##### 









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549


Form 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 31, 2004                                                 
|          
|or        
|          
|o          |  | 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 000-23092


NATIONAL DENTEX CORPORATION


(Exact name of registrant as specified in its charter)


|                                                                              |  |                                         
|----------------------------------------------------------------------------- |  | ----------------------------------------
|MASSACHUSETTS                                                                 |  | 04-2762050                              
|(State or Other Jurisdiction of
    Incorporation or Organization)            |  | (I.R.S. Employer
    Identification No.)
|                                                                             
|526 Boston Post Road,
    Wayland, MA(Address of Principal Executive Offices) |  | 01778(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)


þ o


þ


þ o














---



##### 



PART I




|        |         
|------- | --------
|Item 1. | Business

General




www.nationaldentex.com


Information as to Industry Segments




Description of Business






Restorative Products.


Reconstructive Products.


1



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##### 



Cosmetic Products.


Laboratory and Corporate Operations








Sales and Marketing


tm


Competition




2



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##### 







Employees




Intellectual Property


tm


Backlog






|        |           
|------- | ----------
|Item 2. | Properties



3



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##### 









|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings



PSN Illinois, LLC v. Ivoclar Vivadent, Inc.
et al




|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



PART II




|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities

Trading Market




4



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##### 





|               |  |         |        |  |          |   |        | 
|-------------- |  | ------- | ------ |  | -------- | - | ------ | 
|               |  | Price   |       
|               |  |         |       
|Quarter Ending |  | Low Bid |        |  | High Bid |  
|               |  |         |        |  |          |  
|03/31/03       |  | $       | 11.500 |  |          | $ | 13.633 | 
|06/30/03       |  | $       | 11.967 |  |          | $ | 14.333 | 
|09/30/03       |  | $       | 13.380 |  |          | $ | 16.027 | 
|12/31/03       |  | $       | 12.747 |  |          | $ | 16.267 | 
|03/31/04       |  | $       | 15.347 |  |          | $ | 18.700 | 
|06/30/04       |  | $       | 17.667 |  |          | $ | 21.087 | 
|09/30/04       |  | $       | 17.741 |  |          | $ | 20.986 | 
|12/31/04       |  | $       | 17.160 |  |          | $ | 20.573 | 





Issuer Purchases of Equity Securities


|                                        |  |              |   |  |            |                  |                     |                |                |                 |   |  |  |  |         | 
|--------------------------------------- |  | ------------ | - |  | ---------- | ---------------- | ------------------- | -------------- | -------------- | --------------- | - |  |  |  | ------- | 
|                                        |  |              |   |  |            |                  |                     | Maximum Number |               
|                                        |  |              |   |  |            | Total Number of  |                     |                | of Shares that |                
|                                        |  |              |   |  |            | Shares Purchased |                     |                | May yet Be     |                
|                                        |  | Total Number |   |  | Average    |                  | as Part of Publicly |                |                | Purchased Under |  
|                                        |  | of Shares    |   |  | Price Paid |                  | Announced Plans     |                |                | the Plans or    |  
|Fiscal Period                           |  | Purchased    |   |  | per Share  |                  | or Programs         |                |                | Programs        |  
|                                        |  |              |   |  |            |                  |                     |                |                |                 |  
|October 1, 2004 - October 31, 2004      |  |              |  |  |            | $                |                    |                |                |                 |  |  |  |  | 206,700 | 
|November 1, 2004 - November 30, 2004    |  |              |  |  |            | $                |                    |                |                |                 |  |  |  |  | 206,700 | 
|December 1, 2004 - December 31, 2004    |  |              |  |  |            | $                |                    |                |                |                 |  |  |  |  | 206,700 | 
|Total for Fourth Quarter of Fiscal 2004 |  |              |  |  |            | $                |                    |                |                |                 |  |  |  |  | 206,700 | 

5



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##### 



Stock Plan Disclosure




|          |  |                     |         |  |                     |   |                     |                     |  |  |         | 
|--------- |  | ------------------- | ------- |  | ------------------- | - | ------------------- | ------------------- |  |  | ------- | 
|          |  | Number of Shares of |         |  |                     |   |                    
|          |  | National Dentex     |         |  |                     |   | Number of Shares of |                    
|          |  | Corporation         |         |  |                     |   | National Dentex     |                    
|          |  | Common Stock to     |         |  |                     |   | Corporation         |                    
|          |  | Be Issued Upon      |         |  | Weighted Average    |   |                     | Common Stock        | 
|          |  | Exercise of         |         |  | Exercise Price of   |   |                     | Remaining Available | 
|          |  | Outstanding Options |         |  | Outstanding Options |   |                     | for Future Issuance | 
|          |  |                     |         |  |                     |   |                     |                     | 
|1992 LTIP |  |                     | 449,069 |  |                     | $ | 11.95               |                     |  |  | None    | 
|2001 Plan |  |                     | 407,350 |  |                     | $ | 14.55               |                     |  |  | 392,450 | 
|ESPP      |  |                     |        |  |                     |   |                    |                     |  |  | 70,874  | 
|          |  |                     |         |  |                     |   |                     |                     | 
|Total     |  |                     | 856,419 |  |                     | $ | 13.19               |                     |  |  | 463,324 | 
|          |  |                     |         |  |                     |   |                     |                     | 

6



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##### 





|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                              |  |      |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |         | 
|--------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - |  | - | ------- | 
|                                              |  | 2000 |        |   | 2001 |   |        | 2002 |  |   | 2003   |   |  | 2004 |       
|                                              |  |      |        |   |      |   |        |      |  |   |        |   |  |      |       
|Consolidated Statements of Income:            |  |      |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |         | 
|Net sales                                     |  | $    | 75,680 |   |      | $ | 85,725 |      |  | $ | 95,185 |   |  | $    | 99,274 |   |  | $ | 111,753 | 
|Cost of goods sold                            |  |      | 44,203 |   |      |   | 50,278 |      |  |   | 56,196 |   |  |      | 59,534 |   |  |   | 66,953  | 
|                                              |  |      |        |   |      |   |        |      |  |   |        |   |  |      |       
|Gross profit                                  |  |      | 31,477 |   |      |   | 35,447 |      |  |   | 38,989 |   |  |      | 39,740 |   |  |   | 44,800  | 
|Selling, general & administrative expenses    |  |      | 22,133 |   |      |   | 25,631 |      |  |   | 29,332 |   |  |      | 30,102 |   |  |   | 35,755  | 
|                                              |  |      |        |   |      |   |        |      |  |   |        |   |  |      |       
|Operating income                              |  |      | 9,344  |   |      |   | 9,816  |      |  |   | 9,657  |   |  |      | 9,638  |   |  |   | 9,045   | 
|Other expense                                 |  |      | 83     |   |      |   | 128    |      |  |   | 211    |   |  |      | 296    |   |  |   | 404     | 
|Interest (income) expense                     |  |      | (568   | ) |      |   | (229   | )    |  |   | (80    | ) |  |      | (21    | ) |  |   | 42      | 
|                                              |  |      |        |   |      |   |        |      |  |   |        |   |  |      |       
|Income before provision for income taxes      |  |      | 9,829  |   |      |   | 9,917  |      |  |   | 9,526  |   |  |      | 9,363  |   |  |   | 8,598   | 
|Provision for income taxes                    |  |      | 3,868  |   |      |   | 3,939  |      |  |   | 3,644  |   |  |      | 3,606  |   |  |   | 3,439   | 
|                                              |  |      |        |   |      |   |        |      |  |   |        |   |  |      |       
|Net income                                    |  | $    | 5,961  |   |      | $ | 5,978  |      |  | $ | 5,882  |   |  | $    | 5,757  |   |  | $ | 5,159   | 
|                                              |  |      |        |   |      |   |        |      |  |   |        |   |  |      |       
|Net income per share  basic                  |  | $    | 1.11   |   |      | $ | 1.15   |      |  | $ | 1.13   |   |  | $    | 1.12   |   |  | $ | 0.99    | 
|                                              |  |      |        |   |      |   |        |      |  |   |        |   |  |      |       
|Net income per share  diluted                |  | $    | 1.10   |   |      | $ | 1.12   |      |  | $ | 1.10   |   |  | $    | 1.10   |   |  | $ | 0.94    | 
|                                              |  |      |        |   |      |   |        |      |  |   |        |   |  |      |       
|Weighted average shares outstanding  basic   |  |      | 5,354  |   |      |   | 5,219  |      |  |   | 5,187  |   |  |      | 5,131  |   |  |   | 5,187   | 
|Weighted average shares outstanding  diluted |  |      | 5,402  |   |      |   | 5,343  |      |  |   | 5,330  |   |  |      | 5,216  |   |  |   | 5,465   | 
|                                             
|Consolidated Balance Sheet Data:              |  |      |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |         | 
|Working capital                               |  | $    | 19,455 |   |      | $ | 15,060 |      |  | $ | 15,499 |   |  | $    | 12,252 |   |  | $ | 13,750  | 
|Total assets                                  |  |      | 55,390 |   |      |   | 62,083 |      |  |   | 65,817 |   |  |      | 73,989 |   |  |   | 81,831  | 
|Long-term debt, including current portion     |  |      |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        | 
|Stockholders equity                          |  | $    | 45,596 |   |      | $ | 49,027 |      |  | $ | 53,946 |   |  | $    | 60,140 |   |  | $ | 66,883  | 

7



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##### 





|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

The following discussion should be read in conjunction with
the Consolidated Financial Statements


and the related notes that appear elsewhere in this
document




| |         
| | --------
| | Overview





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Restorative products that are permanently affixed by a dentist
    to a patients existing dental anatomy, including
    traditional porcelain fused to metal crowns and bridges and
    dental implants.                                                                                                                                                                                                                                                                                                                                           
|
| |  | Reconstructive products that are removable prostheses that
    replace missing teeth and associated structures, including
    partial and full dentures.                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Cosmetic products that consist primarily of porcelain veneers
    designed to enhance the appearance of the front of a tooth as
    well as all ceramic crowns that are made without a traditional
    metal substructure and more closely replicates the appearance of
    natural teeth. This category also includes 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.









8



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##### 







| |                                
| | -------------------------------
| | Liquidity and Capital Resources



,












9



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##### 



Commitments and Contingencies




|                                     |             |                        |           |            |            |   |           |             |              |  |             |           |           |         |   |           |           |  |   |           |           | 
|------------------------------------ | ----------- | ---------------------- | --------- | ---------- | ---------- | - | --------- | ----------- | ------------ |  | ----------- | --------- | --------- | ------- | - | --------- | --------- |  | - | --------- | --------- | 
|                                     |             | Payments Due By Period |          
|                                     |             |                        |          
|                                     |             |                        |           | Less Than  |            |   |           |             | Greater Than | 
|                                     |             | Total                  |           |            | 1 Year     |   |           | 1 - 3 Years |              |  | 4 - 5 Years |           |           | 5 Years |  
|                                     |             |                        |           |            |            |   |           |             |              |  |             |           |           |         |  
|Bank Line of Credit                  |             | $                      | 2,000,000 |            |            | $ | 2,000,000 |             |              |  |            |           |           |         |  |           |           |  |  |          
|Operating Leases:                    |             |                        |           |            |            |   |           |             |              |  |             |           |           |         |   |           |           |  |   |          
|                                     | Real Estate |                        |           | 11,093,000 |            |   |           | 2,186,000   |              |  | $           | 4,664,000 |           |         | $ | 1,711,000 |           |  | $ | 2,532,000 |          
|                                     | Vehicles    |                        |           | 876,000    |            |   |           | 585,000     |              |  |             | 291,000   |           |         |   |          |           |  |   |          |          
|                                     | Equipment   |                        |           | 88,000     |            |   |           | 57,000      |              |  |             | 30,000    |           |         |   | 1,000     |           |  |   |          |          
|Laboratory Purchase Obligations      |             |                        | 857,000   |            |            |   | 745,000   |             |              |  | 112,000     |           |           |         |  |           |           |  |  |          
|Contingent Laboratory Purchase Price |             |                        | 3,204,000 |            |            |   | 1,502,000 |             |              |  | 1,702,000   |           |           |         |  |           |           |  |  |          
|                                     |             |                        |           |            |            |   |           |             |              |  |             |           |           |         |  
|                                     |             | TOTAL                  |           | $          | 18,118,000 |   |           | $           | 7,075,000    |  |             | $         | 6,799,000 |         |   | $         | 1,712,000 |  |   | $         | 2,532,000 | 
|                                     |             |                        |           |            |            |   |           |             |              |  |             |           |           |         |  





10



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##### 



Results of Operations




|                                             |  |                          |       |   |      |  |       |      |  |  |       |  
|-------------------------------------------- |  | ------------------------ | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                                             |  | Years Ended December 31, |      
|                                             |  |                          |      
|                                             |  | 2002                     |       |   | 2003 |  |       | 2004 | 
|                                             |  |                          |       |   |      |  |       |      | 
|Net sales                                    |  |                          | 100.0 | % |      |  | 100.0 | %    |  |  | 100.0 | %
|Cost of goods sold                           |  |                          | 59.0  |   |      |  | 60.0  |      |  |  | 59.9  |  
|                                             |  |                          |       |   |      |  |       |      | 
|Gross profit                                 |  |                          | 41.0  |   |      |  | 40.0  |      |  |  | 40.1  |  
|Selling, general and administrative expenses |  |                          | 30.9  |   |      |  | 30.3  |      |  |  | 32.0  |  
|                                             |  |                          |       |   |      |  |       |      | 
|Operating income                             |  |                          | 10.1  |   |      |  | 9.7   |      |  |  | 8.1   |  
|Other expense                                |  |                          | 0.2   |   |      |  | 0.3   |      |  |  | 0.4   |  
|Interest income                              |  |                          | 0.1   |   |      |  | 0.0   |      |  |  | 0.0   |  
|                                             |  |                          |       |   |      |  |       |      | 
|Income before provision for income taxes     |  |                          | 10.0  |   |      |  | 9.4   |      |  |  | 7.7   |  
|Provision for income taxes                   |  |                          | 3.8   |   |      |  | 3.6   |      |  |  | 3.1   |  
|                                             |  |                          |       |   |      |  |       |      | 
|Net income                                   |  |                          | 6.2   | % |      |  | 5.8   | %    |  |  | 4.6   | %
|                                             |  |                          |       |   |      |  |       |      | 



| |                                                                            
| | ---------------------------------------------------------------------------
| | Year Ended December 31, 2004 Compared with Year Ended
    December 31, 2003



| |          
| | ---------
| | Net Sales





| |                   
| | ------------------
| | Cost of Goods Sold





| |                                             
| | --------------------------------------------
| | Selling, General and Administrative Expenses





11



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##### 



tm $ $




| |                 
| | ----------------
| | Operating Income





| |                 
| | ----------------
| | Interest Expense





| |                           
| | --------------------------
| | Provision for Income Taxes





| |           
| | ----------
| | Net Income





| |                                                                            
| | ---------------------------------------------------------------------------
| | Year Ended December 31, 2003 Compared with Year Ended
    December 31, 2002



| |          
| | ---------
| | Net Sales





| |                   
| | ------------------
| | Cost of Goods Sold





| |                                             
| | --------------------------------------------
| | Selling, General and Administrative Expenses



12



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##### 



tm




| |                 
| | ----------------
| | Operating Income





| |                
| | ---------------
| | Interest Income





| |                           
| | --------------------------
| | Provision for Income Taxes





| |           
| | ----------
| | Net Income



Critical Accounting Policies




Summary of Significant Accounting Policies




| |                    
| | -------------------
| | Revenue Recognition





| |                                            
| | -------------------------------------------
| | Revised Classification of Intangible Assets



13



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##### 



Goodwill and Other Intangible Assets Recognition of
Customer Relationship Intangible Assets Acquired in a Business
Combination








| |                                                                                      
| | -------------------------------------------------------------------------------------
| | Goodwill and Other Indefinite-Lived Intangible Assets Not
    Subject to Amortization







| |                                          
| | -----------------------------------------
| | Intangible Assets Subject to Amortization



14



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##### 







| |            
| | -----------
| | Inventories





| |                              
| | -----------------------------
| | Property, Plant and Equipment



|                       |  |  |               | 
|---------------------- |  |  | ------------- | 
|Buildings              |  |  | 25 years      | 
|Furniture and fixtures |  |  | 5 - 10  years | 
|Laboratory equipment   |  |  | 5 - 20  years | 
|Computer equipment     |  |  | 3 - 5  years  | 









| |                                
| | -------------------------------
| | Impairment of Long-Lived Assets





| |                                 
| | --------------------------------
| | Cash Surrender of Life Insurance





| |             
| | ------------
| | Income Taxes



15



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##### 





| |                         
| | ------------------------
| | Stock-Based Compensation





| |                                 
| | --------------------------------
| | Recent Accounting Pronouncements





Forward-Looking Statements and Risk Factors






| |   |                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------
| |  | general economic conditions (particularly those affecting
    consumer choices over whether and when to undergo dental work);
|
| |  | the availability of laboratories for purchase;                                                                               
|
| |  | our ability to acquire and successfully operate additional
    laboratories;                                                 
|
| |  | new dental technology;                                                                                                       
|
| |  | developing economies such as China as well as other global
    competition;                                                  

16



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##### 





| |   |                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | governmental regulation of health care;                                                                                                                                          
|
| |  | trends in the dental industry towards managed care;                                                                                                                              
|
| |  | other factors affecting patient visits to our clients;                                                                                                                           
|
| |  | increases in labor, benefits and materials costs;                                                                                                                                
|
| |  | product development risks;                                                                                                                                                       
|
| |  | technological innovations;                                                                                                                                                       
|
| |  | compliance with evolving federal securities, accounting, and
    marketplace rules and regulations applicable to publicly-traded
    companies on the Nasdaq National Market; and
|
| |  | other risks indicated from time to time in our filings with the
    Securities and Exchange Commission.                                                                          



|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market
    Risk





|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

Quarterly Results




|                             |  |                                              |        |   |          |   |        |           |  |            |          |   |            |           |        |            |          |   |        |           |  |   |          |   |  |   |        |   |  |   |        |  
|---------------------------- |  | -------------------------------------------- | ------ | - | -------- | - | ------ | --------- |  | ---------- | -------- | - | ---------- | --------- | ------ | ---------- | -------- | - | ------ | --------- |  | - | -------- | - |  | - | ------ | - |  | - | ------ | -
|                             |  | Three Months Ended                           |       
|                             |  |                                              |       
|                             |  | March 31,                                    |        |   | June 30, |   |        | Sept. 30, |  |            | Dec. 31, |   |            | March 31, |        |            | June 30, |   |        | Sept. 30, |  |   | Dec. 31, |  
|                             |  | 2003                                         |        |   | 2003     |   |        | 2003      |  |            | 2003     |   |            | 2004      |        |            | 2004     |   |        | 2004      |  |   | 2004     |  
|                             |  |                                              |        |   |          |   |        |           |  |            |          |   |            |           |        |            |          |   |        |           |  |   |          |  
|                             |  |                                              |        |   |          |   |        |           |  | (Restated) |          |   | (Restated) |           |        | (Restated) |          |   |       
|                             |  | (Dollars in thousands except per share data) |        |   |         
|Net sales                    |  | $                                            | 23,965 |   |          | $ | 25,182 |           |  | $          | 24,357   |   |            | $         | 25,769 |            |          | $ | 27,928 |           |  | $ | 28,831   |   |  | $ | 27,395 |   |  | $ | 27,599 |  
|Gross profit                 |  | $                                            | 9,555  |   |          | $ | 10,305 |           |  | $          | 9,569    |   |            | $         | 10,310 |            |          | $ | 11,598 |           |  | $ | 12,002   |   |  | $ | 10,660 |   |  | $ | 10,540 |  
|Gross margin                 |  |                                              | 39.9   | % |          |   | 40.9   | %         |  |            | 39.3     | % |            |           | 40.0   | %          |          |   | 41.5   | %         |  |   | 41.6     | % |  |   | 38.9   | % |  |   | 38.2   | %
|Operating income             |  | $                                            | 2,211  |   |          | $ | 2,778  |           |  | $          | 1,989    |   |            | $         | 2,660  |            |          | $ | 2,713  |           |  | $ | 3,485    |   |  | $ | 1,682  |   |  | $ | 1,165  |  
|Operating margin             |  |                                              | 9.2    | % |          |   | 11.0   | %         |  |            | 8.2      | % |            |           | 10.3   | %          |          |   | 9.7    | %         |  |   | 12.1     | % |  |   | 6.1    | % |  |   | 4.2    | %
|Net income                   |  | $                                            | 1,332  |   |          | $ | 1,650  |           |  | $          | 1,277    |   |            | $         | 1,498  |            |          | $ | 1,581  |           |  | $ | 2,022    |   |  | $ | 935    |   |  | $ | 621    |  
|Net income per diluted share |  | $                                            | 0.26   |   |          | $ | 0.32   |           |  | $          | 0.24     |   |            | $         | 0.28   |            |          | $ | 0.29   |           |  | $ | 0.37     |   |  | $ | 0.17   |   |  | $ | 0.11   |  





17



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##### 





Location of Financial Statements






|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure







|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls
and Procedures




Managements Report on Internal Control over Financial
Reporting


Internal Control  Integrated
Framework




18



---



##### 



Managements Consideration of the Restatement




Changes in Internal Control over Financial Reporting






|         |                  
|-------- | -----------------
|Item 9B. | Other Information



PART III




|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant

Directors.


|                   |  |     |    |  |             |                                                
|------------------ |  | --- | -- |  | ----------- | -----------------------------------------------
|Director Name      |  | Age |    |  | Office Held
|                   |  |     |    |  |            
|David V. Harkins   |  |     | 64 |  |             | Chairman of the Board and Director             
|David L. Brown     |  |     | 64 |  |             | President, Chief Executive Officer and Director
|Jack R. Crosby     |  |     | 78 |  |             | Director                                       
|Norman F. Strate   |  |     | 64 |  |             | Director                                       
|Thomas E. Callahan |  |     | 65 |  |             | Director                                       

Mr. Harkins


19



---



##### 





Mr. Brown


Mr. Crosby


Mr. Strate


Mr. Callahan




| |                      
| | ---------------------
| | Director Independence





| |                        
| | -----------------------
| | Board Committee Matters





20



---



##### 



Executive Officers.


|                       |  |     |    |  |              |                                                                             |                   |  |      | 
|---------------------- |  | --- | -- |  | ------------ | --------------------------------------------------------------------------- | ----------------- |  | ---- | 
|                       |  |     |    |  |              | First Year as an                                                            |                  
|Name                   |  | Age |    |  | Offices Held |                                                                             | Executive Officer | 
|                       |  |     |    |  |              |                                                                             |                   | 
|David L. Brown         |  |     | 64 |  |              | President, Chief Executive Officer, and Director                            |                   |  | 1984 | 
|Donald E. Merz         |  |     | 66 |  |              | Senior Vice President                                                       |                   |  | 1987 | 
|Richard F. Becker, Jr. |  |     | 52 |  |              | Vice President  Treasurer, Chief Financial Officer
    and Assistant Clerk |                   |  | 1990 | 
|James F. Dodd, III     |  |     | 65 |  |              | Vice President  Business Development                                       |                   |  | 1993 | 
|Richard G. Mariacher   |  |     | 60 |  |              | Vice President  Technical Services                                         |                   |  | 1982 | 
|Arthur B. Champagne    |  |     | 64 |  |              | Group Vice President                                                        |                   |  | 1986 | 
|Lynn D. Dine           |  |     | 53 |  |              | Vice President  Research & Development                                     |                   |  | 2003 | 
|Wayne M. Coll          |  |     | 41 |  |              | Corporate Controller & Assistant Treasurer                                  |                   |  | 2003 | 

Mr. Browns


Mr. Merz


Mr. Becker


Mr. Mariacher


Mr. Champagne


Mr. Dodd


Mr. Dine


Mr. Coll


21



---



##### 





| |                                                            
| | -----------------------------------------------------------
| | Section 16(a) Beneficial Ownership Reporting
    Compliance





|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

Summary Compensation Table


|                                      |  |                     |      |  |            |   |         |                        |  |   |         |  |  |     |        |  |  |  |         | 
|------------------------------------- |  | ------------------- | ---- |  | ---------- | - | ------- | ---------------------- |  | - | ------- |  |  | --- | ------ |  |  |  | ------- | 
|                                      |  |                     |      |  |            |   |         | Long-Term Compensation | 
|                                      |  |                     |      |  |           
|                                      |  | Annual Compensation |      |  | Securities |   |         | All Other              | 
|                                      |  |                     |      |  | Underlying |   |         | Compensation           | 
|Name and Principal Position           |  | Year                |      |  | Salary     |   |         | Bonus(1)               |  |   | Options |  |  | (2) |       
|                                      |  |                     |      |  |            |   |         |                        |  |   |         |  |  |     |       
|David L. Brown                        |  |                     | 2004 |  |            | $ | 300,000 |                        |  | $ | 65,000  |  |  |     |       |  |  |  | 173,063 | 
|President and Chief Executive Officer |  |                     | 2003 |  |            |   | 273,385 |                        |  |   | 65,000  |  |  |     | 8,000  |  |  |  | 172,064 | 
|                                      |  |                     | 2002 |  |            |   | 215,000 |                        |  |   | 75,000  |  |  |     | 12,000 |  |  |  | 171,814 | 
|Donald E. Merz                        |  |                     | 2004 |  |            |   | 175,000 |                        |  |   | 72,355  |  |  |     |       |  |  |  | 29,391  | 
|Senior Vice President                 |  |                     | 2003 |  |            |   | 169,192 |                        |  |   | 70,812  |  |  |     | 8,000  |  |  |  | 28,540  | 
|                                      |  |                     | 2002 |  |            |   | 140,000 |                        |  |   | 93,193  |  |  |     | 12,000 |  |  |  | 28,290  | 
|Richard F. Becker, Jr.                |  |                     | 2004 |  |            |   | 175,000 |                        |  |   | 40,000  |  |  |     |       |  |  |  | 11,418  | 
|Vice President, Treasurer             |  |                     | 2003 |  |            |   | 159,462 |                        |  |   | 35,000  |  |  |     | 8,000  |  |  |  | 10,416  | 
|and Chief Financial Officer           |  |                     | 2002 |  |            |   | 140,000 |                        |  |   | 30,000  |  |  |     | 12,000 |  |  |  | 10,166  | 
|James F. Dodd, III                    |  |                     | 2004 |  |            |   | 175,000 |                        |  |   | 35,000  |  |  |     |       |  |  |  | 86,000  | 
|Vice President  Business Development |  |                     | 2003 |  |            |   | 159,462 |                        |  |   | 35,000  |  |  |     | 8,000  |  |  |  | 85,000  | 
|                                      |  |                     | 2002 |  |            |   | 140,000 |                        |  |   | 30,000  |  |  |     | 12,000 |  |  |  | 84,750  | 
|Arthur B. Champagne                   |  |                     | 2004 |  |            |   | 157,500 |                        |  |   | 40,526  |  |  |     |       |  |  |  | 20,974  | 
|Group Vice President                  |  |                     | 2003 |  |            |   | 149,327 |                        |  |   | 33,997  |  |  |     | 8,000  |  |  |  | 19,972  | 
|                                      |  |                     | 2002 |  |            |   | 125,000 |                        |  |   | 51,127  |  |  |     | 12,000 |  |  |  | 19,722  | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Paid for services rendered in 2002, 2003 and 2004 to all of the
    officers named above under the Corporate Executives Incentive
    Compensation Plan and as to Messrs. Merz and Champagne
    under the National Dentex Laboratory Incentive Compensation Plan
    for 2002, 2003 and 2004.                                                                                                                                                                                                         
|   
|(2) | Represents the portion of life insurance premiums we pay to fund
    our Supplemental Executive Retirement Plan. Also includes our
    matching contribution for the account of the officers named
    above under the National Dentex Dollars Plus Plan, a plan
    qualified under Section 401(k) of the Internal Revenue Code
    of 1986, as amended. The matching contribution is 100% of the
    first 1% of salary contributed by the employee and 50% of the
    next 3% of salary contributed.



| |                        
| | -----------------------
| | Options Granted in 2004



22



---



##### 





| |                                    
| | -----------------------------------
| | Option Exercises and Year-End Value



|                       |  |          |   |  |          |   |                            |                      |  |                       |         |  |             |  |        |               |  |   |           |  |  |   |        | 
|---------------------- |  | -------- | - |  | -------- | - | -------------------------- | -------------------- |  | --------------------- | ------- |  | ----------- |  | ------ | ------------- |  | - | --------- |  |  | - | ------ | 
|                       |  |          |   |  |          |   |                            | Value of Unexercised | 
|                       |  | Stock    |   |  |          |   | Number of Unexercised      |                      |  | In-the-Money Options  |        
|                       |  | Acquired |   |  | Value    |   | Options at Fiscal Year-End |                      |  | at Fiscal Year-End(2) |        
|                       |  | on       |   |  | Realized |   |                            |                      |  |                       |        
|Name                   |  | Exercise |   |  | (1)      |   | Exercisable                |                      |  | Unexercisable         |         |  | Exercisable |  |        | Unexercisable | 
|                       |  |          |   |  |          |   |                            |                      |  |                       |         |  |             |  |        |               | 
|David L. Brown         |  |          |  |  |          | $ |                           |                      |  |                       | 202,750 |  |             |  | 14,000 |               |  | $ | 1,412,021 |  |  | $ | 78,546 | 
|Donald E. Merz         |  |          |  |  |          |   |                           |                      |  |                       | 74,500  |  |             |  | 14,000 |               |  |   | 555,818   |  |  |   | 78,546 | 
|Richard F. Becker, Jr. |  |          |  |  |          |   |                           |                      |  |                       | 52,000  |  |             |  | 14,000 |               |  |   | 374,943   |  |  |   | 78,546 | 
|James F. Dodd, III     |  |          |  |  |          |   |                           |                      |  |                       | 42,250  |  |             |  | 14,000 |               |  |   | 282,143   |  |  |   | 78,546 | 
|Arthur B. Champagne    |  |          |  |  |          |   |                           |                      |  |                       | 46,750  |  |             |  | 14,000 |               |  |   | 319,493   |  |  |   | 78,546 | 






|    |                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The value realized upon the exercise of an option is determined
    by multiplying the number of options exercised by the difference
    between the market price of the common stock on the date of
    exercise of the options and the exercise price of the options
    exercised.                                                                   
|   
|(2) | The value of unexercised in-the-money options at the end of
    fiscal year 2004 is determined by multiplying the number of
    options held by the difference between the market price of the
    common stock underlying the options on December 31, 2004
    ($20.30 per share, on a split-adjusted basis) and the
    exercise price of the options.



| |                                                            
| | -----------------------------------------------------------
| | Employment Contracts and Change-in-Control
    Arrangements





23



---



##### 





|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Shareholder Matters





| |   |                                                                                   
| | - | ----------------------------------------------------------------------------------
| |  | each nominee for director;                                                        
|
| |  | each executive officer shown in the summary compensation table
    below;         
|
| |  | all executive officers and directors as a group; and                              
|
| |  | each person who we believe beneficially owns more than 5% of our
    common stock.

|                                                                    |                               |                     |         |               |                       |  |      |   | 
|------------------------------------------------------------------- | ----------------------------- | ------------------- | ------- | ------------- | --------------------- |  | ---- | - | 
|                                                                    |                               |                     |         | Percentage of |                      
|Name                                                                |                               | Number of Shares(1) |         |               | Outstanding Shares(2) | 
|                                                                    |                               |                     |         |               |                       | 
|David V. Harkins*                                                   |                               |                     | 46,452  |               |                       |  | 0.9  | %
|Jack R. Crosby*                                                     |                               |                     | 3,154   |               |                       |  | 0.1  |  
|Norman F. Strate*                                                   |                               |                     | 8,841   |               |                       |  | 0.2  |  
|Thomas E. Callahan*                                                 |                               |                     | 790     |               |                       |  | **   |  
|David L. Brown(3)*+                                                 |                               |                     | 234,851 |               |                       |  | 4.2  |  
|Donald E. Merz(4)+                                                  |                               |                     | 98,532  |               |                       |  | 1.8  |  
|Richard F. Becker, Jr.(5)+                                          |                               |                     | 76,775  |               |                       |  | 1.4  |  
|James F. Dodd III(6)+                                               |                               |                     | 59,750  |               |                       |  | 1.1  |  
|Arthur B. Champagne(7)+                                             |                               |                     | 56,780  |               |                       |  | 1.1  |  
|Daniel A. Grady(8)                                                  |                               |                     | 4,452   |               |                       |  | 0.1  |  
|All executive officers and directors as a group
    (14 persons)(9) |                               |                     | 689,959 |               |                       |  | 11.8 |  
|Artisan Partners Limited Partnership(10)                            |                               |                     | 596,101 |               |                       |  | 11.2 |  
|                                                                    | 825 East Wisconsin Ave., #800 |                     |         |               |                       |  |      |   | 
|                                                                    | Milwaukee, WI 53202           |                     |         |               |                       |  |      |   | 
|FMR Corp.(10)                                                       |                               |                     | 522,000 |               |                       |  | 9.8  |  
|                                                                    | 82 Devonshire Street          |                     |         |               |                       |  |      |   | 
|                                                                    | Boston, MA 02109              |                     |         |               |                       |  |      |   | 
|Royce & Associates, L.L.C.(10)                                      |                               |                     | 379,500 |               |                       |  | 7.1  |  
|                                                                    | 1414 Avenue of the Americas   |                     |         |               |                       |  |      |   | 
|                                                                    | New York, NY 10019            |                     |         |               |                       |  |      |   | 






| |   |                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | Nominee for re-election as a director. The address of this
    person is c/o National Dentex Corporation, 526 Boston Post
    Road, Wayland, MA 01778.



| |    |               
| | -- | --------------
| | ** | Less than 0.1%



| |   |                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------
| | + | Executive officer. The address of this person is
    c/o National Dentex Corporation, 526 Boston Post Road,
    Wayland, MA 01778.



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | The number of shares beneficially owned by each entity, person,
    director or named executive officer is determined under
    applicable SEC rules, particularly Rule 13d-3, and the
    information is not necessarily indicative of beneficial
    ownership for any other purposes. Under such rules, each entity
    or individual is considered the beneficial owner of any shares
    as to which they have the sole or shared voting power or
    investment power. Such persons are also deemed under the same
    rules to beneficially own any shares that they have the right to
    acquire within 60 days of May 2, 2005, through the
    exercise of stock options or other similar rights. This stock
    ownership information is based upon information furnished to us
    by the persons named on the table.
|
| | (2) | Ownership percentage is reported based on 5,326,415 shares
    of common stock outstanding on May 2, 2005, plus, as to
    each holder thereof and no other person, the number of shares
    (if any) that such person                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

24



---



##### 



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | has the right to acquire within 60 days of May 2,
    2005, through the exercise of stock options or other similar
    rights.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (3) | Mr. Brown owns 26,101 shares and holds options for
    212,250 shares, of which 208,250 are exercisable within
    60 days of May 2, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | (4) | Mr. Merz owns 14,032 shares and holds options for
    88,500 shares, of which 84,500 are exercisable within
    60 days of May 2, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (5) | Mr. Becker owns 14,775 shares and holds options for
    66,000 shares, of which 62,000 are exercisable within
    60 days of May 2, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (6) | Mr. Dodd owns 7,500 shares and holds options for
    56,250 shares, of which 52,250 are exercisable within
    60 days of May 2, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (7) | Mr. Champagne owns 12,750 shares, is deemed under
    applicable SEC rules to beneficially own 30 shares held by
    his wife and holds options for 48,000 shares, of which
    44,000 are exercisable within 60 days of May 2, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (8) | Mr. Grady resigned as a director effective as of
    December 31, 2004. He resigned due to the imposition of new
    independence criteria applicable to our independent auditors,
    PricewaterhouseCoopers LLP (PwC). In late 2003,
    Mr. Gradys son was named a partner in PwCs
    Hartford, Connecticut office. Effective January 2005,
    Mr. Gradys son was to be relocated to PwCs
    Boston office. As a result of this relocation, PwC advised us
    and Mr. Grady that, owing to various independence criteria
    applicable to independent auditors and related corporate
    governance issues, it would not be able to continue to serve as
    our independent auditors if Mr. Grady continued his service
    on our Board of Directors beyond December 31, 2004. Not
    wanting to jeopardize our existing relationship with PwC,
    Mr. Grady informed us that he was submitting his
    resignation from our Board of Directors effective
    December 31, 2004.
|
| | (9) | Certain executive officers, other than the executive officers
    named in the table, own a total of 12,762 shares and hold
    options for 92,850 shares, of which 86,850 are exercisable
    within 60 days of May 2, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



|     |                                                                                                                                                                              
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Information as to the number of shares is as of
    December 31, 2004 and is furnished in reliance on the most
    recently filed Schedule 13G of the named beneficial owner.



|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions





|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



Fees to Independent Auditors for Fiscal 2003 and 2004




|                   |  |      |        |  |      |   |         | 
|------------------ |  | ---- | ------ |  | ---- | - | ------- | 
|                   |  | 2003 |        |  | 2004 |  
|                   |  |      |        |  |      |  
|Audit fees         |  | $    | 97,500 |  |      | $ | 410,000 | 
|Audit-Related fees |  |      | 20,600 |  |      |   | 43,100  | 
|Tax fees           |  |      | 17,000 |  |      |   | 25,300  | 
|All other fees     |  |      |       |  |      |   | 1,200   | 

25



---



##### 



PART IV




|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

Financial Statements and Schedules.








List of Financial Statements and Schedules Referenced in this
Item 15




|                                                                                                                      |  |      |     | 
|--------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                      |  | Page |    
|                                                                                                                      |  |      |    
|Report of Independent Registered Public Accounting
    Firm  PricewaterhouseCoopers LLP                              |  |      | F-2 | 
|Consolidated Balance Sheets as of December 31, 2003 and 2004                                                          |  |      | F-4 | 
|Consolidated Statements of Income for each of the three years in
    the period ended December 31, 2004               |  |      | F-5 | 
|Consolidated Statements of Stockholders Equity for each of
    the three years in the period ended December 31, 2004 |  |      | F-6 | 
|Consolidated Statements of Cash Flows for each of the three
    years in the period ended December 31, 2004           |  |      | F-7 | 
|Notes to Consolidated Financial Statements                                                                            |  |      | F-8 | 



| |                                                
| | -----------------------------------------------
| | Financial Statement Schedule included herewith:



Exhibits.




26



---



##### 










NATIONAL DENTEX CORPORATION


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE


|                                                                                                              |                                                                                                                           |      |  |     | 
|------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ---- |  | --- | 
|                                                                                                              |                                                                                                                           | Page | 
|                                                                                                              |                                                                                                                           |      | 
|Financial Statements:                                                                                         |                                                                                                                           |      |  |    
|The consolidated financial statements of National Dentex
    Corporation included herein are as listed below: |                                                                                                                           |      |  |    
|                                                                                                              | Report of Independent Registered Public
    Accounting Firm  PricewaterhouseCoopers LLP                                  |      |  | F-2 | 
|                                                                                                              | Consolidated Balance Sheets as of
    December 31, 2003 and 2004                                                          |      |  | F-4 | 
|                                                                                                              | Consolidated Statements of Income for each
    of the three years in the period ended December 31, 2004                   |      |  | F-5 | 
|                                                                                                              | Consolidated Statements of
    Stockholders Equity for each of the three years in the
    period ended December 31, 2004 |      |  | F-6 | 
|                                                                                                              | Consolidated Statements of Cash Flows for
    each of the three years in the period ended December 31,
    2004           |      |  | F-7 | 
|                                                                                                              | Notes to Consolidated Financial
    Statements                                                                            |      |  | F-8 | 



F-1



---



##### 






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






Consolidated financial statements




Internal control over financial reporting


Internal Control  Integrated Framework Internal Control 
Integrated Framework




F-2



---



##### 













F-3



---



##### 



NATIONAL DENTEX CORPORATION





CONSOLIDATED BALANCE SHEETS


|                                       |                                                                                                              |                                                                                                       |              |            |              |            |            |            |            |            | 
|-------------------------------------- | ------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------- | ------------ | ---------- | ------------ | ---------- | ---------- | ---------- | ---------- | ---------- | 
|                                       |                                                                                                              | December 31,                                                                                          |              |            | December 31, |           
|                                       |                                                                                                              | 2003                                                                                                  |              |            | 2004         |           
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|ASSETS                                
|CURRENT ASSETS:                        |                                                                                                              |                                                                                                       |              |            |              |            |            |           
|                                       | Cash and cash equivalents                                                                                    |                                                                                                       | $            | 1,835,471  |              |            | $          | 2,215,742  |           
|                                       | Accounts receivable:                                                                                         |                                                                                                       |              |            |              |            |            |            |           
|                                       |                                                                                                              | Trade, less allowance of $313,000 in 2003 and $181,000 in 2004                                        |              |            | 11,497,927   |            |            |            | 12,299,033 |           
|                                       |                                                                                                              | Other                                                                                                 |              |            | 416,093      |            |            |            | 692,910    |           
|                                       | Inventories, net                                                                                             |                                                                                                       |              | 5,996,483  |              |            |            | 5,838,898  |           
|                                       | Prepaid expenses                                                                                             |                                                                                                       |              | 1,702,632  |              |            |            | 2,479,939  |           
|                                       | Deferred tax asset                                                                                           |                                                                                                       |              | 481,539    |              |            |            |           |           
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|                                       |                                                                                                              | Total current assets                                                                                  |              |            | 21,930,145   |            |            |            | 23,526,522 |           
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|PROPERTY, PLANT AND EQUIPMENT:         |                                                                                                              |                                                                                                       |              |            |              |            |            |           
|                                       | Land and buildings                                                                                           |                                                                                                       |              | 4,620,571  |              |            |            | 6,672,945  |           
|                                       | Leasehold and building improvements                                                                          |                                                                                                       |              | 6,953,659  |              |            |            | 7,217,877  |           
|                                       | Laboratory equipment                                                                                         |                                                                                                       |              | 11,328,266 |              |            |            | 12,265,565 |           
|                                       | Furniture and fixtures                                                                                       |                                                                                                       |              | 4,617,170  |              |            |            | 5,056,849  |           
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|                                       |                                                                                                              |                                                                                                       | 27,519,666   |            |              |            | 31,213,236 |           
|                                       |                                                                                                              | Less  Accumulated depreciation and amortization                                                      |              |            | 14,169,829   |            |            |            | 16,027,568 |           
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|                                       |                                                                                                              | Net property, plant and equipment                                                                     |              |            | 13,349,837   |            |            |            | 15,185,668 |           
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|OTHER ASSETS, net:                     |                                                                                                              |                                                                                                       |              |            |              |            |            |           
|                                       | Goodwill                                                                                                     |                                                                                                       |              | 27,476,637 |              |            |            | 30,384,978 |           
|                                       | Trade names                                                                                                  |                                                                                                       |              | 2,580,000  |              |            |            | 2,940,000  |           
|                                       | Customer relationships                                                                                       |                                                                                                       |              | 2,143,271  |              |            |            | 2,598,531  |           
|                                       | Non-competition agreements                                                                                   |                                                                                                       |              | 2,838,676  |              |            |            | 2,724,401  |           
|                                       | Other assets                                                                                                 |                                                                                                       |              | 3,670,427  |              |            |            | 4,470,568  |           
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|                                       |                                                                                                              | Total other assets                                                                                    |              |            | 38,709,011   |            |            |            | 43,118,478 |           
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|                                       |                                                                                                              |                                                                                                       | Total assets |            | $            | 73,988,993 |            |            | $          | 81,830,668 | 
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|                                      
|LIABILITIES AND STOCKHOLDERS EQUITY  
|CURRENT LIABILITIES:                   |                                                                                                              |                                                                                                       |              |            |              |            |            |           
|                                       | Revolving line of credit                                                                                     |                                                                                                       | $            |           |              |            | $          | 2,000,000  |           
|                                       | Accounts payable                                                                                             |                                                                                                       |              | 1,778,288  |              |            |            | 2,318,632  |           
|                                       | Accrued liabilities:                                                                                         |                                                                                                       |              |            |              |            |            |            |           
|                                       |                                                                                                              | Payroll and employee benefits                                                                         |              |            | 5,106,325    |            |            |            | 3,781,976  |           
|                                       |                                                                                                              | Current portion of deferred purchase price                                                            |              |            | 2,391,951    |            |            |            | 745,261    |           
|                                       |                                                                                                              | Other accrued expenses                                                                                |              |            | 401,252      |            |            |            | 798,785    |           
|                                       | Deferred tax liability, current                                                                              |                                                                                                       |              |           |              |            |            | 131,878    |           
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|                                       |                                                                                                              | Total current liabilities                                                                             |              |            | 9,677,816    |            |            |            | 9,776,532  |           
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|LONG-TERM LIABILITIES:                 |                                                                                                              |                                                                                                       |              |            |              |            |            |           
|                                       | Payroll and employee benefits                                                                                |                                                                                                       |              | 1,981,751  |              |            |            | 2,461,726  |           
|                                       | Deferred purchase price                                                                                      |                                                                                                       |              | 304,162    |              |            |            | 112,384    |           
|                                       | Deferred tax liability, non-current                                                                          |                                                                                                       |              | 1,885,003  |              |            |            | 2,596,641  |           
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|                                       |                                                                                                              | Total long-term liabilities                                                                           |              |            | 4,170,916    |            |            |            | 5,170,751  |           
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|COMMITMENTS AND CONTINGENCIES (Note 8) |                                                                                                              |                                                                                                       |              |            |              |            |            |           
|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  5,536,533 shares at December 31,
    2003 and 5,648,197 shares at December 31, 2004          |              |            |              |            |            |            |            |           
|                                       |                                                                                                              | Outstanding  5,147,125 shares at
    December 31, 2003 and 5,263,798 shares at
    December 31, 2004 |              |            | 36,911       |            |            |            | 56,482     |           
|                                       | Paid-in capital                                                                                              |                                                                                                       |              | 17,034,343 |              |            |            | 18,557,911 |           
|                                       | Retained earnings                                                                                            |                                                                                                       |              | 48,187,945 |              |            |            | 53,327,961 |           
|                                       | Treasury stock at cost  389,407 shares at
    December 31, 2003 and 384,399 shares at
    December 31, 2004 |                                                                                                       |              | (5,118,938 | )            |            |            | (5,058,969 | )         
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|                                       |                                                                                                              | Total stockholders equity                                                                            |              |            | 60,140,261   |            |            |            | 66,883,385 |           
|                                       |                                                                                                              |                                                                                                       |              |            |              |           
|                                       |                                                                                                              | Total liabilities and stockholders equity                                                            |              | $          | 73,988,993   |            |            | $          | 81,830,668 |           
|                                       |                                                                                                              |                                                                                                       |              |            |              |           



F-4



---



##### 



NATIONAL DENTEX CORPORATION





CONSOLIDATED STATEMENTS OF INCOME


|                                              |                                          |              |            |            |              |   |            |              |  |   |             |            |  
|--------------------------------------------- | ---------------------------------------- | ------------ | ---------- | ---------- | ------------ | - | ---------- | ------------ |  | - | ----------- | ---------- | -
|                                              |                                          | Years Ended  |           
|                                              |                                          |              |           
|                                              |                                          | December 31, |            |            | December 31, |   |            | December 31, | 
|                                              |                                          | 2002         |            |            | 2003         |   |            | 2004         | 
|                                              |                                          |              |            |            |              |   |            |              | 
|Net sales                                     |                                          | $            | 95,184,567 |            |              | $ | 99,273,550 |              |  | $ | 111,752,547 |           
|Cost of goods sold                            |                                          |              | 56,195,536 |            |              |   | 59,533,766 |              |  |   | 66,952,585  |           
|                                              |                                          |              |            |            |              |   |            |              | 
|                                              | Gross profit                             |              |            | 38,989,031 |              |   |            | 39,739,784   |  |   |             | 44,799,962 |  
|Selling, general and administrative expenses  |                                          |              | 29,332,366 |            |              |   | 30,101,751 |              |  |   | 35,755,242  |           
|                                              |                                          |              |            |            |              |   |            |              | 
|                                              | Operating income                         |              |            | 9,656,665  |              |   |            | 9,638,033    |  |   |             | 9,044,720  |  
|Other expense                                 |                                          |              | 210,541    |            |              |   | 295,606    |              |  |   | 404,343     |           
|                                              | Interest income (expense)                |              |            | 79,610     |              |   |            | 20,558       |  |   |             | (42,324    | )
|                                              |                                          |              |            |            |              |   |            |              | 
|                                              | Income before provision for income taxes |              |            | 9,525,734  |              |   |            | 9,362,985    |  |   |             | 8,598,053  |  
|Provision for income taxes                    |                                          |              | 3,644,087  |            |              |   | 3,605,940  |              |  |   | 3,439,221   |           
|                                              |                                          |              |            |            |              |   |            |              | 
|                                              | Net income                               |              | $          | 5,881,647  |              |   | $          | 5,757,045    |  |   | $           | 5,158,832  |  
|                                              |                                          |              |            |            |              |   |            |              | 
|Net income per share  basic                  |                                          | $            | 1.13       |            |              | $ | 1.12       |              |  | $ | 0.99        |           
|                                              |                                          |              |            |            |              |   |            |              | 
|Net income per share  diluted                |                                          | $            | 1.10       |            |              | $ | 1.10       |              |  | $ | 0.94        |           
|                                              |                                          |              |            |            |              |   |            |              | 
|Weighted average shares outstanding  basic   |                                          |              | 5,186,647  |            |              |   | 5,130,659  |              |  |   | 5,186,589   |           
|                                              |                                          |              |            |            |              |   |            |              | 
|Weighted average shares outstanding  diluted |                                          |              | 5,329,377  |            |              |   | 5,216,022  |              |  |   | 5,465,106   |           
|                                              |                                          |              |            |            |              |   |            |              | 



F-5



---



##### 



NATIONAL DENTEX CORPORATION





CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


|                                                                                        |  |              |           |   |          |   |        |         |  |   |            |  |  |          |            |   |       |   |            |   |  |   |            |  
|--------------------------------------------------------------------------------------- |  | ------------ | --------- | - | -------- | - | ------ | ------- |  | - | ---------- |  |  | -------- | ---------- | - | ----- | - | ---------- | - |  | - | ---------- | -
|                                                                                        |  | Common Stock |           |   |          |   |        |         |  |   |           
|                                                                                        |  |              |           |   |          |   |        |         |  |   |           
|                                                                                        |  | Number of    |           |   | $.01 Par |   |        | Paid-in |  |   | Retained   |  |  | Treasury |            |   |      
|                                                                                        |  | Shares       |           |   | Value    |   |        | Capital |  |   | Earnings   |  |  | Stock    |            |   | Total |  
|                                                                                        |  |              |           |   |          |   |        |         |  |   |            |  |  |          |            |   |       |  
|BALANCE, December 31, 2001                                                              |  |              | 5,438,495 |   |          | $ | 36,257 |         |  | $ | 15,982,448 |  |  | $        | 36,549,253 |   |       | $ | (3,540,869 | ) |  | $ | 49,027,089 |  
|Issuance of 36,570 shares of common stock under the stock
    option plans              |  |              | 36,570    |   |          |   | 243    |         |  |   | 357,165    |  |  |          |            |   |       |   |           |   |  |   | 357,408    |  
|Issuance of 19,059 shares of common stock under the
    employee stock purchase program |  |              | 19,059    |   |          |   | 127    |         |  |   | 240,291    |  |  |          |            |   |       |   |           |   |  |   | 240,418    |  
|Issuance of 3,690 shares of common stock as directors
    fees                         |  |              | 3,690     |   |          |   | 25     |         |  |   | 64,059     |  |  |          |            |   |       |   |           |   |  |   | 64,084     |  
|Net income                                                                              |  |              |          |   |          |   |       |         |  |   |           |  |  |          | 5,881,647  |   |       |   |           |   |  |   | 5,881,647  |  
|Repurchase of 125,100 shares of common stock under the
    stock repurchase programs    |  |              |          |   |          |   |       |         |  |   |           |  |  |          |           |   |       |   | (1,624,675 | ) |  |   | (1,624,675 | )
|                                                                                        |  |              |           |   |          |   |        |         |  |   |            |  |  |          |            |   |       |  
|BALANCE, December 31, 2002                                                              |  |              | 5,497,814 |   |          |   | 36,652 |         |  |   | 16,643,963 |  |  |          | 42,430,900 |   |       |   | (5,165,544 | ) |  |   | 53,945,971 |  
|Issuance of 14,190 shares of common stock under the stock
    option plans              |  |              | 14,190    |   |          |   | 95     |         |  |   | 128,483    |  |  |          |            |   |       |   |           |   |  |   | 128,578    |  
|Issuance of 24,529 shares of common stock under the
    employee stock purchase program |  |              | 24,529    |   |          |   | 164    |         |  |   | 260,496    |  |  |          |            |   |       |   |           |   |  |   | 260,660    |  
|Net income                                                                              |  |              |          |   |          |   |       |         |  |   |           |  |  |          | 5,757,045  |   |       |   |           |   |  |   | 5,757,045  |  
|Issuance of 3,892 shares of treasury stock as
    directors fees                       |  |              |          |   |          |   |       |         |  |   | 1,401      |  |  |          |           |   |       |   | 46,606     |   |  |   | 48,007     |  
|                                                                                        |  |              |           |   |          |   |        |         |  |   |            |  |  |          |            |   |       |  
|BALANCE, December 31, 2003                                                              |  |              | 5,536,533 |   |          |   | 36,911 |         |  |   | 17,034,343 |  |  |          | 48,187,945 |   |       |   | (5,118,938 | ) |  |   | 60,140,261 |  
|Issuance of 84,553 shares of common stock under the stock
    option plans              |  |              | 84,553    |   |          |   | 575    |         |  |   | 1,064,262  |  |  |          |            |   |       |   |           |   |  |   | 1,064,837  |  
|Issuance of 27,236 shares of common stock under the
    employee stock purchase program |  |              | 27,236    |   |          |   | 181    |         |  |   | 285,171    |  |  |          |            |   |       |   |           |   |  |   | 285,352    |  
|Tax benefit associated with exercise of stock options                                   |  |              |           |   |          |   |        |         |  |   | 139,143    |  |  |          |            |   |       |   |            |   |  |   | 139,143    |  
|Three-for-two stock split, including fractional shares paid out                         |  |              | (125      | ) |          |   | 18,815 |         |  |   |            |  |  |          | (18,816    | ) |       |   |            |   |  |   | (1         | )
|Net income                                                                              |  |              |          |   |          |   |       |         |  |   |           |  |  |          | 5,158,832  |   |       |   |           |   |  |   | 5,158,832  |  
|Issuance of 5,008 shares of treasury stock as
    directors fees                       |  |              |          |   |          |   |       |         |  |   | 34,992     |  |  |          |           |   |       |   | 59,969     |   |  |   | 94,961     |  
|                                                                                        |  |              |           |   |          |   |        |         |  |   |            |  |  |          |            |   |       |  
|BALANCE, December 31, 2004                                                              |  |              | 5,648,197 |   |          | $ | 56,482 |         |  | $ | 18,557,911 |  |  | $        | 53,327,961 |   |       | $ | (5,058,969 | ) |  | $ | 66,883,385 |  
|                                                                                        |  |              |           |   |          |   |        |         |  |   |            |  |  |          |            |   |       |  



F-6



---



##### 



NATIONAL DENTEX CORPORATION





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |            |           |             |            |            |         |             |  
|------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------- | --------------------------------------------------- | ------------ | ------- | ---------- | ------------ | ---------- | --------- | ----------- | ---------- | ---------- | ------- | ----------- | -
|                                                                          |                                                                                                                       | Years Ended                                                                                                                                                                         |                    
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                    
|                                                                          |                                                                                                                       | December 31,                                                                                                                                                                        |                     |                                                     | December 31, |         |            | December 31, |           
|                                                                          |                                                                                                                       | 2002                                                                                                                                                                                |                     |                                                     | 2003         |         |            | 2004         |           
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |           
|Cash flows from operating activities:                                     |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |            |           |             |           
|                                                                          | Net income                                                                                                            |                                                                                                                                                                                     | $                   | 5,881,647                                           |              |         | $          | 5,757,045    |            |           | $           | 5,158,832  |           
|                                                                          | Adjustments to reconcile net income to net cash provided by
    operating activities, net of effects of acquisitions: |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |            |           |             |            |           
|                                                                          |                                                                                                                       | Depreciation and amortization                                                                                                                                                       |                     |                                                     | 2,106,922    |         |            |              | 2,383,260  |           |             |            | 3,131,697  |        
|                                                                          |                                                                                                                       | Provision (benefit) for deferred income taxes                                                                                                                                       |                     |                                                     | 274,172      |         |            |              | (118,867   | )         |             |            | 739,111    |        
|                                                                          |                                                                                                                       | Impairment of long-lived assets                                                                                                                                                     |                     |                                                     |             |         |            |              |           |           |             |            | 140,000    |        
|                                                                          |                                                                                                                       | Tax benefit associated with exercise of stock options                                                                                                                               |                     |                                                     |             |         |            |              |           |           |             |            | 139,143    |        
|                                                                          |                                                                                                                       | Issuance of common stock as directors fees                                                                                                                                         |                     |                                                     | 64,084       |         |            |              | 48,007     |           |             |            | 94,961     |        
|                                                                          |                                                                                                                       | Provision (benefit) for bad debts                                                                                                                                                   |                     |                                                     | 46,978       |         |            |              | 152,097    |           |             |            | (40,817    | )      
|                                                                          | Changes in operating assets and liabilities, net of effects of
    acquisitions:                                      |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |            |           |             |            |           
|                                                                          |                                                                                                                       | Increase in accounts receivable                                                                                                                                                     |                     |                                                     | (5,513       | )       |            |              | (332,991   | )         |             |            | (508,070   | )      
|                                                                          |                                                                                                                       | (Increase) decrease in inventories                                                                                                                                                  |                     |                                                     | (220,027     | )       |            |              | (103,962   | )         |             |            | 315,824    |        
|                                                                          |                                                                                                                       | (Increase) decrease in prepaid expenses                                                                                                                                             |                     |                                                     | (358,770     | )       |            |              | 478,938    |           |             |            | (777,307   | )      
|                                                                          |                                                                                                                       | Decrease (increase) in other assets                                                                                                                                                 |                     |                                                     | 119,941      |         |            |              | (29,788    | )         |             |            | (1,047,619 | )      
|                                                                          |                                                                                                                       | (Decrease) increase in accounts payable and accrued liabilities                                                                                                                     |                     |                                                     | (152,421     | )       |            |              | (414,018   | )         |             |            | 636,230    |        
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |           
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     | Net cash provided by operating activities           |              |         | 7,757,013  |              |            |           | 7,819,721   |            |            |         | 7,981,985   |  
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |           
|Cash flows from investing activities:                                     |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |            |           |             |           
|                                                                          | Payment for acquisitions, net of cash acquired                                                                        |                                                                                                                                                                                     |                     | (2,836,985                                          | )            |         |            | (7,306,153   | )          |           |             | (3,679,492 | )         
|                                                                          | Payment of deferred purchase price                                                                                    |                                                                                                                                                                                     |                     | (1,859,249                                          | )            |         |            | (1,491,619   | )          |           |             | (3,249,189 | )         
|                                                                          | Premiums paid for life insurance policies                                                                             |                                                                                                                                                                                     |                     | (447,836                                            | )            |         |            | (668,976     | )          |           |             | (774,967   | )         
|                                                                          | Additions to property, plant and equipment, net                                                                       |                                                                                                                                                                                     |                     | (2,155,685                                          | )            |         |            | (2,715,175   | )          |           |             | (3,248,254 | )         
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |           
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     | Net cash used in investing activities               |              |         | (7,299,755 | )            |            |           | (12,181,923 | )          |            |         | (10,951,902 | )
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |           
|Cash flows from financing activities:                                     |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |            |           |             |           
|                                                                          | Net borrowings from current obligations                                                                               |                                                                                                                                                                                     |                     |                                                    |              |         |            |             |            |           |             | 2,000,000  |           
|                                                                          | Net proceeds from issuance of common stock                                                                            |                                                                                                                                                                                     |                     | 597,826                                             |              |         |            | 389,238      |            |           |             | 1,350,188  |           
|                                                                          | Payments for repurchases of common stock                                                                              |                                                                                                                                                                                     |                     | (1,624,675                                          | )            |         |            |             |            |           |             |           |           
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |           
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     | Net cash (used in) provided by financing activities |              |         | (1,026,849 | )            |            |           | 389,238     |            |            |         | 3,350,188   |  
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |           
|Net (decrease) increase in cash and cash equivalents                      |                                                                                                                       |                                                                                                                                                                                     | (569,591            | )                                                   |              |         | (3,972,964 | )            |            |           | 380,271     |           
|Cash and cash equivalents at beginning of period                          |                                                                                                                       |                                                                                                                                                                                     | 6,378,026           |                                                     |              |         | 5,808,435  |              |            |           | 1,835,471   |           
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |           
|Cash and cash equivalents at end of period                                |                                                                                                                       | $                                                                                                                                                                                   | 5,808,435           |                                                     |              | $       | 1,835,471  |              |            | $         | 2,215,742   |           
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |           
|Supplemental disclosures of cash flow information:                        |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |            |           |             |           
|                                                                          | Interest paid                                                                                                         |                                                                                                                                                                                     | $                   | 11,375                                              |              |         | $          | 11,184       |            |           | $           | 51,012     |           
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |           
|                                                                          | Income taxes paid                                                                                                     |                                                                                                                                                                                     | $                   | 4,172,637                                           |              |         | $          | 2,718,140    |            |           | $           | 3,734,480  |           
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |           
|Supplemental schedule of non-cash investing and financing
    activities: |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |            |           |             |           
|                                                                          |                                                                                                                       | The Company purchased the operations of certain dental
    laboratories in 2002, 2003 and 2004.
    In connection with these acquisitions, liabilities were assumed
    as follows: |                     |                                                     |              |         |            |              |            |           |             |            |            |        
|                                                                          |                                                                                                                       | Fair value of assets acquired                                                                                                                                                       |                     | $                                                   | 4,039,000    |         |            | $            | 10,477,000 |           |             | $          | 5,773,000  |        
|                                                                          |                                                                                                                       | Cash paid                                                                                                                                                                           |                     |                                                     | (3,212,000   | )       |            |              | (8,255,000 | )         |             |            | (4,319,000 | )      
|                                                                          |                                                                                                                       | Deferred purchase price at date of acquisition                                                                                                                                      |                     |                                                     | (245,000     | )       |            |              | (375,000   | )         |             |            | (544,000   | )      
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |           
|                                                                          |                                                                                                                       |                                                                                                                                                                                     | Liabilities assumed |                                                     | $            | 582,000 |            |              | $          | 1,847,000 |             |            | $          | 910,000 |            
|                                                                          |                                                                                                                       |                                                                                                                                                                                     |                     |                                                     |              |         |            |              |           



F-7



---



##### 



NATIONAL DENTEX CORPORATION





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2004




|    |             
|--- | ------------
|(1) | Organization





|    |                                           
|--- | ------------------------------------------
|(2) | Summary of Significant Accounting Policies



| |                            
| | ---------------------------
| | Principles of Consolidation





| |                    
| | -------------------
| | Revenue Recognition





| |                                            
| | -------------------------------------------
| | Revised Classification of Intangible Assets

Business Combinations Goodwill and Other Intangible Assets Recognition of
Customer Relationship Intangible Assets Acquired in a Business
Combination






F-8



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                                                                      
| | -------------------------------------------------------------------------------------
| | Goodwill and Other Indefinite-Lived Intangible Assets Not
    Subject to Amortization







| |                                          
| | -----------------------------------------
| | Intangible Assets Subject to Amortization





| |                                  
| | ---------------------------------
| | Advertising and Promotional Costs





| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                                                            
| | -----------------------------------------------------------
| | Accounts Receivable and Allowance for Doubtful
    Accounts



F-9



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                  |  |      |            |  |      |   |            | 
|----------------- |  | ---- | ---------- |  | ---- | - | ---------- | 
|                  |  | 2003 |            |  | 2004 |  
|                  |  |      |            |  |      |  
|Trade             |  | $    | 11,810,607 |  |      | $ | 12,480,214 | 
|Employee          |  |      | 196,998    |  |      |   | 106,843    | 
|Other             |  |      | 219,095    |  |      |   | 586,067    | 
|                  |  |      |            |  |      |  
|Total Receivables |  | $    | 12,226,700 |  |      | $ | 13,173,124 | 



|                                 |                   |            |   |         |            |  |   |            |   |            |        |         |  |  |   |         | 
|-------------------------------- | ----------------- | ---------- | - | ------- | ---------- |  | - | ---------- | - | ---------- | ------ | ------- |  |  | - | ------- | 
|                                 |                   | Balance at |   |         | Charged to |  |   |            |   | Balance at |       
|                                 |                   | Beginning  |   |         | Costs and  |  |   |            |   | End of     |       
|                                 |                   | of Period  |   |         | Expenses   |  |   | Write-offs |   |            | Period |        
|                                 |                   |            |   |         |            |  |   |            |   |            |        |        
|Allowance for Doubtful Accounts: |                   |            |   |         |            |  |   |            |   |            |        |         |  |  |   |        
|                                 | December 31, 2002 |            | $ | 307,467 |            |  | $ | 46,477     |   |            | $      | 46,978  |  |  | $ | 306,966 | 
|                                 | December 31, 2003 |            |   | 306,966 |            |  |   | 157,811    |   |            |        | 152,097 |  |  |   | 312,680 | 
|                                 | December 31, 2004 |            |   | 312,680 |            |  |   | (40,817    | ) |            |        | 90,682  |  |  |   | 181,181 | 



| |            
| | -----------
| | Inventories



|                |  |                   |           |  |                   |   |           | 
|--------------- |  | ----------------- | --------- |  | ----------------- | - | --------- | 
|                |  | December 31, 2003 |           |  | December 31, 2004 |  
|                |  |                   |           |  |                   |  
|Raw Materials   |  | $                 | 5,000,816 |  |                   | $ | 4,804,115 | 
|Work in Process |  |                   | 995,667   |  |                   |   | 861,984   | 
|Finished Goods  |  |                   |          |  |                   |   | 172,799   | 
|                |  |                   |           |  |                   |  
|                |  | $                 | 5,996,483 |  |                   | $ | 5,838,898 | 





| |                              
| | -----------------------------
| | Property, Plant and Equipment



|                       |  |  |               | 
|---------------------- |  |  | ------------- | 
|Buildings              |  |  | 25 years      | 
|Furniture and fixtures |  |  | 5 - 10  years | 
|Laboratory equipment   |  |  | 5 - 20  years | 
|Computer equipment     |  |  | 3 - 5  years  | 



F-10



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                                
| | -------------------------------
| | Impairment of Long-Lived Assets





| |                                 
| | --------------------------------
| | Cash Surrender of Life Insurance





| |             
| | ------------
| | Income Taxes





| |            
| | -----------
| | Stock Split



F-11



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                   
| | ------------------
| | Earnings Per Share



|                                                                                                                |  |                          |           |  |      |  |           |      |  |  |           | 
|--------------------------------------------------------------------------------------------------------------- |  | ------------------------ | --------- |  | ---- |  | --------- | ---- |  |  | --------- | 
|                                                                                                                |  | Years Ended December 31, |          
|                                                                                                                |  |                          |          
|                                                                                                                |  | 2002                     |           |  | 2003 |  |           | 2004 | 
|                                                                                                                |  |                          |           |  |      |  |           |      | 
|Weighted average number of shares used in basic earnings per
    share calculation                              |  |                          | 5,186,647 |  |      |  | 5,130,659 |      |  |  | 5,186,589 | 
|Incremental shares under option plans                                                                           |  |                          | 142,730   |  |      |  | 85,363    |      |  |  | 278,517   | 
|                                                                                                                |  |                          |           |  |      |  |           |      | 
|Weighed average number of shares used in diluted earnings per
    share calculation                             |  |                          | 5,329,377 |  |      |  | 5,216,022 |      |  |  | 5,465,106 | 
|                                                                                                                |  |                          |           |  |      |  |           |      | 
|Shares under option plans excluded in computation of diluted
    earnings per share due to antidilutive effects |  |                          | 260,437   |  |      |  | 379,147   |      |  |  | NONE      | 
|                                                                                                                |  |                          |           |  |      |  |           |      | 



| |                         
| | ------------------------
| | Stock-Based Compensation



|                                                                                                                                                    |                      |                          |           |      |      |   |           |      |  |   |           |     | 
|--------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | ------------------------ | --------- | ---- | ---- | - | --------- | ---- |  | - | --------- | --- | 
|                                                                                                                                                    |                      | Years Ended December 31, |          
|                                                                                                                                                    |                      |                          |          
|                                                                                                                                                    |                      | 2002                     |           |      | 2003 |   |           | 2004 | 
|                                                                                                                                                    |                      |                          |           |      |      |   |           |      | 
|Net income, as reported:                                                                                                                            |                      | $                        | 5,881,647 |      |      | $ | 5,757,045 |      |  | $ | 5,158,832 |    
|Stock-based employee compensation expense included in reported
    net income                                                                       |                      |                          |          |      |      |   |          |      |  |   |          |    
|Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related tax effects |                      |                          | 408,626   |      |      |   | 196,840   |      |  |   | 156,554   |    
|                                                                                                                                                    |                      |                          |           |      |      |   |           |      | 
|Pro forma net income                                                                                                                                |                      | $                        | 5,473,021 |      |      | $ | 5,560,205 |      |  | $ | 5,002,278 |    
|                                                                                                                                                    |                      |                          |           |      |      |   |           |      | 
|Earnings per share:                                                                                                                                 |                      |                          |           |      |      |   |           |      |  |   |           |    
|                                                                                                                                                    | As reported, basic   |                          | $         | 1.13 |      |   | $         | 1.12 |  |   | $         | .99 | 
|                                                                                                                                                    | Pro forma, basic     |                          |           | 1.06 |      |   |           | 1.08 |  |   |           | .96 | 
|                                                                                                                                                    | As reported, diluted |                          |           | 1.10 |      |   |           | 1.10 |  |   |           | .94 | 
|                                                                                                                                                    | Pro forma, diluted   |                          |           | 1.03 |      |   |           | 1.07 |  |   |           | .92 | 

F-12



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                  |  |               |                |  |                  |  |           |            |  |                  |           |  |      |  |      | 
|----------------- |  | ------------- | -------------- |  | ---------------- |  | --------- | ---------- |  | ---------------- | --------- |  | ---- |  | ---- | 
|                  |  | Risk-Free     |                |  | Weighted Average |  |           | Expected   |  |                  | Expected  | 
|Year Ended        |  | Interest Rate |                |  | Expected Life    |  |           | Volatility |  |                  | Dividends | 
|                  |  |               |                |  |                  |  |           |            |  |                  |           | 
|December 31, 2004 |  |               | 1.04%          |  |                  |  | 1.0 Years |            |  |                  | 27.17%    |  |      |  | None | 
|December 31, 2003 |  |               | 1.04% to 2.07% |  |                  |  | 1.8 Years |            |  | 28.03% to 28.28% |           |  | None | 
|December 31, 2002 |  |               | 0.43% to 2.04% |  |                  |  | 1.9 Years |            |  | 28.30% to 28.64% |           |  | None | 



| |                         
| | ------------------------
| | Treasury Stock Purchases





| |                 
| | ----------------
| | Use of Estimates





| |                  
| | -----------------
| | Reclassifications





| |                                                              
| | -------------------------------------------------------------
| | Disclosures About the Fair Value of Financial
    Instruments





| |                     
| | --------------------
| | Comprehensive Income



F-13



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                            
| | -------------------------------------------
| | Disclosures about Segments of an Enterprise





| |                                 
| | --------------------------------
| | Recent Accounting Pronouncements







|    |             
|--- | ------------
|(3) | Acquisitions



F-14



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                           |  |                     |                               |  |          |                 |                 |  |                | 
|-------------------------- |  | ------------------- | ----------------------------- |  | -------- | --------------- | --------------- |  | -------------- | 
|Acquisition                |  | Form of Acquisition |                               |  | Location |                 | Period Acquired | 
|                           |  |                     |                               |  |          |                 |                 | 
|Nobilium of Texas          |  |                     | Certain Assets                |  |          | Houston, TX     |                 |  | March 2003     | 
|Accurate Dental Laboratory |  |                     | Certain Assets                |  |          | Albuquerque, NM |                 |  | April 2003     | 
|Jackson Dental Laboratory  |  |                     | Certain Assets                |  |          | Orlando, FL     |                 |  | April 2003     | 
|Salem Dental Laboratory    |  |                     | All Outstanding Capital Stock |  |          | Cleveland, OH   |                 |  | July 2003      | 
|Top Quality Partials       |  |                     | All Outstanding Capital Stock |  |          | Apopka, FL      |                 |  | September 2003 | 
|Midtown Dental Laboratory  |  |                     | All Outstanding Capital Stock |  |          | Charleston, WV  |                 |  | October 2003   | 
|Thoele Dental              |  |                     | All Outstanding Capital Stock |  |          | Waite Park, MN  |                 |  | November 2003  | 



|                                            |  |                     |                               |  |          |                    |                 |  |               | 
|------------------------------------------- |  | ------------------- | ----------------------------- |  | -------- | ------------------ | --------------- |  | ------------- | 
|Acquisition                                 |  | Form of Acquisition |                               |  | Location |                    | Period Acquired | 
|                                            |  |                     |                               |  |          |                    |                 | 
|Hamlett Dental Laboratory                   |  |                     | Certain Assets                |  |          | Holt, MI           |                 |  | April 2004    | 
|Dental Arts Laboratory of Dallas            |  |                     | Certain Assets                |  |          | Dallas, TX         |                 |  | May 2004      | 
|G&S Dental Laboratory                       |  |                     | Certain Assets                |  |          | North Royalton, OH |                 |  | July 2004     | 
|Loyd Dental Laboratory                      |  |                     | Certain Assets                |  |          | Indianapolis, IN   |                 |  | July 2004     | 
|Artisan Dental                              |  |                     |                               |  |          |                    |                 |  |               | 
|Studio                                      |  |                     | Certain Assets                |  |          | Lakewood, CO       |                 |  | July 2004     | 
|D.H. Baker Dental Laboratory                |  |                     | All Outstanding Capital Stock |  |          | Traverse City, MI  |                 |  | August 2004   | 
|Crown and Glory Aesthetic Dental Laboratory |  |                     | Certain Assets                |  |          | Reisterstown, MD   |                 |  | November 2004 | 

F-15



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                         |                               |                   |           |            |                              |   |           |            |       |       |          |         |   |   |           |          |       | 
|------------------------------------------------------------------------ | ----------------------------- | ----------------- | --------- | ---------- | ---------------------------- | - | --------- | ---------- | ----- | ----- | -------- | ------- | - | - | --------- | -------- | ----- | 
|                                                                         |                               | Year Ended        |           |            | Year Ended December 31, 2004 |  
|                                                                         |                               | December 31, 2003 |           |            |                              |  
|                                                                         |                               |                   |           |            | D.H. Baker                   |   |           |            |       | Total |         
|                                                                         |                               | Total Acquired*   |           |            | Dental Laboratory            |   |           | All Other* |       |       | Acquired |        
|                                                                         |                               |                   |           |            |                              |   |           |            |       |       |          |        
|Total Purchase Price                                                     |                               | $                 | 8,630,000 |            |                              | $ | 3,983,000 |            |       | $     | 880,000  |         |   | $ | 4,863,000 |         
|Less Fair Market Values Assigned to Tangible Assets and
    Liabilities: |                               |                   |           |            |                              |   |           |            |       |       |          |         |   |   |           |         
|                                                                         | Cash                          |                   |           | 949,000    |                              |   |           | 632,000    |       |       |          |        |   |   |           | 632,000  |      
|                                                                         | Accounts receivable           |                   |           | 1,249,000  |                              |   |           | 480,000    |       |       |          | 49,000  |   |   |           | 529,000  |      
|                                                                         | Inventories                   |                   |           | 739,000    |                              |   |           | 113,000    |       |       |          | 45,000  |   |   |           | 158,000  |      
|                                                                         | Property, plant and equipment |                   |           | 995,000    |                              |   |           | 303,000    |       |       |          | 172,000 |   |   |           | 475,000  |      
|                                                                         |                               | Other assets      |           |            | 31,000                       |   |           |            | 8,000 |       |          |         |  |   |           |          | 8,000 | 
|                                                                         | Accounts payable              |                   |           | (329,000   | )                            |   |           | (100,000   | )     |       |          |        |   |   |           | (100,000 | )    
|                                                                         | Accrued liabilities and other |                   |           | (1,518,000 | )                            |   |           | (785,000   | )     |       |          | (25,000 | ) |   |           | (810,000 | )    
|Less Fair Market Values Assigned to Intangible Assets:                   |                               |                   |           |            |                              |   |           |            |       |       |          |         |   |   |           |         
|                                                                         | Customer relationships        |                   |           | 2,143,000  |                              |   |           | 800,000    |       |       |          |        |   |   |           | 800,000  |      
|                                                                         | Trade names                   |                   |           | 1,500,000  |                              |   |           | 500,000    |       |       |          |        |   |   |           | 500,000  |      
|                                                                         | Non-compete agreements        |                   |           | 334,000    |                              |   |           | 200,000    |       |       |          | 572,000 |   |   |           | 772,000  |      
|                                                                         |                               |                   |           |            |                              |   |           |            |       |       |          |        
|Goodwill                                                                 |                               | $                 | 2,537,000 |            |                              | $ | 1,832,000 |            |       | $     | 67,000   |         |   | $ | 1,899,000 |         
|                                                                         |                               |                   |           |            |                              |   |           |            |       |       |          |        






|  |                                                                                                                           
|- | --------------------------------------------------------------------------------------------------------------------------
|* | All 2003 acquisitions and certain 2004 acquisitions were
    individually insignificant and are presented in the aggregate



F-16



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                      |         |              |             |      |              |   |             |      | 
|--------------------- | ------- | ------------ | ----------- | ---- | ------------ | - | ----------- | ---- | 
|                      |         | Years Ended  |            
|                      |         |              |            
|                      |         | December 31, |             |      | December 31, |  
|                      |         | 2003         |             |      | 2004         |  
|                      |         |              |             |      |              |  
|                      |         | (Unaudited)  |            
|Net sales             |         | $            | 113,100,000 |      |              | $ | 114,918,000 |     
|Net income            |         |              | 6,609,000   |      |              |   | 5,375,000   |     
|Net income per share: |         |              |             |      |              |   |             |     
|                      | Basic   |              | $           | 1.29 |              |   | $           | 1.04 | 
|                      | Diluted |              | $           | 1.27 |              |   | $           | .98  | 



|    |                                     
|--- | ------------------------------------
|(4) | Goodwill and Other Intangible Assets





|                                                                              |  |                          |            |  |                   |   |            | 
|----------------------------------------------------------------------------- |  | ------------------------ | ---------- |  | ----------------- | - | ---------- | 
|                                                                              |  | Years Ended              |           
|                                                                              |  |                          |           
|                                                                              |  | December 31, 2003        |            |  | December 31, 2004 |  
|                                                                              |  |                          |            |  |                   |  
|                                                                              |  | (Revised Classification) |            |  |                  
|Balance as of January 1                                                       |  | $                        | 23,343,000 |  |                   | $ | 27,477,000 | 
|Goodwill acquired during the year                                             |  |                          | 3,993,000  |  |                   |   | 1,899,000  | 
|Adjustments related to contingent consideration                               |  |                          | 105,000    |  |                   |   | 814,000    | 
|Adjustments related to the finalization of preliminary purchase
    estimates |  |                          | 36,000     |  |                   |   | 195,000    | 
|                                                                              |  |                          |            |  |                   |  
|Balance as of December 31                                                     |  | $                        | 27,477,000 |  |                   | $ | 30,385,000 | 
|                                                                              |  |                          |            |  |                   |  



Recognition of Customer Relationship Intangible Assets
Acquired in a Business Combination


F-17



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |            
| | -----------
| | Trade Names





|                                     |                                     |                          |           |           |                   |   |           |           |  
|------------------------------------ | ----------------------------------- | ------------------------ | --------- | --------- | ----------------- | - | --------- | --------- | -
|                                     |                                     | Years Ended              |          
|                                     |                                     |                          |          
|                                     |                                     | December 31, 2003        |           |           | December 31, 2004 |  
|                                     |                                     |                          |           |           |                   |  
|                                     |                                     | (Revised Classification) |           |           |                  
|Beginning of year                    |                                     | $                        | 1,174,000 |           |                   | $ | 2,580,000 |          
|Trade names acquired during the year |                                     |                          | 1,406,000 |           |                   |   | 500,000   |          
|                                     |                                     |                          |           |           |                   |  
|                                     | Trade Names                         |                          |           | 2,580,000 |                   |   |           | 3,080,000 |  
|                                     | Less: Charged to Impairment Expense |                          |           |          |                   |   |           | (140,000  | )
|                                     |                                     |                          |           |           |                   |  
|Trade Names  End of year            |                                     | $                        | 2,580,000 |           |                   | $ | 2,940,000 |          
|                                     |                                     |                          |           |           |                   |  



| |                       
| | ----------------------
| | Customer Relationships



|                                                |                                |                          |           |           |                   |   |           |           |  
|----------------------------------------------- | ------------------------------ | ------------------------ | --------- | --------- | ----------------- | - | --------- | --------- | -
|                                                |                                | Years Ended              |          
|                                                |                                |                          |          
|                                                |                                | December 31, 2003        |           |           | December 31, 2004 |  
|                                                |                                |                          |           |           |                   |  
|                                                |                                | (Revised Classification) |           |           |                  
|Beginning of year                               |                                | $                        |          |           |                   | $ | 2,143,000 |          
|Customer relationships acquired during the year |                                |                          | 2,143,000 |           |                   |   | 800,000   |          
|                                                |                                |                          |           |           |                   |  
|                                                | Customer Relationships, Gross  |                          |           | 2,143,000 |                   |   |           | 2,943,000 |  
|                                                | Less: Accumulated amortization |                          |           | (        | )                 |   |           | (345,000  | )
|                                                |                                |                          |           |           |                   |  
|Customer Relationships, Net  End of year       |                                | $                        | 2,143,000 |           |                   | $ | 2,598,000 |          
|                                                |                                |                          |           |           |                   |  

F-18



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|           |  |   |           | 
|---------- |  | - | --------- | 
|2005       |  | $ | 327,000   | 
|2006       |  |   | 327,000   | 
|2007       |  |   | 327,000   | 
|2008       |  |   | 327,000   | 
|2009       |  |   | 327,000   | 
|Thereafter |  |   | 963,000   | 
|           |  |   |          
|           |  | $ | 2,598,000 | 
|           |  |   |          



| |                           
| | --------------------------
| | Non-competition Agreements



|                                |                                                     |              |            |           |              |   |            |           | 
|------------------------------- | --------------------------------------------------- | ------------ | ---------- | --------- | ------------ | - | ---------- | --------- | 
|                                |                                                     | Years Ended  |           
|                                |                                                     |              |           
|                                |                                                     | December 31, |            |           | December 31, |  
|                                |                                                     | 2003         |            |           | 2004         |  
|                                |                                                     |              |            |           |              |  
|Beginning of year               |                                                     | $            | 8,015,000  |           |              | $ | 8,349,000  |          
|                                | Non-competition agreements acquired during the year |              |            | 334,000   |              |   |            | 772,000   | 
|                                |                                                     |              |            |           |              |  
|                                | Non-competition agreements, gross                   |              |            | 8,349,000 |              |   |            | 9,121,000 | 
|Less: Accumulated amortization  |                                                     |              | (5,510,000 | )         |              |   | (6,397,000 | )        
|                                |                                                     |              |            |           |              |  
|Non-competition agreements, net |                                                     | $            | 2,839,000  |           |              | $ | 2,724,000  |          
|                                |                                                     |              |            |           |              |  





|           |  |   |           | 
|---------- |  | - | --------- | 
|2005       |  | $ | 833,000   | 
|2006       |  |   | 663,000   | 
|2007       |  |   | 353,000   | 
|2008       |  |   | 208,000   | 
|2009       |  |   | 185,000   | 
|Thereafter |  |   | 482,000   | 
|           |  |   |          
|           |  | $ | 2,724,000 | 
|           |  |   |          

F-19



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


(5)     Income Taxes




|          |          |              |           |           |              |   |           |              |   |   |           |           | 
|--------- | -------- | ------------ | --------- | --------- | ------------ | - | --------- | ------------ | - | - | --------- | --------- | 
|          |          | Years Ended  |          
|          |          |              |          
|          |          | December 31, |           |           | December 31, |   |           | December 31, |  
|          |          | 2002         |           |           | 2003         |   |           | 2004         |  
|          |          |              |           |           |              |   |           |              |  
|Federal  |          |              |           |           |              |   |           |              |   |   |           |          
|          | Current  |              | $         | 2,703,114 |              |   | $         | 3,058,568    |   |   | $         | 2,204,266 | 
|          | Deferred |              |           | 233,046   |              |   |           | (101,037     | ) |   |           | 633,091   | 
|          |          |              |           |           |              |   |           |              |  
|          |          |              | 2,936,160 |           |              |   | 2,957,531 |              |   |   | 2,837,357 |          
|          |          |              |           |           |              |   |           |              |  
|State    |          |              |           |           |              |   |           |              |   |   |           |          
|          | Current  |              |           | 666,801   |              |   |           | 666,239      |   |   |           | 495,844   | 
|          | Deferred |              |           | 41,126    |              |   |           | (17,830      | ) |   |           | 106,020   | 
|          |          |              |           |           |              |   |           |              |  
|          |          |              | 707,927   |           |              |   | 648,409   |              |   |   | 601,864   |          
|          |          |              |           |           |              |   |           |              |  
|          |          | $            | 3,644,087 |           |              | $ | 3,605,940 |              |   | $ | 3,439,221 |          
|          |          |              |           |           |              |   |           |              |  



|                                    |                                |      |            |                 |      |   |            |            |  
|----------------------------------- | ------------------------------ | ---- | ---------- | --------------- | ---- | - | ---------- | ---------- | -
|                                    |                                | 2003 |            |                 | 2004 |  
|                                    |                                |      |            |                 |      |  
|                                    |                                |      |            | (Revised        |     
|                                    |                                |      |            | Classification) |     
|Deferred Tax Assets:                |                                |      |            |                 |      |   |            |           
|Non-compete agreements              |                                | $    | 743,186    |                 |      | $ | 897,672    |           
|Other liabilities                   |                                |      | 825,191    |                 |      |   | 933,216    |           
|Vacation benefits                   |                                |      | 195,420    |                 |      |   | 86,818     |           
|Inventory basis differences         |                                |      | 39,312     |                 |      |   | 45,178     |           
|Receivables basis differences       |                                |      | 64,687     |                 |      |   | 38,560     |           
|Other reserves                      |                                |      | 182,121    |                 |      |   |           |           
|                                    |                                |      |            |                 |      |  
|                                    | Total deferred tax assets      |      |            | 2,049,917       |      |   |            | 2,001,444  |  
|                                    |                                |      |            |                 |      |  
|Deferred Tax Liabilities:           |                                |      |            |                 |      |   |            |           
|Depreciation differences            |                                |      | (874,569   | )               |      |   | (1,131,242 | )         
|Intangible amortization differences |                                |      | (2,578,812 | )               |      |   | (3,296,287 | )         
|Other reserves                      |                                |      |           |                 |      |   | (302,434   | )         
|                                    |                                |      |            |                 |      |  
|                                    | Total deferred tax liabilities |      |            | (3,453,381      | )    |   |            | (4,729,963 | )
|                                    |                                |      |            |                 |      |  
|Net deferred tax asset/liability    |                                | $    | (1,403,464 | )               |      | $ | (2,728,519 | )         
|                                    |                                |      |            |                 |      |  



|                                                    |  |              |      |   |              |  |      |              |  |  |      |  
|--------------------------------------------------- |  | ------------ | ---- | - | ------------ |  | ---- | ------------ |  |  | ---- | -
|                                                    |  | Years Ended  |     
|                                                    |  |              |     
|                                                    |  | December 31, |      |   | December 31, |  |      | December 31, | 
|                                                    |  | 2002         |      |   | 2003         |  |      | 2004         | 
|                                                    |  |              |      |   |              |  |      |              | 
|Statutory federal income tax rate                   |  |              | 34.0 | % |              |  | 34.0 | %            |  |  | 34.0 | %
|State income tax, net of federal income tax benefit |  |              | 4.6  |   |              |  | 4.6  |              |  |  | 4.6  |  
|Other                                               |  |              | (0.3 | ) |              |  | (0.1 | )            |  |  | 1.4  |  
|                                                    |  |              |      |   |              |  |      |              | 
|Effective income tax rate                           |  |              | 38.3 | % |              |  | 38.5 | %            |  |  | 40.0 | %
|                                                    |  |              |      |   |              |  |      |              | 

F-20



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                
|--- | ---------------
|(6) | Lines of Credit









|    |              
|--- | -------------
|(7) | Benefit Plans







F-21



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                              
|--- | -----------------------------
|(8) | Commitments and Contingencies



| |                 
| | ----------------
| | Operating Leases



|           |  |        |            | 
|---------- |  | ------ | ---------- | 
|Year       |  | Amount |           
|           |  |        |           
|2005       |  | $      | 2,828,000  | 
|2006       |  |        | 2,226,000  | 
|2007       |  |        | 1,574,000  | 
|2008       |  |        | 1,186,000  | 
|2009       |  |        | 905,000    | 
|Thereafter |  |        | 3,338,000  | 
|           |  |        |           
|           |  | $      | 12,057,000 | 
|           |  |        |           



| |                  
| | -----------------
| | Legal Proceedings



PSN Illinois, LLC v. Ivoclar
Vivadent, Inc. et al.


F-22



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                                                            
| | -----------------------------------------------------------
| | Employment Contracts and Change-in-Control
    Arrangements





|    |                                                         
|--- | --------------------------------------------------------
|(9) | Stock Options, Warrants and Employee Stock Purchase Plan



| |                   
| | ------------------
| | Stock Option Plans





|                                               |           |        |         |                  |                |   |       |        |                  |  |                |         |   |                  |       |       |                |  |         |         |   |   |       |       | 
|---------------------------------------------- | --------- | ------ | ------- | ---------------- | -------------- | - | ----- | ------ | ---------------- |  | -------------- | ------- | - | ---------------- | ----- | ----- | -------------- |  | ------- | ------- | - | - | ----- | ----- | 
|                                               |           | 2002   |         |                  | 2003           |   |       | 2004   |                 
|                                               |           |        |         |                  |                |   |       |        |                 
|                                               |           |        |         | Weighted Average |                |   |       |        | Weighted Average |  |                |         |   | Weighted Average |      
|                                               |           | Shares |         |                  | Exercise Price |   |       | Shares |                  |  | Exercise Price |         |   | Shares           |       |       | Exercise Price | 
|                                               |           |        |         |                  |                |   |       |        |                  |  |                |         |   |                  |       |       |                | 
|Outstanding at beginning of year               |           |        | 583,116 |                  |                | $ | 11.59 |        |                  |  | 533,592        |         |   | $                | 11.78 |       |                |  | 511,953 |         |   | $ | 11.87 |      
|                                               | Granted   |        |         | 13,650           |                |   |       | 16.48  |                  |  |                |        |   |                  |       |      |                |  |         |        |   |   |       |      | 
|                                               | Exercised |        |         | (36,573          | )              |   |       | 9.77   |                  |  |                | (14,190 | ) |                  |       | 9.06  |                |  |         | (59,353 | ) |   |       | 11.27 | 
|                                               | Canceled  |        |         | (26,601          | )              |   |       | 12.91  |                  |  |                | (7,449  | ) |                  |       | 10.77 |                |  |         | (3,531  | ) |   |       | 11.44 | 
|                                               |           |        |         |                  |                |   |       |        |                  |  |                |         |   |                  |       |       |                | 
|Outstanding at end of year                     |           |        | 533,592 |                  |                | $ | 11.78 |        |                  |  | 511,953        |         |   | $                | 11.87 |       |                |  | 449,069 |         |   | $ | 11.95 |      
|                                               |           |        |         |                  |                |   |       |        |                  |  |                |         |   |                  |       |       |                | 
|Exercisable at end of year                     |           |        | 382,464 |                  |                | $ | 11.41 |        |                  |  | 451,001        |         |   | $                | 11.59 |       |                |  | 445,020 |         |   | $ | 11.91 |      
|Weighted average fair value of options granted |           | $      | 2.77    |                  |                |   |       |        |                  |  |               |         |   |                  |       |       |                |  |        |         |   |   |       |      

F-23



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                           |  |                     |         |  |                     |  |     |                  |  |   |             |  |  |                  |         |  |  |   |       | 
|-------------------------- |  | ------------------- | ------- |  | ------------------- |  | --- | ---------------- |  | - | ----------- |  |  | ---------------- | ------- |  |  | - | ----- | 
|                           |  | Options Outstanding |         |  | Options Exercisable | 
|                           |  |                     |         |  |                     | 
|                           |  | Number              |         |  | Weighted Average    |  |     | Weighted Average |  |   | Number      |  |  | Weighted Average |        
|                           |  | Outstanding at      |         |  | Remaining           |  |     | Exercise Price   |  |   | Exercisable |  |  | Exercise Price   |        
|Exercise Price Range       |  | 12/31/04            |         |  | Contractual Life    |  |     | Per Share        |  |   | at 12/31/04 |  |  | Per Share        |        
|                           |  |                     |         |  |                     |  |     |                  |  |   |             |  |  |                  |        
|$8.17 to $10.00 per share  |  |                     | 96,870  |  |                     |  | 4.0 |                  |  | $ | 8.55        |  |  |                  | 96,870  |  |  | $ | 8.55  | 
|$10.17 to $13.42 per share |  |                     | 123,880 |  |                     |  | 3.0 |                  |  |   | 11.39       |  |  |                  | 123,880 |  |  |   | 11.39 | 
|$13.50 to $16.59 per share |  |                     | 228,319 |  |                     |  | 5.0 |                  |  |   | 13.70       |  |  |                  | 224,270 |  |  |   | 13.65 | 
|                           |  |                     |         |  |                     |  |     |                  |  |   |             |  |  |                  |        
|                           |  |                     | 449,069 |  |                     |  | 4.3 |                  |  | $ | 11.95       |  |  |                  | 445,020 |  |  | $ | 11.91 | 
|                           |  |                     |         |  |                     |  |     |                  |  |   |             |  |  |                  |        





|                                               |           |        |         |                  |                |   |       |        |                  |   |                |         |   |                  |       |       |                |   |         |         |   |   |       |       | 
|---------------------------------------------- | --------- | ------ | ------- | ---------------- | -------------- | - | ----- | ------ | ---------------- | - | -------------- | ------- | - | ---------------- | ----- | ----- | -------------- | - | ------- | ------- | - | - | ----- | ----- | 
|                                               |           | 2002   |         |                  | 2003           |   |       | 2004   |                 
|                                               |           |        |         |                  |                |   |       |        |                 
|                                               |           |        |         | Weighted Average |                |   |       |        | Weighted Average |   |                |         |   | Weighted Average |      
|                                               |           | Shares |         |                  | Exercise Price |   |       | Shares |                  |   | Exercise Price |         |   | Shares           |       |       | Exercise Price |  
|                                               |           |        |         |                  |                |   |       |        |                  |   |                |         |   |                  |       |       |                |  
|Outstanding at beginning of year               |           |        | 175,125 |                  |                | $ | 13.65 |        |                  |   | 333,150        |         |   | $                | 15.01 |       |                |   | 447,450 |         |   | $ | 14.59 |      
|                                               | Granted   |        |         | 162,750          |                |   |       | 16.44  |                  |   |                | 116,850 |   |                  |       | 13.37 |                |   |         |        |   |   |       |      | 
|                                               | Exercised |        |         |                 |                |   |       |       |                  |   |                |        |   |                  |       |      |                |   |         | (25,200 | ) |   |       | 15.02 | 
|                                               | Canceled  |        |         | (4,725           | )              |   |       | 13.96  |                  |   |                | (2,550  | ) |                  |       | 13.96 |                |   |         | (14,900 | ) |   |       | 14.64 | 
|                                               |           |        |         |                  |                |   |       |        |                  |   |                |         |   |                  |       |       |                |  
|Outstanding at end of year                     |           |        | 333,150 |                  |                | $ | 15.01 |        |                  |   | 447,450        |         |   | $                | 14.59 |       |                |   | 407,350 |         |   | $ | 14.55 |      
|                                               |           |        |         |                  |                |   |       |        |                  |   |                |         |   |                  |       |       |                |  
|Exercisable at end of year                     |           |        | 56,779  |                  |                | $ | 13.64 |        |                  |   | 166,134        |         |   | $                | 14.55 |       |                |   | 289,233 |         |   | $ | 14.53 |      
|Weighted average fair value of options granted |           | $      | 2.76    |                  |                |   |       |        |                  | $ | 2.27           |         |   |                  |       |       |                | $ |        |         |   |   |       |      

|                           |  |                     |         |  |                     |  |     |                  |  |   |             |  |  |                  |         |  |  |   |       | 
|-------------------------- |  | ------------------- | ------- |  | ------------------- |  | --- | ---------------- |  | - | ----------- |  |  | ---------------- | ------- |  |  | - | ----- | 
|                           |  | Options Outstanding |         |  | Options Exercisable | 
|                           |  |                     |         |  |                     | 
|                           |  | Number              |         |  | Weighted Average    |  |     | Weighted Average |  |   | Number      |  |  | Weighted Average |        
|                           |  | Outstanding at      |         |  | Remaining           |  |     | Exercise Price   |  |   | Exercisable |  |  | Exercise Price   |        
|Exercise Price Range       |  | 12/31/04            |         |  | Contractual Life    |  |     | Per Share        |  |   | at 12/31/04 |  |  | Per Share        |        
|                           |  |                     |         |  |                     |  |     |                  |  |   |             |  |  |                  |        
|$13.01 to $13.37 per share |  |                     | 196,052 |  |                     |  | 7.2 |                  |  | $ | 13.37       |  |  |                  | 125,935 |  |  | $ | 13.37 | 
|$13.93 to $16.45 per share |  |                     | 211,298 |  |                     |  | 6.8 |                  |  |   | 15.66       |  |  |                  | 163,298 |  |  |   | 15.42 | 
|                           |  |                     |         |  |                     |  |     |                  |  |   |             |  |  |                  |        
|                           |  |                     | 407,350 |  |                     |  | 7.0 |                  |  | $ | 14.55       |  |  |                  | 289,233 |  |  | $ | 14.53 | 
|                           |  |                     |         |  |                     |  |     |                  |  |   |             |  |  |                  |        



F-24



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|     |                  
|---- | -----------------
|(10) | Subsequent Events





|                                                                         |                               |                   |            |            |  
|------------------------------------------------------------------------ | ----------------------------- | ----------------- | ---------- | ---------- | -
|Green Dental Laboratory, Inc.                                            |                               | Preliminary Value |           
|                                                                         |                               |                   |           
|Total Purchase Price                                                     |                               | $                 | 22,491,000 |           
|Less Fair Market Values Assigned to Tangible Assets and
    Liabilities: |                               |                   |            |           
|                                                                         | Cash                          |                   |            | 1,118,000  |  
|                                                                         | Accounts receivable           |                   |            | 1,488,000  |  
|                                                                         | Inventories                   |                   |            | 595,000    |  
|                                                                         | Property, plant and equipment |                   |            | 1,875,000  |  
|                                                                         | Other assets                  |                   |            | 200,000    |  
|                                                                         | Accounts payable              |                   |            | (496,000   | )
|                                                                         | Accrued liabilities and other |                   |            | (4,851,000 | )
|                                                                         | Assumed Long-term Debt        |                   |            | (1,051,000 | )
|Less Fair Market Values Assigned to Intangible Assets:                   |                               |                   |            |           
|                                                                         | Customer relationships        |                   |            | 6,034,000  |  
|                                                                         | Trade names                   |                   |            | 3,759,000  |  
|                                                                         | Non-compete agreements        |                   |            | 476,000    |  
|                                                                         |                               |                   |           
|Goodwill                                                                 |                               | $                 | 13,344,000 |           
|                                                                         |                               |                   |           





F-25



---



##### 



NATIONAL DENTEX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




F-26



---



##### 



SIGNATURES






| |                            
| | ---------------------------
| | NATIONAL DENTEX CORPORATION



| |     |                   
| | --- | ------------------
| | By: | /s/ DAVID L. BROWN

| |                                
| | -------------------------------
| |                                
| | David L. Brown, President & CEO





|                                                     |  |                                                                                         |  |              |  | 
|---------------------------------------------------- |  | --------------------------------------------------------------------------------------- |  | ------------ |  | 
|Signature                                            |  | Title                                                                                   |  | Date        
|                                                     |  |                                                                                         |  |             
|                                                    
|/s/ DAVID V. HARKINSDavid
    V. Harkins             |  | Chairman of the Board and Director                                                      |  | May 24, 2005
|                                                    
|/s/ JACK R. CROSBYJack
    R. Crosby                 |  | Director                                                                                |  | May 24, 2005
|                                                    
|/s/ THOMAS E. CALLAHANThomas
    E. Callahan         |  | Director                                                                                |  | May 24, 2005
|                                                    
|/s/ NORMAN F. STRATENorman
    F. Strate             |  | Director                                                                                |  | May 24, 2005
|                                                    
|/s/ DAVID L. BROWNDavid
    L. Brown                 |  | President, CEO, and Director
    (Principal Executive Officer)                          |  | May 24, 2005
|                                                    
|/s/ RICHARD F. BECKER, JR.Richard
    F. Becker, Jr. |  | Vice President, Treasurer and Chief Financial Officer
    (Principal Financial Officer) |  | May 24, 2005

F-27



---



##### 



EXHIBIT INDEX


|            |    |                        |  |  |  |                                                                                                                                                                                                                                    
|----------- | -- | ---------------------- |  |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |    | Description of Exhibit
|            |    |                       
|            | 3  | .1                     |  |  |  | Restated Articles of Organization of the Company, filed with the
    Massachusetts Secretary of State on October 14, 1993.                                                                                                         
|            | 3  | .2                     |  |  |  | Articles of Amendment, filed with the Massachusetts Secretary of
    the Commonwealth on September 26, 1995.                                                                                                                       
|            | 3  | .3                     |  |  |  | By-Laws of the Company, as amended on December 31, 1982 and
    May 26, 1992.                                                                                                                                                      
|            | 10 | .1(1)*                 |  |  |  | 2001 Stock Plan, as amended on April 10, 2001.                                                                                                                                                                                     
|            | 10 | .2(4)*                 |  |  |  | Change of Control Severance Agreement between the Company and
    David L. Brown, dated January 23, 2001.                                                                                                                          
|            | 10 | .3(4)*                 |  |  |  | Form of Change of Control Severance Agreements between the
    Company and each of Arthur Champagne, James F. Dodd III,
    Richard G. Mariacher and Donald E. Merz dated January 23,
    2001, and Lynn D. Dine dated May 1, 2004.
|            | 10 | .4(5)*                 |  |  |  | Employment Agreement between the Company and Donald E. Merz,
    dated November 1, 1983.                                                                                                                                           
|            | 10 | .5(2)*                 |  |  |  | 1992 Long-Term Incentive Plan, as amended.                                                                                                                                                                                         
|            | 10 | .6(2)*                 |  |  |  | Employment Agreement between the Company and Richard F.
    Becker, Jr., dated April 1, 1995.                                                                                                                                      
|            | 10 | .7(2)*                 |  |  |  | Change of Control Severance Agreement between the Company and
    Richard F. Becker, Jr., dated April 1, 1995.                                                                                                                     
|            | 10 | .8(2)*                 |  |  |  | Employment Agreement between the Company and David L. Brown,
    dated April 1, 1995.                                                                                                                                              
|            | 10 | .9(7)*                 |  |  |  | National Dentex Corporation Laboratory Incentive Compensation
    Plan.                                                                                                                                                            
|            | 10 | .10(7)*                |  |  |  | National Dentex Corporation Corporate Executives Incentive
    Compensation Plan.                                                                                                                                                  
|            | 10 | .11(2)*                |  |  |  | National Dentex Corporation Dollars Plus Plan, as amended on
    January 3, 1986.                                                                                                                                                  
|            | 10 | .12(7)*                |  |  |  | National Dentex Corporation Employees Stock Purchase Plan.                                                                                                                                                                        
|            | 10 | .13(6)                 |  |  |  | Loan Agreement by and between Fleet National Bank and National
    Dentex Corporation dated June 30, 2004.                                                                                                                         
|            | 21 |                        |  |  |  | Subsidiaries of the Company                                                                                                                                                                                                        
|            | 23 |                        |  |  |  | Consent of PricewaterhouseCoopers LLP.                                                                                                                                                                                             
|            | 31 | .1                     |  |  |  | Certification pursuant to Rule 13a-14(a) and 15d-14(a) of
    the Securities Exchange Act as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act (Chief Executive
    Officer).                                          
|            | 31 | .2                     |  |  |  | Certification pursuant to Rule 13a-14(a) and 15d-14(a) of
    the Securities Exchange Act as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act (Chief Financial
    Officer).                                          
|            | 32 | .1                     |  |  |  | Certification pursuant to 18 U.S.C Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act (Chief
    Executive Officer).                                                                                   
|            | 32 | .2                     |  |  |  | Certification pursuant to 18 U.S.C Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act (Chief
    Financial Officer).                                                                                   








|    |                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference from the Registration Statement on
    Form S-8 (File No. 333-66446) as filed with the
    Commission on August 1, 2001.                                  
|(2) | Incorporated by reference from the Form 10-K for the fiscal
    year ended December 31, 2003 (File No. 000-23092) as
    filed with the Commission on March 12, 2004.               
|(3) | Incorporated by reference from the Form 10-K for the fiscal
    year ended December 31, 2001 (File No. 000-23092) as
    filed with the Commission on March 8, 2002.                
|(4) | Incorporated by reference from the Form 10-K for the fiscal
    year ended December 31, 2000 (File No. 000-23092) as
    filed with the Commission on March 13, 2001.               
|(5) | Incorporated by reference from the Form 10-K for the fiscal
    year ended December 31, 1999 (File No. 000-23092) as
    filed with the Commission on March 3, 2000.                
|(6) | Incorporated by reference from the Current Report on
    Form 8-K (File No. 000-23092) as filed with the
    Commission on July 7, 2004.                                            
|(7) | Incorporated by reference from the Registration Statement on
    Form S-1 (File No. 33-70440) declared effective by the
    Securities and Exchange Commission on December 21, 1993.



| |   |                                                                                             
| | - | --------------------------------------------------------------------------------------------
| | * | These exhibits relate to a management contract or to a
    compensatory plan or arrangement.