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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K/A



Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



For the fiscal year ended December 31, 2004



Commission File Number: 0-23363



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AMERICAN DENTAL PARTNERS, INC.

(Exact name of registrant as specified in our charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|DELAWARE                                                       |  | 04-3297858                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



American Dental
Partners, Inc.

201 Edgewater Drive, Suite 285

Wakefield, Massachusetts 01880

(Address of principal executive offices, including zip code)



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Registrants telephone number, including area code: (781) 224-0880 / (781) 224-4216 (fax)



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



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange on which registered
|None                |  | None                                     



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



Common
Stock, $0.01 par value

(Title of Class)



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



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



Indicate by check mark whether registrant is an accelerated
filer (as defined by Rule 12b-2 of the Act.)  x



The aggregate market value of the registrants voting common stock held by non-affiliates of the registrant was approximately $124,450,520 on June 30, 2004, based on the closing price of such stock, as reported
on the NASDAQ National Market System.



The number of shares of
Common Stock, $0.01 par value, outstanding as of March 7, 2005 was 7,910,677



DOCUMENTS INCORPORATED BY REFERENCE



Portions of the registrants definitive Proxy Statement for our 2005 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A are incorporated by reference in Part III, Items 10, 11, 12, 13 and 14 of
this Annual Report on Form 10-K.



Explanatory Note



The registrant is filing this Form 10-K/A to correct certain typographical
errors contained in the Report of Independent Registered Public Accounting Firm and Consent of Independent Registered Public Accounting Firm filed as a part of the Form 10-K.



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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



Index to Financial Statements



|                                                                                                     |  |     
|---------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                     |  | Page
|Consolidated Financial Statements                                                                    |  |     
|                                                                                                     | 
|Managements Report on Internal Control Over Financial Reporting                                     |  | 34  
|                                                                                                     | 
|Reports of Independent Registered Public Accounting Firms                                            |  | 35  
|                                                                                                     | 
|Consolidated Balance Sheets as of December 31, 2004 and 2003                                         |  | 38  
|                                                                                                     | 
|Consolidated Statements of Income for the Years Ended December 31, 2004, 2003, and 2002              |  | 39  
|                                                                                                     | 
|Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2004, 2003 and 2002 |  | 40  
|                                                                                                     | 
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2003, and 2002          |  | 41  
|                                                                                                     | 
|Notes to Consolidated Financial Statements                                                           |  | 42  
|                                                                                                     | 
|Financial Statement Schedules                                                                        |  |     
|                                                                                                     | 
|Not Applicable.                                                                                      |  |     



33



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MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING



The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules
13a-15(f) under the Securities Exchange Act of 1934. As required by Rule 13a-15(c) under the Exchange Act, the Companys management evaluated the effectiveness of the design and operation of its internal control over financial reporting based
on the framework in Internal Control - Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, the Companys management concluded that the Companys internal
control over financial reporting as of December 31, 2004 was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles.



Our managements
assessment of the effectiveness of the Companys internal control over financial reporting as of December 31, 2004 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which
appears herein.



34



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Report of Independent Registered Public Accounting Firm



To the Board of Directors and Stockholders of American Dental Partners, Inc:



We have completed an integrated audit of American Dental
Partners Incs 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2004 and our audit of its 2003 consolidated financial statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.



Consolidated financial statements



In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of American Dental Partners, Inc. (the Company) at
December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An
audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



Internal control over financial reporting



Also, in our opinion, managements assessment, included in Managements Report on Internal Controls Over Financial Reporting appearing in Item
8, that the Company maintained effective internal control over financial reporting as of December 31, 2004 based on Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on
Internal ControlIntegrated Framework issued by COSO. The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting. Our responsibility is to express opinions on managements assessment and on the effectiveness of the Companys internal control over financial reporting based on our audit. We conducted our audit of internal control
over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating managements
assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinions.



A companys internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable



35



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assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material
effect on the financial statements.



Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.





/s/    PricewaterhouseCoopers LLP

Boston, Massachusetts

March 11, 2005



36



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Directors

American Dental Partners, Inc.:



We have audited the accompanying consolidated statements of income, stockholders equity and cash flows of American Dental Partners, Inc. (the Company) for the year ended December 31, 2002. These consolidated financial statements are
the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.



We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.



In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the results of operations and cash flows of American Dental Partners, Inc. for the year ended December 31, 2002 in conformity with U.S. generally accepted accounting principles.



/s/    KPMG LLP



Boston, Massachusetts

February 25, 2003



37



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AMERICAN DENTAL PARTNERS, INC.



CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)



|                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ---- | - | ------- | -
|                                                                                                                                                                                                                     |  | December 31, |        
|                                                                                                                                                                                                                     |  | 2004         |         |   | 2003 |  
|ASSETS                                                                                                                                                                                                               |  |              |         |   |      |   |         |  
|Current assets:                                                                                                                                                                                                      |  |              |         |   |      |   |         |  
|Cash and cash equivalents                                                                                                                                                                                            |  | $            | 1,378   |   |      | $ | 1,895   |  
|Receivables due from affiliated dental group practices                                                                                                                                                               |  |              | 13,539  |   |      |   | 16,611  |  
|Inventories                                                                                                                                                                                                          |  |              | 1,789   |   |      |   | 1,901   |  
|Prepaid expenses and other receivables                                                                                                                                                                               |  |              | 3,597   |   |      |   | 2,488   |  
|Deferred income taxes                                                                                                                                                                                                |  |              | 1,271   |   |      |   | 987     |  
|                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  
|Total current assets                                                                                                                                                                                                 |  |              | 21,574  |   |      |   | 23,882  |  
|                                                                                                                                                                                                                     |  |             
|Property and equipment, net                                                                                                                                                                                          |  |              | 39,252  |   |      |   | 35,216  |  
|                                                                                                                                                                                                                     |  |             
|Non-current assets:                                                                                                                                                                                                  |  |              |         |   |      |   |         |  
|Goodwill                                                                                                                                                                                                             |  |              | 5,095   |   |      |   | 5,095   |  
|Intangible assets, net                                                                                                                                                                                               |  |              | 87,425  |   |      |   | 83,843  |  
|Other assets                                                                                                                                                                                                         |  |              | 801     |   |      |   | 1,036   |  
|                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  
|Total non-current assets                                                                                                                                                                                             |  |              | 93,321  |   |      |   | 89,974  |  
|                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  
|Total assets                                                                                                                                                                                                         |  | $            | 154,147 |   |      | $ | 149,072 |  
|                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                 |  |              |         |   |      |   |         |  
|Current liabilities:                                                                                                                                                                                                 |  |              |         |   |      |   |         |  
|Accounts payable                                                                                                                                                                                                     |  | $            | 7,506   |   |      | $ | 8,203   |  
|Accrued compensation and benefits                                                                                                                                                                                    |  |              | 5,678   |   |      |   | 5,672   |  
|Accrued expenses                                                                                                                                                                                                     |  |              | 10,169  |   |      |   | 4,684   |  
|Current maturities of debt                                                                                                                                                                                           |  |              | 527     |   |      |   | 1,407   |  
|                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  
|Total current liabilities                                                                                                                                                                                            |  |              | 23,880  |   |      |   | 19,966  |  
|                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  
|Non-current liabilities:                                                                                                                                                                                             |  |              |         |   |      |   |         |  
|Long-term debt                                                                                                                                                                                                       |  |              | 28,014  |   |      |   | 42,319  |  
|Deferred income taxes                                                                                                                                                                                                |  |              | 14,840  |   |      |   | 12,692  |  
|Other liabilities                                                                                                                                                                                                    |  |              | 206     |   |      |   | 203     |  
|                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  
|Total non-current liabilities                                                                                                                                                                                        |  |              | 43,060  |   |      |   | 55,214  |  
|                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  
|Total liabilities                                                                                                                                                                                                    |  |              | 66,940  |   |      |   | 75,180  |  
|                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  
|Commitments and contingencies                                                                                                                                                                                        |  |              |         |   |      |   |         |  
|Stockholders equity:                                                                                                                                                                                                |  |              |         |   |      |   |         |  
|Preferred stock, par value $0.01 per share, 1,000,000 shares authorized, no shares issued or outstanding                                                                                                             |  |              |        |   |      |   |        |  
|Common stock, par value $0.01 per share, 25,000,000 shares authorized, 8,467,587 and 7,934,940 shares issued and 7,885,087 and 7,352,440
shares outstanding at December 31, 2004 and December 31, 2003, respectively |  |              | 85      |   |      |   | 79      |  
|Additional paid-in capital                                                                                                                                                                                           |  |              | 53,623  |   |      |   | 48,833  |  
|Treasury stock, at cost, 582,500 shares                                                                                                                                                                              |  |              | (3,874  | ) |      |   | (3,874  | )
|Retained earnings                                                                                                                                                                                                    |  |              | 37,373  |   |      |   | 28,854  |  
|                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  
|Total stockholders equity                                                                                                                                                                                           |  |              | 87,207  |   |      |   | 73,892  |  
|                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  
|Total liabilities and stockholders equity                                                                                                                                                                           |  | $            | 154,147 |   |      | $ | 149,072 |  
|                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  



See accompanying notes
to consolidated financial statements.



38



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AMERICAN DENTAL PARTNERS, INC.



CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)



|                                            |  |                          |         |      |   |         |  |   |         |  
|------------------------------------------- |  | ------------------------ | ------- | ---- | - | ------- |  | - | ------- | -
|                                            |  | Years Ended December 31, |        
|                                            |  | 2004                     |         | 2003 |   | 2002    | 
|Net revenue                                 |  | $                        | 178,554 |      | $ | 163,707 |  | $ | 146,810 |  
|Operating expenses:                         |  |                          |         |      |   |         |  |   |         |  
|Salaries and benefits                       |  |                          | 77,489  |      |   | 72,557  |  |   | 65,762  |  
|Lab fees and dental supplies                |  |                          | 28,566  |      |   | 27,047  |  |   | 24,164  |  
|Office occupancy expenses                   |  |                          | 20,956  |      |   | 19,999  |  |   | 18,314  |  
|Other operating expenses                    |  |                          | 16,643  |      |   | 14,638  |  |   | 13,163  |  
|General corporate expenses                  |  |                          | 8,856   |      |   | 6,871   |  |   | 5,859   |  
|Depreciation expense                        |  |                          | 5,934   |      |   | 5,378   |  |   | 4,990   |  
|Amortization of intangible assets           |  |                          | 4,408   |      |   | 4,229   |  |   | 4,047   |  
|Special charges                             |  |                          |        |      |   |        |  |   | (26     | )
|                                            |  |                          |         |      |   |         |  |   |         |  
|Total operating expenses                    |  |                          | 162,852 |      |   | 150,719 |  |   | 136,273 |  
|                                            |  |                          |         |      |   |         |  |   |         |  
|Earnings from operations                    |  |                          | 15,702  |      |   | 12,988  |  |   | 10,537  |  
|Interest expense                            |  |                          | 1,592   |      |   | 2,592   |  |   | 2,947   |  
|                                            |  |                          |         |      |   |         |  |   |         |  
|Earnings before income taxes                |  |                          | 14,110  |      |   | 10,396  |  |   | 7,590   |  
|Income taxes                                |  |                          | 5,591   |      |   | 4,215   |  |   | 2,883   |  
|                                            |  |                          |         |      |   |         |  |   |         |  
|Net earnings                                |  | $                        | 8,519   |      | $ | 6,181   |  | $ | 4,707   |  
|                                            |  |                          |         |      |   |         |  |   |         |  
|Net earnings per common share:              |  |                          |         |      |   |         |  |   |         |  
|Basic                                       |  | $                        | 1.12    |      | $ | 0.84    |  | $ | 0.65    |  
|                                            |  |                          |         |      |   |         |  |   |         |  
|Diluted                                     |  | $                        | 1.06    |      | $ | 0.82    |  | $ | 0.63    |  
|                                            |  |                          |         |      |   |         |  |   |         |  
|Weighted average common shares outstanding: |  |                          |         |      |   |         |  |   |         |  
|Basic                                       |  |                          | 7,581   |      |   | 7,319   |  |   | 7,222   |  
|                                            |  |                          |         |      |   |         |  |   |         |  
|Diluted                                     |  |                          | 8,068   |      |   | 7,572   |  |   | 7,451   |  
|                                            |  |                          |         |      |   |         |  |   |         |  





See accompanying notes to consolidated financial statements.



39



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AMERICAN DENTAL PARTNERS, INC.



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(in thousands)



|                                                                                      |  |                   |  |                        |             |  |                          |    |                  |   |                      |  |   |                          |  |   |        |   |  |   |       
|------------------------------------------------------------------------------------- |  | ----------------- |  | ---------------------- | ----------- |  | ------------------------ | -- | ---------------- | - | -------------------- |  | - | ------------------------ |  | - | ------ | - |  | - | ------
|                                                                                      |  | Number of Shares  |  |                        | CommonStock |  | AdditionalPaid-InCapital |    | RetainedEarnings |   | TreasuryStock atCost |  |   | TotalStockholdersEquity
|                                                                                      |  | CommonStockIssued |  | CommonStock inTreasury |             |  |                          |    |                  |  
|Balance at December 31, 2001                                                          |  | 7,755             |  | (582                   | )           |  | $                        | 78 |                  | $ | 47,606               |  | $ | 17,966                   |  | $ | (3,874 | ) |  | $ | 61,776
|Issuance of common stock for employee stock purchase plan                             |  | 56                |  |                       |             |  |                          |   |                  |   | 239                  |  |   |                         |  |   |       |   |  |   | 239   
|Issuance of common stock for exercised stock options, including tax benefit of $21    |  | 26                |  |                       |             |  |                          |   |                  |   | 194                  |  |   |                         |  |   |       |   |  |   | 194   
|Net earnings                                                                          |  |                  |  |                       |             |  |                          |   |                  |   |                     |  |   | 4,707                    |  |   |       |   |  |   | 4,707 
|                                                                                      |  |                   |  |                        |             |  |                          |    |                  |   |                      |  |   |                          |  |   |        |   |  |   |       
|Balance at December 31, 2002                                                          |  | 7,837             |  | (582                   | )           |  |                          | 78 |                  |   | 48,039               |  |   | 22,673                   |  |   | (3,874 | ) |  |   | 66,916
|Issuance of common stock for employee stock purchase plan                             |  | 28                |  |                       |             |  |                          | 1  |                  |   | 218                  |  |   |                         |  |   |       |   |  |   | 219   
|Issuance of common stock for exercised stock options, including tax benefit of $32    |  | 70                |  |                       |             |  |                          |   |                  |   | 576                  |  |   |                         |  |   |       |   |  |   | 576   
|Net earnings                                                                          |  |                  |  |                       |             |  |                          |   |                  |   |                     |  |   | 6,181                    |  |   |       |   |  |   | 6,181 
|                                                                                      |  |                   |  |                        |             |  |                          |    |                  |   |                      |  |   |                          |  |   |        |   |  |   |       
|Balance at December 31, 2003                                                          |  | 7,935             |  | (582                   | )           |  |                          | 79 |                  |   | 48,833               |  |   | 28,854                   |  |   | (3,874 | ) |  |   | 73,892
|Issuance of common stock for employee stock purchase plan                             |  | 30                |  |                       |             |  |                          | 1  |                  |   | 262                  |  |   |                         |  |   |       |   |  |   | 263   
|Issuance of common stock for exercised stock options, including tax benefit of $2,406 |  | 503               |  |                       |             |  |                          | 5  |                  |   | 4,528                |  |   |                         |  |   |       |   |  |   | 4,533 
|Net earnings                                                                          |  |                  |  |                       |             |  |                          |   |                  |   |                     |  |   | 8,519                    |  |   |       |   |  |   | 8,519 
|                                                                                      |  |                   |  |                        |             |  |                          |    |                  |   |                      |  |   |                          |  |   |        |   |  |   |       
|Balance at December 31, 2004                                                          |  | 8,468             |  | (582                   | )           |  | $                        | 85 |                  | $ | 53,623               |  | $ | 37,373                   |  | $ | (3,874 | ) |  | $ | 87,207
|                                                                                      |  |                   |  |                        |             |  |                          |    |                  |   |                      |  |   |                          |  |   |        |   |  |   |       





See accompanying notes to consolidated financial statements.



40



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AMERICAN DENTAL PARTNERS, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|----------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                    |  | Years Ended December 31, |        
|                                                                                    |  | 2004                     |         |   | 2003 |   |         | 2002 | 
|Cash flows from operating activities:                                               |  |                          |         |   |      |   |         |      |  |   |         |  
|Net earnings                                                                        |  | $                        | 8,519   |   |      | $ | 6,181   |      |  | $ | 4,707   |  
|Adjustments to reconcile net earnings to net cash provided by operating activities: |  |                          |         |   |      |   |         |      |  |   |         |  
|Depreciation                                                                        |  |                          | 5,934   |   |      |   | 5,378   |      |  |   | 4,990   |  
|Amortization of intangible assets                                                   |  |                          | 4,408   |   |      |   | 4,229   |      |  |   | 4,047   |  
|Tax benefit on issuance of common stock for exercise of stock options               |  |                          | 2,406   |   |      |   | 32      |      |  |   | 21      |  
|Other amortization                                                                  |  |                          | 224     |   |      |   | 407     |      |  |   | 232     |  
|Deferred income taxes                                                               |  |                          | 1,807   |   |      |   | 1,841   |      |  |   | 147     |  
|(Gain)/loss on disposal of property and equipment                                   |  |                          | 99      |   |      |   | (61     | )    |  |   | (21     | )
|Changes in assets and liabilities, net of acquisitions and affiliations:            |  |                          |         |   |      |   |         |      |  |   |         |  
|Receivables due from affiliated dental group practices                              |  |                          | 3,039   |   |      |   | 1,014   |      |  |   | 2,055   |  
|Other current assets                                                                |  |                          | 427     |   |      |   | 249     |      |  |   | 21      |  
|Accounts payable and accrued expenses                                               |  |                          | (196    | ) |      |   | 1,126   |      |  |   | (73     | )
|Accrued compensation and benefits                                                   |  |                          | (15     | ) |      |   | 1,414   |      |  |   | 341     |  
|Accrued special charges                                                             |  |                          |        |   |      |   |        |      |  |   | (256    | )
|Income taxes payable and receivable, net                                            |  |                          | (1,313  | ) |      |   | (72     | )    |  |   | 829     |  
|Other                                                                               |  |                          | 66      |   |      |   | 68      |      |  |   | (61     | )
|                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Net cash provided by operating activities                                           |  |                          | 25,405  |   |      |   | 21,806  |      |  |   | 16,979  |  
|Cash flows from investing activities:                                               |  |                          |         |   |      |   |         |      |  |   |         |  
|Acquisitions and affiliations, net of cash acquired                                 |  |                          | (3,239  | ) |      |   | (4,648  | )    |  |   | (6,269  | )
|Capital expenditures, net                                                           |  |                          | (9,657  | ) |      |   | (7,381  | )    |  |   | (5,607  | )
|Proceeds from the sale of property and equipment                                    |  |                          | 36      |   |      |   | 175     |      |  |   |        |  
|Contingent and deferred payments                                                    |  |                          | (163    | ) |      |   | (178    | )    |  |   | (163    | )
|Payment of acquisition costs                                                        |  |                          | (86     | ) |      |   | (304    | )    |  |   | (315    | )
|                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Net cash used for investing activities                                              |  |                          | (13,109 | ) |      |   | (12,336 | )    |  |   | (12,354 | )
|Cash flows from financing activities:                                               |  |                          |         |   |      |   |         |      |  |   |         |  
|Repayments under revolving line of credit, net                                      |  |                          | (12,475 | ) |      |   | (6,905  | )    |  |   | (3,827  | )
|Principal payments of debt                                                          |  |                          | (2,710  | ) |      |   | (1,624  | )    |  |   | (1,906  | )
|Common stock issued for the employee stock purchase plan                            |  |                          | 263     |   |      |   | 219     |      |  |   | 239     |  
|Proceeds from issuance of common stock for exercise of stock options                |  |                          | 2,128   |   |      |   | 544     |      |  |   | 173     |  
|Payment of debt issuance costs                                                      |  |                          | (19     | ) |      |   | (653    | )    |  |   |        |  
|                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Net cash used for financing activities                                              |  |                          | (12,813 | ) |      |   | (8,419  | )    |  |   | (5,321  | )
|                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Increase (decrease) in cash and cash equivalents                                    |  |                          | (517    | ) |      |   | 1,051   |      |  |   | (696    | )
|Cash and cash equivalents at beginning of period                                    |  |                          | 1,895   |   |      |   | 844     |      |  |   | 1,540   |  
|                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Cash and cash equivalents at end of period                                          |  | $                        | 1,378   |   |      | $ | 1,895   |      |  | $ | 844     |  
|                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Supplemental disclosure of cash flow information                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Cash paid during the period for interest                                            |  | $                        | 1,558   |   |      | $ | 2,315   |      |  | $ | 2,790   |  
|                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Cash paid during the period for income taxes, net                                   |  | $                        | 2,734   |   |      | $ | 2,415   |      |  | $ | 1,948   |  
|                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Non-cash investing activities:                                                      |  |                          |         |   |      |   |         |      |  |   |         |  
|Fair value of intangible asset acquired                                             |  | $                        | 4,790   |   |      | $ |        |      |  | $ |        |  
|                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Acquisitions and affiliations:                                                      |  |                          |         |   |      |   |         |      |  |   |         |  
|Assets acquired                                                                     |  | $                        | 3,534   |   |      | $ | 6,030   |      |  | $ | 8,281   |  
|Liabilities assumed                                                                 |  |                          | (295    | ) |      |   | (437    | )    |  |   | (1,295  | )
|Subordinated notes issued                                                           |  |                          |        |   |      |   | (945    | )    |  |   | (556    | )
|                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Cash paid                                                                           |  |                          | 3,239   |   |      |   | 4,648   |      |  |   | 6,430   |  
|Less cash acquired                                                                  |  |                          |        |   |      |   |        |      |  |   | (161    | )
|                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Net cash paid for acquisitions and affiliations                                     |  | $                        | 3,239   |   |      | $ | 4,648   |      |  | $ | 6,269   |  
|                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  



See accompanying notes
to consolidated financial statements.



41



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



For the Years Ended December 31, 2004, 2003 and 2002



(1)
Description of Business



American Dental Partners, Inc.
(the Company) is a leading provider of business services to multi-disciplinary dental group practices in selected markets throughout the United States. The Company acquires selected assets of the dental practices with which it affiliates
and enters into long-term service agreements with the affiliated dental group practices or professional corporations (PC). The Company provides all services necessary for the administration of the non-clinical aspects of the dental
operations. Services provided to the affiliated dental group practices include providing assistance with organizational planning and development; recruiting, retention and training programs; quality assurance initiatives; facilities development and
management; employee benefits administration; procurement; information systems; marketing and payor relations; and financial planning, reporting and analysis. The Company operates in one segment.



(2) Summary of Significant Accounting Policies



Basis of Presentation



The accompanying consolidated financial statements have been prepared on the
accrual basis of accounting. The Company does not own any interests in or control the activities of the affiliated dental group practices. Accordingly, the consolidated financial statements of the affiliated dental group practices are not
consolidated with those of the Company.



Certain
reclassifications have been made to the consolidated financial statements for the years ended December 31, 2002 and 2003 in order to conform to the December 31, 2004 presentation.



Principles of Consolidation



The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions
have been eliminated in consolidation.



Use of Estimates



The preparation of these consolidated financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenue and expenses during the reporting period. The Companys carrying amount of receivables due from affiliated dental group practices requires management to make estimates and assumptions
regarding the collectability of fees from affiliates that affect the consolidated financial statements. The Companys business affiliations and acquisitions typically result in goodwill and other intangible assets, which affect the amount of
future period amortization expense and possible impairment expense that the Company will incur. The determination of the value of such intangible assets requires management to make estimates and assumptions that affect the consolidated financial
statements. The Companys liability for future losses for workers compensation and professional liability claims requires management to make estimates and assumptions regarding these costs. There can be no assurance that actual results
will not differ from those estimates.



Cash and Cash
Equivalents



The Company considers all highly liquid
instruments with an original maturity of three months or less to be cash equivalents.



42



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



Fair Value of Financial Instruments



The Company believes the carrying amount of cash and cash equivalents,
accounts receivable, receivables due from affiliated dental group practices, accounts payable and accrued expenses approximate fair value because of the short-term nature of these items. The carrying amount of long-term debt approximates fair value
because the interest rates approximate rates at which similar types of borrowing arrangements could be obtained by the Company.



Net Revenue



The Companys net revenue represents primarily reimbursement of expenses and fees charged to affiliated dental group practices pursuant to the terms
of the service agreements. Under such agreements, the affiliated dental group practices reimburse the Company for actual expenses incurred on their behalf in connection with the operation and administration of the dental facilities and pay fees to
the Company for its business services. Under certain service agreements, our service fee consists of a variable monthly fee which is based upon a specified percentage of the amount by which the affiliated dental group practices adjusted gross
revenue exceeds expenses incurred in connection with the operation and administration of the dental facilities. Under certain service agreements, our service fees consist of a fixed monthly fee and an additional variable fee. To the extent that
there is operating income after payment of the fixed monthly fee, reimbursement of expenses incurred in connection with the operation and administration of the dental facilities and payment of provider expenses, an additional variable fee is paid to
us. Under certain service agreements, our service fee consists entirely of a fixed monthly fee. The fixed monthly fees are determined by agreement of us and the affiliated dental group practice in a formal budgeting process. In all instances, the
service fee is negotiated as fair market value for services and capital provided by us to our affiliated dental group practices. Additionally, the Companys net revenue includes amounts from dental benefit providers related to the arrangement
of the provision of care to patients and dental laboratory fees.



Inventories



Inventories consist primarily of
dental supplies and are stated at the lower of cost or market, with cost being determined under the weighted average method.



Property and Equipment



Property and equipment are stated at cost. Depreciation and amortization are recorded using the straight-line method over the estimated useful lives of
the related assets which are 30-40 years for buildings, 3-12 years for equipment and 5-7 years for furniture and fixtures.



Property and equipment under capital leases are stated at the present value of minimum lease payments at inception of the lease. Equipment held under
capital leases and leasehold improvements are amortized over the shorter of the lease term or estimated useful life of the asset. Amortization of assets subject to capital leases is included in depreciation expense.



Development costs incurred for computer software development or obtained for
internal use are capitalized and amortized in accordance with Statement of Position No. 98-1, Accounting for the Costs of Computer Software Developed for Internal Use.



Goodwill and Intangible Assets



Goodwill results from the excess of the purchase price of an acquisition over the estimated fair value of the tangible and
intangible assets acquired and liabilities assumed.



43



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



Prior to 2004, management performed an impairment test on goodwill on an annual basis during the
Companys first quarter or on an interim basis if an event or circumstance indicated that it is more likely than not that an impairment loss had been incurred. During 2004, the Company changed the timing of the annual impairment test to the
fourth quarter and completed an impairment test during the first and fourth quarters. The Company determines impairment by comparing the fair value to the carrying value of the reporting units. The Company determines the fair value of each reporting
unit based on discounted future cash flows using a discount rate reflecting the Companys average cost of funds. If impairment were determined, an appropriate adjustment to goodwill to reduce the assets carrying value would be made. The
Company has not recorded any impairment charges on goodwill as of December 31, 2004.



Identifiable intangible assets result from nineteen service agreements with the affiliated dental group practices and customer relationships from the acquisition of two dental laboratories. The estimated fair value of
the service agreements are the excess of the purchase price over the estimated fair value of the tangible assets acquired and liabilities assumed of dental practices. All intangible assets associated with service agreements are amortized on a
straight-line basis, generally over 15 to 25 years. In the event a service agreement is terminated, the related affiliated dental group practice is required, at the Companys option in nearly all instances, to purchase the remaining unamortized
balance of intangible assets at the current book value, purchase other assets at the greater of fair market value or book value, and assume leases and other liabilities related to the performance of the Companys obligations under the service
agreement. Identifiable intangible assets associated with the acquisition of dental laboratories are amortized on a straight-line basis over 15 years.



Management performs an impairment test on definite lived intangible assets when facts and circumstances exist which would suggest that the intangible
assets may be impaired. The Company compares the undiscounted net cash flows of the asset to the carrying value of the intangible asset when performing the impairment test. If impairment were determined, an appropriate adjustment to the intangible
asset would be made to reduce the assets carrying value to fair value. Fair value is determined by calculating the projected discounted operating net cash flows of the asset using a discount rate reflecting the Companys average cost of
funds. The Company has not recorded any impairment charges or write-downs on definite lived intangibles as of December 31, 2004.



Insurance



The Company maintains various insurance coverages for our business, including property-casualty, business interruption, workers compensation and general
liability, among others. In addition, the Companys affiliated dental group practices are required to maintain, or cause to be maintained, professional liability insurance with the Company as a named insured. Several of these insurance programs
have retention levels in which the Company is financially obligated for insured losses below certain financial thresholds before the insurer is financially obligated for insured losses. The Company maintains reserves for losses below retention
levels for certain of these programs. Reserves are based upon estimates provided by third-party actuaries or by individual case-basis valuations. Changes in trends of loss severity or loss frequency may affect the calculation of these estimates and
create the need for subsequent adjustments to estimated loss reserves.



Income Taxes



Deferred income taxes are
recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the consolidated financial statement carrying amounts and the tax basis of existing assets and
liabilities. The effect on deferred taxes of changes in the tax rate is recognized in operations in the period that includes the enactment date.



44



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



Stock Option Plans



Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based
Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure-an amendment to FASB Statement No. 123, allows companies to recognize expense for the fair value of stock-based awards
or to continue to apply the provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and disclose the effects of SFAS No. 123 as if the fair-value-based method defined
in SFAS No. 123 had been applied. Under APB Opinion No. 25, compensation expense is recognized only if on the measurement date the fair value of the underlying stock exceeds the exercise price. The Company has elected to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure provisions of SFASs No. 123 and No. 148.



The following table shows the Companys pro forma net earnings and earnings per share if the Company had accounted for stock options under SFAS No.
123 for the years ended December 31 (in thousands, except per share amounts):



|                                                                                                                             |  |      |       |   |      |   |       |      |  |   |       |  
|---------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                                                                                             |  | 2004 |       |   | 2003 |   |       | 2002 | 
|Net earnings, as reported                                                                                                    |  | $    | 8,519 |   |      | $ | 6,181 |      |  | $ | 4,707 |  
|Deduct: Total stock-based compensation expense determined under fair value method for all awards, net of related tax effects |  |      | (896  | ) |      |   | (787  | )    |  |   | (541  | )
|                                                                                                                             |  |      |       |   |      |   |       |      |  |   |       |  
|Pro forma net earnings                                                                                                       |  | $    | 7,623 |   |      | $ | 5,394 |      |  | $ | 4,166 |  
|                                                                                                                             |  |      |       |   |      |   |       |      |  |   |       |  
|Earnings per share:                                                                                                          |  |      |       |   |      |   |       |      |  |   |       |  
|Basic, as reported                                                                                                           |  | $    | 1.12  |   |      | $ | 0.84  |      |  | $ | 0.65  |  
|                                                                                                                             |  |      |       |   |      |   |       |      |  |   |       |  
|Basic, pro forma                                                                                                             |  | $    | 1.01  |   |      | $ | 0.74  |      |  | $ | 0.58  |  
|                                                                                                                             |  |      |       |   |      |   |       |      |  |   |       |  
|Diluted, as reported                                                                                                         |  | $    | 1.06  |   |      | $ | 0.82  |      |  | $ | 0.63  |  
|                                                                                                                             |  |      |       |   |      |   |       |      |  |   |       |  
|Diluted, pro forma                                                                                                           |  | $    | 0.95  |   |      | $ | 0.72  |      |  | $ | 0.56  |  
|                                                                                                                             |  |      |       |   |      |   |       |      |  |   |       |  



Earnings per Share



Earnings per share are computed based on SFAS No. 128
Earnings per Share. SFAS No. 128 requires presentation of basic earnings per share (Basic EPS) and diluted earnings per share (Diluted EPS) by all entities that have publicly traded common stock or
potential common stock (options, warrants, convertible securities or contingent stock arrangements). Basic EPS is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the
period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period. The computation of Diluted EPS does not assume conversion, exercise or contingent exercise of securities that would have an antidilutive effect
on earnings.



Recent Accounting Pronouncements



In December 2004, the FASB issued Statement No. 123(R), Share-Based
Payment, revising Statement No. 123 and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. Statement No. 123(R) requires companies to measure the cost of employee services received in exchange
for an award of equity instruments and include these costs in the financial statements. Statement No. 123(R) applies to all stock awards granted after the effective date and all outstanding and unvested share-based payment awards as of the



45



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



effective date. Statement No. 123 (R) is effective as of the beginning of the first interim or annual period that begins after June 15, 2005. The Company is
currently evaluating the impact of implementing Statement No. 123(R) on its consolidated financial statements.



(3) Receivables Due From Affiliated Dental Group Practices and Net Revenue



Receivables Due From Affiliated Dental Group Practices



Receivables due from affiliated dental group practices represent amounts due pursuant to the terms of the service
agreements.



Net Revenue



For the years ended December 31, 2004, 2003 and 2002, net revenue consisted
of the following (in thousands):



|                                                                                                      |  |      |         |      |   |         |  |   |        
|----------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|                                                                                                      |  | 2004 |         | 2003 |   | 2002   
|Reimbursement of expenses:                                                                            |  |      |         |      |   |         |  |   |        
|Salaries and benefits                                                                                 |  | $    | 63,020  |      | $ | 58,919  |  | $ | 53,184 
|Lab and dental supplies                                                                               |  |      | 30,340  |      |   | 27,793  |  |   | 23,923 
|Office occupancy expenses                                                                             |  |      | 19,326  |      |   | 18,389  |  |   | 16,968 
|Other operating expenses                                                                              |  |      | 13,044  |      |   | 12,096  |  |   | 4,174  
|Depreciation expense                                                                                  |  |      | 5,016   |      |   | 4,508   |  |   | 10,751 
|                                                                                                      |  |      |         |      |   |         |  |   |        
|Total reimbursement of expenses                                                                       |  |      | 130,746 |      |   | 121,705 |  |   | 109,000
|Business service fees                                                                                 |  |      | 42,714  |      |   | 35,553  |  |   | 31,049 
|                                                                                                      |  |      |         |      |   |         |  |   |        
|Business services provided to affiliated dental group practices                                       |  |      | 173,460 |      |   | 157,258 |  |   | 140,049
|Revenue related to arrangement of the provision of care to patients, dental laboratory fees and other |  |      | 5,094   |      |   | 6,449   |  |   | 6,761  
|                                                                                                      |  |      |         |      |   |         |  |   |        
|Net revenue                                                                                           |  | $    | 178,554 |      | $ | 163,707 |  | $ | 146,810
|                                                                                                      |  |      |         |      |   |         |  |   |        



Net revenue derived
from the service agreement with Park Dental represented approximately 32%, 31% and 32% of consolidated net revenue for 2004, 2003 and 2002, respectively. Net revenue from the service agreement with Wisconsin Dental Group represented approximately
13%, 13% and 15% of consolidated net revenue for 2004, 2003 and 2002, respectively. No other service agreement or customers accounted for greater than 10% of consolidated net revenue.



(4) Special Charges



During 2001, the Company recorded $1,004,000 of special charges as a result of actions taken in response to managed care contract terminations received by
three of the Companys affiliated dental groups. During 2002, the remaining unused balance of $26,000 was recognized as income in the Consolidated Statements of Income.



(5) Acquisitions and Affiliations



During the year ended December 31, 2003, the Company entered into a platform affiliation with one dental group practice and
acquired selected assets of six dental practices that joined existing affiliates. All transactions



46



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



completed in 2003 are referred to as 2003 Transactions. The aggregate purchase price paid in connection with these transactions consisted of
approximately $4,648,000 in cash, $945,000 in subordinated promissory notes and $65,000 in deferred payments.



During the year ended December 31, 2004, the Company acquired selected assets of five dental practices that joined existing affiliates. All transactions
completed in 2004 are referred to as 2004 Transactions. The aggregate purchase price paid in connection with these transactions consisted of approximately $2,888,000 in cash and $28,000 in deferred payments.



The 2003 and 2004 Transactions are as follows:



|               |  |                                   |  |                               
|-------------- |  | --------------------------------- |  | ------------------------------
|Date           |  | Affiliation/Acquisition           |  | Locations                     
|April 2003     |  | Fred D. Archer, D.D.S.            |  | Buffalo, NY                   
|May 2003       |  | Redwood Dental Group, P.C.        |  | Detroit, MI                   
|June 2003      |  | Joel D. Latham, D.D.S.            |  | Piedmont, AL                  
|August 2003    |  | Millennium Dental P.C.            |  | Buffalo, NY                   
|September 2003 |  | Edward A. Kahn, D.D.S.            |  | Hamburg, NY                   
|November 2003  |  | Daniel P. Ratkus, D.M.D.          |  | Robinson Township, PA         
|November 2003  |  | Thomas A. Coleman, D.D.S.         |  | Shaftsbury, VT                
|January 2004   |  | The Dental Office at Saddle Creek |  | Germantown, TN                
|April 2004     |  | Lufborrow Dental Group, L.L.P.    |  | Killeen, Belton and Temple, TX
|April 2004     |  | David W. Zipnock, D.M.D.          |  | Mount Pleasant, PA            
|May 2004       |  | Heidi C. Ritsco, D.D.S.           |  | Amherst, NY                   
|December 2004  |  | William H. Grass, D.D.S.          |  | Hadley, MA                    



The accompanying
consolidated financial statements include the results of operations under the service agreements from the date of affiliation. The excess of the purchase price associated with the 2003 Transactions and 2004 Transactions over the estimated fair value
of net assets acquired and assumed has been recorded as intangible assets which are summarized as follows (in thousands):



|                                                       |  |      |       |      |   |      
|------------------------------------------------------ |  | ---- | ----- | ---- | - | -----
|                                                       |  | 2004 |       | 2003
|Total consideration paid                               |  | $    | 2,916 |      | $ | 5,658
|Fair value of net tangible assets acquired and assumed |  |      | 150   |      |   | 1,083
|                                                       |  |      |       |      |   |      
|Intangible assets                                      |  | $    | 2,766 |      | $ | 4,575
|                                                       |  |      |       |      |   |      



The Company affiliated
with 1stAdvantage Dental Management, L.L.C. (1stAdvantage) in 2002. In connection with the 1stAdvantage transaction, the asset purchase agreement between the Company and 1stAdvantage includes a future contingent payment based on a multiple of earnings before interest and taxes in excess of a predetermined threshold for the year ending December 31, 2004 less capital expenditures incurred during the
period. The amount of the contingent payment is $4,790,000 which was accrued as of December 31, 2004 and will be paid in 2005.



47



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



(6) Property and Equipment



Property and equipment consisted of the following at December 31 (in thousands):



|                                           |  |      |         |   |      |   |         |  
|------------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | -
|                                           |  | 2004 |         |   | 2003 |  
|Land, buildings and leasehold improvements |  | $    | 33,438  |   |      | $ | 29,768  |  
|Equipment                                  |  |      | 34,820  |   |      |   | 29,516  |  
|Furniture and fixtures                     |  |      | 7,765   |   |      |   | 7,705   |  
|                                           |  |      |         |   |      |   |         |  
|Total property and equipment               |  |      | 76,023  |   |      |   | 66,989  |  
|Less accumulated depreciation              |  |      | (36,771 | ) |      |   | (31,773 | )
|                                           |  |      |         |   |      |   |         |  
|Property and equipment, net                |  | $    | 39,252  |   |      | $ | 35,216  |  
|                                           |  |      |         |   |      |   |         |  



Since 2002,the
Company has been developing Improvis, a replacement system to Comdent, a proprietary practice management system which is currently used by many of the Companys affiliated dental group practices. The first phase of development is expected to be
completed in the second quarter of 2005. Pursuant to Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, the Company capitalized applicable costs beginning in 2003,
with total capitalized costs through December 31, 2004 of $836,000. These costs will be amortized over ten years when the first phase is complete.



The Company is obligated under non-cancelable operating leases for premises and equipment expiring in various years through the year 2021. Rent expense
for the years ended December 31, 2004, 2003 and 2002 amounted to $16,130,000, $15,263,000 and $14,291,000, respectively, of which $14,924,000, $14,204,000 and $13,276,000 were reimbursed under service agreements. The Company has several leases with
stockholders that were assumed in connection with its affiliation transactions. Such amounts are generally reimbursed pursuant to the terms of the service agreements.



Minimum future rental payments under non-cancelable operating leases and amounts to be reimbursed under service agreements
as of December 31, 2004 are as follows (in thousands):



|                             |  |                 |        |                                               |   |           |  |   |      
|---------------------------- |  | --------------- | ------ | --------------------------------------------- | - | --------- |  | - | -----
|                             |  | Total AmountDue |        | Amount to beReimbursedUnder ServiceAgreements |   | NetAmount
|2005                         |  | $               | 12,296 |                                               | $ | 11,486    |  | $ | 810  
|2006                         |  |                 | 10,515 |                                               |   | 9,829     |  |   | 686  
|2007                         |  |                 | 9,168  |                                               |   | 8,732     |  |   | 436  
|2008                         |  |                 | 8,084  |                                               |   | 7,751     |  |   | 333  
|2009                         |  |                 | 6,625  |                                               |   | 6,335     |  |   | 290  
|Thereafter                   |  |                 | 29,372 |                                               |   | 26,872    |  |   | 2,500
|                             |  |                 |        |                                               |   |           |  |   |      
|Total minimum lease payments |  | $               | 76,060 |                                               | $ | 71,005    |  | $ | 5,055
|                             |  |                 |        |                                               |   |           |  |   |      



48



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



(7) Intangible Assets



Intangible assets consisted of the following as of December 31, 2004 and 2003 (in thousands):



|                        |  |                     |         |                         |   |         |                    |  |   |       
|----------------------- |  | ------------------- | ------- | ----------------------- | - | ------- | ------------------ |  | - | ------
|                        |  | GrossCarryingAmount |         | AccumulatedAmortization |   |         | Net CarryingAmount
|December 31, 2004       |  |                     |         |                         |   |         |                    |  |   |       
|Service agreements      |  | $                   | 113,006 |                         | $ | (25,750 | )                  |  | $ | 87,256
|Customer relationships  |  |                     | 205     |                         |   | (36     | )                  |  |   | 169   
|                        |  |                     |         |                         |   |         |                    |  |   |       
|Total intangible assets |  | $                   | 113,211 |                         | $ | (25,786 | )                  |  | $ | 87,425
|                        |  |                     |         |                         |   |         |                    |  |   |       
|December 31, 2003       |  |                     |         |                         |   |         |                    |  |   |       
|Service agreements      |  | $                   | 105,017 |                         | $ | (21,357 | )                  |  | $ | 83,660
|Customer relationships  |  |                     | 205     |                         |   | (22     | )                  |  |   | 183   
|                        |  |                     |         |                         |   |         |                    |  |   |       
|Total intangible assets |  | $                   | 105,222 |                         | $ | (21,379 | )                  |  | $ | 83,843
|                        |  |                     |         |                         |   |         |                    |  |   |       



Intangible asset
amortization expense for 2004, 2003 and 2002 was $4,408,000, $4,229,000 and $4,047,000, respectively. Estimated amortization expense for each of the five succeeding fiscal years is $4,702,000 in 2005, $4,696,000 in 2006 and 2007, $4,693,000 in 2008
and $4,684,000 in 2009.



(8) Income Taxes



Income tax expense for the years ended December 31 consists of the following
(in thousands):



|                   |  |      |       |      |   |       |  |   |      
|------------------ |  | ---- | ----- | ---- | - | ----- |  | - | -----
|                   |  | 2004 |       | 2003 |   | 2002 
|Current:           |  |      |       |      |   |       |  |   |      
|Federal            |  | $    | 2,950 |      | $ | 1,851 |  | $ | 2,270
|State              |  |      | 778   |      |   | 502   |  |   | 467  
|                   |  |      |       |      |   |       |  |   |      
|                   |  |      | 3,728 |      |   | 2,353 |  |   | 2,737
|Deferred:          |  |      |       |      |   |       |  |   |      
|Federal            |  |      | 1,792 |      |   | 1,789 |  |   | 38   
|State              |  |      | 71    |      |   | 73    |  |   | 108  
|                   |  |      |       |      |   |       |  |   |      
|                   |  |      | 1,863 |      |   | 1,862 |  |   | 146  
|                   |  |      |       |      |   |       |  |   |      
|Total income taxes |  | $    | 5,591 |      | $ | 4,215 |  | $ | 2,883
|                   |  |      |       |      |   |       |  |   |      



49



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



The tax effects of temporary differences that give rise to significant portions of deferred tax
assets and deferred tax liabilities as of December 31 are as follows (in thousands):



|                                       |  |      |         |   |      |   |         |  
|-------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                       |  | 2004 |         |   | 2003 |  
|Deferred tax assets:                   |  |      |         |   |      |   |         |  
|Operating loss and other carryforwards |  | $    | 320     |   |      | $ | 318     |  
|Organization and start-up costs        |  |      | 49      |   |      |   | 89      |  
|Accrued expenses and other liabilities |  |      | 1,238   |   |      |   | 990     |  
|                                       |  |      |         |   |      |   |         |  
|Gross deferred tax assets              |  |      | 1,607   |   |      |   | 1,397   |  
|Net valuation allowance                |  |      | (46     | ) |      |   | (318    | )
|                                       |  |      |         |   |      |   |         |  
|Net deferred tax assets                |  | $    | 1,561   |   |      | $ | 1,079   |  
|                                       |  |      |         |   |      |   |         |  
|Deferred tax liabilities:              |  |      |         |   |      |   |         |  
|Intangibles                            |  | $    | (12,278 | ) |      | $ | (11,866 | )
|Property and equipment                 |  |      | (2,257  | ) |      |   | (788    | )
|Software costs                         |  |      | (327    | ) |      |   | (130    | )
|Other                                  |  |      | (268    | ) |      |   |        |  
|                                       |  |      |         |   |      |   |         |  
|Total deferred tax liabilities         |  |      | (15,130 | ) |      |   | (12,784 | )
|                                       |  |      |         |   |      |   |         |  
|Net deferred tax liabilities           |  | $    | (13,569 | ) |      | $ | (11,705 | )
|                                       |  |      |         |   |      |   |         |  



The Company has a
valuation allowance against its deferred tax assets related to its state tax attributes. Based upon the Companys current structure, it is more likely than not that this deferred tax asset will not be realized. The valuation allowance for
deferred tax assets was $46,000 and $318,000 as of December 31, 2004 and 2003, respectively. The change in the valuation allowance for the years ended December 31, 2004 and 2003 was $(272,000) and $(155,000), respectively.



Tax benefits associated with tax deductions for stock option exercises were
credited to additional paid-in capital in the amounts of $2,406,000 and $32,000 for the years ended December 31, 2004 and 2003, respectively.



The net deferred tax assets and liabilities consisted of the following at December 31 (in thousands):



|                               |  |         |         |   |       |   |        |       |  |   |         |   |  |       |         |   |       |   |        |   |  |   |         |  
|------------------------------ |  | ------- | ------- | - | ----- | - | ------ | ----- |  | - | ------- | - |  | ----- | ------- | - | ----- | - | ------ | - |  | - | ------- | -
|                               |  | 2004    |         |   | 2003  |  
|                               |  | Federal |         |   | State |   |        | Total |  |   | Federal |   |  | State |         |   | Total |  
|Deferred tax assets:           |  |         |         |   |       |   |        |       |  |   |         |   |  |       |         |   |       |   |        |   |  |   |         |  
|Current                        |  | $       | 957     |   |       | $ | 314    |       |  | $ | 1,271   |   |  | $     | 795     |   |       | $ | 192    |   |  | $ | 987     |  
|Non-current                    |  |         | (85     | ) |       |   | 375    |       |  |   | 290     |   |  |       | 74      |   |       |   | 18     |   |  |   | 92      |  
|                               |  |         |         |   |       |   |        |       |  |   |         |   |  |       |         |   |       |   |        |   |  |   |         |  
|Total deferred tax assets      |  |         | 872     |   |       |   | 689    |       |  |   | 1,561   |   |  |       | 869     |   |       |   | 210    |   |  |   | 1,079   |  
|                               |  |         |         |   |       |  
|Deferred tax liabilities:      |  |         |         |   |       |   |        |       |  |   |         |   |  |       |         |   |       |   |        |   |  |   |         |  
|Current                        |  |         |        |   |       |   |       |       |  |   |        |   |  |       |        |   |       |   |       |   |  |   |        |  
|Non-current                    |  |         | (12,427 | ) |       |   | (2,703 | )     |  |   | (15,130 | ) |  |       | (10,632 | ) |       |   | (2,152 | ) |  |   | (12,784 | )
|                               |  |         |         |   |       |   |        |       |  |   |         |   |  |       |         |   |       |   |        |   |  |   |         |  
|Total deferred tax liabilities |  |         | (12,427 | ) |       |   | (2,703 | )     |  |   | (15,130 | ) |  |       | (10,632 | ) |       |   | (2,152 | ) |  |   | (12,784 | )
|                               |  |         |         |   |       |   |        |       |  |   |         |   |  |       |         |   |       |   |        |   |  |   |         |  
|Net deferred tax liabilities   |  | $       | (11,555 | ) |       | $ | (2,014 | )     |  | $ | (13,569 | ) |  | $     | (9,763  | ) |       | $ | (1,942 | ) |  | $ | (11,705 | )
|                               |  |         |         |   |       |   |        |       |  |   |         |   |  |       |         |   |       |   |        |   |  |   |         |  



The Company has net
operating loss carryforwards of $6,397,000 as of December 31, 2004 which expire at various times from 2005 through 2024.



50



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



The following table reconciles the Federal statutory income tax rate to the Companys effective
income tax rate for the years ended December 31:



|                                       |  |      |   |  |      |   |  |      |  
|-------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|                                       |  | 2004 |   |  | 2003 |   |  | 2002 |  
|Income taxes at Federal statutory rate |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
|Differential due to graduated rate     |  | (0.7 | ) |  | (0.7 | ) |  | (0.9 | )
|State taxes, net of Federal benefit    |  | 6.4  |   |  | 3.9  |   |  | 4.9  |  
|Other permanent differences            |  | (1.1 | ) |  | 2.3  |   |  | (1.0 | )
|                                       |  |      |   |  |      |   |  |      |  
|Effective income tax rate              |  | 39.6 | % |  | 40.5 | % |  | 38.0 | %
|                                       |  |      |   |  |      |   |  |      |  



The American Jobs
Creation Act of 2004 (the Act) was signed into law on October 22, 2004. The Act contains numerous amendments and additions to the U.S. corporate income tax rules. None of these changes, either individually of in the aggregate, are
expected to have any significant effect on our income tax liability.



(9)
Debt



Long-term debt and capital lease obligations consist
of the following at December 31 (in thousands):



|                                                                                                                                                                           |  |      |        |      |   |       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------
|                                                                                                                                                                           |  | 2004 |        | 2003
|Revolving line of credit advances, collateralized by substantially all assets of the Company, LIBOR-based and prime interest rates ranging
from approximately 3.5% to 5.5% |  | $    | 26,950 |      | $ | 39,425
|Mortgages payable                                                                                                                                                          |  |      |       |      |   | 278   
|Note payable                                                                                                                                                               |  |      |       |      |   | 8     
|Subordinated notes payable to stockholders and former owners, bearing interest at 7%, maturing through 2010                                                                |  |      | 1,591  |      |   | 3,988 
|Capital lease obligations                                                                                                                                                  |  |      |       |      |   | 27    
|                                                                                                                                                                           |  |      |        |      |   |       
|Total long-term debt and capital lease obligations                                                                                                                         |  |      | 28,541 |      |   | 43,726
|Less current maturities                                                                                                                                                    |  |      | 527    |      |   | 1,407 
|                                                                                                                                                                           |  |      |        |      |   |       
|Long-term debt and capital lease obligations, excluding current maturities                                                                                                 |  | $    | 28,014 |      | $ | 42,319
|                                                                                                                                                                           |  |      |        |      |   |       



Annual
maturities of long-term debt and future minimum lease payments under capital leases as of December 31, 2004 are as follows (in thousands):



|               |  |               |       
|-------------- |  | ------------- | ------
|               |  | Long-termDebt
|2005           |  | $             | 527   
|2006           |  |               | 27,825
|2007           |  |               | 81    
|2008           |  |               | 36    
|2009           |  |               | 36    
|Thereafter     |  |               | 36    
|               |  |               |       
|Total payments |  | $             | 28,541
|               |  |               |       



51



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



Revolving Line of Credit



The Company has a credit facility that is used for general corporate purposes, including working capital, affiliations,
acquisitions and capital expenditures. The credit facility matures in October 2006 and the maximum principal amount is $70,000,000. The credit facility will be reduced to $65,000,000 in October 2005. Borrowings under the credit facility bear
interest at either prime or LIBOR plus a margin, at the Companys option. The margin is based upon the Companys debt coverage ratio and ranges from 0.25% to 1.00% for prime borrowings and 1.25% to 2.00% for LIBOR borrowings. At December
31, 2004, the LIBOR interest rate under the credit facility, including borrowing margin, was approximately 3.60% and the prime interest rate under the credit facility was 5.50%. In addition, the Company pays a commitment fee which ranges from 0.375%
to 0.500% of the average daily balance of the unused line. Borrowings are limited to an availability formula based on earnings before income taxes, depreciation and amortization, adjusted for certain items. The credit facility is collateralized by a
first lien on substantially all of the Companys assets, including a pledge of the stock of its subsidiaries. The Company is also required to comply with financial and other covenants. The financial covenants include a minimum net worth,
leverage and fixed charge coverage ratios and maximum capital expenditures as defined by the credit facility agreement. The Company was in compliance with its covenants as of December 31, 2004. The outstanding balance under this line as of December
31, 2004 was $26,950,000. The unused balance at December 31, 2004 was $43,050,000 and based on borrowing covenants $40,959,000 was available for borrowing.



(10) Related Party Transactions



The Company affiliated with PDHC, Ltd. (Park Dental) in 1996. In connection with the Park Dental transaction, the Company entered into a
service agreement with an affiliated dental group practice owned in part by a former director of the Company. The service agreement is on substantially the same terms and conditions as all of the Companys other service agreements. The
aggregate net revenue earned by the subsidiary of the Company under the service agreement with Park Dental in 2004, 2003 and 2002 was $56,746,000, $50,473,000 and $47,086,000, respectively, of which $43,453,000, $39,307,000 and $36,302,000 were
reimbursements for expenses incurred in connection with the operation and administration of dental facilities.



The Company affiliated with 1stAdvantage Dental Management, L.L.C. (1stAdvantage) in 2002. In connection with the
1stAdvantage transaction, the Company entered into a subordinated note agreement with the owners of 1stAdvantage, including an individual who became an executive officer of the Company. During 2004, the executive officers
portion of subordinated note payments made by the Company to 1stAdvantage was $61,000. In addition, the asset
purchase agreement between the Company and 1stAdvantage includes a future contingent payment based on a multiple of
earnings before interest and taxes in excess of a predetermined threshold for the year ending December 31, 2004 less capital expenditures incurred during the period. The amount of the contingent payment is $4,790,000 which was accrued as of December
31, 2004 and will be paid in 2005. Of the total contingent payment, the executive officer is due to receive approximately $714,000. The subordinated note and service agreement are on substantially the same terms and conditions as all of the
Companys other subordinated note and service agreements.



(11)
Stockholders Equity



Preferred
Stock



The Company is authorized to issue up to 1,000,000
shares of Preferred Stock, $0.01 par value.



Preferred Stock
may be issued in one or more series as determined by the Board of Directors without further stockholder approval, and the Board of Directors is authorized to fix and determine the terms, limitations and



52



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



relative rights and preferences of such Preferred Stock, and to fix and determine the variations among series of Preferred Stock. Any new Preferred Stock
issued would have priority over the Common Stock with respect to dividends and other distributions, including the distribution of assets upon liquidation and dissolution. Such Preferred Stock may be subject to repurchase or redemption by the
Company. The Board of Directors, without stockholder approval, could issue Preferred Stock with voting and conversion rights that could adversely affect the voting power of the holders of Common Stock and the issuance of which could be used by the
Board of Directors in defense of a hostile takeover of the Company. As of December 31, 2004 and 2003 there were no shares of Preferred Stock issued or outstanding.



Common Stock



The Company is authorized to issue up to 25,000,000 shares of Common Stock, $0.01 par value. As of December 31, 2004, 8,467,587 shares were issued and
7,885,087 shares were outstanding. As of December 31, 2003, 7,934,940 shares were issued and 7,352,440 shares were outstanding.



Treasury Stock



On December 16, 1999, the Board of Directors authorized the Company to repurchase up to $5,000,000 of its Common Stock in the open market. Under this
plan, the Company has repurchased 582,500 shares of its Common Stock through December 31, 2004 at a cost of $3,874,000.



Dividends



The Company has the ability to pay cash dividends on its Common Stock but has not to date. The terms of the Companys credit facility allow the
Company to pay dividends without the lenders consent up to certain maximums and compliance with certain covenants.



(12) Stock Compensation Plans



1999 Restricted Stock Plan



The Companys 1999 Restricted Stock Plan (the Restricted Stock Plan) provides for the grant of restricted shares of the Companys
Common Stock at a price equal to the par value of such shares ($0.01 per share). Restricted shares may be issued to key employees of the Company and shall be subject to such restrictions as the Board of Directors determines, including, but not
limited to, time and performance restrictions. The maximum number of restricted shares which may be issued under the Restricted Stock Plan is 25,000, and as of December 31, 2004, there were no shares issued or outstanding under this Plan.



1996 Stock Option Plan



The Companys 1996 Stock Option Plan, as amended (the 1996
Plan), provides for the grant of stock options to key employees. The 1996 Plan permits the granting of options that qualify as incentive stock options and non-qualified options. The exercise price of such options is no less than the fair
market value of the Common Stock at the time of grant. Options granted pursuant to the 1996 Plan generally vest over four years and expire ten years after the date of grant. At December 31, 2004, 1,573,246 shares were authorized under the 1996 Plan,
with 1,181,914 shares reserved for issuance and options for 976,763 shares outstanding.



1996 Time Accelerated Restricted Stock Option Plan



The Companys 1996 Time Accelerated Restricted Stock Option Plan, as amended (TARSOP Plan), provides for the grant of stock options to key employees. Only non-qualified options may be granted pursuant
to



53



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



the TARSOP Plan. The exercise price of such options is no less than the fair market value of the Common Stock at the time of grant. Options granted under
this plan vest at the end of the nine years, subject to accelerated vesting based on achievement of certain performance measures, and generally expire after nine and a half years. In February 2003, the Companys Board of Directors approved an
amendment to prohibit future grants under the TARSOP Plan, except for options for 9,369 shares that were granted in July 2003 in connection with the Companys one-time stock option exchange program. At December 31, 2004, options for 38,639
shares were outstanding under this Plan. All outstanding options to purchase such shares became exercisable at the completion of the IPO except for the option granted in July 2003 in connection with the Companys one-time stock option exchange
program.



1996 Affiliate Stock Option Plan



The Companys 1996 Affiliate Stock Option Plan, as
amended (the Affiliate Plan), provides for the grant of stock options to certain persons associated with the affiliated dental group practices. Only non-qualified options may be granted pursuant to the Affiliate Plan. The exercise price
of such options is no less than the fair market value of the Common Stock at the time of grant. Options granted pursuant to the Affiliate Plan generally vests over four years and expire ten years after the date of grant. In February 2003, the
Companys Board of Directors approved an amendment to prohibit future grants under the Affiliate Plan. At December 31, 2004, options for 65,340 shares were outstanding under this Plan.



1996 Directors Stock Option Plan



The Companys 1996 Directors Stock Option Plan, as amended (the
Directors Plan), provides for the granting of options to outside directors. Only non-qualified options may be granted pursuant to the Directors Plan. The exercise price of such options is no less than the fair market value of the Common
Stock at the time of grant. Options granted pursuant to the Directors Plan generally vest over four years and expire ten years after the date of grant. At December 31, 2004, 385,000 shares were authorized under the Directors Plan, with 373,500
shares reserved for issuance and options for 222,750 shares outstanding.



1997 Employee Stock Purchase Plan



The 1997 Employee Stock Purchase Plan, as amended (the Employee Stock Purchase Plan or ESPP), enables eligible employees to purchase shares of Common Stock at a discount on a periodic basis
through payroll deductions and is intended to meet the requirements of Section 423 of the Internal Revenue Code. Purchases occur at the end of option periods, each of six months duration. The purchase price of Common Stock under the ESPP is
85% of the lesser of the value of the Common Stock at the beginning or the end of the option period. Prior to each option period, participants may elect to have from 2% to 10% of their compensation withheld and applied to the purchase of shares at
the end of the option period. The ESPP imposes a maximum of $12,500 on the amount that may be withheld from any participant in any option period. A total of 400,000 shares of Common Stock has been reserved for issuance under the ESPP, of which
291,221 shares have been issued through 2004 and 10,664 shares were committed for issuance as of December 31, 2004.



54



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



Stock Option Activity



A summary of stock option activity under all the Companys stock option plans for the years ended December 31, 2004,
2003 and 2002 follows:



|                                 |  |           |   |      |                               |       |         |           |   |                               |   |         |  |           |                               |  |   |      
|-------------------------------- |  | --------- | - | ---- | ----------------------------- | ----- | ------- | --------- | - | ----------------------------- | - | ------- |  | --------- | ----------------------------- |  | - | -----
|                                 |  | 2004      |   | 2003 |                               | 2002 
|                                 |  | Options   |   |      | WeightedAverageExercise Price |       | Options |           |   | WeightedAverageExercise Price |   | Options |  |           | WeightedAverageExercise Price
|Outstanding at beginning of year |  | 1,679,277 |   |      | $                             | 7.33  |         | 1,563,943 |   |                               | $ | 7.95    |  | 1,412,880 |                               |  | $ | 7.95 
|Granted                          |  | 164,600   |   |      |                               | 13.35 |         | 570,401   |   |                               |   | 9.33    |  | 206,350   |                               |  |   | 8.15 
|Exercised                        |  | (502,176  | ) |      |                               | 4.24  |         | (69,893   | ) |                               |   | 7.80    |  | (25,907   | )                             |  |   | 6.75 
|Cancelled                        |  | (38,209   | ) |      |                               | 9.35  |         | (385,174  | ) |                               |   | 13.00   |  | (29,380   | )                             |  |   | 10.54
|                                 |  |           |   |      |                               |       |         |           |   |                               |   |         |  |           |                               |  |   |      
|Outstanding at end of year       |  | 1,303,492 |   |      | $                             | 9.22  |         | 1,679,277 |   |                               | $ | 7.33    |  | 1,563,943 |                               |  | $ | 7.95 
|                                 |  |           |   |      |                               |       |         |           |   |                               |   |         |  |           |                               |  |   |      
|Exercisable at end of year       |  | 734,506   |   |      | $                             | 8.50  |         | 909,285   |   |                               | $ | 6.14    |  | 1,052,684 |                               |  | $ | 8.10 
|                                 |  |           |   |      |                               |       |         |           |   |                               |   |         |  |           |                               |  |   |      



The following table
summarizes information about stock options outstanding at December 31, 2004:



|                        |  |                     |  |                                                     |  |                                |       |                   |         |                                |   |      
|----------------------- |  | ------------------- |  | --------------------------------------------------- |  | ------------------------------ | ----- | ----------------- | ------- | ------------------------------ | - | -----
|                        |  | Options Outstanding |  | Options Exercisable                                
|Range ofExercise Prices |  | NumberOutstanding   |  | Weighted AverageRemainingContractual Life(in years) |  | Weighted AverageExercise Price |       | NumberExercisable |         | Weighted AverageExercise Price
|$  0.33 - $ 7.125       |  | 225,255             |  | 5.1                                                 |  | $                              | 6.16  |                   | 217,505 |                                | $ | 6.14 
|$  7.25 - $ 8.971       |  | 298,096             |  | 6.3                                                 |  |                                | 7.92  |                   | 186,124 |                                |   | 7.82 
|$  8.98 - $ 8.98        |  | 289,351             |  | 8.5                                                 |  |                                | 8.98  |                   | 128,299 |                                |   | 8.98 
|$  9.00 - $ 10.00       |  | 252,650             |  | 7.8                                                 |  |                                | 9.80  |                   | 120,938 |                                |   | 9.83 
|$12.50 - $ 14.17        |  | 238,140             |  | 6.9                                                 |  |                                | 13.43 |                   | 81,640  |                                |   | 13.58
|                        |  |                     |  |                                                     |  |                                |       |                   |         |                                |   |      
|                        |  | 1,303,492           |  | 7.0                                                 |  | $                              | 9.22  |                   | 734,506 |                                | $ | 8.50 
|                        |  |                     |  |                                                     |  |                                |       |                   |         |                                |   |      



Accounting for
Stock Compensation Plans



The Company accounts for stock
compensation plans in accordance with APB Opinion No. 25. Accordingly, no compensation expense has been recognized in the consolidated financial statements for stock compensation plans. Pro forma information regarding net earnings and earnings per
share is required by SFAS No. 123, as amended by SFAS No. 148, and has been determined as if the Company had accounted for its stock compensation plans under the fair value method. See Note 2 for pro forma information on the Companys stock
compensation plans. The fair value for these options and purchase rights granted was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions for the years ended December 31:



|                                                                               |  |              |  |       |  |              |  |       |  |              |  |      
|------------------------------------------------------------------------------ |  | ------------ |  | ----- |  | ------------ |  | ----- |  | ------------ |  | -----
|                                                                               |  | 2004         |  | 2003  |  | 2002        
|                                                                               |  | StockOptions |  | ESPP  |  | StockOptions |  | ESPP  |  | StockOptions |  | ESPP 
|Risk-free interest rate                                                        |  | 2.6%         |  | 1.6%  |  | 1.6%         |  | 1.0%  |  | 4.0%         |  | 1.5% 
|Expected dividend yield                                                        |  | 0.0%         |  | 0.0%  |  | 0.0%         |  | 0.0%  |  | 0.0%         |  | 0.0% 
|Expected volatility                                                            |  | 61%          |  | 43%   |  | 63%          |  | 31%   |  | 72%          |  | 70%  
|Expected life (years)                                                          |  | 4.0          |  | 0.5   |  | 3.0          |  | 0.5   |  | 4.0          |  | 0.5  
|Weighted average fair value of options/purchase rights granted during the year |  | $6.45        |  | $3.34 |  | $3.97        |  | $1.91 |  | $4.61        |  | $2.26



55



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



In January 2003, the Company instituted a one-time stock option exchange program. This allowed
employees to tender certain stock options for replacement options that were to be issued at least six months later at the then current market value at an exchange ratio of 0.9 replacement options for each option tendered. The total number of options
tendered in January 2003 was 276,000 with an average exercise price of $14.05 by 21 employees, and in July 2003 248,000 options with an exercise price of $8.98 were reissued. Under APB 25, the Company did not record compensation expense as a result
of the transaction; however, the effect of this exchange is presented in the pro forma disclosure in accordance with SFAS 123.



(13) Employee Retirement Benefit Plans



The Company has a Savings and Retirement Plan (401(k) Plan), adopted October 1, 1996, which is the Companys principal defined contribution
retirement plan. The plan provides for a match of up to 50% of the first 6% of an employees eligible compensation. Total plan expense for the years ended December 31, 2004, 2003 and 2002 was $995,000, $809,000 and $667,000, respectively.



(14) Earnings Per Share



The following table provides a reconciliation of the numerators and
denominators of the basic and diluted earnings per share computations for the years ended December 31 (in thousands, except per share amounts):



|                                              |  |      |       |      |   |       |  |   |      
|--------------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|                                              |  | 2004 |       | 2003 |   | 2002 
|Basic Earnings Per Share:                     |  |      |       |      |   |       |  |   |      
|Net earnings available to common stockholders |  | $    | 8,519 |      | $ | 6,181 |  | $ | 4,707
|                                              |  |      |       |      |   |       |  |   |      
|Weighted average common shares outstanding    |  |      | 7,581 |      |   | 7,319 |  |   | 7,222
|                                              |  |      |       |      |   |       |  |   |      
|Net earnings per share                        |  | $    | 1.12  |      | $ | 0.84  |  | $ | 0.65 
|                                              |  |      |       |      |   |       |  |   |      
|Diluted Earnings Per Share:                   |  |      |       |      |   |       |  |   |      
|Net earnings available to common stockholders |  | $    | 8,519 |      | $ | 6,181 |  | $ | 4,707
|                                              |  |      |       |      |   |       |  |   |      
|Weighted average common shares outstanding    |  |      | 7,581 |      |   | 7,319 |  |   | 7,222
|Add: Dilutive effect of options(1)            |  |      | 487   |      |   | 253   |  |   | 229  
|                                              |  |      |       |      |   |       |  |   |      
|Weighted average common shares as adjusted    |  |      | 8,068 |      |   | 7,572 |  |   | 7,451
|                                              |  |      |       |      |   |       |  |   |      
|Net earnings per share                        |  | $    | 1.06  |      | $ | 0.82  |  | $ | 0.63 
|                                              |  |      |       |      |   |       |  |   |      

---

|(1) | In 2004 no options were excluded from the computation of diluted earnings per share due to their antidilutive effect. In 2003 and 2002, 154,737 and 435,680 options were excluded,
respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



56



---

AMERICAN DENTAL PARTNERS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the Years Ended December 31, 2004, 2003 and 2002



(15) Selected Quarterly Operating Results (unaudited)



The following table sets forth summary quarterly results of operations for
the Company for the years ended December 31, 2004 and 2003 (in thousands, except per share amounts):



|                                            |  |              |        |               |   |              |  |               |        |  |   |       
|------------------------------------------- |  | ------------ | ------ | ------------- | - | ------------ |  | ------------- | ------ |  | - | ------
|                                            |  | FirstQuarter |        | SecondQuarter |   | ThirdQuarter |  | FourthQuarter
|2004                                        |  |              |        |               |   |              |  |               |        |  |   |       
|Net revenue                                 |  | $            | 44,064 |               | $ | 45,044       |  | $             | 44,640 |  | $ | 44,806
|Operating expenses                          |  |              | 40,201 |               |   | 40,814       |  |               | 40,960 |  |   | 40,877
|Earnings from operations                    |  |              | 3,863  |               |   | 4,230        |  |               | 3,680  |  |   | 3,929 
|Earnings before income taxes                |  |              | 3,398  |               |   | 3,838        |  |               | 3,294  |  |   | 3,580 
|Income taxes                                |  |              | 1,334  |               |   | 1,519        |  |               | 1,301  |  |   | 1,437 
|Net earnings                                |  | $            | 2,064  |               | $ | 2,319        |  | $             | 1,993  |  | $ | 2,143 
|Net earnings per share(1):                  |  |              |        |               |   |              |  |               |        |  |   |       
|Basic                                       |  | $            | 0.28   |               | $ | 0.31         |  | $             | 0.26   |  | $ | 0.28  
|Diluted                                     |  | $            | 0.26   |               | $ | 0.29         |  | $             | 0.25   |  | $ | 0.26  
|Weighted average common shares outstanding: |  |              |        |               |   |              |  |               |        |  |   |       
|Basic                                       |  |              | 7,391  |               |   | 7,537        |  |               | 7,635  |  |   | 7,760 
|Diluted                                     |  |              | 7,858  |               |   | 8,057        |  |               | 8,130  |  |   | 8,207 
|                                            |  |              |        |              
|2003                                        |  |              |        |               |   |              |  |               |        |  |   |       
|Net revenue                                 |  | $            | 39,032 |               | $ | 41,012       |  | $             | 41,659 |  | $ | 42,004
|Operating expenses                          |  |              | 36,505 |               |   | 37,700       |  |               | 38,356 |  |   | 38,158
|Earnings from operations                    |  |              | 2,527  |               |   | 3,312        |  |               | 3,303  |  |   | 3,846 
|Earnings before income taxes                |  |              | 1,894  |               |   | 2,684        |  |               | 2,675  |  |   | 3,143 
|Income taxes                                |  |              | 723    |               |   | 1,020        |  |               | 1,139  |  |   | 1,333 
|Net earnings                                |  | $            | 1,171  |               | $ | 1,664        |  | $             | 1,536  |  | $ | 1,810 
|Net earnings per share(1):                  |  |              |        |               |   |              |  |               |        |  |   |       
|Basic                                       |  | $            | 0.16   |               | $ | 0.23         |  | $             | 0.21   |  | $ | 0.25  
|Diluted                                     |  | $            | 0.16   |               | $ | 0.22         |  | $             | 0.20   |  | $ | 0.24  
|Weighted average common shares outstanding: |  |              |        |               |   |              |  |               |        |  |   |       
|Basic                                       |  |              | 7,266  |               |   | 7,312        |  |               | 7,345  |  |   | 7,352 
|Diluted                                     |  |              | 7,518  |               |   | 7,557        |  |               | 7,586  |  |   | 7,660 

---

|(1) | The sum of the quarterly earnings per share may not equal the full-year earnings per share as the computations of the weighted average shares outstanding for each quarter and the
full year are made independently.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



(16) Subsequent Events



Affiliation



On February 1, 2005, the Company affiliated with Premier Dental Partners, a
group dental practice in St. Louis, Missouri. The Company acquired certain non-clinical assets and entered into a service agreement with the professional corporation. This affiliation resulted in the addition of five dental facilities. The
aggregate purchase price paid in connection with this transaction consisted of $3,736,000 in cash and $350,000 of deferred payments.



Credit Facility



On February 22, 2005, the Company amended its credit facility. The amended credit facility matures in February 2008 with the maximum principal under the
same terms as the original credit facility. Major changes from the original credit facility are a decrease in the margin based upon our debt coverage ratio ranging from 0.00% to 1.00% for prime borrowings and 1.00% to 2.00% for LIBOR borrowings and
a decrease in our commitment fee range to 0.25% to 0.50%. The Company is evaluating the applicability of EITF 98-14, Debtors Accounting for Changes in Line-of-Credit or Revolving Debt Arrangements, and EITF 96-19,
Debtors Accounting for a Modification or Exchange of Debt Instruments, as it relates to $400,000 of capitalized financing costs.



57



---

SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the Town of Wakefield, Commonwealth of Massachusetts, on the 11thday of March, 2005.



AMERICAN DENTAL PARTNERS, INC.By:

/S/    GREGORY A. SERRAOGregory A. SerraoChairman, President and Chief Executive Officer




Pursuant to
the requirement of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



|                                                |  |                                                                                                |  |               
|----------------------------------------------- |  | ---------------------------------------------------------------------------------------------- |  | --------------
|Signature                                       |  | Capacity In Which Signed                                                                       |  | Date          
|                                                |  |                                                                                               
|/S/    GREGORY A.
SERRAOGregory A.
Serrao       |  | Chairman, President and Chief Executive Officer and Director (principal executive officer)     |  | March 11, 2005
|                                                |  |                                                                                               
|/S/    BREHT T. FEIGHBreht T. Feigh             |  | Executive Vice President  Chief Financial Officer and Treasurer (principal financial officer) |  | March 11, 2005
|                                                |  |                                                                                               
|/S/    MARK W. VARGOMark W. Vargo               |  | Vice President  Chief Accounting Officer (principal accounting officer)                       |  | March 11, 2005
|                                                |  |                                                                                               
|/S/    DR. ROBERT E.
HUNTERDr. Robert E.
Hunter |  | Director                                                                                       |  | March 11, 2005
|                                                |  |                                                                                               
|/S/    JAMES T. KELLYJames T. Kelly             |  | Director                                                                                       |  | March 11, 2005
|                                                |  |                                                                                               
|/S/    MARTIN J.
MANNIONMartin J.
Mannion       |  | Director                                                                                       |  | March 11, 2005
|                                                |  |                                                                                               
|/S/    GERARD M.
MOUFFLETGerard M.
Moufflet     |  | Director                                                                                       |  | March 11, 2005
|                                                |  |                                                                                               
|/S/    DERRILL W.
REEVESDerril W.
Reeves        |  | Director                                                                                       |  | March 11, 2005



61



---

EXHIBIT INDEX



|               |  |                                                                                                                                                                        
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Exhibit Description                                                                                                                                                    
|3(a)           |  | Second Amended and Restated Certificate of Incorporation of American Dental Partners, Inc. (1)                                                                         
|               | 
|3(b)           |  | Amended and Restated By-laws of American Dental Partners, Inc. (2)                                                                                                     
|               | 
|4(a)           |  | Form of Stock Certificate (1)                                                                                                                                          
|               | 
|4(b)           |  | Form of Subordinated Promissory Note and Form of Subordination Agreement (3)                                                                                           
|               | 
|10(b)          |  | American Dental Partners, Inc. Amended and Restated 1996 Stock Option Plan, as amended by Amendments No. 1, No. 2, No. 3 and No. 4 (4)                                 
|               | 
|10(d)          |  | Amendment No. 5 to American Dental Partners, Inc. Amended and Restated 1996 Stock Option Plan (5)                                                                      
|               | 
|10(e)          |  | Amendment No. 6 to American Dental Partners, Inc. Amended and Restated 1996 Stock Option Plan (6)                                                                      
|               | 
|10(f)          |  | American Dental Partners, Inc. 1996 Time Accelerated Stock Option Plan, as amended by Amendment No. 1 (2)                                                              
|               | 
|10(g)          |  | American Dental Partners, Inc. Amended and Restated 1996 Affiliate Stock Option Plan, as amended by Amendments No.1, No. 2 and No. 3 (4)                               
|               | 
|10(h)          |  | American Dental Partners, Inc. Amended and Restated 1996 Directors Stock Option Plan, as amended by Amendments No. 1, No. 2, No. 3 and No. 4 (4)                       
|               | 
|10(i)          |  | Amendment No. 5 to Amended and Restated 1996 Directors Stock Option Plan (6)                                                                                           
|               | 
|10(j)          |  | American Dental Partners, Inc. 1999 Restricted Stock Plan (7)                                                                                                          
|               | 
|10(k)          |  | Amendment No. 1 to American Dental Partners, Inc. Amended and Restated 1999 Restricted Stock Plan (5)                                                                  
|               | 
|10(l)          |  | Amended and Restated Employment and Non-Competition Agreement dated January 2, 2001, between American Dental Partners, Inc. and Gregory A. Serrao (8)                  
|               | 
|10(m)          |  | Amended and Restated Employment and Noncompetition Agreement dated May 15, 2001 between PDHC, Ltd. and Gregory T. Swenson, D.D.S. (9)                                  
|               | 
|10(n)          |  | Registration Rights Agreement dated November 11, 1996, among American Dental Partners, Inc. and certain of its stockholders (the former stockholders of PDHC, Ltd.) (2)
|               | 
|10(q)          |  | Registration Rights Agreement dated October 1, 1997, among American Dental Partners, Inc. and Karl H. Biewald, D.D.S. and Terri M. Lawler (2)                          
|               | 
|10(s)          |  | Employment agreement dated August 1, 2002 between American Dental Partners, Inc. and Frank DAllaird, D.D.S. (10)                                                      
|               | 
|10(t)          |  | Amendment No. 6 to American Dental Partners, Inc. Amended and Restated 1996 Stock Option Plan (11)                                                                     
|               | 
|10(u)          |  | Amendment No. 4 to American Dental Partners, Inc. Amended and Restated 1996 Affiliate Stock Option Plan (11)                                                           
|               | 
|10(v)          |  | Amendment No. 2 to American Dental Partners, Inc. 1996 Time Accelerated Stock Option Plan (11)                                                                         
|               | 
|10(w)          |  | Amended Exhibit A-1 to Amended and Restated Service Agreement dated January 1, 2003, between PDHC, Ltd. and PDG, P.A. (12)                                             



62



---

|               |  |                                                                                                                                                                             
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Exhibit Description                                                                                                                                                         
|10(x)          |  | Credit Agreement dated October 16, 2003 among American Dental Partners, Inc., the Lenders Party Hereto and KeyBank National Association as Agent (13)                       
|               | 
|10(y)          |  | Amended Exhibit A-1 to Amended and Restated Service Agreement dated January 1, 2004, between PDHC, Ltd. and PDG, P.A. (14)                                                  
|               | 
|10(z)          |  | Amendment No. 7 to American Dental Partners, Inc. Amended and Restated 1996 Directors Stock Option Plan (14)                                                                
|               | 
|10(aa)         |  | Amendment No. 7 to American Dental Partners, Inc. Amended and Restated 1996 Stock Option Plan (15)                                                                          
|               | 
|10(bb)         |  | Amendment No. 4 to American Dental Partners, Inc. 1997 Employee Stock Purchase Plan (15)                                                                                    
|               | 
|10(cc)         |  | Amendment No. 2 to American Dental Partners, Inc. 1999 Restricted Stock Plan (15)                                                                                           
|               | 
|10(dd)         |  | Amended and Restated Credit Agreement dated February 22, 2005 among American Dental Partners, Inc., the Lenders Named Herein and KeyBank National Association as Agent (16) 
|               | 
|10(ee)         |  | Amended and Restated Subsidiary Guaranty dated February 22, 2005 between The Subsidiaries of American Dental Partners, Inc. and KeyBank National Association (16)           
|               | 
|10(ff)         |  | Amended and Restated Pledge and Security Agreement dated February 22, 2005 between American Dental Partners, Inc. and its subsidiaries and KeyBank National Association (16)
|               | 
|10(gg)         |  | Amended and Restated Service Agreement dated January 1, 1999 between Smileage Dental Care, Inc. and Wisconsin Dental Group, S.C. filed herewith.                            
|               | 
|10(hh)         |  | Amendment No. 1 to Amended and Restated Service Agreement dated October 1, 2000 between Wisconsin Dental Group, S.C. and Northpark Dental Group, Inc., filed herewith.      
|               | 
|10(ii)         |  | Amendment No. 2 to Amended and Restated Service Agreement dated January 1, 2001 between Wisconsin Dental Group, S.C. and Northpark Dental Group, Inc., filed herewith.      
|               | 
|10(jj)         |  | Amendment No. 3 to Amended and Restated Service Agreement dated July 1, 2003 between Wisconsin Dental Group, S.C. and Northpark Dental Group, Inc., filed herewith.         
|               | 
|10(kk)         |  | Amended Exhibit A-1 to Amended and Restated Service Agreement dated January 1, 2004 between Wisconsin Dental Group, S.C. and Northpark Dental Group, Inc., filed herewith.  
|               | 
|14.1           |  | American Dental Partners, Inc. Code of Business Conduct and Ethics (17)                                                                                                     
|               | 
|21             |  | Subsidiaries of American Dental Partners, Inc., filed herewith.                                                                                                             
|               | 
|23             |  | Consent of PricewaterhouseCoopers LLP, filed herewith.                                                                                                                      
|               | 
|23.1           |  | Consent of KPMG LLP, filed herewith.                                                                                                                                        
|               | 
|31.1           |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.                                                         
|               | 
|31.2           |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.                                                         
|               | 
|32.1           |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.                                                         
|               | 
|32.2           |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.                                                         

---

|(1) | Incorporated by reference to Amendment No. 1 to the Companys Registration Statement on Form S-1 (Registration No. 333-39981) filed on December 31, 1997.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



63



---

|(2) | Incorporated by reference to the Companys Registration Statement on Form S-1 (Registration No. 333-39981) filed on November 12, 1997.
|--- | --------------------------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference to the Companys Registration Statement on Form S-4 (Registration No. 333-56941) filed on June 16, 1998.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference to the Companys Form 10-K filed on March 16, 2000.
|--- | -----------------------------------------------------------------------------

|(5) | Incorporated by reference to the Companys Form 10-Q filed on November 13, 2001.
|--- | --------------------------------------------------------------------------------

|(6) | Incorporated by reference to the Companys Form 10-Q filed on August 12, 2002.
|--- | ------------------------------------------------------------------------------

|(7) | Incorporated by reference to the Companys Form 10-Q filed on November 10, 1999.
|--- | --------------------------------------------------------------------------------

|(8) | Incorporated by reference to the Companys Form 10-K filed on March 23, 2001.
|--- | -----------------------------------------------------------------------------

|(9) | Incorporated by reference to the Companys Form 10-Q filed on August 13, 2001.
|--- | ------------------------------------------------------------------------------

|(10) | Incorporated by reference to the Companys Form 10-K filed on March 20, 2003.
|---- | -----------------------------------------------------------------------------

|(11) | Incorporated by reference to the Companys Form 10-Q filed on May 15, 2003.
|---- | ---------------------------------------------------------------------------

|(12) | Incorporated by reference to the Companys Form 10-Q filed on August 8, 2003.
|---- | -----------------------------------------------------------------------------

|(13) | Incorporated by reference to the Companys Form 10-Q filed on November 5, 2003.
|---- | -------------------------------------------------------------------------------

|(14) | Incorporated by reference to the Companys Form 10-Q filed on May 13, 2004.
|---- | ---------------------------------------------------------------------------

|(15) | Incorporated by reference to the Companys Form 10-Q filed on August 11, 2004.
|---- | ------------------------------------------------------------------------------

|(16) | Incorporated by reference to the Companys Form 8-K filed on February 28, 2005.
|---- | -------------------------------------------------------------------------------

|(17) | Incorporated by reference to the Companys Form 10-K filed on March 17, 2004.
|---- | -----------------------------------------------------------------------------



64