##### Table of Contents





UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, DC
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number
    000-23092
 NATIONAL DENTEX
    CORPORATION
 (Exact name of registrant as
    specified in its charter)
  MASSACHUSETTS(State or Other Jurisdiction
    of
    Incorporation or Organization)

04-2762050(I.R.S. Employer
    Identification No.)2 Vision Drive,
    Natick, MA(Address of Principal
    Executive Offices)

01760(Zip
    Code)   (508) 907-7800 (Registrants
    Telephone No., including Area Code) Securities
    registered pursuant to Section 12(b) of the Act:
  Title of Each Class

Name of Exchange on Which RegisteredCommon Stock, par value $.01 per share

The NASDAQ Stock Market, LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated filer o

Accelerated filer þ

Non-accelerated filer o

Smaller reporting company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




---





TABLE OF CONTENTS  PART IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersPART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesItem 6. Selected Financial DataItem 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7A. Quantitative and Qualitative Disclosures about Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPART IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder MattersItem 13. Certain Relationships and Related TransactionsItem 14. Principal Accountant Fees and ServicesPART IVItem 15. Exhibits and Financial Statement SchedulesNATIONAL DENTEX CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULEREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMCONSOLIDATED BALANCE SHEETSCONSOLIDATED STATEMENTS OF INCOMECONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITYCONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2008EXHIBIT INDEXEX-10.7a Key Employee and Corporate Support Group Incentive Compensation PlanEX-10.9f Amendment No. 5 to Second Amended and Restated Loan AgreementEX-23 Consent of PricewaterhouseCoopers LLPEX-31.1 CEO Certification pursuant to Section 302EX-31.2 CFO Certification pursuant to Section 302EX-32.1 CEO Certification pursuant to Section 906EX-32.2 CFO Certification pursuant to Section 906    Table of Contents  
  PART I
 
  Item 1.
    Business  General
    (508) 907-7800. Form 10-K, Form 10-Q, Form 8-K,
  Information
    as to Industry and Operating Segments
    Description
    of Business
      Restorative Products.
 1




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##### Table of Contents



Reconstructive Products.
  Cosmetic Products.
  Laboratory
    and Corporate Operations
        Sales
    and Marketing
  tm
 2




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tm
  Competition
       3




---



##### Table of Contents



Employees
    Intellectual
    Property
  tm
  Backlog
   
  Item 1A.
    Risk
    Factors    Our
    success depends on economic and other external factors that
    affect consumer decisions about whether and when to have dental
    procedures performed.
     4




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##### Table of Contents



We
    operate in a highly competitive and fragmented market that is
    increasingly global in scope.
    We
    face increased competitive pressures from larger competitors,
    foreign-sourced products and
    technology-based
    solutions.
        Our
    failure to generate sufficient cash to meet our liquidity needs
    may affect our ability to service our indebtedness and grow our
    business.
     5




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##### Table of Contents



We may
    be more leveraged than some of our competitors, which could
    adversely affect our business plans.
      Our
    Senior Credit Facility contains a number of financial and other
    covenants that may restrict our ability to engage in some
    business transactions.
      An
    impairment in the carrying value of goodwill or other acquired
    intangibles could negatively affect our operating results and
    net worth.
     6




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##### Table of Contents



Risks
    associated with our strategic acquisitions could adversely
    affect our business.
    
    difficulties integrating the acquired company, retaining the
    acquired laboratories customers, and achieving the
    expected benefits of the acquisition, such as revenue increases,
    cost savings, and increases in geographic or product presence,
    in the desired time frames, if at all;
    loss of key employees from the acquired company;
    implementing and maintaining consistent standards, controls,
    procedures, policies and information systems; and
    diversion of managements attention from other business
    concerns.    If we
    fail to develop new or expand existing customer relationships,
    our ability to grow our business will be impaired.
   7




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If we
    cannot continue to respond to technical innovations we may not
    be able to compete effectively.
    Our
    failure to attract and retain qualified personnel would
    adversely affect our business.
    Our
    business results are adversely affected by increases in labor,
    benefits and related costs.
    Our
    operating results can be adversely affected by changes in the
    cost or availability of raw materials, particularly precious
    metals like gold, platinum and palladium.
    Compliance
    with changing regulation of corporate governance, public
    disclosure, and accounting standards may result in additional
    expenses and risks.
   8




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We are
    subject to a number of continuing listing standard requirements
    of Nasdaq. If we fail to comply with these listing standards we
    may be subject to delisting.
    We may
    face increased regulatory action by, among other governmental
    entities, the United States Food and Drug Administration (the
    FDA).
    Our
    business may be adversely affected by the actions of and risks
    associated with our third-party suppliers.
    Forward
    Looking Statements
   9




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##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments   
  Item 2.
    Properties       
  Item 3.
    Legal
    Proceedings     
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   10




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##### Table of Contents



PART II
 
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Trading
    Market
      PriceQuarter Ending

Low


High03/31/07

$
13.96


$
17.5106/30/07

$
13.01


$
20.9509/30/07

$
14.74


$
19.9112/31/07

$
13.60


$
18.0003/31/08

$
11.50


$
16.8406/30/08

$
10.05


$
13.2509/30/08

$
6.01


$
12.6012/31/08

$
4.19


$
6.90   Holders
    Dividends
    Recent
    Sales of Unregistered Securities
    Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers
   11




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Issuer
    Purchases of Equity Securities
  Maximum NumberTotal Number of

of Shares thatShares Purchased

May Yet BeTotal Number

Average

as Part of Publicly

Purchased Underof Shares

Price Paid

Announced Plans

the Plans orFiscal Period

Purchased

per Share

or Programs

ProgramsJanuary 1, 2008 - December 31, 2008





$








206,700  12




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Stock
    Performance Graph
      COMPARISON
    OF CUMULATIVE TOTAL RETURN (1) AMONG NATIONAL DENTEX
    (NADX),
    NASDAQ INDUSTRIAL INDEX AND PEER GROUP INDEX (2)
  
  12-31-03


12-31-04


12-31-05


12-31-06


12-31-07


12-31-08NADX



100.00




126.88




140.88




109.38




99.50




28.44NASDAQ



100.00




115.84




115.98




130.35




135.85




74.27Peers



100.00




131.62




111.38




121.11




146.63




87.59   (1)
    
    Assumes $100 invested on December 31, 2003 in our common
    stock, the NASDAQ Industrial Index and the Peer Group Index,
    including reinvestment of any dividends paid on the investment.(2)
    
    The Peer Group Index consists of Dentsply International, Inc.
    and Patterson Companies, Inc. We believe that these companies
    represent the other publicly traded companies within the dental
    service community. 13




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Item 6.
    Selected
    Financial Data    2004


2005


2006


2007


2008(Dollars in thousands, except per share data)Consolidated Statements of Income:Net sales

$
111,753


$
135,843


$
150,107


$
170,361


$
171,674Cost of goods sold


66,953



78,381



88,269



97,739



102,184Gross profit


44,800



57,462



61,838



72,622



69,490Selling, general & administrative expenses


35,755



44,728



50,097



58,562



58,588Goodwill impairment


















6,950Operating income


9,045



12,734



11,741



14,060



3,952Other expense


405



646



786



771



747Interest expense


42



665



1,523



2,803



2,110Income before provision for income taxes


8,598



11,423



9,432



10,486



1,095Provision for income taxes


3,439



4,334



3,669



3,860



1,972Net income (loss)

$
5,159


$
7,089


$
5,763


$
6,626


$
(877
)Net income (loss) per share  basic

$
0.99


$
1.33


$
1.05


$
1.20


$
(0.16
)Net income (loss) per share  diluted

$
0.94


$
1.27


$
1.01


$
1.17


$
(0.16
)Weighted average shares outstanding  basic


5,187



5,334



5,485



5,540



5,631Weighted average shares outstanding  diluted


5,465



5,601



5,732



5,665



5,631Consolidated Balance Sheet Data:Working capital

$
13,750


$
11,126


$
6,232


$
6,000


$
9,527Total assets


81,831



117,119



148,490



155,639



161,515Long-term debt, including current portion






18,701



35,458



29,695



39,258Stockholders equity

$
66,883


$
76,074


$
82,794


$
91,192


$
90,492  
  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.
  Certain statements in this Annual Report, particularly
    statements contained in this Item 7,
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations constitute
    forward-looking statements within the meaning of
    Section 27A of the Securities Act of 1933, as amended, and
    Section 21E of the Securities Exchange Act of 1934, as
    amended. The words anticipate, believe,
    estimate, expect, plan,
    intend and other similar expressions are intended to
    identify these forward-looking statements, but are not the
    exclusive means of identifying them. Forward-looking statements
    included in this Annual Report or hereafter included in other
    publicly available documents filed with the Securities and
    Exchange Commission (SEC), reports to our
    stockholders and other publicly available statements issued or
    released by us involve known and unknown risks, uncertainties,
    and other factors which could cause our actual results,
    performance (financial or operating) or achievements to differ
    from the future results, performance (financial or operating) or
    achievements expressed or implied by such forward-looking
    statements. Such future results are based upon our best
    estimates based upon current conditions and the most recent
    results of operations. Various risks, uncertainties and
    contingencies could cause our actual results, performance or
    achievements to differ materially from those
 14




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expressed in, or implied by, the forward-looking statements
    contained in this Annual Report. These include, but are not
    limited to, those described above under Item 1A, Risk
    Factors. We assume no obligation to update these
    forward-looking statements contained in this report, whether as
    a result of new information, future events, or otherwise.
  Overview
      Restorative Products.
  Reconstructive Products.
  Cosmetic Products.
  Recent
    Trends
     15




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Acquisitions
    tm
    Overview
    of Results of Operations
     16




---



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Liquidity
    and Capital Resources
   17




---



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18




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##### Table of Contents



Long-Term
    Obligations:
  December 31, 2007


December 31, 2008Term note

$
29,583,000


$
24,583,000Borrowings classified as long term under the revolving line of
    credit






13,800,000Borrowings classified as short term under the revolving line of
    credit






2,940,000Other long-term debt


112,000



875,000Total long-term debt


29,695,000



42,198,000Less: Current maturities


5,064,000



5,115,000Long-term debt, less current portion

$
24,631,000


$
37,083,000     December 31, 2008Principal DueFiscal 2009


5,115,000Fiscal 2010


5,083,000Fiscal 2011


31,407,000Fiscal 2012


84,000Thereafter


509,000Total

$
42,198,000     tm
   19




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Commitments
    and Contingencies
    Payments Due By PeriodLess Than








Greater ThanTotal


1 Year


1 - 3 Years


4 - 5 Years


5 YearsTerm Loan Facility

$
24,583,000


$
5,000,000


$
19,583,000


$



$
Line of Credit


16,740,000







16,740,000







Interest Expense


4,531,000



1,596,000



2,816,000



62,000



57,000Capital Leases


876,000



115,000



168,000



169,000



424,000Operating Leases:Real Estate


22,027,000



3,971,000



7,082,000



5,421,000



5,553,000Vehicles


749,000



493,000



256,000







Equipment


260,000



113,000



124,000



22,000



1,000Construction Contracts


552,000



552,000











Laboratory Purchase Obligations


300,000



300,000











TOTAL

$
70,618,000


$
12,140,000


$
46,769,000


$
5,674,000


$
6,035,000        20




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##### Table of Contents



Results
    of Operations
    Years Ended December 31,2006


2007


2008Net sales


100.0
%


100.0
%


100.0
%Cost of goods sold


58.8



57.4



59.5Gross profit


41.2



42.6



40.5Selling, general and administrative expenses


33.4



34.3



34.2Goodwill impairment










4.0Operating income


7.8



8.3



2.3Other expense


0.5



0.5



0.4Interest expense


1.0



1.6



1.3Income before provision for income taxes


6.3



6.2



0.6Provision for income taxes


2.5



2.3



1.1Net income (loss)


3.8
%


3.9
%


(0.5
)%   Year
    Ended December 31, 2008 Compared with Year Ended
    December 31, 2007
  Net
    Sales
      Cost of
    Goods Sold
   21




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##### Table of Contents



Selling,
    General and Administrative Expenses
      
    Additional operating and amortization expense associated with
    the Dental Art acquisition  $501,000;
    Increases in delivery costs, resulting primarily from cost
    increases in fuel and delivery services  $694,000;
    Increases in selling expenses, including $271,000 in increased
    marketing expense at Keller and $454,000 in increased sales
    compensation, offset by decreases in customer rewards program
    expenses of $273,000  $507,000;
    Increases in administrative expenses at the laboratory level,
    including $852,000 in increased compensation primarily resulting
    from increases to base pay of $485,000 related to the change in
    the Laboratory Plan, offset by decreases to depreciation expense
    and losses on asset disposals of
    $189,000  $758,000;
    Increases in salaries and benefits at the corporate
    level $649,000; and;
    Decrease of the cash surrender value of life insurance policies
    as a result of market value declines, net of decreases in the
    related deferred compensation accruals for our supplemental
    executive retirement plans  $730,000;    
    Decreases in laboratory incentive compensation as a result of
    the Laboratory Plan restructuring  $3,281,000.
    Decreases in executive incentive compensation accruals due to
    our financial results  $400,000; and
    Decrease in amortization due to fully amortized non-compete
    agreements  $193,000.  Goodwill
    Impairment
   22




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Operating
    Income
    Interest
    Expense
    Provision
    for Income Taxes
    Net
    Income
    Operating
    Segment Results
    23




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##### Table of Contents



Year Ended December 312007


2008


$ Change


% ChangeRevenue:NDX Laboratories

$
127,388,588


$
126,240,949


$
(1,147,639
)


(0.9
)%Green Dental


19,859,770



20,724,865



865,095



4.4
%Keller


23,843,093



25,987,992



2,144,899



9.0
%Subtotal


171,091,451



172,953,806



1,862,355



1.1
%Less: Inter-segment Revenues:NDX Laboratories


370,913



438,200



67,287



18.1
%Green Dental


199,525



369,526



170,001



85.2
%Keller


160,384



471,645



311,261



194.1
%Net Sales

$
170,360,629


$
171,674,435


$
1,313,806



0.8
%Laboratory Operating Income:NDX Laboratories

$
17,572,491


$
15,059,508


$
(2,512,983
)


(14.3
)%Green Dental


4,665,630



4,795,136



129,506



2.8
%Keller


3,228,640



3,660,913



432,273



13.4
%Laboratory Operating Income

$
25,466,761


$
23,515,557


$
(1,951,204
)


(7.7
)%   NDX
    Laboratories
      Green
    Dental Laboratory
   24




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##### Table of Contents



Keller
    Group
      Year
    Ended December 31, 2007 Compared with Year Ended
    December 31, 2006
  Net
    Sales
    Cost of
    Goods Sold
     25




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##### Table of Contents



Selling,
    General and Administrative Expenses
      
    Additional operating costs associated with recent
    acquisitions  $7,078,000;
    Increases in salaries and benefits at the corporate level due to
    additional management staff, net of related reductions in
    consulting expense  $895,000;
    Increases in executive incentive compensation 
    $298,000;
    Increases in deferred compensation and post-retirement medical
    benefits, net of increases in related cash surrender value of
    life insurance policies  $158,000;
    Increases in delivery expenses, excluding salaries and
    benefits  $330,000;
    Increases in selling expenses, including $175,000 in increased
    compensation  $251,000; and
    Absence of gains on the sale of fixed assets in 2007, compared
    with the gain recorded in 2006 primarily resulting from the sale
    of our former laboratory facility in Houston, Texas 
    $479,000;    
    Decreases in administrative and delivery salaries and benefits
    at the laboratory level  $655,000;
    Decreases in health insurance expense 
    $137,000; and
    Decreases in laboratory incentive compensation 
    $209,000.  Operating
    Income
    Interest
    Expense
    Provision
    for Income Taxes
   26




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##### Table of Contents



Net
    Income
    Operating
    Segment Results
    Year Ended December 312006


2007


$ Change


% ChangeRevenue:NDX Laboratories

$
126,543,054


$
127,388,588


$
845,534



0.7
%Green Dental


18,817,607



19,859,770



1,042,163



5.5
%Keller


4,863,988



23,843,093



18,979,105



Subtotal


150,224,649



171,091,451



20,866,802



13.9
%Less: Inter-segment Revenues:NDX Laboratories






370,913



370,913



Green Dental


117,242



199,525



82,283



70.2
%Keller






160,384



160,384



Net Sales

$
150,107,407


$
170,360,629


$
20,253,222



13.5
%Laboratory Operating Income:NDX Laboratories

$
16,840,606


$
17,572,491


$
731,885



4.3
%Green Dental


4,820,007



4,665,630



(154,377
)


(3.2
)%Keller


446,151



3,228,640



2,782,489



Laboratory Operating Income

$
22,106,764


$
25,466,761


$
3,359,997



15.2
%   NDX
    Laboratories
       27




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##### Table of Contents



Green
    Dental
    Keller
    Critical
    Accounting Policies
    Summary
    of Significant Accounting Policies
  Revenue
    Recognition
  EITF 00-10
  Goodwill
    and Other Indefinite-Lived Intangible Assets Not Subject to
    Amortization
     28




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##### Table of Contents



Intangible
    Assets Subject to Amortization
  02-17 (EITF 02-17),
  Inventories
  (first-in,
  Property,
    Plant and Equipment
    Buildings


25 yearsFurniture and fixtures


5 - 10 yearsLaboratory equipment


5 - 20 yearsComputer equipment


3 - 5 years  29




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##### Table of Contents



Impairment
    of Long-Lived Assets
    Cash
    Surrender of Life Insurance
    Income
    Taxes
    Accounting for Uncertainty in Income Taxes-an
    Interpretation of FASB Statement No. 109 
  Fair
    Value Measurements
  contract-by-contract
  FSP 157-2
 30




---



##### Table of Contents



Level 1:
  Level 2:
  Level 3:
    Quoted Prices in


Significant Other


SignificantAs of December 31,


Active Markets


Observable Inputs


Unobservable InputsDescription

2008


(Level 1)


(Level 2)


(Level 3)Financial AssetsCash Surrender Value of Life Insurance

$
5,479,000






$
5,479,000



Total Financial Assets

$
5,479,000






$
5,479,000



   Recent
    Accounting Pronouncements
   
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk       31




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##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Quarterly
    Results
    Three Months EndedMarch 31,


June 30,


Sept. 30,


Dec. 31,


March 31,


June 30,


Sept. 30,


Dec. 31,2007


2007


2007


2007


2008


2008


2008


2008(Dollars in thousands except per share data)Net sales

$
43,343


$
44,434


$
41,204


$
41,380


$
43,529


$
44,580


$
42,302


$
41,264Gross profit

$
19,060


$
19,560


$
17,491


$
16,510


$
18,210


$
18,665


$
16,552


$
16,062Gross margin


44.0
%


44.0
%


42.4
%


39.9
%


41.8
%


41.9
%


39.1
%


38.9
%Operating income (loss)

$
4,520


$
4,875


$
3,036


$
1,630


$
3,389


$
3,861


$
2,183


$
(5,482
)Operating margin


10.4
%


11.0
%


7.4
%


3.9
%


7.8
%


8.7
%


5.2
%


(13.3
)%Net income (loss)

$
2,244


$
2,417


$
1,308


$
656


$
1,681


$
1,937


$
791


$
(5,286
)Net income (loss) per diluted share

$
0.40


$
0.43


$
0.23


$
0.12


$
0.30


$
0.34


$
0.14


$
(0.93
)     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
  Rules 13a-15(e) 15d-15(e),
 32




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##### Table of Contents



Managements
    Report on Internal Control over Financial Reporting
  Rules 13a-15(f) 15d-15(f). Internal
    Control  Integrated Framework
    Form 10-K,
  Changes
    in Internal Control over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
 
  Item 9B.
    Other
    Information  Amendments
    to National Dentex Corporation Key Employee and Corporate
    Support Group Incentive Compensation Plan
  Plan
  Amendment
    No. 5 to the Second Agreement
  Amendment Second Agreement
 33




---



##### Table of Contents



PART III
 
  Item 10.
    Directors,
    Executive Officers and Corporate Governance    www.nationaldentex.com.
 
  Item 11.
    Executive
    Compensation   
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Shareholder Matters   
  Item 13.
    Certain
    Relationships and Related Transactions   
  Item 14.
    Principal
    Accountant Fees and Services   
  PART IV
 
  Item 15.
    Exhibits
    and Financial Statement Schedules    page F-1.
        Form 10-K
    Form 10-K
     34




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
  PageFinancial Statements:The consolidated financial statements of National Dentex
    Corporation included herein are as listed below:Report of Independent Registered Public Accounting Firm


F-2Consolidated Balance Sheets as of December 31, 2007 and 2008


F-3Consolidated Statements of Income for each of the three years in
    the period ended December 31, 2008


F-4Consolidated Statements of Stockholders Equity for each of
    the three years in the period ended December 31, 2008


F-5Consolidated Statements of Cash Flows for each of the three
    years in the period ended December 31, 2008


F-6Notes to Consolidated Financial Statements


F-7  F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    Internal Control - Integrated Framework
          
   F-2




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
  
  CONSOLIDATED
    BALANCE SHEETS
  December 31,


December 31,2007


2008ASSETSCURRENT ASSETS:Cash and cash equivalents

$
1,689,391


$
2,109,943Accounts receivable:Trade, less allowance of $359,000 in 2007 and $492,000 in 2008


16,073,716



16,701,139Other


2,484,821



2,527,168Inventories


7,354,062



6,991,385Prepaid expenses


4,298,891



3,688,057Deferred tax asset


964,892



931,919Property held for sale


259,000



69,822Total current assets


33,124,773



33,019,433PROPERTY, PLANT AND EQUIPMENT:Land and buildings


7,835,015



7,535,015Leasehold and building improvements


16,202,649



18,890,911Laboratory equipment


21,327,055



22,503,086Furniture and fixtures


7,789,754



8,721,72453,154,473



57,650,736Less  Accumulated depreciation and amortization


22,279,229



24,213,721Net property, plant and equipment


30,875,244



33,437,015OTHER ASSETS, net:Goodwill


68,987,397



69,384,320Trade names


8,998,123



9,977,917Customer relationships


5,575,194



6,210,176Non-competition agreements


1,743,867



1,583,895Other assets


6,334,545



7,902,147Total other assets


91,639,126



95,058,455Total assets

$
155,639,143


$
161,514,903LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Revolving line of credit

$
4,547,101


$
2,939,978Current portion of long-term debt


5,064,174



5,115,032Accounts payable


5,810,303



3,541,996Accrued liabilities:Payroll and employee benefits


6,545,770



7,574,971Current portion of deferred acquisition costs


1,278,861



300,000Other accrued expenses


3,878,207



4,019,992Total current liabilities


27,124,416



23,491,969LONG-TERM LIABILITIES:Long-term obligations


24,630,801



34,142,891Deferred compensation


5,593,067



6,114,609Other accrued expenses


961,453



1,419,561Deferred tax liability


6,137,143



5,853,821Total long-term liabilities


37,322,464



47,530,882COMMITMENTS AND CONTINGENCIES (Note 8)STOCKHOLDERS EQUITY:Preferred stock, $.01 par valueAuthorized  500,000 sharesNone issued and outstanding






Common stock, $.01 par valueAuthorized  8,000,000 sharesIssued and Outstanding  5,582,119 shares at
    December 31, 2007 and 5,663,749 shares at
    December 31, 2008


55,821



56,637Paid-in capital


18,501,175



19,522,536Retained earnings


72,189,938



71,312,895Other comprehensive income (loss)


445,329



(400,016
)Total stockholders equity


91,192,263



90,492,052Total liabilities and stockholders equity

$
155,639,143


$
161,514,903    F-3




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##### Table of Contents



NATIONAL
    DENTEX CORPORATION
  CONSOLIDATED STATEMENTS OF INCOME
  Years EndedDecember 31,


December 31,


December 31,2006


2007


2008Net sales

$
150,107,407


$
170,360,629


$
171,674,435Cost of goods sold


88,269,509



97,738,785



102,184,879Gross profit


61,837,898



72,621,844



69,489,556Selling, general and administrative expenses


50,096,653



58,561,368



58,587,890Goodwill impairment










6,950,000Operating income


11,741,245



14,060,476



3,951,666Other expense


786,292



771,660



746,633Interest expense


1,522,778



2,802,944



2,110,113Income before provision for income taxes


9,432,175



10,485,872



1,094,920Provision for income taxes


3,669,116



3,860,213



1,971,963Net income (loss)

$
5,763,059


$
6,625,659


$
(877,043
)Net income (loss) per share  basic

$
1.05


$
1.20


$
(0.16
)Net income (loss) per share  diluted

$
1.01


$
1.17


$
(0.16
)Weighted average shares outstanding  basic


5,484,741



5,540,496



5,631,450Weighted average shares outstanding  diluted


5,732,106



5,665,042



5,631,450    F-4




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
 
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
  Common Stock








CumulativeNumber of


$.01 Par


Paid-in


Retained


TranslationShares


Value


Capital


Earnings


Adjustment


TotalBALANCE, December 31, 2005


5,411,463


$
54,114


$
15,603,188


$
60,416,779


$



$
76,074,081Cumulative effect of SAB 108 adjustment (see Note 2)














(615,559
)






(615,559
)Issuance of 71,567 shares of common stock under the stock
    option plans


71,567



716



939,227











939,943Issuance of 25,318 shares of common stock under the
    employee stock purchase program


25,318



253



432,377











432,630Tax benefit associated with exercise of stock options










96,105











96,105Net income














5,763,059







5,763,059Issuance of 1,064 shares of common stock as directors
    fees


1,064



11



23,983











23,994Stock compensation expense










201,290











201,290Cumulative translation adjustment


















(121,911
)


(121,911
)BALANCE, December 31, 2006


5,509,412



55,094



17,296,170



65,564,279



(121,911
)


82,793,632Issuance of 42,450 shares of common stock under the stock
    option plans


42,450



425



567,407











567,832Issuance of 24,030 shares of common stock under the
    employee stock purchase program


24,030



240



295,325











295,565Tax benefit associated with exercise of stock options










15,859











15,859Net income














6,625,659







6,625,659Issuance of 6,227 shares of common stock as directors
    fees


6,227



62



165,302











165,364Stock compensation expense










161,112











161,112Cumulative translation adjustment


















567,240



567,240BALANCE, December 31, 2007


5,582,119



55,821



18,501,175



72,189,938



445,329



91,192,263Issuance of 12,000 shares of common stock under the stock
    option plans


20,250



202



188,799











189,001Issuance of 33,375 shares of common stock under the
    employee stock purchase program


33,375



334



371,308











371,642Tax benefit associated with exercise of stock options










12,037











12,037Net loss














(877,043
)






(877,043
)Issuance of 28,005 shares of common stock as
    directors fees


28,005



280



269,720











270,000Stock compensation expense










179,497











179,497Cumulative translation adjustment


















(845,345
)


(845,345
)BALANCE, December 31, 2008


5,663,749


$
56,637


$
19,522,536


$
71,312,895


$
(400,016
)

$
90,492,052    F-5




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
 
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years EndedDecember 31,


December 31,


December 31,2006


2007


2008Cash flows from operating activities:Net income (loss)

$
5,763,059


$
6,625,659


$
(877,043
)Adjustments to reconcile net income to net cash provided by
    operating activities, net of effects of acquisitions:Depreciation and amortization


4,814,580



5,338,432



6,011,564Goodwill impairment










6,950,000Loss (gain) on disposal of property, plant and equipment


(329,215
)


150,109



(2,792
)Benefit for deferred income taxes


(1,379,347
)


(265,149
)


(1,099,572
)Impairment of long-lived assets


207,847



94,000



44,000Tax benefit associated with exercise of stock options


96,105



15,859



12,037Provision for bad debts


30,702



151,330



148,068Losses on write-down of inventories


162,711



107,791



219,255Stock-based compensation expense


225,284



326,477



449,498Other non-cash items


(117,870
)


489,375



Changes in operating assets and liabilities, net of effects of
    acquisitions:Increase in accounts receivable


(479,582
)


(701,142
)


(5,886
)(Increase) decrease in inventories


(250,830
)


(226,117
)


355,532Decrease (increase) in prepaid expenses


1,269,889



(2,363,317
)


586,798Decrease (increase) in other assets


3,660



(19,635
)


616,081Increase (decrease) in accounts payable and accrued liabilities


1,071,767



2,828,757



(80,844
)Net cash provided by operating activities


11,088,760



12,552,429



13,326,696Cash flows from investing activities:Payment for acquisitions, net of cash acquired


(21,402,927
)






(10,000,000
)Payment of deferred purchase price


(3,205,241
)


(2,158,880
)


(1,577,720
)Increase in notes receivable










(2,000,000
)Premiums paid for life insurance policies


(519,050
)


(386,621
)


(324,505
)Proceeds received from life insurance policies


20,194



46,700



87,734Additions to property, plant and equipment


(4,899,460
)


(7,535,578
)


(7,024,076
)Cash proceeds from the disposition of property, plant, and
    equipment


920,333



183,373



322,589Net cash used in investing activities


(29,086,151
)


(9,851,006
)


(20,515,978
)Cash flows from financing activities:Borrowings of revolving line of credit


1,343,228



55,370,014



55,555,496Repayments of revolving line of credit






(52,166,141
)


(57,162,619
)Borrowings of long-term debt


19,625,000







13,800,000Repayments of long-term debt


(4,092,355
)


(5,775,105
)


(5,109,985
)Net proceeds from issuance of common stock


1,372,573



863,396



560,644Net cash provided (used) by financing activities


18,248,446



(1,707,836
)


7,643,536Effect of Exchange rate changes on cash


(4,041
)


47,539



(33,702
)Net increase in cash and cash equivalents


247,014



1,041,126



420,552Cash and cash equivalents at beginning of period


401,251



648,265



1,689,391Cash and cash equivalents at end of period

$
648,265


$
1,689,391


$
2,109,943Supplemental disclosures of cash flow information:Interest paid (net of capitalized interest of $18,000 in 2006,
    $37,000 in 2007 and $26,000 in 2008)

$
1,647,972


$
2,853,706


$
2,211,714Income taxes paid

$
4,468,811


$
5,792,166


$
3,156,077Supplemental schedule of non-cash investing and financing
    activities:Capital lease obligations

$



$



$
(881,000
)The Company purchased the operations of certain dental
    laboratories in 2006 and 2008. In connection with these
    acquisitions, liabilities were assumed as follows:Fair value of assets acquired including acquired cash

$
28,821,000


$



$
11,959,000Cash purchase price


(21,725,000
)






(10,112,000
)Deferred purchase price at date of acquisition


(967,000
)






Liabilities assumed

$
6,129,000


$



$
1,847,000  F-6




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##### Table of Contents



NATIONAL
    DENTEX CORPORATION
 
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    December 31, 2008
  (1)
    Organization    (2)
    Summary
    of Significant Accounting Policies  Principles
    of Consolidation
    Revenue
    Recognition
  EITF 00-10
  Staff
    Accounting Bulletin No. 108
  Considering the Effects of Prior Year Misstatements
    When Quantifying Misstatements in Current Year Financial
    Statements
   F-7




---



##### Table of Contents



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
  Business Combinations 02-17 Recognition of Customer Relationship Intangible Assets
    Acquired in a Business Combination
  Advertising
    and Promotional Costs
  93-7,
 F-8




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Cash
    and Cash Equivalents
    Accounts
    Receivable and Allowance for Doubtful Accounts
      2007


2008Trade

$
16,432,268


$
17,193,121Allowance for doubtful accounts


(358,552
)


(491,982
)Employee


85,850



298,893Income Taxes


1,618,647



1,400,548Other


780,324



827,727Total Receivables

$
18,558,537


$
19,228,307     Balance at


Charged to





Acquired in


Balance atBeginning


Costs and





Purchase Business


End ofof Period


Expenses


Write-offs


Combinations


PeriodAllowance for Doubtful Accounts:December 31, 2006


299,781



30,702



94,224



53,733



289,992December 31, 2007


289,992



151,330



82,770







358,552December 31, 2008


358,552



148,069



84,639



70,000



491,982   Inventories
    December 31, 2007


December 31, 2008Raw Materials

$
5,941,931


$
5,783,468Work in Process


1,160,686



985,278Finished Goods


251,445



222,639$
7,354,062


$
6,991,385   (first-in,
 F-9




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Property,
    Plant and Equipment
    Buildings


25 yearsFurniture and fixtures


5 - 10 yearsLaboratory equipment


5 - 20 yearsComputer equipment


3 - 5 years         Impairment
    of Long-Lived Assets
    Cash
    Surrender of Life Insurance
    Income
    Taxes
    Accounting for Uncertainty in Income Taxes-an
    Interpretation of FASB Statement No. 109 
 F-10




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Earnings
    per Share
    Years Ended December 31,2006


2007


2008Weighted average number of shares used in basic earnings per
    share calculation


5,484,741



5,540,496



5,631,450Incremental shares under option and employee stock purchase plans


247,365



124,546



Weighted average number of shares used in diluted earnings per
    share calculation


5,732,106



5,665,042



5,631,450Shares under option plans excluded in computation of diluted
    earnings per share due to anti-dilutive effects


1,927



1,215



591,486   Use of
    Estimates
    Disclosures
    about the Fair Value of Financial Instruments
    Comprehensive
    Income
    Year Ended December 31,2006


2007


2008Net income (loss)

$
5,763,059


$
6,625,659


$
(877,043
)Foreign currency translation adjustments


(121,911
)


567,240



(845,345
)Total comprehensive income (loss)

$
5,641,148


$
7,192,899


$
(1,722,388
)    F-11




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Disclosures
    about Segments of an Enterprise
      Fair
    Value Measurements
  contract-by-contract
  FSP 157-2
      Level 1:
  Level 2:
  Level 3:
 F-12




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Quoted Prices in


Significant Other


SignificantAs of


Active Markets


Observable Inputs


UnobservableDescription

December 31, 2008


(Level 1)


(Level 2)


Inputs (Level 3)Financial AssetsCash Surrender Value of Life Insurance

$
5,479,000






$
5,479,000



Total Financial Assets

$
5,479,000






$
5,479,000



   Recent
    Accounting Pronouncements
    (3)
    Acquisitions      Business
    Combinations
    Acquisition

Form of Acquisition

Location

Period AcquiredDental Art Laboratories, Inc.


All Outstanding Capital Stock



Lansing, MI



September, 2008  F-13




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      TotalDental Art Laboratories, Inc.

AcquiredTotal Purchase Price

$
10,112,000Less Fair Market Values Assigned to Tangible Assets and
    Liabilities:Cash


112,000Accounts receivable


883,000Inventories


252,000Property, plant and equipment


332,000Other assets


140,000Accounts payable


(192,000
)Accrued liabilities and other


(1,655,000
)Less Fair Market Values Assigned to Intangible Assets:Customer relationships


1,500,000Trade names


1,100,000Non-compete agreements


150,000Goodwill

$
7,490,000       Years EndedDecember 31, 2007


December 31, 2008Net sales

$
178,140,000


$
176,858,000Net income (loss)


7,324,000



(413,000
)Net income (loss) per share:Basic

$
1.32


$
(0.07
)Diluted

$
1.29


$
(0.07
)  F-14




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (4)
    Goodwill
    and Other Intangible Assets    Years EndedDecember 31, 2007


December 31, 2008Balance as of January 1

$
68,001,000


$
68,987,000Goodwill acquired during the year






7,490,000Goodwill impairment






(6,950,000
)Adjustments related to contingent consideration


667,000



300,000Adjustments related to the finalization of preliminary purchase
    estimates


(31,000
)


Effects of exchange rate changes


350,000



(443,000
)Balance as of December 31

$
68,987,000


$
69,384,000     Years EndedDecember 31, 2007


December 31, 2008NDX Laboratories

$
37,636,000


$
38,033,000Green Dental Laboratory


15,208,000



15,208,000Keller Group


16,143,000



16,143,000Total

$
68,987,000


$
69,384,000        F-15




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Trade
    Names
      Years EndedDecember 31, 2007


December 31, 2008Beginning of year

$
9,032,000


$
8,998,000Trade names acquired during the year






1,100,000Effects of exchange rate changes


60,000



(76,000
)Trade names


9,092,000



10,022,000Less: Charged to impairment expense


(94,000
)


(44,000
)Trade names  end of year

$
8,998,000


$
9,978,000   Customer
    Relationships
  EITF 02-17,
 F-16




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years EndedDecember 31, 2007


December 31, 2008Beginning of year

$
7,945,000


$
7,993,000Customer relationships acquired during the year






1,500,000Effects of exchange rate changes


48,000



(54,000
)Customer relationships, gross


7,993,000



9,439,000Less: Accumulated amortization


(2,418,000
)


(3,229,000
)Customer relationships, net  end of year

$
5,575,000


$
6,210,000     2009

$
891,0002010


891,0002011


891,0002012


821,0002013


610,000Thereafter


2,106,000$
6,210,000   Non-competition
    Agreements
    Years EndedDecember 31,


December 31,2007


2008Beginning of year

$
10,546,000


$
10,553,000Non-competition agreements acquired during the year






150,000Non-competition agreements, gross


10,546,000



10,703,000Less: Accumulated amortization


(8,809,000
)


(9,112,000
)Effects of exchange rate changes


7,000



(7,000
)Non-competition agreements, net

$
1,744,000


$
1,584,000    F-17




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009

$
295,0002010


286,0002011


246,0002012


192,0002013


170,000Thereafter


395,000$
1,584,000   (5)
    Income
    Taxes    Years EndedDecember 31,


December 31,


December 31,2006


2007


2008Federal Current

$
4,229,525


$
2,985,255


$
2,134,884Deferred


(1,220,661
)


(189,842
)


(851,093
)3,008,864



2,795,413



1,283,791State Current


818,938



860,500



646,717Deferred


(158,686
)


(25,700
)


(188,545
)660,252



834,800



458,172Foreign Current


818,938



237,848



240,108Deferred


(158,686
)


(7,848
)


(10,108
)660,252



230,000



230,000$
3,669,116


$
3,860,213


$
1,971,963    F-18




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2008Deferred Tax Assets:Non-compete agreements

$
1,046,036


$
900,252Other liabilities


2,703,010



2,917,310Vacation benefits


714,177



745,677Inventory basis differences


274,563



251,687Receivables basis differences


11,873



44,405Total deferred tax assets


4,749,659



4,859,331Deferred Tax Liabilities:Depreciation differences


(2,220,792
)


(2,146,150
)Intangible amortization differences


(7,701,118
)


(7,635,082
)Total deferred tax liabilities


(9,921,910
)


(9,781,232
)Net deferred tax asset/liability

$
(5,172,251
)

$
(4,921,901
)     December 31,


December 31,


December 31,2006


2007


2008Statutory federal income tax rate


35.0
%


35.0
%


34.0
%State income tax, net of federal income tax benefit


4.6



4.9



27.6Research and experimentation credit










(55.1
)Non-deductible goodwill










151.3Cash surrender value of life insurance


(.2
)


(.7
)


21.9Domestic production deduction


(1.0
)


(2.2
)


(13.2
)Other


.5



(.2
)


13.6Effective income tax rate


38.9
%


36.8
%


180.1
%    F-19




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Unrecognized tax benefits at January 1, 2007

$
296,000Additions based on tax positions related to the current year


1,599,000Subtractions for tax positions of prior years


(138,000
)Unrecognized tax benefits at December 31, 2007


2,033,000Additions based on tax positions related to the current year


Subtractions for tax positions of prior years


(536,000
)Unrecognized tax benefits at December 31, 2008

$
1,497,000     (6)
    Lines of
    Credit and Term Loan Facility       F-20




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Long-Term Obligations:
  December 31,


December 31,2007


2008Term note

$
29,583,000


$
24,583,000Borrowings classified as long term under the revolving line of
    credit






13,800,000Borrowings classified as short term under the revolving line of
    credit






2,940,000Other long-term debt


112,000



875,000Total long-term debt


29,695,000



42,198,000Less: current maturities


5,064,000



5,115,000Long-term debt, less current portion

$
24,631,000


$
37,083,000     December 31, 2008Principal DueFiscal 2009


5,115,000Fiscal 2010


5,083,000Fiscal 2011


31,407,000Fiscal 2012


84,000Thereafter


509,000Total

$
42,198,000   (7)
    Benefit
    Plans   F-21




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            (8)
    Commitments
    and Contingencies  Operating
    Leases
    Year

Amount2009

$
4,577,0002010


4,053,0002011


3,409,0002012


3,095,0002013


2,348,000Thereafter


5,555,000$
23,037,000  F-22




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Employment
    Contracts and
    Change-in-Control
    Arrangements
  change-in-control change-in-control
  (9)
    Stock
    Options and Employee Stock Purchase Plan  Stock
    Option Plans
      2006


2007


2008Weighted Average





Weighted Average





Weighted AverageShares


Exercise Price


Shares


Exercise Price


Shares


Exercise PriceOutstanding at beginning of year


359,181


$
12.14



308,544


$
12.10



243,565


$
11.79Granted






















Exercised


(45,592
)


12.35



(39,900
)


13.34



(20,250
)


9.33Canceled


(5,045
)


12.78



(25,079
)


13.15



(68,985
)


11.64Outstanding at end of year


308,544


$
12.10



243,565


$
11.79



154,330


$
12.18Exercisable at end of year


308,544


$
12.10



243,565


$
11.79



154,330


$
12.18Weighted average fair value of optionsgranted

$







$







$
   Options Outstanding


Options ExercisableNumber


Weighted Average


Weighted Average


Number


Weighted AverageOutstanding at


Remaining


Exercise Price


Exercisable


Exercise PriceExercise Price Range

12/31/08


Contractual Life


per Share


at 12/31/08


Per Share$8.67 per share


45,000



1.3


$
8.67



45,000


$
8.67$11.17 per share


3,180



1.0



11.17



3,180



11.17$13.50 to $16.59 per share


106,150



2.1



13.70



106,150



13.70154,330



1.9


$
12.18



154,330


$
12.18    F-23




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2006


2007


2008Weighted Average





Weighted Average





Weighted AverageShares


Exercise Price


Shares


Exercise Price


Shares


Exercise PriceOutstanding at beginning of year


358,925


$
14.52



331,950


$
14.52



318,000


$
14.53Granted


















275,000



12.00Exercised


(25,975
)


14.52



(2,550
)


13.96







Canceled


(1,000
)


13.37



(11,400
)


14.51



(30,000
)


15.22Outstanding at end of year


331,950


$
14.52



318,000


$
14.53



563,000


$
13.25Exercisable at end of year


331,950


$
14.52



318,000


$
14.53



288,000


$
14.45Weighted average fair value of optionsgranted

$







$







$
   Options Outstanding


Options ExercisableNumber


Weighted Average


Weighted Average


Number


Weighted AverageOutstanding at


Remaining


Exercise Price


Exercisable


Exercise PriceExercise Price Range

12/31/08


Contractual Life


Per Share


at 12/31/08


Per Share$12.00 per share


275,000



9.6


$
12.00






$
$13.37 per share


156,650



3.0



13.37



156,650



13.37$13.93 to $16.45 per share


131,350



2.9



15.75



131,350



15.75563,000



6.2


$
13.25



288,000


$
14.45     (10)
    Stock-Based
    Compensation  Share Based Payments
 F-24




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Accounting for Stock Issued to Employees
         F-25




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    LTIP Plan


2001 PlanWeighted-





Weighted-Shares


Average


Shares


AverageUnderlying


Exercise


Underlying


ExerciseOptions


Price


Options


PriceOutstanding December 31, 2006


308,544


$
12.10



331,950


$
14.52Granted














Exercised


(39,900
)


13.34



(2,550
)


13.96Forfeited


(25,079
)


13.15



(11,400
)


14.51Outstanding December 31, 2007


243,565


$
11.79



318,000


$
14.53Granted










275,000



12.00Exercised


(20,250
)


9.33







Forfeited


(68,985
)


11.64



(30,000
)


15.22Outstanding December 31, 2008


154,330


$
12.18



563,000


$
13.25Exercisable at end of period:


154,330


$
12.18



563,000


$
13.25       Restricted Stock


Restricted Stock UnitsWeighted-Average





Weighted-AverageGrant Date Fair





Grant Date FairNumber of Shares


Value


Number of Shares


ValueNonvested December 31, 2006














Granted


6,001


$
17.99



6,003


$
17.99Vested


1,596


$
22.55



3,192


$
22.55Nonvested December 31, 2007


6,001


$
17.99



6,003


$
17.99Granted


20,280


$
10.65



10,140


$
10.65Vested


15,373


$
15.44



12,364


$
17.29Nonvested December 31, 2008


15,505


$
11.39



6,971


$
10.65    F-26




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     January 1-


April 1-March 31,


December 31,2008


2008Weighted-Average Grant Date Fair Value

$
4.18


$
3.91Risk-free Interest Rate


4.92
%


2.25
%Expected Volatility


30.29
%


40.54
%Expected Holding Period


1.0 Year



1.0 YearExpected Forfeiture Rate


9.67
%


6.70
%Expected Dividends


None



None   January 1-


April 1-March 31,


December 31,2007


2007Weighted-Average Grant Date Fair Value

$
6.69


$
4.18Risk-free Interest Rate


5.27
%


4.92
%Expected Volatility


33.19
%


30.29
%Expected Holding Period


1.0 Year



1.0 YearExpected Forfeiture Rate


5.70
%


9.67
%Expected Dividends


None



None   1-year 1-year
  Accounting for Stock-Based
    Compensation  Transition and Disclosure 
    an amendment of FASB Statement No. 123. Accounting for Stock-Based Compensation
  (11)
    Segment
    Information  Disclosures
    about Segments of an Enterprise and Related Information.
   F-27




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2006


2007


2008Revenue:NDX Laboratories

$
126,543,054


$
127,388,588


$
126,240,949Green Dental Laboratory


18,817,607



19,859,770



20,724,865Keller Group


4,863,988



23,843,093



25,987,992Subtotal


150,224,649



171,091,451



172,953,806Inter-segment Revenues:NDX Laboratories






370,913



438,200Green Dental Laboratory


117,242



199,525



369,526Keller Group






160,384



471,645Net Sales

$
150,107,407


$
170,360,629


$
171,674,435Laboratory Operating Income:NDX Laboratories

$
16,840,606


$
17,572,491


$
15,059,508Green Dental Laboratory


4,820,007



4,665,630



4,795,136Keller Group


446,151



3,228,640



3,660,913$
22,106,764


$
25,466,761


$
23,515,557Total Assets:NDX Laboratories

$
87,414,371


$
87,811,020


$
93,661,985Green Dental Laboratory


26,537,905



26,756,893



26,140,524Keller Group


24,848,553



25,769,930



25,634,168Corporate


9,689,455



15,301,300



16,078,226$
148,490,284


$
155,639,143


$
161,514,903Capital Expenditures:NDX Laboratories

$
4,670,309


$
4,604,908


$
5,606,100Green Dental Laboratory


350,299



463,763



161,415Keller Group


45,073



756,581



420,628Corporate


519,572



1,871,058



899,243$
5,585,253


$
7,696,310


$
7,087,386Depreciation & Amortization on Property,
    Plant & Equipment:NDX Laboratories

$
2,152,833


$
2,579,090


$
3,114,183Green Dental Laboratory


271,476



330,820



330,698Keller Group


98,433



452,935



532,410Corporate


611,757



691,769



894,591$
3,134,499


$
4,054,614


$
4,871,882  F-28




---



##### Table of Contents



NATIONAL
    DENTEX CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2006


2007


2008Laboratory Operating Income

$
22,106,764


$
25,466,761


$
23,515,557Less:Corporate Selling, General and Administrative Expenses


9,623,752



10,894,225



12,220,728Amortization Expense  Intangible Assets


1,528,059



1,283,720



1,139,796Goodwill Impairment










6,950,000Add:Other Expense


786,292



771,660



746,633Consolidated Operating Income

$
11,741,245


$
14,060,476


$
3,951,666  F-29




---



##### Table of Contents



SIGNATURES
      By:
    /s/  DAVID
    L. BROWN        Signature

Title

Date/s/  DAVID
    V. HARKINSDavid
    V. Harkins

Chairman of the Board and Director

March 16, 2009/s/  JACK
    R. CROSBYJack
    R. Crosby

Director

March 16, 2009/s/  THOMAS
    E. CALLAHANThomas
    E. Callahan

Director

March 16, 2009/s/  NORMAN
    F. STRATENorman
    F. Strate

Director

March 16, 2009/s/  JAMES
    E. MULVIHILL, D.M.D.James
    E. Mulvihill, D.M.D.

Director

March 16, 2009/s/  DAVID
    L. BROWNDavid
    L. Brown

President, CEO, and Director
    (Principal Executive Officer)

March 16, 2009/s/  WAYNE
    M. COLLWayne
    M. Coll

Vice President & Chief Financial
    Officer (Principal Financial Officer)

March 16, 2009




---



##### Table of Contents



EXHIBIT INDEX
  Exhibit No.

Description of Exhibit3
.1(2)

Restated Articles of Organization of the Company, filed with the
    Massachusetts Secretary of State on October 14, 1993.3
.2(2)

Articles of Amendment, filed with the Massachusetts Secretary of
    the Commonwealth on September 26, 1995.3
.3(17)

Amended and Restated By-Laws of the Company, as amended on
    March 25, 2008.10
.1(5)*

Amended & Restated 2001 Stock Plan, as amended on
    May 16, 2006.10
.1a(6)*

Form of Annual Director Fee Deferral and Restricted Stock/RSU
    Subscription Agreement.10
.1b(6)*

Form of Restricted Stock Unit Agreement for Employees and
    Directors Under the Companys Amended and Restated 2001
    Stock Plan.10
.1c(6)*

Form of Restricted Stock Agreement (Non-Employee Director).10
.1d(18)*

Amended and Restated 2001 Stock Plan Form of Incentive Stock
    Option Agreement for Employees.10
.1e(18)*

Amended and Restated 2001 Stock Plan Form of Non-Qualified Stock
    Option Agreement for Employees.10
.1f(18)*

Amended and Restated 2001 Stock Plan Form of Restricted Stock
    Agreement for Employees.10
.1g(18)*

Amended and Restated 2001 Stock Plan Form of Restricted Stock
    Unit Agreement for Employees.10
.2(20)*

Form of Amended and Restated Change of Control Severance
    Agreement with David L. Brown, Richard F. Becker, Jr., and
    Arthur B Champagne.10
.3(20)*

Form of Change of Control Severance Agreement with Wayne Coll
    And John F. Green.10
.4(1)*

1992 Long-Term Incentive Plan, as amended.10
.5(1)*

Employment Agreement between the Company and Richard F. Becker,
    Jr., dated April 1, 1995.10
.5a(20)*

First Amendment to Employment Agreement between the Company and
    Richard F. Becker, Jr., dated July 28, 2008.10
.6(1)*

Employment Agreement between the Company and David L. Brown,
    dated April 1, 1995.10
.6a(19)*

Written Summary of Compensation Arrangements with David L.
    Brown, effective June 1, 2008.10
.6b (20)*

First Amendment to Employment Agreement between the Company and
    David L. Brown dated July 28, 2008.10
.7(4)*

National Dentex Corporation Key Employee and Corporate Support
    Group Incentive Compensation Plan.10
.7a*

Amended National Dentex Corporation Key Employee and Corporate
    Support Group Incentive Compensation Plan.10
.8(4)*

National Dentex Corporation Employees Stock Purchase Plan,
    as amended effective April 4, 2000.10
.8a(15)*

Second Amendment to National Dentex Corporation Employees
    Stock Purchase Plan.10
.9(9)

Second Amended and Restated Loan Agreement by and between Bank
    of America, N.A., National Dentex Corporation and Green Dental
    Laboratories, Inc. dated November 7, 2006.10
.9a(14)

Amendment dated October 24, 2007 to Second Amended and
    Restated Loan Agreement by and between Bank of America, N.A.,
    National Dentex Corporation, and its subsidiaries listed therein.10
.9b(13)

Loan Modification Agreement dated as of March 29, 2007 by
    and between Bank of America, N.A., National Dentex Corporation,
    Green Dental Laboratories, Inc., Keller Group, Inc., Keller
    Laboratories, Incorporation  Midwest, and Keller
    Laboratories, Incorporation  Southwest.10
.9c(18)

Amendment No. 2 to Second Amended and Restated Loan
    Agreement by and among Bank of America, N.A., National Dentex
    Corporation and the subsidiaries of National Dentex Corporation
    therein named.10
.9d(21)

Amendment No. 3 to Second Amended and Restated Loan
    Agreement by and between Bank of America, N.A., National Dentex
    Corporation and the subsidiaries therein named dated
    September 2, 2008.10
.9e(22)

Amendment No. 4 to Second Amended and Restated Loan
    Agreement by and between Bank of America, N.A., National Dentex
    Corporation and the subsidiaries therein named dated
    December 11, 2008.




---



##### Table of Contents



Exhibit No.

Description of Exhibit10
.9f

Amendment No. 5 to Second Amended and Restated Loan
    Agreement by and between Bank of America, N.A., National Dentex
    Corporation and the subsidiaries therein named dated
    March 13, 2009.10
.10(4)*

National Dentex Supplemental Executive Retirement Plan.10
.10a(10)*

Amendment No. 1 to Supplemental Executive Retirement Plan
    dated as of January 17, 2006.10
.10b(10)*

Amendment No. 2 to Supplemental Executive Retirement Plan
    dated as of January 17, 2006.10
.10c(23)*

Amendment No. 3 to National Dentex Supplemental Executive
    Retirement Plan, dated December 31, 2008.10
.11(4)*

National Dentex Supplemental Laboratory Executive Retirement
    Plan.10
.11a(23)*

Amendment No. 2 to National Dentex Supplemental Laboratory
    Executive Retirement Plan., dated December 31, 2008.10
.12(3)

Stock Purchase Agreement by and among John W. Green IV, Richard
    M. Nordskog and the Company dated as of March 1, 2005.10
.13(7)*

Supplemental Executive Retirement Plan VI effective as of
    August 11, 2006.10
.13a(23)*

Amendment No. 1 to Supplemental Executive Retirement Plan
    VI effective as of December 31, 2008.10
.14(8)

Stock Purchase Agreement by and among William G. Keller, Thomas
    A. Keller and the Company dated October 5, 2006.10
.15(11)*

Written Summary of Compensation Arrangements with Richard F.
    Becker, Jr., Arthur B. Champagne, Wayne Coll and John W. Green
    effective January 24, 2007.10
.16(24)*

Written Summary of Non-Employee Director Compensation
    Arrangements.10
.17(16)*

Retirement Agreement by and among National Dentex Corporation
    and Donald Merz dated January 2, 2008.21
(12)

Subsidiaries of the Company.23


Consent of PricewaterhouseCoopers LLP.31
.1

Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act (Chief Executive Officer).31
.2

Certification 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).Unless otherwise noted all exhibits are filed herewith. The file
    number for our Exchange Act reports is 0-23092.*  These exhibits relate to a management contract or
    to a compensatory plan or arrangement.     (1)
    
    Incorporated by reference from the
    Form 10-K
    for the fiscal year ended December 31, 2003 as filed with
    the Commission on March 12, 2004.(2)
    
    Incorporated by reference from the Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2004 as filed with
    the Commission on May 24, 2005.(3)
    
    Incorporated by reference from the Current Report on
    Form 8-K/A
    as filed with the Commission on January 26, 2006.(4)
    
    Incorporated by reference from the Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005 as filed with
    the Commission on March 16, 2006.(5)
    
    Incorporated by reference from the Proxy Statement filed on
    Schedule 14A with the Commission on March 29, 2006.(6)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    as filed with the Commission on May 22, 2006.(7)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    as filed with the Commission on August 14, 2006.




---



##### Table of Contents



(8)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    as filed with the Commission on October 6, 2006.(9)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    as filed with the Commission on November 8, 2006.(10)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    as filed with the Commission on December 12, 2006.(11)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    as filed with the Commission on January 29, 2007.(12)
    
    Incorporated by reference from the
    Form 10-K
    for the fiscal year ended December 31, 2006 filed with the
    Commission on March 13, 2007.(13)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    as filed with the Commission on April 2, 2007.(14)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    as filed with the Commission on October 30, 2007.(15)
    
    Incorporated by reference from the Registrants
    Registration Statement on
    Form S-8
    as filed on November 16, 2007.(16)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    as filed with the Commission on January 1, 2008.(17)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    filed with the Commission on March 27, 2008.(18)
    
    Incorporated by reference from the Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2008 as filed with the
    Commission on May 12, 2008.(19)
    
    Incorporated by reference from the Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2008 as filed with the
    Commission on August 8, 2008.(20)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    filed with the Commission on August 1, 2008.(21)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    filed with the Commission on September 8, 2008.(22)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    filed with the Commission on December 17, 2008.(23)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    filed with the Commission on January 6, 2009.(24)
    
    Incorporated by reference from the Form 10-K for the fiscal
    year ended December 31, 2007 filed with the Commission on
    March 12, 2008.