Stockholders' (Deficit) Equity

9 Months Ended

Sep. 30, 2011

Notes to Financial Statements

Stockholders' (Deficit) Equity

Note I – Stockholders’ (Deficit) Equity

The following table reconciles stockholders’ (deficit) equity for the year ended December 31, 2010 and the nine months ended September 30, 2011 (in thousands):

	Stockholders’ (Deficit) Equity of Controlling Interests			Non- Controlling Interests			Total Equity
December 31, 2009	$	(44,624	)	$	639		$	(43,985	)
Net income for the year ended December 31, 2010
Continuing operations		4,231			55			4,286
Discontinued operation		52,938			—			52,938
Foreign currency translation adjustments		997			—			997
Defined benefit plans adjustment		(719	)		—			(719	)
Stock compensation expense		198			—			198
Purchase of treasury stock		(1	)		—			(1	)
Taxes payable adjustment for noncontrolling interests		—			17			17
K&M distribution		—			(98	)		(98	)
Deconsolidation of Congoleum		37,127			329			37,456
December 31, 2010		50,147			942			51,089
Net income for the nine months ended       September 30, 2011		49			1			50
Foreign currency translation adjustments		(1,162	)		—			(1,162	)
Stock compensation expense		123			—			123
Exercise of employee stock options		(21	)		—			(21	)
September 30, 2011	$	49,136		$	943		$	50,079

In May and June 2011, certain employees exercised vested stock options with an exercise price of $6.50. Upon exercise of the stock options, the Company issued a total of 5,785 shares of common stock from treasury shares. The cost of the treasury shares was greater than the exercise price and the market value of the Company’s stock on the days the stock options were exercised. Consequently, the issuance of stock from treasury stock resulted in a reduction of the Company’s equity by $21 thousand.

Prior to July 1, 2010, American Biltrite owned 55% of Congoleum’s outstanding shares of Class A and Class B common stock. The noncontrolling interests recorded in American Biltrite’s consolidated financial statements included the 45% of outstanding shares of Congoleum Class A and Class B common stock not owned by American Biltrite. Upon effectiveness of Congoleum’s plan of reorganization as of July 1, 2010, ABI’s ownership interests in Congoleum were cancelled by operation of the plan. Consequently, the results of reorganized Congoleum are not included in the consolidated results of the Company subsequent to June 30, 2010. 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

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. In August 2010, the Company acquired the 5.5% minority interest in K&M in a non-cash transaction. The Company recognized $44 thousand of income attributable to non-controlling interests in K&M, net of tax, for the eight months ended August 28, 2010.