<PAGE>   1
 
================================================================================
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
 
                                   FORM 10-K
(MARK ONE)
     [X]
                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

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

                    FOR THE TRANSITION PERIOD FROM        TO

                         COMMISSION FILE NUMBER 0-23092
 
                          NATIONAL DENTEX CORPORATION
             (Exact name of registrant as specified in its charter)
 
               MASSACHUSETTS                            04-2762050
      (State or Other Jurisdiction of      (I.R.S. Employer Identification No.)
       Incorporation or Organization)
 
    526 BOSTON POST ROAD, WAYLAND, MA                     01778
 (Address of Principal Executive Offices)               (Zip Code)
                                             
                                 (508) 358-4422
               (Registrant's Telephone No., including Area Code)
 
       Securities registered pursuant to Section 12(b) of the Act:  None
 Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
                              value $.01 per share
                                (Title of Class)
 
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                              Yes  X        No
                                 -----        ----- 

     Indicated 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. [  ]
 
     As of February 17, 1998, the aggregate market value of the 3,159,462
outstanding shares of voting stock held by non-affiliates of the registrant was
$71,087,895.
 
     As of February 17, 1998, 3,461,623 shares of the registrant's Common Stock,
par value $.01 per share, were issued and outstanding.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
     Portions of Registrant's definitive Proxy Statement for the Registrant's
Special Meeting in Lieu of Annual Meeting of Stockholders to be held on April 7,
1998 are incorporated by reference into Part III.
================================================================================
<PAGE>   2
 
                                     PART I
 
ITEM 1.  BUSINESS
 
GENERAL
 
     National Dentex Corporation (the "Company") was founded in 1982 as H&M
Laboratories Services, Inc., a Massachusetts corporation, which acquired six
full-service dental laboratories and related branch laboratories from Healthco,
Inc. In 1983, the Company changed its name to National Dentex Corporation and
acquired 20 additional full-service dental laboratories and related branch
laboratories from Lifemark Corporation. The Company today owns and operates 32
dental laboratories, consisting of 27 full-service dental laboratories and five
branch laboratories located in 21 states through the United States. The
Company's dental laboratories custom design and fabricate dentures, crowns and
fixed bridges, and other dental prosthetic appliances. Each dental laboratory
operates under its own business name. The Company's principal executive offices
are located at 526 Boston Post Road, Wayland, MA 01778, telephone number (508)
358-4422.
 
INFORMATION AS TO INDUSTRY SEGMENTS
 
     The Company's business consists of only one industry segment, which is the
design, fabrication, marketing and sale of custom dental prosthetic appliances
for and to dentists.
 
DESCRIPTION OF BUSINESS
 
     The Company's dental laboratories design and fabricate custom dental
prosthetic appliances such as dentures, crowns and bridges. These products are
produced by trained technicians working primarily in dental laboratories in
accordance with work orders and cases (consisting of impressions, models and
occlusal registrations of a patient's teeth) provided by the dentist. Dentists
are the direct purchasers of the Company's products.
 
     The Company's products are grouped into the following three main
categories:
 
     Restorative Products.  Restorative products sold by the Company's dental
laboratories consist primarily of crowns and bridges. A crown replaces the part
of a tooth which is visible, and is usually made of gold or porcelain. A bridge
is a restoration of one or more missing teeth which is permanently attached to
the natural teeth or roots. In addition to the traditional crown, the Company
also makes porcelain jackets, which are crowns constructed entirely of
porcelain; onlays, which are partial crowns which do not cover all of the
visible tooth; and precision crowns, which are restorations designed to receive
and connect a removable partial denture. The Company also makes inlays, which
are restorations made to fit a prepared tooth cavity and then cemented into
place.
 
     Reconstructive Products.  Reconstructive products sold by the Company's
dental laboratories consist primarily of partial dentures and full dentures.
Partial dentures are removable dental prostheses which replace missing teeth and
associated structures. Full dentures are dental prostheses which substitute for
the total loss of teeth and associated structures. The Company also sells
precision attachments, which connect a crown and an artificial prosthesis, and
implants, which are fixtures anchored securely in the bone of the mouth to which
a crown, partial or full denture is secured by means of screws or clips.
 
     Cosmetic Products.  Cosmetic products sold by the Company's dental
laboratories consist primarily of porcelain veneers and ceramic crowns.
Porcelain veneers are thin coverings of porcelain cemented to the front of a
tooth to enhance personal appearance. Ceramic crowns are crowns made from
ceramic materials which most closely replicate natural teeth. The Company also
sells composite inlays and onlays, which replace silver fillings for a more
natural appearance, and orthodontic appliances, which are products fabricated to
move existing teeth to enhance function and appearance.
 
LABORATORY AND CORPORATE OPERATIONS
 
     The Company's full-service dental laboratories design and fabricate a full
range of custom-made dental prosthetic appliances. These custom products are
manufactured from raw materials, such as high noble, noble
 
                                        2
<PAGE>   3
 
and predominantly base alloys, dental resins, composites and porcelain. There
are different production processes for the various types of prosthetic
appliances depending upon the product and the materials used in the type of
appliance being fabricated, each of which requires different skills and levels
of training. The Company's dental laboratories perform numerous quality control
checks throughout the production cycle to improve the quality of its products
and to make certain the design and appearance satisfy the needs of the dentist
and the patient. The Company's branch dental laboratories are smaller in size
and offer a limited number of products. When a branch receives an order that it
cannot fill, the branch refers the business to its affiliated full-service
dental laboratory.
 
     The Company operates each of its dental laboratories as a stand-alone
facility under the direction of a local manager responsible for operation of the
dental laboratory, supervision of its technical and sales staff and delivery of
quality products and services. Each of the Company's dental laboratories markets
and sells its products through its own direct sales force, supported by regional
sales managers and Company-wide marketing programs. Employees at each dental
laboratory have a direct stake in the financial success of the dental laboratory
through participation in the Company's cash and stock incentive plans.
 
     The Company's corporate management provides overall strategy, direction and
financial management for the Company and negotiates all acquisitions. Corporate
personnel also support the operations of its dental laboratories by performing
functions which are not directly related to the production and sale of dental
laboratory products, such as processing payroll and related benefit programs,
obtaining insurance and procuring financing. The Company's corporate management
provides marketing, financial and administrative services, negotiates
Company-wide purchasing arrangements, and sets quality and performance standards
for the dental laboratories.
 
SALES AND MARKETING
 
     Each of the Company's local dental laboratories markets and sells its
products through its own direct sales force. The sales force interacts with
dentists within its market area, primarily through visits to dentists' offices,
to introduce the dental laboratory's services and products offered, and to
promote new products and techniques that can assist dentists in expanding their
practices. The Company has developed and utilizes its own customer-focused
marketing and sales program entitled "Knowledge Based Relationships"(TM) as a
sales tool. The Company believes that this unique approach toward assisting the
dentist and his or her staff to improve chairtime efficiencies will enhance its
ability to expand its base of business by establishing lasting professional
relationships with its customers. The Company presently has a total of 26 sales
representatives. In addition, the dental laboratories, either alone or with
local dental societies, dental schools or study clubs, sponsor technical
training clinics for dentists on topics such as advanced clinical techniques.
The local dental laboratories also exhibit at state and local dental
conventions.
 
COMPETITION
 
     The dental laboratory industry is highly competitive and fragmented. A
typical dental laboratory's business originates from dentists located within 50
miles of the dental laboratory. There are approximately 12,000 dental
laboratories in the United States, ranging in size from one to approximately 200
technicians. The Company estimates that presently its sales represent less than
3% of the total sales of custom-made dental prosthetic appliances in the United
States. Competition is primarily from other dental laboratories in the
respective local market areas. The vast majority of dental laboratories consist
of single units, although the Company believes there is one national chain,
Dental Services Group - Sentage Corporation which competes with the Company in
two market areas. There is also limited competition from mail order dental
laboratories.
 
     Most dentists use a limited number of dental laboratories, relying on those
laboratories which produce quality products delivered on a timely basis and
which carry all of the products which the dentist may need, even if a particular
item is a newer specialty product used only sporadically by the dentist. While
price is one of the competitive factors in the dental laboratory industry, the
Company believes that most dentists consider product quality and service to be
more important. The Company believes that it competes favorably with respect to
these factors. The Company considers that its ability to produce quality
products locally and to deliver such products on a timely basis, the breadth of
its product line, the use of innovative marketing
 
                                        3
<PAGE>   4
 
programs, and its sponsorship of educational clinics provide a competitive
advantage over other dental laboratories in the local markets in which its
dental laboratories operate. The Company's ability to provide newer specialty
products for implantology, adult orthodontics and cosmetic dentistry, which
require highly skilled technicians, more extensive inventories, additional
working capital, and investment in both training and capital equipment, also
distinguishes it from many smaller dental laboratories which do not have
comparable resources to provide these products. While such specialty products
presently represent less than 20% of the Company's business, the Company
believes that the ability to offer these products is essential for dental
laboratories to remain competitive.
 
EMPLOYEES
 
     As of December 31, 1997, the Company had 1,212 employees, 1,185 of whom
worked at individual laboratories. Corporate management and administrative staff
totaled 27 people. None of the Company's employees is covered by a collective
bargaining agreement. Management considers the Company's employee relations to
be good.
 
INTELLECTUAL PROPERTY
 
     The Company's general technological know-how and experience are important
to the conduct of the Company's business. The Company has several trademarks and
licenses to use trademarks, but does not deem any of such trademarks or licenses
to be material to the conduct of its business. Each of its dental laboratories
operates under its own trade name, and the Company considers these trade names
to be important to the goodwill of its dental laboratories.
 
ITEM 2.  PROPERTIES
 
     The Company currently leases a total of approximately 147,000 square feet
of space. As of December 31, 1997, the aggregate minimum annual rent payable for
all of its leased real properties was approximately $1,063,000. The Company
considers these properties to be modern, well maintained and suitable for its
purposes and believes that its current facilities are adequate to meet its needs
for the foreseeable future. The Company also believes that suitable substitute
or replacement space is readily available. The Company's principal executive and
administrative offices occupy approximately 10,200 square feet of space in
Wayland, Massachusetts, which the Company first occupied in November 1997. Its
21 leased dental laboratories range in size from 1,000 to 21,000 square feet and
average $45,200 in annual base rent.
 
     The Company owns six dental laboratory facilities, which are located in
Denver, Colorado; Metairie, Louisiana; Dallas, Texas; Houston, Texas;
Jacksonville, Florida; and Waukesha, Wisconsin. These locations total
approximately 70,000 square feet and range in building size from 4,000 to 20,000
square feet.
 
ITEM 3.  LEGAL PROCEEDINGS
 
     The Company is involved from time to time in litigation incidental to its
business. Management believes that the outcome of current litigation will not
have a material adverse effect upon the operations or financial condition of the
Company and will not disrupt the normal operations of the Company.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     None.
 
                                    PART II
 
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
     The Company's Common Stock, $.01 par value, is traded on the
over-the-counter market, on the NASDAQ National Market System, under the symbol
"NADX". The following table presents low and high bid information for the time
periods specified. The over-the-counter market quotations reflect inter-dealer
prices, without retail markup, markdown or commission and may not necessarily
represent actual transactions.
 
                                        4
<PAGE>   5
 
The over-the-counter market quotations have been furnished by the NASDAQ Stock
Market, Inc. Trading in the Company's Common Stock commenced on December 21,
1993.
 
<TABLE>
<CAPTION>
                                                                 PRICE
                                                           ------------------
       QUARTER ENDED                                       LOW BID   HIGH BID
       -------------                                       -------   --------
       <S>                                                 <C>       <C>
       03/31/96..........................................  $19.250   $25.250
       06/30/96..........................................  $19.750   $24.500
       09/30/96..........................................  $18.750   $24.500
       12/31/96..........................................  $16.500   $20.250
       03/31/97..........................................  $16.625   $20.750
       06/30/97..........................................  $16.250   $19.250
       09/30/97..........................................  $18.375   $23.750
       12/31/97..........................................  $18.750   $23.000
</TABLE>
 
     The Company has paid no cash dividends in the past and has no plans to pay
cash dividends in the foreseeable future.
 
     As of February 17, 1998, there were approximately 410 registered record
holders of the Company's Common Stock, which the Company believes represented
approximately 1,900 beneficial holders. As of February 17, 1998, both the low
and high bid prices of the Common Stock were $22.50.
 
ITEM 6.  SELECTED FINANCIAL DATA
 
     The following selected financial data for the five years ended December 31,
1997 are derived from the audited consolidated financial statements of the
Company. The data should be read in conjunction with the financial statements
and the related notes included in this Report and in conjunction with Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
 
<TABLE>
<CAPTION>
                                                  1993      1994      1995      1996      1997
                                                  ----      ----      ----      ----      ----
                                                      (IN THOUSANDS EXCEPT PER SHARE DATA)
<S>                                              <C>       <C>       <C>       <C>       <C>
CONSOLIDATED STATEMENTS OF INCOME:
     Net sales.................................  $33,624   $37,788   $44,283   $51,971   $59,196
     Cost of goods sold........................   19,371    21,334    24,853    29,627    33,755
                                                 -------   -------   -------   -------   -------
     Gross profit..............................   14,253    16,454    19,430    22,344    25,441
     Total operating expenses..................   11,443    12,729    14,440    16,462    18,370
                                                 -------   -------   -------   -------   -------
     Operating income..........................    2,810     3,725     4,990     5,882     7,071
     Other income..............................      116       136       187       141        69
     Interest expense (income).................      323      (144)     (234)     (131)      (81)
                                                 -------   -------   -------   -------   -------
     Income before provision for income
       taxes...................................    2,603     4,005     5,411     6,154     7,221
     Provision for income taxes................      756     1,602     2,167     2,449     2,874
                                                 -------   -------   -------   -------   -------
     Net income................................  $1,847    $ 2,403   $ 3,244   $ 3,705   $ 4,347
                                                 =======   =======   =======   =======   =======
     Net income per share - basic..............  $  0.91   $  0.79   $  1.02   $  1.09   $  1.26
                                                 =======   =======   =======   =======   =======
     Net income per share - diluted............  $  0.78   $  0.72   $  0.95   $  1.06   $  1.24
                                                 =======   =======   =======   =======   =======
     Weighted average shares
       outstanding - basic.....................    2,024     3,025     3,175     3,414     3,454
     Weighted average shares                            
       outstanding - diluted...................    2,378     3,322     3,427     3,509     3,517
 
CONSOLIDATED BALANCE SHEET DATA:
     Working capital...........................  $ 8,312   $ 8,742   $ 7,557   $ 9,859   $ 9,611
     Total assets..............................   17,304    21,405    28,202    30,234    35,730
     Long-term obligations, including current
       portion.................................       49        39       298       204        --
     Stockholders' equity......................  $13,576   $16,030   $19,956   $24,036   $28,669
</TABLE>
 
                                        5
<PAGE>   6
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The Company's working capital decreased from $9,859,000 at December 31,
1996 to $9,611,000 at December 31, 1997. Cash and equivalents decreased $47,000
from $4,959,000 at December 31, 1996 to $4,912,000 at December 31, 1997.
Operating activities provided $5,773,000 in cash flow for the year ended
December 31,1997. Inventories increased $107,000 from December 31, 1996. The
increase in inventory was attributable to the acquisition of dental
laboratories.
 
     Cash outflows related to dental laboratory acquisitions totaled $4,376,000
for the year ended December 31, 1997. Capital expenditures for the same period
were $1,525,000. The Company expects that increases in capital expenditures, if
any, will be in proportion with increasing revenues.
 
     The Company maintains a financing agreement (the "Agreement") with State
Street Bank and Trust Company (the "Bank"). The Agreement, as amended and
extended on June 27, 1997, includes revolving lines of credit of $4,000,000 and
$8,000,000. The interest rate on both revolving lines of credit is the prime
rate minus one half of one percent or Libor rate plus 1.5%, at the Company's
option. Both revolving lines of credit mature on June 1, 2001.
 
     A commitment fee of one eighth of 1% is payable on the unused amount of
both lines of credit. At December 31, 1997, the full principal amount was
available to the Company under both revolving lines of credit. The Agreement
requires compliance with certain covenants, including the maintenance of
specified net worth and other financial ratios. As of December 31, 1997, the
Company was in compliance with these covenants.
 
     Management believes that existing working capital and financing will be
sufficient to meet contemplated operating and capital requirements, including
costs associated with anticipated acquisitions, if any, in the foreseeable
future.
 
RESULTS OF OPERATIONS
 
     The following table sets forth for the periods indicated the percentage of
net sales represented by certain items in the Company's Consolidated Financial
Statements:
 
<TABLE>
<CAPTION>
                                                                   YEARS ENDED DECEMBER 31,
                                                                   ------------------------
                                                                   1995      1996      1997
                                                                   ----      ----      ----
      <S>                                                         <C>       <C>       <C>
      Net sales.................................................  100.0%    100.0%    100.0%
      Cost of goods sold........................................   56.1      57.0      57.0
                                                                  -----     -----     -----
      Gross profit..............................................   43.9      43.0      43.0
      Total operating expenses..................................   32.6      31.7      31.0
                                                                  -----     -----     -----
      Operating income..........................................   11.3      11.3      12.0
      Other income..............................................    0.4       0.3       0.1
      Interest income...........................................    0.5       0.2       0.1
                                                                  -----     -----     -----
      Income before provision for income taxes..................   12.2      11.8      12.2
      Provision for income taxes................................    4.9       4.7       4.9
                                                                  -----     -----     -----
      Net income................................................    7.3%      7.1%      7.3%
                                                                  =====     =====     =====
</TABLE>
 
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996
 
  Net Sales
 
     For the year ended December 31, 1997, net sales increased $7,225,000 or
13.9% over the prior year ended December 31, 1996. Of this increase
approximately $2,377,000 or 4.6% came from same laboratory sales, while
approximately $4,848,000 came from acquisitions.
 
  Cost of Goods Sold
 
     The Company's cost of goods sold, which consists principally of labor and
related benefits, cost of materials, and laboratory overhead, increased by
$4,128,000 or 13.9% in the fiscal year ended December 31,
 
                                        6
<PAGE>   7
 
1997 over the prior fiscal year, attributable primarily to increased unit sales.
The Company continued its emphasis on training of technical personnel at
individual dental laboratories and cross training programs. Cost of goods sold
as a percentage of sales for the year 1997 remained constant at 57.0%.
 
  Total Operating Expenses
 
     Operating expenses, which consist of selling, delivery and administrative
expenses both at the laboratory and corporate level, increased by $1,908,000 or
11.6% in the year ended December 31, 1997 over 1996. During this same period
operating expenses decreased as a percentage of net sales from 31.7% in 1996 to
31.0% in 1997.
 
  Operating Income
 
     Due to the increase in net sales and improved productivity, which held
constant the cost of goods sold and reduced the operating expenses as a percent
of net sales, operating income increased $1,189,000 or 20.2% in fiscal year 1997
over fiscal year 1996.
 
  Interest Income
 
     Interest income decreased by $50,000 in the year ended December 31, 1997
from 1996. The decrease was due to decreased investment principal following two
laboratory acquisitions during the year.
 
  Provision for Income Taxes
 
     The provision for income taxes increased to $2,874,000 in 1997 from
$2,449,000 in 1996. This $425,000 increase was the result of increased income.
The 39.8% effective tax rate for fiscal year 1997 remained consistent with the
39.8% effective tax rate for fiscal year 1996.
 
  Net Income
 
     As a result of all the factors discussed above, net income increased to
$4,347,000 or $1.24 per share on a diluted basis in 1997 from $3,705,000 or
$1.06 per share on a diluted basis in 1996.
 
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995
 
  Net Sales
 
     Net sales increased $7,688,000 or 17.4% for the year ended December 31,
1996 over the year ended December 31, 1995. Approximately $6,515,000 of this
increase was attributable to acquired sales, with the remaining increase
representing unit growth at dental laboratories operating throughout the year
ended December 31, 1996 and the comparison year ended December 31, 1995.
 
  Cost of Goods Sold
 
     Cost of goods sold, which consists principally of labor and related
benefits, cost of materials, and laboratory overhead, increased by $4,774,000,
or 19.2%. As a percentage of sales, cost of goods sold increased from 56.1% to
57.0%, representing a gross margin decrease of 0.9%. A portion of the gross
margin decrease is attributable to the integration of laboratories acquired in
the year ended December 31, 1995 with the Company's other laboratories.
 
  Total Operating Expenses
 
     Total operating expenses, which consist of (i) selling expenses, the cost
of the Company's pick-up and delivery services and administrative expenses at
the dental laboratory level, and (ii) costs of operation by the Company's
corporate headquarters and field support services, increased by $2,022,000 or
14.0% during the year ended December 31, 1996 over 1995.
 
     This increase was primarily attributable to the operating and amortization
expense associated with acquired dental laboratories. During this same period
operating expenses decreased as a percentage of net sales from 32.6% in 1995 to
31.7% in 1996.
 
                                        7
<PAGE>   8
 
  Operating Income
 
     Operating income increased by $892,000 or 17.9% for the year ended December
31, 1996 over 1995. The increase was the result of higher sales volume.
Operating income was 11.3% of sales for the years ended December 31, 1995 and
1996.
 
  Interest Income
 
     Interest income decreased by $103,000 or 44.0% in the year ended December
31, 1996 from 1995. The decrease was due to lower interest rates for short-term
liquid investments and decreased investment principal.
 
  Provision for Income Taxes
 
     The Company's provision for income taxes for the year ended December 31,
1996 increased to $2,449,000 from $2,167,000 in 1995. The effective tax rate
decreased slightly from 40.0% to 39.8%.
 
  Net Income
 
     As a result of the factors discussed above, net income for the year ended
December 31, 1996 increased by $461,000 or 14.2% over 1995. Net income per share
on a diluted basis increased from $0.95 per share to $1.06 per share.
 
GENERAL
 
     This Form 10-K and the Company's Annual Report contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The
Company's actual results could differ materially from those set forth in the
forward-looking statements. Certain factors that could affect operating results,
capital expenditures, the Company's requirements for capital and the costs
associated with anticipated acquisitions include general economic conditions,
the availability of laboratories for purchase by the Company, the ability of the
Company to acquire and successfully operate additional laboratories,
governmental regulation of health care, other factors affecting patient visits
to the Company's clients, and other risks indicated in the Company's filings
with the Securities and Exchange Commission.
 
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
     Not applicable.
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
QUARTERLY RESULTS
 
     The following table sets forth certain selected financial information for
the Company for its eight most recent fiscal quarters. In the opinion of the
Company, this unaudited information has been prepared on the same basis as the
audited financial information and includes all adjustments (consisting of only
normal, recurring adjustments) necessary to present this information fairly when
reviewed in conjunction with the Company's Consolidated Financial Statements and
notes thereto contained herein.
 
<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED
                       -----------------------------------------------------------------------------------------
                       MARCH 31,   JUNE 30,   SEPT. 30,   DEC. 31,   MARCH 31,   JUNE 30,   SEPT. 30,   DEC. 31,
                         1996        1996       1996        1996       1997        1997       1997        1997
                       ---------   --------   ---------   --------   ---------   --------   ---------   --------
                                             (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S>                    <C>         <C>        <C>         <C>        <C>         <C>        <C>         <C>
Net sales............   $12,349    $13,705     $12,987    $12,930     $13,981    $15,266     $15,118    $14,831
Gross profit.........     5,324      6,130       5,426      5,464       5,981      6,873       6,333      6,254
Gross margin.........      43.1%      44.7%       41.8%      42.3%       42.8%      45.0%       41.9%      42.2%
Operating income.....     1,300      1,900       1,302      1,380       1,539      2,195       1,626      1,711
Operating margin.....      10.5%      13.9%       10.0%      10.7%       11.0%      14.4%       10.8%      11.5%
Net income...........   $   827    $ 1,180     $   836    $   862     $   956    $ 1,349     $ 1,003    $ 1,039
Net income per
  share - diluted....   $  0.24    $  0.34     $  0.24    $  0.25     $  0.27    $  0.38     $  0.28    $  0.29
</TABLE>
 
                                        8
<PAGE>   9
 
     The Company's results of operations have historically fluctuated on a
quarterly basis and are expected to be subject to quarterly fluctuations in the
future. As a result, the Company believes that the results of operations for the
interim periods are not necessarily indicative of the results to be expected for
any future period or for a full year. Quarterly results are subject to
fluctuations resulting from a number of factors, including the number of working
days in the quarter for both dentists and Company employees, the number of paid
vacation days and holidays in the period and general economic conditions.
Historically, the second quarter has generated the highest quarterly net sales
for the year and has been the most profitable for the Company due to the greater
number of working days in the quarter and more patients scheduling visits with
their dentists before departing for summer vacation.
 
LOCATION OF FINANCIAL STATEMENTS
 
     The financial statements furnished in connection with this Report are
attached immediately following the Signatures.
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
 
     None.
 
                                    PART III
 
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     (a) Directors.  The information with respect to directors required by this
item is incorporated herein by reference from Registrant's Proxy Statement dated
March 5, 1998 for the special meeting in lieu of the annual shareholders meeting
to be held on April 7, 1998 (the "1998 Proxy Statement").
 
     (b) Executive Officers.  The information with respect to executive officers
required by this item is incorporated herein by reference from the 1998 Proxy
Statement.
 
ITEM 11.  EXECUTIVE COMPENSATION
 
     The information required by this item is incorporated herein by reference
from the 1998 Proxy Statement.
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     The information required by this item is incorporated herein by reference
from the 1998 Proxy Statement.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information
required by this item is incorporated herein by reference from the 1998 Proxy
Statement.
 
                                    PART IV
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
     (a), (d) Financial Statements and Schedules.
 
     (1) The financial statements set forth in the list below are filed as part
         of this Report.
 
     (2) The financial statement schedules set forth in the list below are filed
         as part of this Report.
 
     (3) Exhibits filed herewith or incorporated herein by reference are set
         forth in Item 14(c) below.
 
                                        9
<PAGE>   10
 
     List of Financial Statements and Schedules Referenced in this Item 14
 
     The historical consolidated financial statements of National Dentex
Corporation included herein are as listed below:
 
                                                                   PAGE
                                                                   ----

     Report of Independent Public Accountants....................   F-2
     Consolidated Balance Sheets as of December 31, 1996 and
       1997......................................................   F-3
     Consolidated Statements of Income for the three years ended
       December 31, 1997.........................................   F-4
     Consolidated Statements of Stockholders' Equity for the
       three years ended December 31, 1997.......................   F-5
     Consolidated Statements of Cash Flows for the three years
       ended December 31, 1997...................................   F-6
     Notes to Consolidated Financial Statements..................   F-7
 
     Certain Financial Schedules included herewith:
 
     Schedule II: Valuation and Qualifying Accounts
 
     All other schedules are omitted because they are not applicable or not
required, or because the required information is shown either in the financial
statements or in the notes thereto.
 
     (b) Reports on Form 8-K.
 
     During the Company's fiscal quarter ended December 31, 1997, the Company
was not required to file, and did not file, any Current Report on Form 8-K.
 
     (c) Exhibits.
 
     (i) The following exhibits, required by Item 601 of Regulation S-K, are
filed herewith:
 
     EXHIBIT NO.                                  TITLE
     -----------                                  -----

         11            Computation of Net Income Per Share
         23            Consent of Arthur Andersen LLP
         27            Financial Data Schedule
 
     (ii) The following exhibits were filed with the Company's Annual Report on
Form 10-K for the year ended December 31, 1995 and are herein incorporated by
reference:
 
     EXHIBIT NO.                                  TITLE
     -----------                                  -----

        *10a           Long Term Incentive Plan, as amended.

        *10b           Employment Agreement between the Company and Richard F.
                       Becker, Jr., dated April 1, 1995.

        *10c           Change of Control Severance Agreement between the Company
                       and Richard F. Becker, Jr., dated April 1, 1995.

        *10d           Employment Agreement between the Company and David L. 
                       Brown, dated April 1, 1995.

        *10e           Change of Control Severance Agreement between the Company
                       and David L. Brown dated April 1, 1995.

        *10f           Employment Agreement between the Company and William M.
                       Mullahy, dated April 1, 1995.

        *10g           Change of Control Severance Agreement between the Company
                       and William M. Mullahy, dated April 1, 1995.
 
                                       10
<PAGE>   11
 
     (iii) The following exhibits were filed as part of the Company's Form S-1
Registration Statement (File No. 33-70440) declared effective by the Securities
and Exchange Commission on December 21, 1993 and are herein incorporated by
reference:
 
     EXHIBIT NO.                              TITLE
     -----------                              -----

          2a       Purchase and Sale Agreement, dated June 25, 1982, between
                   Healthco, Inc. and H & M Laboratory Services, Inc. (now
                   known as National Dentex Corporation).

          2b       Stock Purchase Agreement, dated as of December 31, 1982,
                   between the Company and Lifemark Corporation.

          2c       Agreement and Plan of Merger, dated as of February 28, 1992,
                   and Closing Agreement, dated as of February 28, 1992, among
                   the Company, Dodd Dental Laboratories, Inc., James F. Dodd,
                   III, Robert M. Dodd, Stephen K. Dodd and Amy Ann Dodd.

          3a       Restated Articles of Organization of the Company, filed with
                   Massachusetts Secretary of State on October 14, 1993.

          3b       By-Laws of the Company, as amended on December 31, 1982 and
                   May 26, 1992.

          4a       Registration Agreement, dated as of February 14, 1983, among
                   the Company, National City Capital Corporation ("NCC"),
                   National City Venture Corporation ("NCV") and Rust Capital,
                   Ltd. ("Rust"), as amended on April 11, 1983, September 30,
                   1985, and February 27, 1992.

          4b       Inter-Investor Agreement, dated as of April 11, 1983, among
                   Rust, NCC, NCV, and InterFirst Venture Corporation
                   ("InterFirst").

          4c       Amended and Restated Executive Agreement, made as of
                   September 30, 1985 by and among the Company, Mullahy, Rust,
                   NCC, NCV, and InterFirst, as amended on October 8, 1993.

          4d       Amended and restated Executive Agreement, made as of
                   September 30, 1985 by and among the Company, Harkins, Rust,
                   NCC, NCV, and InterFirst, terminated on October 8, 1993.

          4e       Exchange Agreement, dated as of September 30, 1985, among
                   the Company, Mullahy, Harkins, Rust, NCC, NCV, and
                   InterFirst, as amended on October 8, 1993.

          4f       Exchange Agreement, dated as of September 30, between the
                   Company and American Medical International, Inc. ("AMI").

          4g       Restated Letter Agreement, dated February 22, 1993, between
                   the Company and State Street Bank and Trust Company (the
                   "Bank").

          4h       Guaranty and Pledge Agreement, dated May 3, 1990, among
                   Harkins, Mullahy and the Bank.

          4i       Limited Guaranty and Pledge Agreement, dated as of May 3,
                   1990, between the Bank and Rust.

          4j       Limited Guaranty and Pledge Agreement, dated as of May 3,
                   1990, between the Bank and NCC.

          4k       Limited Guaranty and Pledge Agreement, dated as of May 3,
                   1990, between the Bank and NCV.

          4l       Limited Guaranty and Pledge Agreement, dated as of May 3,
                   1990, between the Bank and O'Donnell & Masur.

          4m       Limited Guaranty and Pledge Agreement, dated as of February
                   27, 1992, between Mullahy and the Bank.

          4n       Common Stock Purchase Warrant, dated as of September 30,
                   1985 to AMI.

          4o       Common Stock Purchase Warrant, dated as of February 27, 1992
                   to the Bank.

          4p       Proposed Form of Common Stock Purchase Warrant to Advest,
                   Inc.

          4q       Form of Lock-Up Agreements from each of Rust, NCC, NCV,
                   O'Donnell & Masur, Mullahy, Harkins, David L. Brown, Richard
                   F. Becker, Jr., Richard G. Mariacher, Arthur B. Champagne,
                   James F. Dodd, III, Kenneth C. Hallett and Donald E. Merz.

          4r       Form of Lock-Up Agreement from Trustee for Albert M. Tate,
                   Jr. D.D.S.
 
                                       11
<PAGE>   12
 
     EXHIBIT NO.                               TITLE
     -----------                               -----
     
        *10a        Salary Continuation Agreement, dated April 1, 1985, between
                    the Company and Mullahy.
        *10b        Salary Continuation Agreement, dated April 1, 1985, between
                    the Company and Merz.
        *10c        National Dentex Corporation Laboratory Incentive
                    Compensation Plan.
        *10d        National Dentex Corporation Executives Incentive
                    Compensation Plan.
        *10e        National Dentex Corporation Group Managers Incentive
                    Compensation Plan.
        *10g        National Dentex Corporation Dollars Plus Plan, as amended on
                    January 3, 1986.
        *10h        National Dentex Corporation Employees' Stock Purchase Plan.
        *10j        Nonqualified Stock Option Agreement, dated April 24, 1991,
                    between the Company and Mullahy, as amended on October 14,
                    1993.
 
---------------
 
* These exhibits relate to a management contract or to a compensatory plan or
  arrangement.
 
                                       12
<PAGE>   13
 
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 and 15(d) of the Securities
Exchange Act of 1934, the Registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
 
                                          NATIONAL DENTEX CORPORATION
 

                                          By:    /s/ WILLIAM M. MULLAHY
                                             -----------------------------------
                                               WILLIAM M. MULLAHY, PRESIDENT
 
March 5, 1998
 
     In accordance with the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
                      SIGNATURE                                    TITLE                        DATE
                      ---------                                    -----                        ----
<S>                                                    <C>                                   <C>
 
               /s/ WILLIAM M. MULLAHY                  President, Chief Executive            March 5, 1998
-----------------------------------------------------    Officer and Director
                 WILLIAM M. MULLAHY                      (Principal Executive
                                                         Officer)
 
                /s/ DAVID V. HARKINS                   Chairman of the Board and             March 5, 1998
-----------------------------------------------------    Director
                  DAVID V. HARKINS
 
                 /s/ JACK R. CROSBY                    Director                              March 5, 1998
-----------------------------------------------------
                   JACK R. CROSBY
 
               /s/ WILLIAM H. MCCLURG                  Director                              March 5, 1998
-----------------------------------------------------
                 WILLIAM H. MCCLURG
 
                /s/ NORMAN F. STRATE                   Director                              March 5, 1998
-----------------------------------------------------
                  NORMAN F. STRATE
 
                 /s/ DAVID L. BROWN                    Vice President, Treasurer &           March 5, 1998
-----------------------------------------------------    Chief Financial Officer, and
                   DAVID L. BROWN                        Assistant Clerk (Principal
                                                         Financial Officer)
 
             /s/ RICHARD F. BECKER, JR.                Vice President, Finance and           March 5, 1998
-----------------------------------------------------    Assistant Treasurer
               RICHARD F. BECKER, JR.                    (Principal Accounting
                                                         Officer)
</TABLE>
 
                                       13
<PAGE>   14
 
                          NATIONAL DENTEX CORPORATION
 
            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
 
                                                                 PAGE
                                                                 ----
Financial Statements:
The historical consolidated financial statements of National
  Dentex Corporation included herein are as listed below.
     Report of Independent Public Accountants...............      F-2
     Consolidated Balance Sheets as of December 31, 1996 
      and 1997..............................................      F-3
     Consolidated Statements of Income for the three years  
      ended December 31, 1997...............................      F-4
     Consolidated Statements of Stockholders' Equity for 
      the three years ended December 31, 1997...............      F-5
     Consolidated Statements of Cash Flows for the three    
      years ended December 31, 1997.........................      F-6
     Notes to Consolidated Financial Statements.............      F-7

Schedule:
     Valuation and Qualifying Accounts......................  Schedule II
 
                                       F-1
<PAGE>   15
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To National Dentex Corporation:
 
     We have audited the accompanying consolidated balance sheets of National
Dentex Corporation (a Massachusetts corporation) as of December 31, 1996 and
1997, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1997. These consolidated financial statements and the schedule referred to below
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of National
Dentex Corporation as of December 31, 1996 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
 
     Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedule in the index to
consolidated financial statements is presented for purposes of complying with
the Securities and Exchange Commission's rules and is not a required part of the
basic consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in the audits of the basic consolidated financial
statements and, in our opinion, fairly states, in all material respects, the
financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.

                                            /s/ ARTHUR ANDERSEN LLP
                                            Arthur Andersen LLP
 
Boston, Massachusetts
February 4, 1998
 
                                       F-2
<PAGE>   16
 
                          NATIONAL DENTEX CORPORATION
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  1996           1997
                                                              ------------   ------------
<S>                                                           <C>            <C>
ASSETS
CURRENT ASSETS:
    Cash and equivalents....................................  $ 4,959,038    $ 4,912,097
    Accounts receivable:
        Trade, less allowance of $204,000 in 1996 and
         $146,000 in 1997...................................    6,149,448      6,708,260
        Other...............................................      198,481        208,799
    Inventories.............................................    2,929,898      3,091,800
    Prepaid expenses........................................      668,606        493,781
    Deferred tax asset......................................      402,703        364,979
                                                              -----------    -----------
        Total current assets................................   15,308,174     15,779,716
                                                              -----------    -----------
PROPERTY AND EQUIPMENT:
    Land and buildings......................................    3,773,720      3,590,720
    Leasehold and building improvements.....................    2,380,010      3,142,342
    Laboratory equipment....................................    5,734,432      6,491,244
    Furniture and fixtures..................................    1,592,657      1,832,982
    Capital leases..........................................      342,819        342,819
                                                              -----------    -----------
                                                               13,823,638     15,400,107
    Less -- Accumulated depreciation and amortization.......    7,352,321      7,981,989
                                                              -----------    -----------
    Net property and equipment..............................    6,471,317      7,418,118
                                                              -----------    -----------
OTHER ASSETS, net:
    Goodwill................................................    5,346,757      8,254,191
    Noncompetition agreements...............................    2,750,787      3,508,875
    Other...................................................      357,086        768,953
                                                              -----------    -----------
                                                                8,454,630     12,532,019
                                                              -----------    -----------
                                                              $30,234,121    $35,729,853
                                                              ===========    ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Current portion of long-term obligations................  $   204,213    $        --
    Accounts payable........................................      973,080      1,137,701
    Accrued liabilities:
        Payroll and employee benefits.......................    2,604,909      2,826,089
        Deferred purchase price.............................    1,244,629      1,868,577
        Other...............................................      422,693        336,661
                                                              -----------    -----------
            Total current liabilities.......................    5,449,524      6,169,028
                                                              -----------    -----------
LONG TERM LIABILITIES:
    Deferred tax liability..................................      304,819        195,827
    Deferred purchase price.................................      443,300        696,367
                                                              -----------    -----------
            Total long-term liabilities.....................      748,119        892,194
                                                              -----------    -----------
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' EQUITY:
    Preferred stock, $.01 par value Authorized -- 500,000
     shares None issued and outstanding.....................           --             --
    Common stock, $.01 par value Authorized -- 8,000,000
     shares Issued and outstanding -- 3,440,738 shares at
     December 31, 1996, and 3,460,829 shares at December 31,
     1997...................................................       34,407         34,608
    Paid-in capital.........................................   13,683,615     13,968,731
    Retained earnings.......................................   10,318,456     14,665,292
                                                              -----------    -----------
            Total stockholders' equity......................   24,036,478     28,668,631
                                                              -----------    -----------
                                                              $30,234,121    $35,729,853
                                                              ===========    ===========
</TABLE>
 
                                       F-3
<PAGE>   17
 
                          NATIONAL DENTEX CORPORATION
 
                       CONSOLIDATED STATEMENTS OF INCOME
 
<TABLE>
<CAPTION>
                                                                       YEARS ENDED
                                                        ------------------------------------------
                                                        DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                                            1995           1996           1997
                                                        ------------   ------------   ------------
<S>                                                     <C>            <C>            <C>
Net sales.............................................  $44,283,064    $51,971,105    $59,196,110
Cost of goods sold....................................   24,853,120     29,627,013     33,755,470
                                                        -----------    -----------    -----------
     Gross profit.....................................   19,429,944     22,344,092     25,440,640
Total operating expenses..............................   14,439,562     16,462,045     18,370,360
                                                        -----------    -----------    -----------
     Operating income.................................    4,990,382      5,882,047      7,070,280
Other income..........................................      186,128        141,000         69,265
Interest income.......................................      234,049        131,316         81,114
                                                        -----------    -----------    -----------
     Income before provision for income taxes.........    5,410,559      6,154,363      7,220,659
Provision for income taxes............................    2,166,751      2,449,437      2,873,823
                                                        -----------    -----------    -----------
     Net income.......................................  $ 3,243,808    $ 3,704,926    $ 4,346,836
                                                        ===========    ===========    ===========
Net income per share - basic..........................  $      1.02    $      1.09    $      1.26
                                                        ===========    ===========    ===========
Net income per share - diluted........................  $       .95    $      1.06    $      1.24
                                                        ===========    ===========    ===========
Weighted average shares outstanding - basic...........    3,175,150      3,414,411      3,454,473
                                                        ===========    ===========    ===========
Weighted average shares outstanding - diluted.........    3,427,209      3,509,231      3,516,770
                                                        ===========    ===========    ===========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       F-4
<PAGE>   18
 
                          NATIONAL DENTEX CORPORATION
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                              PREFERRED STOCK          COMMON STOCK
                                            --------------------   --------------------
                                            NUMBER OF   $.01 PAR   NUMBER OF   $.01 PAR     PAID-IN      RETAINED
                                             SHARES      VALUE      SHARES      VALUE       CAPITAL      EARNINGS        TOTAL
                                            ---------   --------   ---------   --------     -------      --------        -----
<S>                                         <C>         <C>        <C>         <C>        <C>           <C>           <C>
BALANCE, December 31, 1994................     --         $--     3,088,874    $30,889    $12,629,125   $ 3,369,722   $16,029,736
 
Issuance of 166,971 shares of common stock
  under the stock option plans............     --          --       166,971      1,670        555,130            --       556,800
Issuance of 14,643 shares of common stock
  under the employee stock purchase
  plan....................................     --          --        14,643        146        113,086            --       113,232
Issuance of 980 shares of common stock as
  director's fees.........................     --          --           980         10         11,995            --        12,005
Net income................................     --          --            --         --             --     3,243,808     3,243,808
                                              ---         ---      ---------   -------    -----------   -----------   -----------
BALANCE, December 31, 1995................     --          --      3,271,468    32,715     13,309,336     6,613,530    19,955,581
 
Issuance of 155,028 shares of common stock
  under the stock option plans............     --          --       155,028      1,550        217,228            --       218,778
Issuance of 13,634 shares of common stock
  under the employee stock purchase
  plan....................................     --          --        13,634        136        145,049            --       145,185
Issuance of 608 shares of common stock as
  director's fees.........................     --          --           608          6         12,002            --        12,008
Net income................................     --          --            --         --             --     3,704,926     3,704,926
                                              ---         ---      ---------   -------    -----------   -----------   -----------
BALANCE, December 31, 1996................     --          --      3,440,738    34,407     13,683,615    10,318,456    24,036,478
 
Issuance of 6,295 shares of common stock
  under the stock option plans............     --          --         6,295         63         79,635            --        79,698
Issuance of 12,386 shares of common stock
  under the employee stock purchase
  plan....................................     --          --        12,386        124        181,525            --       181,649
Issuance of 1,410 shares of common stock
  as director's fees......................     --          --         1,410         14         23,956            --        23,970
Net income................................     --          --            --         --             --     4,346,836     4,346,836
                                              ---         ---      ---------   -------    -----------   -----------   -----------
BALANCE, December 31, 1997................     --         $--      3,460,829   $34,608    $13,968,731   $14,665,292   $28,668,631
                                              ===         ===      =========   =======    ===========   ===========   ===========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       F-5
<PAGE>   19
 
                          NATIONAL DENTEX CORPORATION
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                            YEARS ENDED
                                                             ------------------------------------------
                                                             DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                                                 1995           1996           1997
                                                             ------------   ------------   ------------
<S>                                                          <C>            <C>            <C>
Cash flows from operating activities:
    Net income.............................................  $ 3,243,808    $ 3,704,926    $ 4,346,836
    Adjustments to reconcile net income to net cash
       provided by operating activities, net of effects of
       acquisitions:
         Depreciation and amortization.....................      922,141      1,350,314      1,753,376
         (Increase) decrease in accounts receivable........     (388,600)        35,788        (47,640)
         Increase in inventories...........................     (244,566)      (385,004)      (106,745)
         (Increase) decrease in prepaid expenses...........     (116,372)         3,241        178,355
         (Increase) decrease in deferred tax asset.........      (21,770)       (26,228)        47,724
         (Increase) decrease in other assets...............       55,820        (63,973)      (309,343)
         Increase (decrease) in accounts payable and
            accrued liabilities............................       82,970       (694,129)        19,480
         Decrease in deferred tax liability................      (91,637)       (29,277)      (108,992)
                                                             -----------    -----------    -----------
              Net cash provided by operating activities....    3,441,794      3,895,658      5,773,051
                                                             -----------    -----------    -----------
Cash flows from investing activities:
    Payment for acquisitions, net of cash acquired.........   (4,019,935)      (839,017)    (3,691,799)
    Payment of deferred purchase price.....................   (1,000,718)    (1,607,826)      (684,631)
    Additions to property and equipment, net...............     (934,641)      (964,894)    (1,524,666)
                                                             -----------    -----------    -----------
         Net cash used in investing activities.............   (5,955,294)    (3,411,737)    (5,901,096)
                                                             -----------    -----------    -----------
Cash flows from financing activities:
    Net payments of current and long-term obligations......       (2,247)       (94,248)      (204,213)
    Net proceeds from issuance of common stock.............      682,037        375,971        285,317
                                                             -----------    -----------    -----------
         Net cash provided by financing activities.........      679,790        281,723         81,104
                                                             -----------    -----------    -----------
Net increase (decrease) in cash and equivalents............   (1,833,710)       765,644        (46,941)
Cash and equivalents at beginning of period................    6,027,104      4,193,394      4,959,038
                                                             -----------    -----------    -----------
Cash and equivalents at end of period......................  $ 4,193,394    $ 4,959,038    $ 4,912,097
                                                             ===========    ===========    ===========
Supplemental disclosures of cash flow information:
    Interest paid..........................................  $    13,007    $    22,098    $    11,179
                                                             ===========    ===========    ===========
    Income taxes paid......................................  $ 1,806,795    $ 2,739,444    $ 3,071,545
                                                             ===========    ===========    ===========
Supplemental schedule of noncash investing and financing
  activities:
    The Company purchased the operations of certain dental
       laboratories in 1995, 1996 and 1997. In conjunction
       with these acquisitions, liabilities were assumed as
       follows:
    Fair value of assets acquired..........................  $ 7,905,740    $ 1,618.000    $ 5,735,000
    Cash paid..............................................   (4,103,236)      (910,000)    (3,893,000)
    Deferred purchase price at date of acquisition.........   (2,918,116)      (468,000)    (1,545,000)
                                                             -----------    -----------    -----------
Liabilities assumed........................................  $   884,388    $   240,000    $   297,000
                                                             ===========    ===========    ===========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       F-6
<PAGE>   20
 
                          NATIONAL DENTEX CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1997
 
(1)  ORGANIZATION
 
     National Dentex Corporation (the "Company") owns and operates 27
full-service dental laboratories and five branch laboratories in 21 states
throughout the United States. Working from dentists' work orders, the Company's
dental laboratories custom design and fabricate dentures, crowns and fixed
bridges, and other dental prosthetic appliances.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Principles of Consolidation
 
     The consolidated financial statements include all operations of the
Company. Acquisitions are reflected from the date acquired by the Company (see
Note 3) to December 31, 1997. All significant intercompany balances and
transactions have been eliminated in consolidation.
 
  Revenue Recognition
 
     Revenue is recognized as the dentists' orders are shipped.
 
  Inventories
 
     Inventories, consisting principally of raw materials, are stated at the
lower of cost (first-in, first-out) or market.
 
  Property and Equipment
 
     Property and equipment are stated at cost, less accumulated depreciation.
Depreciation is calculated using the straight-line method over the following
estimated useful lives:
 
<TABLE>
         <S>                                                           <C>
         Buildings...................................................  25 years
         Furniture and fixtures......................................  5-10 years
         Automobiles and trucks......................................  5 years
         Laboratory equipment........................................  10 years
</TABLE>
 
     Leasehold improvements and capital leases are amortized over the lesser of
the assets' estimated useful lives or the lease terms.
 
     Gains and losses are recognized upon the disposal of property and
equipment, and the related accumulated depreciation and amortization are removed
from the accounts. Maintenance, repairs and betterments that do not enhance the
value of or increase the life of the assets are charged to operations as
incurred.
 
  Other Assets
 
     Included in other assets are the costs of noncompetition agreements which
are deferred and amortized on a straight-line basis according to the terms of
the agreements typically over five to ten years. Goodwill is being amortized
using the straight-line method over a period of 20 years, the estimated useful
life. The Company continually evaluates whether events and circumstances have
occurred that indicate the remaining estimated useful life of goodwill may
warrant revision or that the remaining balance of goodwill may not be
recoverable. When factors indicate that goodwill should be evaluated for
possible impairment, the Company uses an estimate of the related business
segment's undiscounted operating income over the remaining life of the goodwill
in measuring whether the goodwill is recoverable. As of December 31, 1997 there
have been no write-downs of goodwill.
 
                                       F-7
<PAGE>   21
                          NATIONAL DENTEX CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1997 -- (CONTINUED)
 
     Accumulated amortization on these intangible assets was approximately
$1,855,000 and $2,840,000 at December 31, 1996 and 1997, respectively.
 
  Income Taxes
 
     The Company follows Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes". Under SFAS No. 109, deferred tax assets
and liabilities are recognized for the expected future tax consequences of
events that have been included in the financial statements or tax returns. The
amount of deferred tax asset or liability is based on the difference between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
 
  Net Income per Common Share
 
     During 1997, the Company adopted the provisions of SFAS No. 128, "Earnings
per Share", which is effective for financial statements for periods ending after
December 15, 1997. SFAS No. 128 requires replacement of primary earnings per
share ("EPS") with basic EPS, which is computed by dividing income available to
common shareholders by the weighted-average number of common shares outstanding.
Diluted EPS, which gives effect to all dilutive potential common shares
outstanding, is also required.
 
  Cash and Equivalents
 
     The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents.
 
  Stock-Based Compensation
 
     Effective January 1, 1996, the Company adopted the provisions of SFAS No.
123, "Accounting for Stock-Based Compensation" (see Note 8). The Company has
elected to continue to account for stock options at intrinsic value with
disclosure of the effects of fair value accounting on net income and earnings
per share on a pro forma basis.
 
  Use of Estimates in the Financial Statements
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Disclosures About the Fair Value of Financial Instruments
 
     The Company's financial instruments consist mainly of cash and equivalents,
accounts receivable and accounts payable. The carrying amounts of the Company's
cash and equivalents, accounts receivable and accounts payable approximate their
fair value due to the short-term nature of these instruments.
 
  Accounting Pronouncements
 
     The Financial Accounting Standards Board issued two new statements in June
1997. SFAS No. 130, "Reporting Comprehensive Income", establishes standards for
reporting and display of comprehensive income and its components. SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information",
establishes standards for the way that public business enterprises report
information and operating segments in
 
                                       F-8
<PAGE>   22
                          NATIONAL DENTEX CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1997 -- (CONTINUED)
 
annual financial statements and requires reporting of selected information in
interim financial reports. Both statements are effective for fiscal years
beginning after December 15, 1997. The required disclosures for SFAS No. 130
will be included in the Company's quarterly report on Form 10 - Q for the first
quarter of 1998. The required disclosures for SFAS No. 131 will be included in
the Company's 1998 annual report on Form 10 - K.
 
(3) ACQUISITIONS
 
     During 1996, the Company acquired the following dental laboratory
operations:
 
        Microfit Dental Laboratory................................  March 1996
        Flud Dental Laboratory....................................  April 1996
 
     During 1997, the Company acquired the following dental laboratory
operations:
 
        Scrimpshire Dental Studio.................................  January 1997
        TLC Dental Laboratory.....................................  July 1997
 
     These acquisitions, which have been reflected in the accompanying
consolidated financial statements from the dates of acquisition, have been
accounted for as purchases in accordance with Accounting Principles Board (APB)
Opinion No. 16. The excess of the total purchase price over the carrying amount
of the net assets acquired, based on estimates of their related fair values
(which are subject to revision), was allocated as follows as of December 31,
1996 and 1997:
 
<TABLE>
<CAPTION>
                                                               1996         1997
                                                            ----------   ----------
        <S>                                                 <C>          <C>
        Total Purchase Price..............................  $1,378,000   $5,438,000
        Less-Fair market values assigned to assets and
          liabilities:
             Cash.........................................      71,000      202,000
             Accounts receivable..........................     183,000      521,000
             Property and equipment.......................      16,000      191,000
             Noncompete agreements........................     393,000    1,295,000
             Inventories..................................      26,000       55,000
             Other assets.................................      16,000      151,000
             Accounts payable.............................     (37,000)    (134,000)
             Accrued liabilities and other................    (203,000)    (163,000)
                                                            ----------   ----------
        Goodwill..........................................  $  913,000   $3,320,000
                                                            ==========   ==========
</TABLE>
 
     In connection with these acquisitions, the Company has incurred certain
deferred purchase costs relating to noncompete agreements with certain
individuals, ranging over periods of five to ten years, and other contingent
payments provided for in the purchase agreements.
 
     The following unaudited pro forma operating results of the Company assume
the acquisitions had been made as of January 1, 1996. Such information includes
adjustments to reflect additional depreciation, noncompete amortization,
amortization of goodwill and interest expense, and is not necessarily indicative
of the results of operations in future periods.
 
<TABLE>
<CAPTION>
                                                                  YEAR ENDED
                                                          ---------------------------
                                                          DECEMBER 31,   DECEMBER 31,
                                                              1996           1997
                                                          ------------   ------------
                                                                  (UNAUDITED)
        <S>                                               <C>            <C>
        Net sales.......................................  $57,873,000    $60,269,000
        Net income......................................    4,089,000      4,369,000
        Net income per share - basic....................         1.20           1.26
        Net income per share - diluted..................         1.17           1.24
</TABLE>
 
                                       F-9
<PAGE>   23
                          NATIONAL DENTEX CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1997 -- (CONTINUED)
 
(4) INCOME TAXES
 
     The following is a summary of the provision for income taxes:
 
<TABLE>
<CAPTION>
                                                              YEARS ENDED
                                               ------------------------------------------
                                               DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                                   1995           1996           1997
                                               ------------   ------------   ------------
        <S>                                    <C>            <C>            <C>
        Federal --
             Current.........................   $1,637,345     $2,092,021     $2,343,556
             Deferred........................       55,863       (140,849)       (70,966)
                                                ----------     ----------     ----------
                                                 1,693,208      1,951,172      2,272,590
                                                ----------     ----------     ----------
        State --
             Current.........................      463,685        523,121        613,756
             Deferred........................        9,858        (24,856)       (12,523)
                                                ----------     ----------     ----------
                                                   473,543        498,265        601,233
                                                ----------     ----------     ----------
                                                $2,166,751     $2,449,437     $2,873,823
                                                ==========     ==========     ==========
</TABLE>
 
     Deferred income taxes are comprised of the following at December 31, 1996
and 1997:
 
<TABLE>
<CAPTION>
                                                                    1996        1997
                                                                  ---------   ---------
        <S>                                                       <C>         <C>
        Deferred Tax Assets:
             Vacation benefits..................................  $ 180,566   $ 182,515
             Inventory basis differences........................     61,290      59,896
             Receivables basis differences......................     81,247      57,979
             Other reserves.....................................     79,600      64,589
                                                                  ---------   ---------
                  Total deferred tax assets.....................    402,703     364,979
                                                                  ---------   ---------
        Deferred Tax Liabilities:
             Property basis differences.........................   (277,693)   (345,681)
             Noncompete agreements..............................    (25,637)     89,217
             Other liabilities..................................     (1,489)     60,637
                                                                  ---------   ---------
                  Total deferred tax liabilities................   (304,819)   (195,827)
                                                                  ---------   ---------
        Net deferred tax asset..................................  $  97,884   $ 169,152
                                                                  =========   =========
</TABLE>
 
     A reconciliation between the provision for income taxes computed at
statutory rates and the amount reflected in the accompanying statements of
income is as follows:
 
<TABLE>
<CAPTION>
                                                                         YEARS ENDED
                                                          ------------------------------------------
                                                          DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                                              1995           1996           1997
                                                          ------------   ------------   ------------
     <S>                                                  <C>            <C>            <C>
     Statutory federal income tax rate..................      34.0%          34.0%          34.0%
     State income tax, net of federal income tax
       benefit..........................................       5.6            5.6            5.6
     Other..............................................       0.4            0.2            0.2
                                                              ----           ----           ----
     Effective income tax rate..........................      40.0%          39.8%          39.8%
                                                              ----           ----           ----
</TABLE>
 
                                      F-10
<PAGE>   24
                          NATIONAL DENTEX CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1997 -- (CONTINUED)
 
(5) LONG-TERM OBLIGATIONS
 
     Long-term obligations, which the Company paid in full during 1997,
consisted of the following:
 
<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                                   ---------------
                                                                     1996     1997
                                                                   --------   ----
     <S>                                                           <C>        <C>
     Promissory note, payable $100,000 April 1, 1996 and 
       $200,000 July 31, 1997, including imputed interest 
       calculated at 8.50%.......................................  $190,083   $ --
     8.50% promissory note, payable in equal monthly 
       installments of $1,232, including interest, final 
       payment due December 1997.................................    14,130     --
                                                                   --------   ----
                                                                    204,213
     Less -- current maturities..................................   204,213     --
                                                                   --------   ----
                                                                   $     --   $ --
                                                                   ========   ====
</TABLE>
 
     The Company maintains a financing agreement (the "Agreement") with State
Street Bank and Trust Company (the "Bank"). The Agreement, as amended on June
27, 1997, includes revolving lines of credit of $4,000,000 and $8,000,000. The
interest rate on both revolving lines of credit is the prime rate minus 1/2 of
one percent or the LIBOR rate plus 1.5%, at the Company's option. Both revolving
lines of credit mature on June 1, 2001.
 
     A commitment fee of one eighth of 1% is payable on the unused amount of
both revolving lines of credit. The Agreement requires compliance with certain
covenants, including the maintenance of specified net worth and other financial
ratios. As of December 31, 1997, the Company was in compliance with these
covenants.
 
(6) BENEFIT PLANS
 
     The Company has an employee savings plan (the "Plan") under IRS Code
Section 401(k). The Plan allows contributions of up to 10% of a participant's
salary, a portion of which is matched in cash by the Company. The Company
contributes this amount once a year, within 120 days after December 31, the
Plan's year-end. All employees are eligible to participate in the Plan after
completing one year of service with the Company and the attainment of age 21.
Participants become fully vested after six years of service or upon attaining
age 65. The Company has incurred charges to operations of approximately
$204,000, $240,000 and $253,000 to match contributions for the years ended
December 31, 1995, 1996 and 1997, respectively.
 
     The Company has an incentive plan, the Laboratory Plan, for dental
laboratory management and other designated key employees who could directly
influence the financial performance of an individual dental laboratory.
Eligibility is determined annually for each laboratory. Each participant is
eligible to receive an amount based on the achievement of certain earnings
levels of the participant's laboratory, as defined. The Company has incurred
charges to operations of approximately $1,705,000, $1,689,000 and $1,897,000 for
the years ended December 31, 1995, 1996 and 1997, respectively, under the
Laboratory Plan.
 
     The Company has an executive bonus plan (the "Executive Incentive
Compensation Plan") for key executives and management of the Company, and a
management bonus plan (the "Managers Plan") for laboratory group managers.
Eligibility to participate in each plan is determined annually. Participants are
eligible to receive a bonus, based on a percentage of salary, dependent upon the
achievement of earnings targets, as defined. The bonus is distributed within 90
days after year-end. The Company has incurred charges to operations of
approximately $602,000, $486,000 and $592,000 for the years ended December 31,
1995, 1996 and 1997, respectively.
 
     The Company established a Supplemental Executive Retirement Plan ("SERP")
for certain key employees providing for annual benefits payable over a period of
ten years or in lump-sum beginning at age 65 or date of retirement. Benefits
will be funded by life insurance contracts purchased by the Company. The cost
 
                                      F-11
<PAGE>   25
                          NATIONAL DENTEX CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1997 -- (CONTINUED)
 
of these benefits is being charged to expense and accrued using a present value
method over the expected terms of employment. The charges to expense for the
years ended December 31, 1995, 1996 and 1997 were approximately $57,000,
$106,000 and $124,000, respectively.
 
(7)  COMMITMENTS AND CONTINGENCIES
 
  Operating Leases
 
     The Company is committed under various noncancelable operating lease
agreements covering its office space and dental laboratory facilities. Certain
of these leases also require the Company to pay maintenance, repairs, insurance
and related taxes. The total rental expense for the years ended December 31,
1995, 1996 and 1997 was approximately $760,000, $976,000 and $1,095,000,
respectively. The approximate aggregate minimum lease commitments under these
leases as of December 31, 1997 are as follows:
 
        YEAR                                                   AMOUNT
        ----                                                   ------

        1998...............................................  $1,063,000
        1999...............................................   1,003,000
        2000...............................................     875,000
        2001...............................................     813,000
        2002...............................................     742,000
        Thereafter.........................................   2,694,000
                                                             ----------
                                                             $7,190,000
                                                             ==========
 
  Employment Contracts and Change-In-Control Arrangements
 
     In April 1995 the Company entered into employment contracts and
change-in-control arrangements with certain key executives. The employment
contracts expire April 1998 and renew automatically thereafter until termination
by the Company or the executive. The change-in-control arrangements provide
certain severance benefits in the event that the executive is terminated by the
Company without cause or the executive terminates his employment contract for
certain specified reasons.
 
(8)  STOCK OPTIONS AND WARRANTS
 
  Stock Option Plans
 
     On April 24, 1991, the Company's Board of Directors (the "Board") granted a
nonqualified stock option to an officer of the Company to purchase 104,399
shares of common stock of the Company at an exercise price of $1.00 per share
(representing the fair market value at that time). The option expired five years
from the date of grant and was nontransferable. During 1995 and 1996, 95,000 and
9,399 options were exercised, respectively.
 
     In addition, an Incentive Stock Option Plan (the "ISO Plan") was adopted by
the Board in February 1983. An aggregate of 268,325 shares of the Company's
common stock had been reserved for issuance under the ISO Plan to employees of
the Company. The options are granted at the direction of the Board and may be
exercised by the individual as the options vest over a three-year period, but no
later than five years from the date of grant. In May 1992, the ISO Plan was
terminated. During 1996 the last of these options were exercised.
 
                                      F-12
<PAGE>   26
                          NATIONAL DENTEX CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1997 -- (CONTINUED)
 
     Summarized below is the option activity under the plans for the years ended
December 31, 1995, 1996 and 1997:
 
<TABLE>
<CAPTION>
                                                                     OPTIONS
                                                                   OUTSTANDING
                                                        ---------------------------------
                                                        INCENTIVE STOCK    NON-QUALIFIED
                                                          OPTION PLAN      STOCK OPTIONS
                                                        ---------------    -------------
        <S>                                             <C>                <C>
        Balance, December 31, 1994....................      179,439           104,399
             Granted..................................           --                --
             Exercised................................      (71,580)          (95,000)
             Canceled.................................       (1,305)               --
                                                           --------           -------
        Balance, December 31, 1995....................      106,554             9,399
             Granted..................................           --                --
             Exercised................................     (106,640)           (9,399)
             Canceled.................................           86                --
                                                           --------           -------
        Balance, December 31, 1996....................           --                --
                                                           --------           -------
             Granted..................................           --                --
             Exercised................................           --                --
             Canceled.................................           --                --
                                                           --------           -------
        Balance, December 31, 1997....................           --                --
                                                           ========           =======
</TABLE>
 
     In May 1992, the Board adopted the 1992 Long-Term Incentive Plan (the
"LTIP"). Under the LTIP, the Board may grant stock options, stock appreciation
rights, restricted stock, deferred stock, stock purchase rights and other
stock-based compensation to key employees, officers and directors of the
Company. In August 1995 the Board amended the LTIP to increase the number of
shares of common stock reserved for issuance under the plan from 150,000 to
235,000 and in April 1997 to 335,000. As of December 31, 1997, 320,771 options
were outstanding, at between $9.50 and $21.875 per share, the fair market value
on the dates of grant, 116,620 of which were exercisable.
 
     The following summarizes the transactions of the Company's LTIP for the
years ended December 31, 1995, 1996 and 1997:
 
<TABLE>
<CAPTION>
                                           1995                   1996                   1997
                                    -------------------    -------------------    -------------------
                                               WEIGHTED               WEIGHTED               WEIGHTED
                                               AVERAGE                AVERAGE                AVERAGE
                                               EXERCISE               EXERCISE               EXERCISE
                                     SHARES     PRICE       SHARES     PRICE       SHARES     PRICE
                                     ------    --------     ------    --------     ------    --------
<S>                                 <C>        <C>         <C>        <C>         <C>        <C>
Outstanding at beginning of
  year............................    44,000    $ 9.50      135,730    $12.35      209,302    $15.25
Granted...........................    95,115     13.59       81,210     19.80      124,960     20.38
Exercised.........................      (391)     9.50       (3,183)    10.13       (4,295)    10.64
Canceled..........................    (2,994)    10.16       (4,455)    13.56       (9,196)    16.41
                                    --------    ------     --------    ------     --------    ------
Outstanding at end of year........   135,730    $12.35      209,302    $15.25      320,771    $17.28
                                    ========    ======     ========    ======     ========    ======
Exercisable at end of year........    13,487    $ 9.50       64,924    $11.79      116,620    $13.77
Weighted average fair value of
  options granted.................  $   2.70               $   3.97               $   4.64
</TABLE>
 
     Of the options outstanding at December 31, 1997, 103,892 have exercise
prices between $9.50 and $15.00, with a weighted average price of $11.64 and a
weighted average remaining contractual life of 5.2 years. Of these options,
80,028 are exercisable at a weighted average exercise price of $11.33. The
remaining 216,879 options have exercise prices between $16.50 and $21.875, with
a weighted average exercise price of $19.98 and a weighted average remaining
contractual life of 9.1 years. Of these options 36,592 are exercisable at a
weighted average exercise price of $19.12.
 
                                      F-13
<PAGE>   27
                          NATIONAL DENTEX CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1997 -- (CONTINUED)
 
     Also, the Company has the 1992 Employees' Stock Purchase Plan (the "Stock
Purchase Plan") under which an aggregate of 100,000 shares of the Company's
common stock may be purchased, through a payroll deduction program, primarily at
a price equal to 85% of the fair market value of the common stock on either the
grant date or the exercise date, whichever is lower. The number of shares of
common stock purchased through the Stock Purchase Plan for 1995, 1996 and 1997
were 14,643, 13,634 and 12,386, respectively. The Stock Purchase Plan was
renewed with a grant date of April 1, 1997 and an exercise date of March 31,
1998.
 
     The Company accounts for the LTIP and Stock Purchase Plan under APB Opinion
No. 25 under which no compensation cost has been recognized. Had compensation
costs for these plans been determined consistent with SFAS No. 123, the
Company's net income and earnings per share would have been reduced to the
following pro forma amounts:
 
<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                 ------------------------------------
                                                    1995         1996         1997
                                                 ----------   ----------   ----------
        <S>                                      <C>          <C>          <C>
        Net Income:
             As reported.......................  $3,243,808   $3,704,926   $4,346,836
             Pro forma.........................   3,144,633    3,446,190    4,026,642
        Earnings per share -- basic:
             As reported.......................  $     1.02   $     1.09   $     1.26
             Pro forma.........................         .99         1.01         1.17
        Earnings per share -- diluted:
             As reported.......................  $      .95   $     1.06   $     1.24
             Pro forma.........................         .92          .98         1.14
</TABLE>
 
     Because the SFAS No. 123 method of accounting has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
cost may not be representative of that to be expected in future years.
 
     The fair value of each option grant under the LTIP and the Stock Purchase
Plan, is estimated as of the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions used for grants in
1995, 1996 and 1997 respectively: risk-free interest rates of between 4.92% and
5.76% for the 1995 option grants, between 4.91% and 5.98% for the 1996 option
grants and between 5.19% and 5.48% for the 1997 option grants; no expected
dividend yield for any plan year; expected lives of between one and three years
for the 1995, 1996 and 1997 option grants, based on vesting periods; expected
volatility of between 26.68% and 28.27% for 1995 option grants, between 33.19%
and 35.84% for option grants in 1996 and between 33.34% and 36.74% for option
grants in 1997.
 
  Warrants
 
     In December 1993, the Company issued warrants to the representative of the
underwriter to purchase 100,000 shares of common stock of the Company at an
exercise price of 135% of the initial offering price of $8.00, or $10.80 per
share. In January 1996, 35,806 shares of common stock of the Company were issued
in a cashless exercise of 70,000 of these warrants, leaving 30,000 outstanding.
 
                                      F-14
<PAGE>   28
                          NATIONAL DENTEX CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1997 -- (CONTINUED)
 
(9) EARNINGS PER SHARE
 
     Basic earnings per share was computed by dividing net income by the
weighted-average common shares outstanding. Diluted earnings per share was
computed by giving the effect to all dilutive potential common shares
outstanding. These shares include shares issuable upon the exercise of options
and warrants as determined by the application of the treasury stock method. The
effect of SFAS No. 128 on previously reported earnings per share data was as
follows:
 
                                                         1995       1996
                                                         -----      -----
                                                        (PER SHARE AMOUNTS)

        Primary EPS as reported........................  $ .95      $1.06
        Effect of SFAS No. 128.........................    .07        .03
                                                         -----      -----
        Basic EPS as restated..........................  $1.02      $1.09
                                                         =====      =====
        Fully diluted EPS as reported..................  $ .93      $1.06
        Effect of SFAS No. 128.........................    .02         --
                                                         -----      -----
        Diluted EPS as restated........................  $ .95      $1.06
                                                         =====      =====
 
     Options to purchase 185,789 shares of common stock at prices ranging from
$19.75 to $21.875 per share were outstanding during 1997 but were not included
in the computation of diluted EPS because the options' exercise price was
greater than the average market price of the common shares. The options, which
expire March 2006 through October 2007 were still outstanding at the end of
1997.
 
                                      F-15
<PAGE>   29
 
                                                                     SCHEDULE II
 
                          NATIONAL DENTEX CORP0RATION
 
                       VALUATION AND QUALIFYING ACCOUNTS
 
<TABLE>
<CAPTION>
                                       BALANCE
                                         AT        CHARGED TO                               BALANCE AT
                                      BEGINNING    COSTS AND                                  END OF
                                      OF PERIOD     EXPENSES     WRITE-OFFS    DEDUCTION      PERIOD
                                      ---------    ----------    ----------    ---------    ----------
<S>                                   <C>          <C>           <C>           <C>          <C>
Allowance for Doubtful Accounts:
     December 31, 1995..............  $107,099      $106,942      $ 34,045     $     --      $179,996
     December 31, 1996..............  $179,996      $ 69,124      $ 44,981     $     --      $204,139
     December 31, 1997..............  $204,139      $ 49,473      $107,936     $     --      $145,676
</TABLE>