrite Inc. is filing this Amendment No. 1 to its Annual Report on Form 10-K for the year ended December 31, 2011 ("Form 10-K"), which was filed with the Securities and Exchange Commission on March 29, 2012, for the sole purpose of furnishing corrected XBRL Interactive Data Files. Due to a filing error by a third party financial printer, the XBRL Interactive Data Files originally furnished with the Form 10-K contained inaccuracies in the financial statement headers preceding the Company’s Consolidated Balance Sheet, Statements of Operations and Statements of Cash Flow. No other changes have been made to the Form 10-K. Except as specifically described above, this Amendment No. 1 does not reflect events occurring after the filing of the Form 10-K, does not update disclosures contained in the Form 10-K and does not modify or amend the Form 10-K.
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 14,200,000
Entity Common Stock, Shares Outstanding		3,447,142
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2011

XML

Income Taxes

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Income Taxes

9. Income Taxes

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

The components of (loss) income from continuing operations before the provision for (benefit from) income taxes and other items for the years ended December 31, 2011 and 2010 were as follows (in thousands):

	2011			2010
Domestic	$	(3,512	)	$	3,548
Foreign		2,045			610
	$	(1,467	)	$	4,158

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

	2011			2010
Current:
Federal	$	(685	)	$	512
Foreign		218			769
State		10			315
Total current		(457	)		1,596
Deferred:
Federal		–			–
Foreign		643			(1,724	)
State		–			–
Total deferred		643			(1,724	)
	$	186		$	(128	)

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

	2011			2010
U.S. statutory rate		(34.0	)%		34.0%
State income taxes, net of federal benefits		(14.5	)		3.7
Foreign tax rate difference		(2.5	)		(6.4	)
Tax credits		(19.2	)		(9.9	)
Valuation allowance		82.4			(55.7	)
Change in tax liability reserves		3.3			14.6
Expired net operating losses		1.4			17.1
Other		(4.2	)		(0.5	)
Effective tax rate		12.7%			(3.1	)%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2011 and 2010 were as follows (in thousands):

	2011			2010
Deferred tax assets:
Inventory	$	512		$	448
Investments		3,300			3,682
Accruals and reserves		1,635			1,642
Environmental reserves		2,479			2,404
Postretirement benefit obligations		4,325			2,814
Depreciation and amortization		873			1,098
Net operating losses and credit carryforwards		3,397			2,150
Total deferred tax assets		16,521			14,238
Less valuation allowance		(12,537	)		(9,951	)
Net deferred tax assets		3,984			4,287
Deferred tax liabilities:
Depreciation and amortization		2,444			2,514
Postretirement benefit obligations		–			297
Total deferred tax liabilities		2,444			2,811
Net deferred tax asset	$	1,540		$	1,476

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

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

As of December 31, 2010, the Company reversed the valuation allowance previously maintained against the AB Canada net deferred tax assets. The Company’s assessment was based upon its cumulative history of earnings before taxes for financial reporting purposes over a three year period and an assessment of its expected future results of operations for the Canadian operations as of December 31, 2010. As a result, the Company recognized net deferred tax assets of $1.5 million for AB Canada. As of December 31, 2011, AB Canada’s net deferred tax assets remained at $1.5 million.

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

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

A reconciliation of the allowance for uncertain tax positions for the years ended December 31, 2011 and 2010 is as follows (in thousands):

	2011		2010
Balance at January 1	$	1,559	$	1,110
Increase (decrease) for tax positions taken during    a prior year		–		401
Increase (decrease) for tax positions taken during    the current year		–		48
Decreases relating to settlements		–		–
Decrease resulting from the expiration of the    statute of limitations		–		–
Balance at December 31	$	1,559	$	1,559

The Company’s federal and state income tax returns are subject to examination for all tax years from 2005 to the present. However, the tax years in which losses arose may be subject to audit when such NOL and tax credit carryforwards are utilized to offset taxable income and tax liabilities in future periods. During 2010, AB Canada was audited by the Canadian Revenue Authority (“CRA”) for the years ending 2002 through 2007. In January 2011, the CRA notified AB Canada that certain amounts related to the Company’s management fees and AB Canada’s net operating loss carryforwards of a discontinued operation will be disallowed. In May and June 2011, AB Canada received formal assessments for 2002 through 2007. In June 2011, AB Canada filed notices of objection to the assessments; however, as required by the CRA, AB Canada also made a minimum payment of $2.1 million. The Company intends to vigorously defend its positions. The Company’s estimate of its potential liability is included in its allowance for uncertain tax positions; however, the outcome of the CRA audit is uncertain and therefore, the impact on the financial position and results of operations of the Company cannot be fully determined. If the CRA positions are sustained in full, the Company would recognize additional tax expense of approximately $3.6 million plus interest and penalties for these years.

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

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Consolidated Statements of Operations (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Income Statement [Abstract]
Net sales	$ 208,733	$ 201,628
Cost of products sold	159,991	148,909
Selling, general & administrative expenses	49,873	48,678
(Loss) income from operations	(1,131)	4,041
Other income (expense)
Interest expense	(835)	(916)
Other income	499	1,033
Total other (expense) income	(336)	117
(Loss) income before income taxes and other items	(1,467)	4,158
Provision for (benefit from) income taxes	186	(128)
Net (loss) income	(1,653)	4,286
Noncontrolling interests	(1)	(55)
Net (loss) income from continuing operations of the controlling interest	(1,654)	4,231
Net income of discontinued operation, net of noncontrolling interests (including gain on deconsolidation of $53,565)		52,938
Net (loss) income attributable to controlling interest	$ (1,654)	$ 57,169
Basic
Continuing operations	$ (0.48)	$ 1.23
Discontinued operation		$ 15.38
Basic earnings per share	$ (0.48)	$ 16.61
Diluted
Continuing operations	$ (0.48)	$ 1.23
Discontinued operation		$ 15.36
Diluted earnings per share	$ (0.48)	$ 16.59
Weighted average shares outstanding
Basic	3,444,762	3,441,431
Diluted	3,444,762	3,446,042

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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Property, Plant and Equipment

3. Property, Plant and Equipment

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

	2011		2010
Land and improvements	$	2,734	$	2,596
Buildings		30,771		31,017
Machinery and equipment		99,506		98,941
Construction-in-progress		941		1,414
		133,952		133,968
Less accumulated depreciation		105,450		104,077
	$	28,502	$	29,891

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

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Inventories

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Inventories

2. Inventories

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

	2011		2010
Finished goods	$	20,013	$	19,202
Consigned inventory		4,646		5,058
Work-in-process		8,216		8,416
Raw materials and supplies		6,585		5,930
	$	39,460	$	38,606

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

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Discontinued Operation

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Discontinued Operation

14. Discontinued Operation

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

The Congoleum plan of reorganization governs an intercompany settlement and ongoing intercompany arrangements among American Biltrite and its subsidiaries and reorganized Congoleum, pursuant to which American Biltrite and reorganized Congoleum entered into a management services and commercial agreement effective as of July 1, 2010, which agreement has a term of two years. The management services and commercial agreement includes the provision of management services by American Biltrite to reorganized Congoleum and other business relationships substantially consistent with their traditional relationships. For the year ended December 31, 2011 and for the period July 1, 2010 through December 31, 2010, the Company recorded $813 thousand and $400 thousand, respectively, of income for fees under the management services agreement.

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Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Other Comprehensive Income (Loss)

10. Other Comprehensive Income (Loss)

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

	2011			2010
Foreign currency translation adjustments	$	(413	)	$	997
Defined benefits plan adjustments		(5,259	)		(719	)
Deconsolidation of Congoleum		–			37,127
Net change in accumulated other    comprehensive income	$	(5,672	)	$	37,405

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

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

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

As of December 31, 2011 and 2010, the components of accumulated other comprehensive loss, net of taxes and noncontrolling interests, were as follows (in thousands):

	2011			2010
Foreign currency translation adjustments	$	2,897		$	3,310
Pension liability		(10,252	)		(4,993	)
	$	(7,355	)	$	(1,683	)

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Other Liabilities

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Other Liabilities

6. Other Liabilities

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

	2011		2010
Pension benefit obligations	$	10,663	$	6,973
Environmental remediation and product related liabilities		7,931		7,516
Income taxes		640		808
Other		1,241		1,474
	$	20,557	$	16,771

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Accrued Expenses

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Accrued Expenses

4. Accrued Expenses

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

	2011		2010
Accrued advertising and sales promotions	$	3,956	$	4,995
Employee compensation and related benefits		4,633		4,906
Environmental liabilities		869		982
Royalties		756		1,133
Income taxes		104		805
Professional fees		1,038		710
Other		2,974		3,333
	$	14,330	$	16,864

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Financing Arrangements

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Financing Arrangements

5. Financing Arrangements

Long-term debt and notes payable under revolving credit facilities at December 31 were as follows (in thousands):

	2011		2010
Notes payable (current)	$	8,995	$	4,639
Term loan	$	4,777	$	6,111
Other notes		980		1,227
Total term debt		5,757		7,338
Less current portion		1,458		1,487
Non-current term debt	$	4,299	$	5,851

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

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

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

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

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

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

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

Other Notes

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

Interest

Interest paid on all outstanding debt amounted to $839 thousand and $926 thousand for 2011 and 2010, respectively.

Future Payments

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

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

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Pension Plans

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Pension Plans

7. Pension Plans

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

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

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

	2011			2010
	(in thousands)
Change in Benefit Obligation:
Benefit obligation at beginning of year	$	32,923		$	28,656
Service cost		862			811
Interest cost		1,835			1,750
Plan participants contributions		198			189
Actuarial (gain) loss		4,305			1,748
Foreign currency exchange rate changes and other		(424	)		1,217
Benefits paid		(1,847	)		(1,448	)
Benefit obligation at end of year	$	37,852		$	32,923
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	27,320		$	24,082
Actual return on plan assets		(115	)		2,325
Employer contribution		1,975			1,330
Plan participants contribution		198			189
Foreign currency exchange rate changes		(384	)		842
Benefits paid		(1,847	)		(1,448	)
Fair value of plan assets at end of year	$	27,147		$	27,320

The weighted-average assumptions used to determine benefit obligation for the pension benefits as of December 31, 2011 and 2010 were as follows:

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

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

	2011			2010
Unfunded status	$	(10,704	)	$	(5,603	)
Unrecognized net actuarial loss		6,785			728
Unamortized prior service cost		663			800
Net amount recognized	$	(3,256	)	$	(4,075	)

The amounts recorded in the consolidated balance sheets as of December 31, 2011 and 2010 were as follows (in thousands):

		Pension Benefits
		2011			2010
Other assets (noncurrent)		–		$	1,413
Accrued benefit liability – current	$	(41	)		(44	)
Accrued benefit liability – non-current		(10,663	)		(6,973	)
Accumulated other comprehensive loss		7,448			1,529
Net amount recorded	$	(3,256	)	$	(4,075	)

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

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

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

	Pension Benefits
	2011			2010
Service cost	$	862		$	811
Interest cost		1,835			1,750
Expected return on plan assets		(1,878	)		(1,666	)
Amortization of net loss		113			109
Amortization of prior service cost		11			12
Recognized net actuarial (gain) loss		19			(33	)
Net periodic benefit cost	$	962		$	983

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

	2011			2010
Net actual (gain) loss	$	6,023		$	997
Recognized actuarial gain		(19	)		33
Prior service (credit) cost		(113	)		(113	)
Recognized prior service credit		(11	)		(13	)
Foreign exchange		39			52
Total changes recognized in Other Comprehensive Income (before tax effect)	$	5,919		$	956

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

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

	2011	2010
Discount rate	5.00% - 5.50%	5.75% - 6.25%
Expected long-term return on plan assets	6.75% - 7.00%	6.75% - 7.00%
Rate of compensation increase	3.00%	3.00% - 3.50%

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

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

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

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

Money market funds: Valued at the quoted market price reported on the active market on which the individual funds are traded on the last business day of the year.

Mutual funds: Valued at the quoted market prices which represent the net asset value of shares held by the pension plans at year end.

Common stocks: Valued at the quoted market price reported on the active market on which the individual securities are traded on the last business day of the year.

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

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

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

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

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

· Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Plans assets do not include any Level 3 investments. The following tables set forth by level, within the fair value hierarchy, the assetscarried at fair value as of December 31, 2011 and 2010.

	December 31, 2011
	Level 1		Level 2		Total
	(In thousands)
Cash and money market funds	$	239	$	-	$	239	0.9%
Equity mutual funds		7,198		2,163		9,361	34.4
Fixed income mutual funds		2,948		-		2,948	10.9
Common stocks		7,210		-		7,210	26.6
Government agencies		-		1,748		1,748	6.4
Treasury obligations		-		643		643	2.4
Corporate bonds		-		4,998		4,998	18.4
	$	17,595	$	9,552	$	27,147	100.0%

	December 31, 2010
	Level 1		Level 2		Total
	(In thousands)
Cash and money market funds	$	167	$	-	$	167	0.6%
Equity mutual funds		3,290		3,799		7,089	25.9
Fixed income mutual funds		2,967		-		2,967	10.9
Common stocks		9,874		-		9,874	36.1
Government agencies		-		1,890		1,890	6.9
Treasury obligations		-		451		451	1.7
Corporate bonds		-		4,882		4,882	17.9
	$	16,298	$	11,022	$	27,320	100.0%

Contributions

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

Estimated Future Benefit Payments

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

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

Defined Contribution Plans

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

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Stock Option Plans

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Stock Option Plans

12. Stock Option Plans

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

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

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

The total fair value of ABI options that vested during 2011 and 2010 was $176 thousand and $172 thousand, respectively.

The following tables summarize information about ABI’s stock options:

	2011					2010
	Shares			Weighted- Average Exercise Price		Shares			Weighted- Average Exercise Price
Outstanding at beginning of year		488,500		$	7.88		536,500		$	8.14
Granted		3,000			9.68		4,000			3.64
Exercised		(30,300	)		6.50		-			-
Expired		(3,000	)		14.00		(19,000	)		13.85
Forfeited		(5,000	)		7.76		(33,000	)		8.12
Outstanding at end of year		453,200			7.94		488,500			7.88
Options exercisable at end of year		353,200		$	8.39		337,800		$	8.62
Available for grant at end of year		399,520					394,520

At December 31, 2011, the Company’s stock price closed at $4.80. Based on this stock price, the aggregate intrinsic values of the Company’s outstanding stock options and vested stock options at December 31, 2011 were $38 thousand and $26 thousand, respectively.

Range of Exercise Price	Outstanding at December 31, 2011		Weighted- Average Exercise Price		Exercisable at December 31, 2011		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)
$  1.34 - $  4.75		25,500	$	3.29		18,700	$	3.41		7.3
$  6.50 - $  9.80		419,200	$	8.15		326,000	$	8.59		4.2
$10.97 - $12.00		8,500	$	11.52		8,500	$	11.52		2.6

Stock option information related to nonvested shares for ABI’s stock option plans for the year ended December 31, 2011 was as follows:

	Shares			Weighted- Average Grant Date Fair Value
Nonvested at December 31, 2010		150,700		$	3.32
Granted		3,000			5.13
Vested		(50,700	)		3.26
Forfeited		(3,000	)		3.49
Nonvested at December 31, 2011		100,000		$	3.40

The compensation expense the Company will recognize from January 2012 through December 2014 is approximately $340 thousand with respect to the nonvested options outstanding as of December 31, 2011, assuming those options vest in accordance with their terms.

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

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Consolidated Statements of Operations (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Income Statement [Abstract]
Gain on deconsolidation		$ 53,565

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Significant Accounting Policies

1. Significant Accounting Policies

Principles of Consolidation

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

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

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

Use of Estimates and Critical Accounting Policies

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

Concentration of Credit Risk

The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. Credit losses in previous years have generally been within management’s expectations. None of the Company’s customers accounted for more than 10% of consolidated net sales for each of the years 2011 and 2010 or 10% of the Company’s consolidated accounts receivable as of December 31, 2011 or 2010.

Cash, Cash Equivalents and Short-Term Investments

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

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

Allowance for Doubtful Accounts

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

Inventories

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

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

Property, Plant and Equipment

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

Debt Issuance Costs

Costs incurred in connection with the issuance of debt have been capitalized and are being amortized over the term of the related debt agreements. Debt issuance costs at December 31, 2011 and 2010 amounted to $511 thousand and $1.1 million, respectively, net of accumulated amortization of $1.5 million and $898 thousand, respectively, and are included in other noncurrent assets.

Impairment of Long-Lived Assets

The Company assesses its long-lived assets for impairment whenever facts and circumstances indicate that the carrying amount may not be fully recoverable. To analyze recoverability, it projects undiscounted net future cash flows over the remaining life of such assets. If these projected cash flows are less than the carrying amount, an impairment would be recognized, resulting in a write-down of the assets with a corresponding charge to earnings. The impairment loss is measured based upon the difference between the carrying amount and the fair value of the assets. The Company evaluated the recoverability of its other long-lived assets and determined they were not impaired as of December 31, 2011 or 2010.

Product Warranties

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

	2011			2010
Beginning balance	$	1,060		$	896
Accruals		820			1,610
Charges		(1,138	)		(1,446	)
Ending balance	$	742		$	1,060

Environmental and Product Liabilities

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

Asbestos Liability and Insurance Receivable

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

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

Noncontrolling Interests

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

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

Revenue Recognition

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

Selling, General and Administrative Expenses

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

Income Taxes

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

The Company reduces its deferred tax assets by a valuation allowance if, based upon the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Relevant evidence, both positive and negative, is considered in determining the need for a valuation allowance. Information evaluated includes the Company’s financial position and results of operations for the current and preceding years as well as an evaluation of currently available information about future years.

The Company operates within multiple taxing jurisdictions and could be subject to audit in these jurisdictions. These audits can involve complex issues, which may require an extended period of time to resolve and may cover multiple years. In the Company’s opinion, adequate provisions for income taxes have been made for all years subject to audit.

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

Stock-Based Compensation

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

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

Research and Development Costs

Expenditures relating to the development of new products are charged to operations as incurred and amounted to $2.0 million and $1.7 million for the years ended December 31, 2011 and 2010, respectively.

Foreign Currency Translation

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

Issuances of Stock by Subsidiaries

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

Earnings Per Share

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

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Income (Loss) Per Share

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Income (Loss) Per Share

11. Income (Loss) Per Share

The following table sets forth the computation of basic and diluted loss per share for the years ended December 31, 2011 and 2010 (in thousands, except share and per share amounts):

	2011			2010
Numerator:
Net (loss) income of continuing operations	$	(1,654	)	$	4,231
Net income of discontinued operation		–			52,938
Net (loss) income attributable to controlling interests	$	(1,654	)	$	57,169
Denominator:
Basic income per share: Weighted-average shares		3,444,762			3,441,431
Dilutive employee stock options		–			4,611
Diluted income per share: Adjusted weighted-average shares and assumed conversions		3,444,762			3,446,042
Net (loss) income per share attributable to controlling interests
Basic
Continuing operations	$	(0.48	)	$	1.23
Discontinued operation		–			15.38
	$	(0.48	)	$	16.61
Diluted
Continuing operations	$	(0.48	)	$	1.23
Discontinued operation		–			15.36
	$	(0.48	)	$	16.59

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