<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                             ----------------------

                                    FORM 10-K

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

                   For the fiscal year ended December 31, 2001

                                       or

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

              For the transition period             to
                                        -----------    -----------

                         Commission File Number: 0-23363

                         AMERICAN DENTAL PARTNERS, INC.
             (Exact name of registrant as specified in our charter)

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

                         American Dental Partners, Inc.
                         301 Edgewater Place, Suite 320
                         Wakefield, Massachusetts 01880
          (Address of principal executive offices, including zip code)

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

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

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

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

                          Common Stock, $0.01 par value
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [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. [X]

The aggregate market value of the registrant's voting common stock held by
non-affiliates of the registrant was approximately $25,239,000 on March 21,
2002, 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 21, 2002 was 7,204,695.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Definitive 2002 Proxy Statement for our 2002 Annual
Meeting of Stockholders to be filed pursuant to Regulation 14A are incorporated
by reference in Part III of this Annual Report on Form 10-K.

================================================================================

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.
                                      INDEX
                                      -----

<TABLE>
<CAPTION>
                                                                                                     Page
                                                                                                     ----
<S>                                                                                                   <C>
Information Regarding Forward-looking Statements..................................................     3

PART I.

Item 1.     Business..............................................................................     3

Item 2.     Properties............................................................................    16

Item 3.     Legal Proceedings.....................................................................    16

Item 4.     Submission of Matters to a Vote of Security Holders...................................    16

PART II.

Item 5.     Market for Registrant's Common Equity and Related Stockholder Matters.................    17

Item 6.     Selected Financial Data...............................................................    18

Item 7.     Management's Discussion and Analysis of Financial Condition and Results
               of Operations......................................................................    19

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk............................    26

Item 8.     Financial Statements and Supplementary Data...........................................    27

Item 9.     Changes in and Disagreements with Accountants on Accounting and
                Financial Disclosure..............................................................    49

PART III.

Item 10.    Directors and Executive Officers of the Registrant....................................    49

Item 11.    Executive Compensation................................................................    49

Item 12.    Security Ownership of Certain Beneficial Owners and Management.......................     49

Item 13.    Certain Relationships and Related Transactions........................................    49

PART IV.

Item 14.    Exhibits, Financial Statement Schedules and Reports on Form 8-K.......................    51
</TABLE>

                                       2

<PAGE>

                INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

     Some of the information in this Annual Report on Form 10-K contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The words "believe," "expect," "anticipate,"
"project," and similar expressions, among others, identify forward-looking
statements. Forward-looking statements speak only as of the date the statement
was made. Such forward-looking statements are subject to uncertainties and other
factors that could cause actual results to differ materially from those
projected, anticipated or implied. Certain factors that might cause such a
difference include, among others, the Company's risks associated with overall or
regional economic conditions, its affiliated dental groups' contracts with third
party payors and the impact of any terminations or potential terminations of
such contracts, the cost of and access to capital, the fluctuations in labor
markets, the Company's acquisition and affiliation strategy, management of rapid
growth, dependence upon affiliated dental groups, dependence upon service
agreements and government regulation of the dental industry. Additional risks,
uncertainties and other factors are set forth in the "Risk Factors" section of
the Company's Registration Statement on Form S-4 (File No. 333-56941).

                                     PART I

ITEM 1. BUSINESS

Overview

     American Dental Partners, Inc. ("ADPI") was formed in 1995 and is a leading
provider of business services to multi-disciplinary dental groups in selected
markets throughout the United States. We seek to affiliate with leading dental
groups that provide a comprehensive range of dental care services, have
outstanding reputations for quality and have proven records of financial
performance. When affiliating with a dental group, we acquire selected
non-clinical assets and enter into a long-term service agreement to manage the
non-clinical aspects of the dental operations.

     Our objective is to be the leading business partner to dental groups in the
United States. Our strategy for achieving this objective is to:

(i)  expand into carefully selected and diverse geographic markets which have
     favorable demographics and projected economic growth;
(ii) affiliate with leading dental groups which have reputations for quality
     care and proven records of financial performance;
(iii) increase market penetration of each of affiliated dental groups markets
     through additional affiliations, recruitment of dentists and facility
     development;
(iv) add value to each affiliated dental group by assisting the practice in
     improving operating performance; and

(v)  pursue initiatives to ensure the highest quality of care and service.

     We add value to our affiliated dental groups by providing a broad range of
services designed to enhance practice revenue, improve operating efficiencies
and expand operating margins. We share the best practices of our affiliates and
provide 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.

     From November 1996 (the date of our first affiliation) through December 31,
2001, we completed 43 affiliation transactions, comprising 19 dental groups with
154 dental facilities in 14 states. Our growth has resulted primarily from these
affiliations, which consisted of three affiliations completed in 1996, six
affiliations completed in 1997, ten affiliations completed in 1998, twelve
affiliations completed in 1999, nine affiliations completed in 2000 and three
affiliations in 2001.

                                       3

<PAGE>

Dental Care Industry

      The market for dental care is large, growing and highly fragmented. Based
on Health Care Financing Administration statistics, estimated expenditures for
dental care were approximately $65.4 billion in 2001 and will reach
approximately $109 billion by 2010, representing a compound annual growth rate
of approximately 6%. We believe that the growth in expenditures for dental care
will continue to be driven by both increases in costs and increases in demand
for services due to:

(i)  increased prevalence of dental benefits offered by employers, including
     indemnity insurance plans, preferred provider organization ("PPO") plans
     and, to a lesser extent, capitated managed care plans;
(ii) increased demand for dental care as a result of the aging population and a
     greater percentage of the population retaining its dentition; and
(iii) increased demand for cosmetic dental procedures as a result of an
     increasing awareness of personal appearance.

     We believe that this growth will benefit not only dentists, but companies
that provide services to the dental care industry, such as dental practice
management companies. However, the failure of any of these factors to
materialize could offset increases in demand for dental care, and any such
increases may not correlate with growth in our business.

     Unlike many other sectors of the health care services industry, the dental
care profession remains highly fragmented. Although dental care is typically
offered by solo practitioners, the trend towards group practice is growing.
According to the American Dental Association ("ADA"), in 1999, 15% of the
approximately 152,000 dentists in the United States were practicing in groups of
three or more, up from 4% in 1991. We believe this trend towards the delivery of
dental care in a group practice setting will continue.

     Most dental care performed in the United States is categorized as general
dentistry. According to the ADA, in 1999, general dentistry was estimated to
represent approximately 81% of all dental services performed in the United
States. General dentistry includes preventative care, diagnosis and treatment
planning, as well as procedures such as fillings, crowns, bridges, dentures and
extractions. Specialty dentistry, which includes orthodontics, periodontics,
endodontics, prosthodontics and pediatric dentistry, represented the remaining
19% of dental care services.

     Historically, dental care was not covered by insurers and consequently was
paid for by patients on a fee-for-service basis. An increasing number of
employers have responded to the desire of employees for enhanced benefits by
providing coverage from third party payors for dental care. These third party
payors offer indemnity insurance, PPO plans and capitated managed care plans.
Under an indemnity insurance plan, the dental provider charges a fee for each
service provided to the insured patient, which is typically the same as that
charged to a patient not covered by any type of dental insurance. We categorize
indemnity insurance plans as fee-for-service plans. Under a PPO plan, the
dentist charges a discounted fee for each service provided based on a schedule
negotiated with the dental benefit provider. Under a capitated managed care
plan, the dentist receives a fixed monthly fee from the managed care
organization for each member covered under the plan who selects that dentist as
his or her provider. Capitated managed care plans also typically require a
co-payment by the patient.

     The National Association of Dental Plans ("NADP") estimated that 153
million people, or 56% of the population of the United States, were covered by
some form of dental care plan in 1999. This compares with 124 million people, or
47% of the population of the United States, in 1995 and 96 million people, or
41% of the population of the United States, in 1990. Of the 153 million people
with coverage, 43% were covered by indemnity insurance, 18% were covered by
capitated managed care plans and 39% were covered by PPO plans. The remaining
120 million people, or 44% of the population of the United States in 1999, did
not have dental benefit coverage. We believe that the number of people with
dental benefits will continue to increase and that the majority of this growth
will be in PPO plans. For instance, according to the NADP, the number of people
covered by PPO plans increased from 16 million in 1995 to 48 million in 1999,
representing a 32% compound annual growth rate.

     We believe that the increased complexity of managing and operating dental
practices, as a result of the growth of both the group practice delivery model
and the prevalence of dental insurance plans, has led dental groups to begin to
affiliate with entities such as us that:

(i)  allow dentists to focus on the clinical aspects of dentistry by providing
     management resources to conduct the business and administrative aspects of
     dentistry;
(ii) provide information and operating systems that are required to manage
     effectively in an increasingly complex reimbursement environment;
(iii) assist with dental benefit provider contracting, realize economies of
     scale in purchasing and provide access to capital;
(iv) assist with the development of organizational and ownership structures that
     will allow dental groups to endure beyond their existing dentist
     leadership; and
(v)  provide dentists the opportunity to monetize part of the value of their
     practices.

                                       4

<PAGE>

Business Strategy

     Our objective is to be the leading business partner to dental groups in the
United States. In order to achieve this objective, our business strategy is to:

          Expand into carefully selected markets. We focus on markets that:

          (i) offer the opportunity to gain market share leadership;
          (ii) have a prevalence of dental group practices;
          (iii) have favorable demographics and projected economic growth; and
          (iv) have access to dental schools.

          To date, we have identified approximately 125 markets that currently
     meet our market selection criteria.

          Affiliate with leading dental groups. In entering a new market, we
     seek to affiliate with a leading dental group in that market as a platform
     for expansion. A "platform" dental group is one which has a reputation for
     quality care, provides a comprehensive range of dental services, has a
     significant market presence and has a proven record of financial
     performance.

          Increase market penetration. We assist our affiliated dental groups in
     achieving market share leadership. After affiliating with a leading dental
     group, we seek to increase market share by assisting the affiliate in
     recruiting new general and specialty dentists in the same market area and
     opening new facilities. Additionally, we may affiliate with other dental
     practices or specialty practices that complement the platform dental group.

          Add value to each affiliated dental group. We support our affiliated
     dental groups with a broad range of services designed to enhance their
     practice revenue, improve operating efficiencies and expand operating
     margins. We share the best practices of each of our affiliated dental
     groups and assist each affiliate with an analysis of its revenue and payor
     mix, capacity, utilization, staffing, scheduling and productivity. We also
     provide our affiliates 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.

          Focus on quality care. We pursue various initiatives to help our
     affiliates provide the highest quality of care and service. Our goal is to
     have each affiliated dental group become accredited by the Accreditation
     Association for Ambulatory Health Care ("AAAHC"). Through our National
     Professional Advisory Forum, we provide our affiliated dental groups with
     the opportunity to share clinical knowledge and best clinical practices. We
     also implement comprehensive patient satisfaction surveys administered by
     independent third parties. We believe that our focus on quality care
     enhances:

          (i)  our affiliates' relationships with patients;
          (ii) our affiliates' ability to recruit dentists;
          (iii) our affiliates' attractiveness to dental benefit providers,
               where appropriate or necessary; and
          (iv) our ability to attract new dental groups as affiliates.

Affiliation Philosophy

     We believe that dental care is an important part of an individual's overall
health care. Because the practitioner is best qualified to manage the clinical
aspects of dentistry, the provision of dental care must be centered around the
dentist. However, current market trends in health care are increasing the
complexity of operating a dental practice. Consequently, dentists are
affiliating with professional practice managers who can manage the non-clinical
aspects of dentistry and provide the business skills that can improve practice
operating performance.

     We believe that, similar to other sectors of the health care delivery
system, the delivery of dental care is fundamentally a local business.
Therefore, we operate our business in a decentralized manner, and each
affiliated dental group maintains its local identity and operating philosophy.
In each affiliation, we strive to maintain the local culture of the affiliated
group, and we encourage it to retain the name of the practice, continue its
presence in community events, maintain its relationship with patients and local
dental benefit providers and, to the extent possible, maintain the existing
management organization.

     Our affiliation model is designed to create a partnership in management
between the affiliated dental group and us that allows each party to maximize
its strengths and retain its autonomy. Under our affiliation model, the
affiliated dental group continues to own its practice and has sole purview over
the clinical aspects of the practice while we manage the business aspects of the
practice. This affiliation model is consistent across groups and, even where
permitted by law, we do not employ practicing dentists.

                                       5

<PAGE>

     We believe the core values of a business partnership are shared governance
and shared financial objectives and have structured our affiliation model to
achieve these goals. Shared governance is achieved by the formation of a joint
policy board for each affiliated dental group which is comprised of an equal
number of representatives from the affiliated dental group and us. Together,
members of the joint policy board develop strategies and decide on major
business initiatives for the practice. Shared financial objectives are achieved
through the joint implementation of a budgeting process that establishes the
financial performance standards for the dental practice.

     The organizational structure of a dental group before and after affiliation
with us is generally as follows:

                                   [FLOWCHART]

Market and Group Selection

     Market Selection

     We have a well-defined market selection criteria. We define potential
markets with reference to one or more Metropolitan Statistical Areas ("MSAs").
An MSA is generally a geographic area consisting of a city of at least 50,000
people, together with adjacent communities that have a high degree of economic
and social integration with the population center. There are more than 300 MSAs
in the United States, and we typically focus on markets with a population of at
least 250,000 people that:

     (i)  offer the opportunity to gain market share leadership;
     (ii) have a prevalence of dental group practices;
     (iii) have favorable demographics and projected economic growth; and
     (iv) have access to dental schools.

     We have identified approximately 125 MSAs that currently meet our market
selection criteria. At December 31, 2001, our 19 affiliated dental groups served
33 of these MSAs.

     Group Selection

     We seek to affiliate with a leading dental group in each selected market.
We focus on group practices because they have greater potential to be market
share leaders, are more likely to have implemented quality assurance and peer
review policies and procedures and are better positioned to operate in an
increasingly complex reimbursement environment. When entering a new market, we
seek to affiliate with a platform dental group with a:

     (i)  reputation for quality care;
     (ii) comprehensive range of dental care services;
     (iii) significant market presence; and
     (iv) proven record of financial performance.

     We believe that, although a limited number of platform dental groups exist
within any given market, there are a significant number of such groups
nationwide. We have identified more than 325 dental groups in our target markets
that are not affiliated with us or other dental practice management companies.

                                       6

<PAGE>

     Affiliation Process

     Once we have identified a potential affiliate within a market, our
management seeks to determine whether the group shares a common philosophy about
the dental profession and common strategic goals and objectives. To this end, we
conduct a series of meetings, site visits and presentations with the potential
affiliate, during which we discuss trends in the dental profession, our mission
and strategy and our affiliation model. We believe that the existence of shared
philosophical values is a critical element of each affiliation's ultimate
success.

     If it is determined that we mutually share common values, goals and
objectives, we then undertake a preliminary due diligence review of clinical,
operating and financial information. Based upon this review, we formulate an
offer outlining the basic terms and conditions of the affiliation which, if
accepted by the dental group, is generally embodied in a letter of intent
between the parties.

     Upon signing a letter of intent, we begin a thorough review of the
potential affiliate's clinical systems, processes, facilities and compliance
with licensing and credentialing requirements, as well as perform legal and
accounting due diligence. Affiliation, service and other agreements are then
prepared and the transaction is closed. Generally, the affiliation process, from
identifying an acceptable affiliation candidate to closing the transaction takes
at least twelve months.

     Potential Affiliations

     We are constantly discussing potential affiliations with dental groups that
meet our selection criteria, which may be at various stages at any point in
time. Our growth to date has resulted in large measure from our ability to
affiliate with additional dental practices. Although we have affiliated with
many dental practices since our initial affiliation in November 1996, there can
be no assurance that additional affiliation candidates can be identified or that
the affiliations can be consummated or successfully integrated into our
operations. We currently are in discussions with a number of dentists and owners
of dental groups about possible affiliations with us. While we continue to
evaluate new affiliation opportunities, we intend to focus more on internal
operations. As a result, it is expected that the number of new affiliations over
the next twelve months will be more than in 2001, but lower relative to 2000.

                                       7

<PAGE>

Affiliated Dental Groups

     From November 1996 (the date of our first affiliation) through December 31,
2001, we completed 43 affiliation transactions, comprising 19 dental groups in
14 states. The following table lists our affiliates at December 31, 2001:

<TABLE>
<CAPTION>
                                                                                              Dental Services/(3)/
                                                                                   -------------------------------------
                                                        Dental
Affiliate                                  State       Facilities    Operatories   General   Endondontics   Oral Surgery
---------                                  -----       ----------    -----------   -------   ------------   ------------
<S>                                     <C>                <C>          <C>          <C>          <C>            <C>
American Family Dentistry               Tennessee            8             43        [X]
Associated Dental Care Providers/(1)/   Arizona              9             77        [X]
Chestnut Hills Dental                   Pennsylvania         8             58        [X]                         [X]
Dental Arts Center                      Virginia             2             48        [X]          [X]            [X]
Dental Care of Alabama                  Alabama              3             28        [X]                         [X]
Family Care Dental Centers/(1)/         Wisconsin            4             34        [X]          [X]            [X]
Lakeside Dental Care                    Louisiana            2             33        [X]                         [X]
Longhorn Dental Associates/(1)/         Texas                9             63        [X]                         [X]
Mintz & Pincus Dental Group             Maryland             5             65        [X]                         [X]
Northpark Dental Group/(1)/             Wisconsin           14            141        [X]          [X]
Northpoint Dental Group/(1)/            Wisconsin            2             30        [X]
Oklahoma Dental Group                   Oklahoma             6             54        [X]          [X]
Orthodontic Care Specialists/(1)/       Minnesota           20            103
Park Dental/(1)/                        Minnesota           30            275        [X]          [X]            [X]
Riverside Dental Group                  California           5            101        [X]          [X]            [X]
TSC Dental Centers                      Texas                5             42        [X]
University Dental Associates/(2)/       North               11             95        [X]                         [X]
                                        Carolina
Western New York Dental Group           New York             7             38        [X]
Wilkens Dental Group/(1)/               Wisconsin            4             32        [X]
                                                           ---          -----
                                                           154          1,360
                                                           ===          =====

<CAPTION>
                                                               Dental Services/(3)/
                                        ----------------------------------------------------------

Affiliate                               Orthodontics   Pendodontics   Penodontics   Prosthodontics
---------                               ------------   ------------   -----------   --------------
<S>                                          <C>           <C>            <C>             <C>
American Family Dentistry
Associated Dental Care Providers/(1)/        [X]
Chestnut Hills Dental                        [X]
Dental Arts Center                           [X]           [X]            [X]
Dental Care of Alabama                       [X]           [X]            [X]
Family Care Dental Centers/(1)/              [X]
Lakeside Dental Care                         [X]
Longhorn Dental Associates/(1)/              [X]
Mintz & Pincus Dental Group                  [X]           [X]            [X]
Northpark Dental Group/(1)/                  [X]           [X]            [X]
Northpoint Dental Group/(1)/                 [X]                          [X]
Oklahoma Dental Group                        [X]
Orthodontic Care Specialists/(1)/            [X]
Park Dental/(1)/                                           [X]            [X]             [X]
Riverside Dental Group                       [X]           [X]            [X]
TSC Dental Centers
University Dental Associates/(2)/            [X]

Western New York Dental Group                [X]                          [X]
Wilkens Dental Group/(1)/                    [X]
</TABLE>

/(1)/ Accredited by the Accreditation Association for Ambulatory Health Care.

/(2)/ University Dental Associates' dental residency program is accredited by
     the American Dental Association and Winston-Salem practices are accredited
     by the AAAHC.

/(3)/ Services provided by specialists who are board-certified or
     board-eligible.

Market Penetration

     After affiliating with a platform dental group, our strategy is to increase
market penetration by expanding existing dental facilities, developing new
dental facilities and by affiliating with other leading dental groups that
complement or add to the dental care provided by the platform affiliate.

     Increase the Platform Groups' Market Share

     Upon completing an affiliation, we prepare a thorough operating evaluation
of the affiliate which builds upon our operational due diligence. Based on this
evaluation, we prepare a plan for increasing the affiliate's market penetration.
This plan may include one or more of the following methods:

(i)  opening new facilities that are conveniently located in highly populated
     areas within the MSA or in contiguous MSAs;
(ii) recruiting additional general and specialty dentists that will complement
     or enhance the dental care provided by each affiliated dental group;
(iii) expanding physical capacity by adding new operatories at existing
     facilities;
(iv) increasing the utilization of existing physical capacity by expanding hours
     of operation; and

                                       8

<PAGE>

     (v)  growing our affiliate's patient base through increased marketing
          efforts and expanded relationships with dental benefit providers.

     Affiliations in Existing Markets

     We also increase our market penetration by affiliating with other leading
general and specialty dental practices that complement the platform dental
group. These practices are selected in much the same manner as the platform
dental group. We identify those practices which have an outstanding reputation
for quality dental care and provide the type of dental care which will
complement or add to the dental care offered by the platform dental group.

     At December 31, 2001, our 19 affiliated dental groups had dental facilities
in 33 of our 125 target markets. They provided care to nearly one million active
patients, or approximately 3% of these market's total population of 30 million.

Operations

     Operating Structure

     We operate under a decentralized organizational structure. At the practice
level, where permitted by applicable state law, we generally employ the dental
hygienists, dental assistants and administrative staff. At each practice, a
practice manager typically oversees the day-to-day business operations. The
practice manager and administrative staff are responsible for, among other
things, facility staffing, patient scheduling, on-site patient invoicing and
ordering office and dental supplies. We believe local office scheduling is
crucial because it allows each practice to accommodate the needs of its patients
and increase the productivity of its dentists.

     We have regional management team that supervises the operations of one or
more affiliates. This team provides support in areas such as recruiting, hiring
and training facility staff, developing and implementing operating policies and
procedures, administering employee benefits, billing and collecting accounts
receivable, processing payroll, information systems, accounting, marketing and
facilities development and management.

     Each regional management team reports to one of our operating vice
presidents. An operating vice president is responsible for monitoring the
operating performance of multiple affiliated dental groups in multiple markets.
Each operating vice president participates as a member of the joint policy board
of each of the affiliated dental groups for which he or she has management
oversight responsibilities. The operating vice presidents are responsible for
overseeing the development of operating plans and annual budgets and monitoring
actual results. Additionally, we support each of our dental groups with analyses
of the capacity, utilization and productivity of each dental facility. This
analysis assists each practice in improving its operating performance from both
a clinical and financial perspective.

     On a national level, we support our affiliates in several ways. We assist
with:

     (i)    sharing best clinical practices through our National Professional
            Advisory Forum;
     (ii)   preparing for survey by the Accreditation Association for Ambulatory
            Health Care;
     (iii)  developing training programs for the practice managers and
            administrative staff;
     (iv)   designing, locating and leasing new dental facilities;
     (v)    evaluating and negotiating dental benefit provider contracts;
     (vi)   evaluating and negotiating local practice affiliations;
     (vii)  developing budgets and implementing accounting and financial
            systems;
     (viii) developing and implementing practice management and other
            information systems;
     (ix)   professional recruitment; and
     (x)    administering employee benefit plans.

     We also take advantage of economies of scale by contracting for various
goods and services. For example, we have arranged for national contracts for the
purchase of dental supplies and equipment, long distance telephone services,
professional, casualty and general liability insurance, employee benefits such
as a 401(k) plan, flexible spending program, life insurance and disability
insurance and payroll processing.

                                       9

<PAGE>

     National Professional Advisory Forum

     We have organized the National Professional Advisory Forum ("NPAF") to
provide guidance to our affiliated dental groups with respect to the clinical
aspects of dentistry. Leading dentists from our affiliated dental groups are
selected to participate in the NPAF. The NPAF meets on a regional basis and a
national basis each year and provides a forum for dentists to share the best
clinical practices of their respective dental groups and an opportunity for them
to build professional relationships with other dental groups affiliated with us.
These dentists, as a result of their affiliation with us, share common long-term
goals. This enables the discussion at the NPAF to be more open than it may be in
other professional settings. While the primary emphasis of the NPAF is on the
clinical aspects of dentistry, it also provides our management an opportunity to
continue to build strong, mutually beneficial partner relationships with our
affiliated dental groups.

     Payor Relationships and Reimbursement Mix

     We believe that our affiliated dental groups' clinical philosophy should
not be compromised by economic decisions. We recognize, however, that the source
of payment for services affects operating and financial performance. We assist
our affiliates in analyzing their revenue and payor mix on an ongoing basis and
recommend methods by which the affiliated dental group can improve operating
efficiency while not compromising this clinical practice philosophy. As a
general rule, we believe that growth in a market is best facilitated where the
payor mix of our affiliates mirrors the payor mix for their community. We assist
each of our affiliated dental groups in evaluating and negotiating dental
benefit provider contracts.

     We believe it is advantageous to be affiliated with dental groups that have
successfully provided care to patients under all reimbursement methodologies.
Since a shift is taking place in the dental benefits market from capitated
managed care dental plans to PPO plans and, to a lesser extent, traditional
fee-for-service plans, we believe that our affiliates' experience in operating
under all of these plans provides them with a competitive advantage. Most of our
affiliated dental groups provide care under traditional fee-for-service plans
and non-fee-for-service plans. The following table provides the aggregate payor
mix of our affiliates for the years ended December 31:

                                       1999             2000             2001
                                       ----             ----             ----
Fee-for-service                         44%              46%              47%
PPO plans                               14%              21%              25%
Capitated managed care plans            42%              33%              28%

     In today's dental economy, many of our affiliated dental groups are
challenged with strong patient demand and fluctuations in labor markets. This
combination can create an unstable practice environment which negatively impacts
staff retention. Given these market dynamics, in selected markets, our
affiliated dental groups have been realigning their reimbursement mix towards
dental benefit plans designed to address the realities of the marketplace. This
has largely been accomplished with the cooperation of the dental benefit
provider community in general. There can be no assurance, however, that the
shift in reimbursement mix will not result in the termination of certain third
party payor contracts. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

     Facilities Development and Management

     We believe an inviting professional environment is a critical aspect of
overall patient satisfaction. Each of our facilities is constructed to be warm,
attractive and inviting to the patients in addition to being highly functional.
Our dental facilities typically have eight to ten operatories and accommodate
general and specialty dentists, dental hygienists and dental assistants, a
practice manager and a receptionist. Generally, our facilities are either stand
alone or located within a professional office building or medical facility.

     We work with each of our affiliated dental groups in analyzing utilization
of existing capacity and identifying facility upgrade and expansion priorities.
We also provide our affiliates guidance in the site selection process. We
initially construct each facility as appropriate for the market and add or equip
additional operatories as necessary based on capacity and utilization analyses.

     We use architectural design services to improve the facility design process
and to ensure that all facilities are properly constructed and meet the
standards set forth by the AAAHC and Occupational Safety and Health
Administration/American Dental Association. To this end, we work with each
affiliated dental group to establish a defined set of standards which are
consistent with the desires of the dental group. We believe such facility
standards are necessary to speed the site development process and create
consistency across newly developed facilities, leading to enhanced staff and
dentist productivity.

                                       10

<PAGE>

     Budgeting and Planning; Financial Information System

     We assist each affiliate with budgeting and planning. Together with each
affiliate, we develop on an annual basis a strategic plan for increased market
penetration. We then jointly develop a budget which sets specific goals for
revenue growth, operating expenses and capital expenditures. Once a budget has
been approved, we measure the financial performance of each affiliated dental
group on a monthly basis and compare actual performance to budget.

     Our financial information system enables us to measure, monitor and compare
the financial performance of each affiliated dental group on a standardized
basis. The system also allows us to track and control costs and facilitates the
accounting and financial reporting process. This financial system is installed
in all affiliated dental groups.

     Practice Management Systems

     We use various dental practice management software systems to facilitate
patient scheduling, to invoice patients and insurance companies, to assist with
facility staffing and for other practice related activities. In connection with
our affiliation with Park Dental, we acquired the rights to Comdent, a
proprietary practice management software system which has been used and
continuously enhanced at Park Dental since 1987. We believe that Comdent's
scheduling, electronic data interchange and data management features are
superior to others that are commercially available. In addition, Comdent is
scalable and capable of accommodating large multi-site dental groups. We expect
to have all of our multi-specialty dental groups on Comdent or Quality Systems,
Inc. ("QSI"), a third party practice management system, by year end 2003. We are
also developing a data warehouse and decision support system to analyze
information from the dental practice management systems in use.

Affiliation Structure

     Service Agreement

     We have entered into a service agreement with each affiliated professional
corporation ("PC") pursuant to which we perform all administrative, non-clinical
aspects of the dental group. We expect that each new affiliated PC will enter
into a similar service agreement or become a party to an existing service
agreement at the time of affiliation with us. We are dependent on our service
agreements for the vast majority of our operating revenue. The termination of
one or more of these service agreements could have a material adverse effect on
us.

     We are responsible for providing all services necessary for the
administration of the non-clinical aspects of the dental operations. These
services include assisting our affiliates 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 PC is responsible for recruiting and hiring all of the dentists
necessary to provide dental care. We do not assume any authority,
responsibility, supervision or control over the provision of dental care to
patients. The service agreement requires the PC to enter into an employment or
independent contractor agreement with each dentist retained by the PC. The
service agreement also requires the PC to implement and maintain quality
assurance and peer review programs, maintain professional and comprehensive
general liability insurance covering the PC and each of its dentists and abide
by non-competition and confidentiality provisions.

     We and each PC establish a joint policy board which is responsible for
developing and implementing management and administrative policies for the
dental operation. The joint policy board consists of an equal number of
representatives designated by us and the PC. The joint policy board members
designated by the PC must be licensed dentists employed by the PC. The joint
policy board's responsibilities include the review and approval of the long-term
strategic and short-term operational goals, objectives, and plans for the dental
facilities, all annual capital and operating budgets, all renovation and
expansion plans and capital equipment expenditures with respect to the dental
facilities, all advertising and marketing services, and staffing plans regarding
provider and support personnel for the dental group. The joint policy board also
reviews and monitors the financial performance of the PC with respect to the
attainment of the PC's budgeted goals. The joint policy board also has the
authority to approve or disapprove any merger or combination with, or
acquisition of, any dental practice by the PC. Finally, the joint policy board
reviews and makes recommendations with respect to contractual relationships
between the PC and dental benefit providers. However, the PC has final approval
over matters relating to dental care, including all dental benefit plan provider
contracts and patient fee schedules.

                                       11

<PAGE>

     The PC reimburses us for actual expenses incurred on its behalf in
connection with the operation and administration of the dental facilities and
pays fees to us for 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 PC's adjusted gross revenue exceeds
expenses incurred in connection with the operation and administration of our
dental facilities. Under certain service agreements our service fees consist of
a fixed monthly fee and an additional variable fee. 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
in a formal budgeting process. The PC is also responsible for provider expenses,
which generally consist of the salaries, benefits, and certain other expenses of
the dentists. Pursuant to the terms of the service agreements, we bill patients
and third party payors on behalf of the affiliated PCs. Such funds are applied
in the following order of priority:

     (i)   reimbursement of expenses incurred in connection with the operation
           and administration of the dental facilities;
     (ii)  repayment of advances, if any, made by us to the PC;
     (iii) payment of the monthly fee;
     (iv)  payment of provider expenses; and
     (v)   payment of the additional variable fee, as applicable.

     Each of our current service agreements is for an initial term of 40 years
and automatically renews for successive five-year terms, unless terminated by
notice given at least 120 days prior to the end of the initial term or any
renewal term. In addition, the service agreement may be terminated earlier by
either party upon the occurrence of certain events involving the other party,
such as our dissolution, bankruptcy, liquidation, or our failure to perform our
material duties and obligations under the service agreement. In the event a
service agreement is terminated, the related affiliated dental practice is
generally required to purchase, at our option, the unamortized balance of
intangible assets at the current book value, as well as all related other assets
associated with the affiliated dental group.

     Employment Agreements with Dentists

     The service agreements require that all dentists practicing full-time at
the dental facilities enter into employment agreements with their respective
PCs. The employment agreements with dentists who are owners of the PCs generally
are for a specified initial term of up to five years and may not be terminated
by the dentists without cause during such initial term. The employment
agreements with other dentists may be for terms up to 18 months. Such employment
agreements are usually terminable by either party upon advance written notice,
which in most cases is 90 days, and are terminable by the PC for cause
immediately upon written notice to the dentist. Such agreements typically
contain non-competition provisions which prohibit the dentist from engaging in
the practice of dentistry or otherwise performing professional dental services
within a specified geographic area, usually a specified number of miles from the
relevant dental facility, following termination. The non-competition
restrictions are generally for one to two years following termination.

Competition

     The dental services industry is highly competitive and is expected to
become more competitive. Our affiliates compete with other dental practices in
their market. We compete with more than ten other companies that provide
business services to dentists, as well as those seeking to affiliate with
existing dental practices through service agreement arrangements. We believe
that the principal factors of competition between companies that provide
business services to dentists are their affiliation methods and models, the
number and reputation of their existing affiliates, their management expertise
and experience, the sophistication of their management information, accounting,
finance and other systems and their operating methods. We believe that we
compete effectively with other companies that provide business services to
dentists with respect to these factors.

Government Regulation

     General

     The practice of dentistry is highly regulated, and our operations and those
of our affiliated dental practices are subject to numerous state and federal
laws and regulations. Furthermore, we may become subject to additional laws and
regulations as we expand into new markets. There can be no assurance that the
regulatory environment in which we and our affiliated dental groups operate will
not change significantly in the future. Our ability to operate profitably will
depend, in part, upon us and our affiliated dental groups obtaining and
maintaining all necessary licenses, certifications and other approvals and
operating in compliance with applicable laws.

                                       12

<PAGE>

     State Regulation

     Every state imposes licensing and other requirements on individual dentists
and dental facilities and services. Except for Wisconsin, the laws of the states
in which we currently operate prohibit, either by specific statutes, case law or
as a matter of general public policy, entities not wholly owned or controlled by
dentists, such as us, from practicing dentistry, from employing dentists and, in
certain circumstances, dental assistants and dental hygienists, or from
exercising control over the provision of dental services. Many states prohibit
or restrict the ability of a person other than a licensed dentist to own, manage
or control the assets, equipment or offices used in a dental practice. The laws
of some states prohibit the advertising of dental services under a trade or
corporate name and require all advertisements to be in the name of the dentist.
A number of states also regulate the content of advertisements of dental
services and the use of promotional gift items. These laws and their
interpretation vary from state to state and are enforced by regulatory
authorities with broad discretion.

     There are certain regulatory issues associated with our role in negotiating
and administering managed care contracts. To the extent that we or any
affiliated dental group contracts with third party payors, including
self-insured plans, under a capitated or other arrangement which causes us or
such affiliated dental group to assume a portion of the financial risk of
providing dental care, we or such affiliated dental group may become subject to
state insurance laws. If we or any affiliated dental group is determined to be
engaged in the business of insurance, we may be required to change the method of
payment from third party payors or to seek appropriate licensure. Any regulation
of us or our affiliated dental groups under insurance laws could have a material
adverse effect on our business, financial condition and results of operations.
Through our role in negotiating and administering managed care and other
provider contracts, we are also subject to regulation in certain states as an
administrator and must ensure that our activities comply with relevant
regulation.

     Many states' laws and regulations relating to the practice of dentistry
were adopted prior to the emergence of providers of business services to dental
groups like us. As a result, a number of states, including states in which we
currently operate, are in the process of reviewing and/or amending their laws or
regulations relating to the practice of dentistry and dentists' business
arrangements with unlicensed persons like us. There can be no assurance that any
amendments or new laws or regulations, or the interpretation or application of
existing or new laws or regulations, will not have a material adverse effect on
our business, financial condition and results of operations.

     Federal Regulation

     The dental industry is also regulated at the federal level to the extent
that dental services are reimbursed under federal programs. Participation by the
affiliated dental groups and their dentists in such programs subject them, and
potentially us, to significant regulation regarding the provision of services to
beneficiaries, submission of claims and related matters, including the types of
regulations discussed below. Violation of these laws or regulations can result
in civil and criminal penalties, including possible exclusion of individuals and
entities from participation in federal payment programs.

     The federal anti-kickback statutes prohibit, in part, and subject to
certain safe harbors, the payment or receipt of remuneration in return for, or
in order to induce, referrals, or arranging for referrals, for items or services
which are reimbursable under federal payment programs. Other federal laws impose
significant penalties for false or improper billings or inappropriate coding for
dental services regardless of the payor source. The federal self-referral law,
or "Stark law," prohibits dentists from making referrals for certain designated
health services reimbursable under federal payment programs to entities with
which they have financial relationships unless a specific exception applies. The
Stark law also prohibits the entity receiving such referrals from submitting a
claim for services provided pursuant to such referral. We may be subject to
federal payor rules prohibiting the assignment of the right to receive payment
for services rendered unless certain conditions are met. These rules prohibit a
billing agent from receiving a fee based on a percentage of collections and may
require payments for the services of the dentists to be made directly to the
dentist providing the services or to a lock-box account held in the name of the
dentist or his or her dental group. In addition, these rules provide that
accounts receivables from federal payors are not saleable or assignable.

     Federal antitrust laws prohibit agreements in restraint of trade, the
exercise of monopoly power and other practices that are considered to be
anti-competitive, including cooperation by separate economic entities to fix the
prices of services. Finally, dental practices are also subject to compliance
with federal regulatory standards in the areas of safety and health.

Employees

     As of December 31, 2001, we employed 1,435 people. This amount included 685
hygienists and dental assistants and 750 administrative and management personnel
located at our dental facilities, local management offices and our corporate
office. In addition, we are affiliated with 358 dentists, as well as 266
hygienists and dental assistants located in states which prohibit our employment
of hygienists and/or dental assistants, all of whom were employees or
independent contractors of their respective affiliated PCs. We consider our
relations with our employees to be good.

                                       13

<PAGE>

Executive Officers of the Registrant

     The following table sets forth information concerning each of our executive
officers:

<TABLE>
<CAPTION>
           Name              Age                     Position
           ----              ---                     --------
<S>                           <C>  <C>
Gregory A. Serrao.........    39   Chairman, President and Chief Executive Officer
Joseph V. Errante, D.D.S..    46   Senior Vice President - Business Development
Michael F. Frisch.........    44   Senior Vice President - Regional Operations
Paul F. Gill..............    56   Senior Vice President - Regional Operations
Michael J. Vaughan........    48   Senior Vice President and Chief Operating Officer
Ian H. Brock..............    32   Vice President - Finance
Breht T. Feigh............    35   Vice President - Chief Financial Officer and Treasurer
Roger A. Horton, D.M.D....    47   Vice President - Information Systems
Jesley C. Ruff, D.D.S.....    47   Vice President - Chief Professional Officer
Peter G. Swenson..........    30   Vice President - Market Development
</TABLE>

The executive officers are elected annually by the Board of Directors.

     Mr. Serrao founded American Dental Partners, Inc. and has served as our
President, Chief Executive Officer and a Director since December 1995 and as
Chairman since October 1997. From 1992 through December 1995, Mr. Serrao served
as the President of National Specialty Services, Inc., a subsidiary of Cardinal
Health, Inc. ( "Cardinal Health "). From 1991 to 1992, Mr. Serrao served as Vice
President--Corporate Development of Cardinal Health. Before joining Cardinal
Health, Mr. Serrao was an investment banker at Dean Witter Reynolds Inc. where
he co-founded its health care investment banking group and specialized in
mergers, acquisitions and public equity offerings.

     Dr. Errante has served as our Senior Vice President - Business Development
since January 2000. From November 1998 through December 1999, Dr. Errante served
as Vice President - Regional Operations. From January 1996 to October 1998, Dr.
Errante served as Chief Executive Officer of Innovative Practice Concepts, Inc.
(which we acquired in January 1998). From January 1996 to January 1998, Dr.
Errante also served as Chairman of Associated Dental Care Providers, P.C., one
of our affiliated dental groups, which he co-founded in 1985. From 1992 to 1996,
Dr. Errante served as Chief Executive Officer and Chairman of Associated
Companies, Inc., the management company that operated Associated Health Plans,
Inc. ( "AHP "), a managed care dental plan in Arizona. From 1985 to 1992, Dr.
Errante served as the Dental Director for AHP. Dr. Errante is currently the
Immediate Past President of the American Academy of Dental Group Practice (
"AADGP ") and sits on the Managed Care Dental Advisory Board to Proctor and
Gamble.

     Mr. Frisch has served as our Senior Vice President - Regional Operations
since January 2000. From June 1997 through December 1999, Mr. Frisch served as
Vice President - Regional Operations. From January 1997 to June 1997, Mr. Frisch
was Director - National Support Initiatives. From July 1996 to December 1996,
Mr. Frisch was an independent consultant to us. From June 1993 to July 1996, Mr.
Frisch served as Vice President and General Manager of National Specialty
Services, Inc., a subsidiary of Cardinal Health. From July 1986 to June 1993,
Mr. Frisch was employed by VHA, Inc., a national health care alliance, in a
variety of marketing, business development and management positions.

     Mr. Gill has served as our Senior Vice President - Regional Operations
since January 2001. From October 1993 to December 2000, Mr. Gill served as
Administrator for Riverside Dental Group, one of our affiliated dental groups.
From September 1991 to September 1993, Mr. Gill served as Community Development
Director for the City of Moreno Valley, California. Before working for the City
of Moreno Valley, Mr. Gill served as a career Air Force officer and pilot. His
last assignment was as Commander of March Air Force Base in California.

     Mr. Vaughan has served as our Senior Vice President and Chief Operating
Officer since October 2001. From January 2001 to September 2001, Mr. Vaughan
served as Senior Vice President - Regional Operations. From January 2000 to
December 2000, Mr. Vaughan served as Vice President - Operations. From 1996 to
1999, Mr. Vaughan served as Regional Vice President for Cardinal Distribution, a
subsidiary of Cardinal Health. From 1988 to 1995, Mr. Vaughan held the positions
of Vice President and General Manager of Cardinal Distribution's Knoxville,
Tennessee and Zanesville, Ohio facilities and also Vice President of Strategic
Initiatives. Prior to joining Cardinal Health, Mr. Vaughan worked for McKesson
HBOC in various sales management positions.

                                       14

<PAGE>

     Mr. Brock has served as our Vice President - Finance since October 2001.
Mr. Brock was Vice President - Financial Planning from January 2001 to September
2001, Director - Financial Planning from February 1998 to December 2000 and
Assistant Controller from September 1996 to January 1998. Prior to joining us,
Mr. Brock worked for American Medical Response, Inc., ("AMR") a national
provider of ambulance services, as a corporate financial analyst from October
1995 to August 1996 and as an accounting manager and financial analyst from June
1991 to September 1995 with AMR of Connecticut, Inc., one of AMR's four founding
subsidiaries.

     Mr. Feigh has served as our Vice President - Chief Financial Officer and
Treasurer since January 2001, served as Vice President - Strategic Initiatives
from January 2000 to December 2000 and was Director - Corporate Development from
October 1997 to December 1999. Prior to joining us, Mr. Feigh was employed in
the health care mergers and acquisition group of Robertson, Stephens & Company
from 1996 to 1997. From 1994 to 1996, he was employed in the Latin American
investment banking group of ING Barings, and from 1989 to 1993, he was employed
in the health care investment banking group of Dean Witter Reynolds, Inc.

     Dr. Horton has served as our Vice President - Information Systems since
January 2001 and was Director - Information Systems from May 1997 to December
2000. Dr. Horton has an extensive background in both dentistry and information
systems. After receiving his D.M.D. from the University of Pittsburgh and
completing first a clinical residency and then a fellowship at the University of
Colorado and Wake Forest University, respectively, he spent several years as a
member of the faculty and staff at the Department of Dentistry at Wake Forest
University School of Medicine. He also spent several years as an independent
systems consultant focused on the development of software applications in
dentistry and medical image processing.

     Dr. Ruff has served as our Vice President - Chief Professional Officer
since January 1999 and has chaired our National Professional Advisory Forum
since January 1997. From 1992 to 1998, Dr. Ruff served as President of Wisconsin
Dental Group, S.C., one of our affiliated dental groups, where he was employed
as a practicing dentist and held a variety of positions since 1985. In 1994, Dr.
Ruff served on the Board of Directors of the National Association of Prepaid
Dental Plans. From 1983 to 1991, Dr. Ruff was an Assistant Professor at the
Marquette University School of Dentistry and an adjunct faculty member from 1991
to 1996, where he held a variety of clinical faculty and grant-related
positions.

     Mr. Swenson has served as our Vice President - Market Development for the
Company since January 2000. Mr. Swenson was Director - Market Development from
January 1998 to December 1999 and Director - Facility Development from January
1997 to December 1997. From April 1994 to December 1996, Mr. Swenson was Manager
- Facilities Development of Park Dental, one of our affiliated dental groups.

                                       15

<PAGE>

ITEM 2. PROPERTIES

     We lease most of our dental facilities. Typically, each acquired dental
facility is located at the site used by the dental group prior to affiliating
with us. As of December 31, 2001, we owned or leased 154 dental facilities, 10
local management offices and our corporate office. Our corporate office is
located at 301 Edgewater Place, Suite 320, Wakefield, Massachusetts, in
approximately 6,900 square feet occupied under a lease which expires in March
2002. As of April 2002, our corporate office will be located at 201 Edgewater
Drive, Suite 285, Wakefield, Massachusetts, with approximately 8,300 square feet
occupied under a lease which will expire in March 2007. The Company considers
that its properties are in good condition, are well maintained and are generally
suitable and adequate to carry on the Company's business.

     Typically, each dental facility has some excess capacity to allow for
future growth. In 2001, some dental facilities operated at or near capacity and
others operated moderately below capacity due to the excess capacity created by
the contract terminations by Cigna Dental and Protective Life with three of our
affiliates. The excess capacity arising from the contract terminations in
certain markets will likely continue in the near future.

     In 2001, our dental facilities operated at levels of utilization which
varied from affiliate to affiliate, but overall were satisfactory.

ITEM 3. LEGAL PROCEEDINGS

     From time to time, we may be subject to litigation incidental to our
business. We are not presently a party to any material litigation. The dentists
employed by, or independent contractors of, our affiliated PCs are from time to
time subject to malpractice claims. Such claims, if successful, could result in
damage awards exceeding applicable insurance coverage which could have a
material adverse effect on our business, financial condition and results of
operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

                                       16

<PAGE>

                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Market Information, Holders and Dividends

     Our Common Stock is traded on the Nasdaq National Market system under the
symbol "ADPI." The following table sets forth the range of the reported high and
low sales prices of our Common Stock for the years ended December 31, 2000 and
2001:

                             High      Low     Close
                            ------    ------   ------
     2000
     ----
1st Quarter .............   $ 9.375   $6.250   $6.938
2nd Quarter .............   $ 7.000   $6.875   $7.000
3rd Quarter .............   $ 9.000   $6.375   $6.875
4th Quarter .............   $ 8.500   $5.000   $7.500

                             High       Low     Close
                            -------    ------   -----
     2001
     ----
1st Quarter .............   $11.500    $6.688   $9.250
2nd Quarter..............   $ 8.750    $3.740   $4.200
3rd Quarter .............   $ 7.950    $4.300   $7.500
4th Quarter..............   $ 8.200    $4.360   $6.300

     As of March 21, 2002, there were approximately 51 holders of record of
Common Stock, as shown on the records of the transfer agent and registrar of
Common Stock. The number of record holders does not bear any relationship to the
number of beneficial owners of the Common Stock. The last reported sale price of
the Common Stock on the Nasdaq National Market as of March 21, 2002 was $8.62
per share.

     We have not paid any cash dividends on our Common Stock in the past and do
not plan to pay any cash dividends on our Common Stock in the foreseeable
future. In addition, the terms of our revolving credit facility prohibit us from
paying dividends or making other payments with respect to our Common Stock
without the lenders' consent. Our Board of Directors intends, for the
foreseeable future, to retain earnings to finance the continued operation and
expansion of our business.

Recent Sales of Unregistered Securities

     None.

                                       17

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA(1) (in thousands, except per share amounts and
        statistical data)

<TABLE>
<CAPTION>
                                                                        Years Ended December 31,
                                                         ----------------------------------------------------
                                                           1997       1998       1999       2000       2001
                                                         --------    -------   --------   --------   --------
<S>                                                      <C>         <C>       <C>        <C>        <C>
Consolidated Statement of Operations Data:
Net revenue ..........................................   $ 53,270    $84,090   $117,352   $143,644   $147,410
                                                         --------    -------   --------   --------   --------
Operating expenses:
     Salaries and benefits ...........................     28,438     43,190     57,417     68,135     70,341
     Lab fees and dental supplies ....................      6,435     10,796     15,866     21,078     22,681
     Office occupancy ................................      4,814      7,635     11,321     14,784     16,669
     Other operating expenses ........................      6,264      6,840      9,235     10,990     12,370
     General corporate expenses ......................      3,337      3,951      4,814      5,364      5,660
     Depreciation ....................................      1,580      2,495      3,642      4,708      5,088
     Amortization of goodwill and intangible assets...        769      2,085      3,016      3,822      3,955
     Special charges .................................         --         --         --         --        844
                                                         --------    -------   --------   --------   --------
          Total operating expenses ...................     51,637     76,992    105,311    128,881    137,608
                                                         --------    -------   --------   --------   --------
Earnings from operations .............................      1,633      7,098     12,041     14,763      9,802
     Interest expense, net ...........................        563      1,085      1,877      4,378      4,295
                                                         --------    -------   --------   --------   --------
Earnings before income taxes .........................      1,070      6,013     10,164     10,385      5,507
     Income taxes ....................................         --      2,127      4,151      4,216      2,236
                                                         --------    -------   --------   --------   --------
     Net earnings ....................................   $  1,070    $ 3,886   $  6,013   $  6,169   $  3,271
                                                         ========    =======   ========   ========   ========
Net earnings (loss) per common share (2):
     Basic ...........................................   $  (0.05)   $  0.59   $   0.80   $   0.87   $   0.46
     Diluted .........................................   $  (0.05)   $  0.54   $   0.78   $   0.84   $   0.45

Weighted average common shares outstanding (2):
     Basic ...........................................      2,273      5,907      7,513      7,119      7,183
     Diluted .........................................      2,273      6,867      7,745      7,320      7,343
</TABLE>

<TABLE>
<CAPTION>
                                                                            December 31,
                                                         ----------------------------------------------------
                                                           1997       1998       1999       2000       2001
                                                         --------    -------   --------   --------   --------
<S>                                                      <C>         <C>       <C>        <C>        <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents ............................   $  5,265    $ 2,420   $  2,325   $    472   $  1,540
Working capital ......................................        759     (2,725)        22      4,063      9,123
Total assets .........................................     52,450     79,441    119,416    141,814    144,335
Long-term debt, excluding current maturities..........     21,253      9,980     40,249     55,330     54,840
Redeemable and convertible preferred stock ...........     16,297         --         --         --         --
Total stockholders' equity ...........................        909     48,305     52,229     58,486     61,776

Statistical Data (end of period):
Number of states .....................................          5          8         12         14         14
Number of dental facilities ..........................         77        103        134        156        154
Number of operatories (3) ............................        566        830      1,193      1,397      1,360
Number of affiliated dentists (4) ....................        171        231        324        373        358
</TABLE>

----------
(1)  Certain reclassifications have been made to the consolidated financial
     statements to conform with current year presentation.
(2)  Net earnings (loss) per common share are computed on the basis described in
     Notes 2 and 13 to our Consolidated Financial Statements.
(3)  An operatory is an area where dental care is performed and generally
     contains a dental chair, a hand piece delivery system and other essential
     dental equipment.
(4)  Includes full-time equivalent general dentists employed by the PCs and
     full-time equivalent specialists, some of whom are independent contractors
     to the PCs.

                                       18

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Overview

     American Dental Partners, Inc. is a leading provider of business services
to multi-disciplinary dental groups in selected markets throughout the United
States. We were formed in December 1995, commenced operations in January 1996
and began providing business services to dental groups in November 1996,
concurrent with the completion of our first dental group affiliation. Our rapid
growth has resulted primarily from our affiliations with dental groups. From
November 1996 to December 31, 2001, we completed 43 affiliation transactions,
comprising 19 dental groups and 154 dental facilities with 1,360 operatories in
14 states.

Affiliation Summary

     When affiliating with a dental group, we acquire selected assets and enter
into a long-term service agreement with the affiliated dental group or
professional corporation ("PC"). Under our service agreements, we are
responsible for providing all services necessary for the administration of the
non-clinical aspects of the dental operations. The PC is responsible for the
provision of dental care. Each of our service agreements is for an initial term
of 40 years.

     During 1999, 2000 and 2001, we acquired selected non-clinical assets from
twelve, nine, and three dental practices, respectively, and simultaneously
entered into 40-year service agreements with seven of the affiliated dental
groups (17 practices joined existing affiliates). In total, these 24
affiliations resulted in the addition of 45 dental facilities and 474
operatories. Subsequent to December 31, 2001, we acquired selected assets of one
dental practice that joined an existing affiliate. This affiliation resulted in
the addition of one dental facility with four operatories. See Note 5 of "Notes
to Consolidated Financial Statements" for further information on acquisitions
and affiliations. We currently are in discussions with a number of dentists and
owners of dental groups about possible affiliations with us. While we continue
to evaluate new affiliation opportunities we intend to keep on focusing on
internal operations in 2002. Accordingly, there can be no assurance that we will
consummate any additional affiliations in 2002.

Affiliate Adjusted Gross Revenue Compared to Net Revenue

     Affiliate Adjusted Gross Revenue and Payor Mix

     We do not own or control the affiliated dental groups and, accordingly, do
not consolidate the financial statements of the PCs with ours. Our affiliated
dental groups generate revenue from patients and dental benefit providers under
fee-for-service, PPO plans and capitated managed care plans. The affiliated
dental groups record revenue at established rates reduced by contractual
adjustments and allowances for doubtful accounts to arrive at adjusted gross
revenue. Contractual adjustments represent the difference between gross billable
charges at established rates and the portion of those charges reimbursed
pursuant to certain dental benefit plan provider contracts. While payor mix
varies from market to market, the aggregate payor mix percentage of our
affiliated dental groups for the year ended December 31, 2001 was approximately
47% fee-for-service, 25% PPO plans and 28% capitated managed care plans.

     The PCs reimburse us for expenses incurred on their behalf in connection
with the operation and administration of the dental facilities and pay fees to
us for business services. Expenses incurred for the operation and administration
of the dental facilities include salaries and benefits for non-dentist personnel
working at the dental facilities (the administrative staff and, where permitted
by law, the dental hygienists and dental assistants), lab fees, dental supplies,
office occupancy costs of the dental facilities, depreciation related to the
fixed assets at the dental facilities and other expenses such as professional
fees, marketing costs and general and administrative expenses. See
"Business--Operations--Operating Structure."

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     The PCs are responsible for the salaries, benefits and other expenses of
the dentists. In addition, in certain states where the PCs must employ dental
hygienists and dental assistants, the PCs are responsible for salaries, benefits
and other expenses of such non-dentist employees. Since 1999, we have entered
into affiliation transactions with a number of dental practices located in
states where dental hygienists and dental assistants are required to be employed
by the PCs. In recent years, due to the increasing demand for dental services
relative to a decreasing supply of dentists nationally, dentist compensation has
been increasing generally and for our affiliated dental groups specifically. We
expect this trend to moderate. As a result of these two factors, the percentage
of affiliate adjusted gross revenue retained by the PCs has increased from 29.3%
of adjusted gross revenue in 1999 to 31.9% in 2000 and 34.2% in 2001. We incur
costs to operate and support the affiliated adjusted gross revenue at the dental
facilities. Consequently, it is helpful to analyze operating trends as a
percentage of affiliate adjusted gross revenue as well as a percentage of our
net revenue.

     The adjusted gross revenue and amounts retained by the affiliated dental
groups are presented below (in thousands):

<TABLE>
<CAPTION>
                                                                      Years Ended December 31,
                                                                  ------------------------------
                                                                    1999       2000       2001
                                                                  --------   --------   --------
<S>                                                               <C>        <C>        <C>
Adjusted gross revenue-affiliated dental groups (unaudited) ...   $151,965   $194,572   $207,736
     Amounts retained by affiliated dental groups (unaudited)..     44,565     62,020     71,090
                                                                  --------   --------   --------
Net revenue earned by the Company under service
agreements ....................................................   $107,400   $132,552   $136,646
                                                                  ========   ========   ========
</TABLE>

Net  Revenue

     The Company's net revenue represents primarily reimbursement of expenses
and fees charged to affiliated dental groups pursuant to the terms of the
service agreements. Under such agreements, the affiliated dental groups
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, the
Company's service fee consists of a variable monthly fee which is based upon a
specified percentage of the amount by which the PC's adjusted gross revenue
exceeds expenses incurred in connection with the operation and administration of
the dental facilities. Under certain service agreements, the Company's 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 the Company in the amount of such excess up
to budgeted operating income and a percentage of such excess over budgeted
operating income. Under certain service agreements, the Company's service fee
consists entirely of a fixed monthly fee. The fixed monthly fees are determined
by agreement of the Company and the affiliated dental groups in a formal
budgeting process. Additionally, the Company's net revenue includes amounts from
dental benefit providers related to the arrangement of the provision of care to
patients.

Results of Operations

     Net  Revenue

     Net revenue increased 22% in 2000 to $143,644,000 and 3% in 2001 to
$147,410,000. The increases in net revenue are due to same market growth from
dental groups which were our affiliates during the entirety of both the current
year and the previous year and the inclusion of revenue derived from service
agreements entered into in connection with affiliation transactions in 2000 and
2001. Same market growth of 12.2% in 2000 and 0.4% in 2001 resulted from the
addition and expansion of our facilities and successful renegotiation of certain
dental benefit provider contracts which increased the level of reimbursement for
services provided by our affiliated dental groups. In 2001, the increase in net
revenue from these sources was offset by the disruption and loss of business
associated with contract terminations. Net revenue derived from our service
agreement with Park Dental represented approximately 34%, 32% and 33% of our
consolidated net revenue for 1999, 2000 and 2001, respectively.

     During the fourth quarter of 2000, several of our affiliated dental groups
were impacted by severe winter storms and one affiliate was impacted by a
tornado. This weather occurred primarily in December 2000 and, as a result, our
affiliated dental groups were unable to reschedule lost production in 2000
because of full patient schedules during the balance of the year. We estimate
that these winter storms and the tornado reduced our net revenue and net
earnings by approximately $366,000.

     Net revenue derived from our service agreement with Associated Dental Care
Providers decreased from $10,115,000 in 2000 to $5,257,000 in 2001 due to the
contract terminations.

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<PAGE>

     Salaries and Benefits Expense

     Salaries and benefits expense includes costs for personnel working for us
at the dental facilities as well as local and regional management. At the
facility level, we generally employ the administrative staff and, where
permitted by state law, the dental hygienists and dental assistants. The local
and regional operating management teams supervise and support the staff at the
dental facilities.

     Salaries and benefits expense as a percentage of net revenue decreased from
48.9% in 1999 to 47.4% in 2000 as a result of increased business in states where
the PC's are required to employ the dental hygienists and dental assistants,
more efficient utilization of staff in existing facilities and leveraging of
local and regional management and administrative resources in certain markets.

     Salaries and benefits expense as a percentage of net revenue increased from
47.4% in 2000 to 47.7% in 2001. This is primarily related to the lost revenue
associated with the contract terminations by Cigna Dental and Protective Life
while maintaining a certain staff level to accommodate future replacement
business and wage inflation due to fluctuations in labor markets in the dental
sector. We anticipate such wage inflation pressures will begin to moderate in
selected markets.

     Lab  Fees and Dental Supplies Expense

     Lab fees and dental supplies expense varies from affiliate to affiliate and
is affected by the volume and type of procedures performed. The increase in lab
fees and dental supplies expense as a percentage of net revenue from 13.5% in
1999 to 14.7% in 2000 to 15.4% in 2001 was primarily due to price increases from
certain lab providers due to increases in costs of certain precious metals and
their internal wage inflation. We believe inflation will continue to affect lab
fees and dental supply expenses for the foreseeable future. In 2001, we
continued to focus our efforts to offset dental supply manufacturer price
increases with the economies of scale realized through our national dental
supply purchasing and rebate programs. Lab fees and dental supplies expense has
stabilized when calculated as a percentage of affiliate adjusted gross revenue.

     Office Occupancy Expense

     Office occupancy expense includes rent expense and certain other operating
costs such as utilities associated with dental facilities and the local
administrative offices. Such costs vary based on the size of each facility and
the market rental rate for dental office space in the particular geographic
market.

     Office occupancy expense as a percentage of net revenue increased from 9.6%
in 1999 to 10.3% in 2000 and 11.3% in 2001 primarily as a result of the
investment in the relocation and addition of new dental facilities and a
decrease in facility utilization as a result of the managed care contract
terminations at three of our affiliates. In 1999, we added seven new facilities
and relocated and expanded 24 facilities. In 2000, we added one new facility and
relocated and expanded 15 facilities. In 2001, we added three new facilities and
relocated and expanded nine facilities, while we closed three locations in
Arizona due to the loss of the Cigna and Protective Life contracts. This net
investment in facilities increased our physical capacity in these markets to
allow for future growth. Initially, however, the increase in office occupancy
expense was not fully offset by incremental net revenue. While office occupancy
expense has increased, the trend is less significant when calculated as a
percentage of affiliated adjusted gross revenue.

     In addition, office occupancy expense as a percentage of net revenue
increased in 2001 compared to 2000 due to the excess capacity created by the
contract terminations by Cigna Dental and Protective Life and the affiliation
with practices with a generally higher ratio of office occupancy expense to net
revenue in their respective markets compared to the existing base of affiliates.

     We expect office occupancy expense to continue to increase as we invest in
the relocation and expansion of dental facilities, resulting in similar expense
as a percentage of net revenue in 2001. These increases should be partially or
fully offset by better utilization of capacity in existing dental facilities.
The excess capacity arising from the contract terminations in certain markets
will likely continue in the near future.

     Other Operating Expenses

     Other operating expenses decreased as a percentage of net revenue from 7.9%
in 1999 to 7.7% in 2000 primarily as a result of economies of scale as it
relates to professional fees and insurance expense, the regionalization of
administrative and data processing functions in certain markets, the dilution of
the impact of the Minnesota Care Tax and better management of certain
discretionary spending. These costs savings were partially offset by the
affiliation with practices with a generally higher ratio of other operating
expenses to net revenue in their respective markets compared to the existing
base of affiliates.

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<PAGE>

     Other operating expenses increased as a percentage of net revenue from 7.7%
in 2000 to 8.4% in 2001 primarily due to the impact of the lost business
associated with the contract terminations by Cigna Dental and Protective Life
and $147,000 of unusual expenses in 2001 related to costs associated with
increased patient communications, deinstallation of certain computer equipment
and the relocation of certain resource center personnel (see Note 4 to "Notes to
Consolidated Financial Statements"). In 2002, our other operating expenses may
increase due to increased insurance costs; however, we hope to offset these
increases with continued management of discretionary spending.

     General Corporate Expenses

     General corporate expenses consist of compensation expenses for our
corporate personnel and administrative staff, as well as facility and other
administrative costs of our corporate office. General corporate expenses
decreased as a percentage of net revenue from 4.1% in 1999 to 3.7% in 2000 and
increased to 3.8% in 2001. General corporate expenses in 2001 included $192,000
of unusual expenses associated with the restructuring of management. These costs
included separation and relocation of certain management personnel (see Note 4
to "Notes to Consolidated Financial Statements"). The level of general corporate
expenses may continue to increase in the future as we continue to expand our
management infrastructure. However, it is anticipated that these costs will
decline as a percentage of net revenue in the future.

     Depreciation

     Depreciation expense includes charges related to leasehold improvements and
furniture, fixtures and equipment used to operate the dental facilities, local
and regional management offices and our corporate office. Depreciation expense
increased as a percentage of net revenue from 3.1% in 1999 to 3.3% in 2000 to
3.5% in 2001 primarily due to the depreciation of assets acquired and capital
expenditures associated with the investment in the relocation and addition of
new dental facilities in certain markets. In 1999, we added seven new facilities
and relocated and expanded 24 facilities. In 2000, we added one new facility and
relocated and expanded 15 facilities. In 2001, we added three new facilities and
relocated and expanded nine facilities, offset by the closing and write-off of
three locations in Arizona. These capital expenditures increased our capacity to
allow for future growth. This increase in depreciation expense as a percentage
of net revenue was partially offset by leveraging the costs in existing
facilities.

     We expect to continue to invest in the relocation and expansion of our
physical capacity, although at a lower amount than historical levels.
Accordingly, depending on the amount and timing of such future capital
expenditures, depreciation could increase. While depreciation expense has
increased as a percentage of net revenue, it has remained unchanged as a
percentage of affiliate adjusted gross revenue.

     Amortization of Goodwill and Intangible Assets

     Amortization increased as a percentage of net revenue from 2.6% in 1999 to
2.7% in 2000 primarily as a result of intangible assets recorded in connection
with the 21 affiliation transactions completed in 1999 and 2000. Amortization
expense increased from $3,822,000 in 2000 to $3,955,000 in 2001, but remained at
2.7% as a percentage of net revenue.

     We are currently evaluating the applicability of Statement of Financial
Accounting Standards ("SFAS") No. 142 "Goodwill and Other Intangible Assets" to
our dental group affiliation model and the impact its application will have on
amortization expense in 2002 and thereafter. Upon review of the standard service
agreement that we have with all of our affiliated dental groups, we interpret
our intangible assets to have indefinite lives. Therefore, application of the
non-amortization provisions of SFAS No. 142 for goodwill and intangible assets
is expected to result in our goodwill and intangible assets no longer being
amortized beginning January 1, 2002. We would then perform an impairment test on
the goodwill and intangible assets annually and when circumstances exist which
would suggest that they may be impaired (loss of key personnel, change in legal
factors, competition, etc.). In the future, we might have amortization of
intangible assets with definite lives as a result of intangibles recorded in
connection with future affiliations.

     Special Charges

     Special charges represent a provision for costs associated with reductions
in physical capacity in Arizona and patient communications as a result of
contract terminations received by three of our affiliates from Cigna Dental and
Protective Life. These costs include facility closure and lease exit costs of
three dental offices in Phoenix and regional resource centers, employee
termination costs, patient communication and other expenses. For further
information on these special charges, see Note 4 to "Notes to Consolidated
Financial Statements."

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<PAGE>

     Interest Expense, Net

     Net interest expense increased from $1,877,000 in 1999 to $4,378,000 in
2000 primarily as a result of increased average borrowings under our revolving
credit facility to fund the affiliation transations completed since 1999 and our
capital expenditures in 1999 and 2000. In addition, a higher overall average
market interest rate in 2000 and increased financing costs associated with
amending our revolving credit facility in July 2000 further increased interest
expense from 1999 to 2000.

     Net interest expense decreased from $4,378,000 in 2000 to $4,295,000 in
2001 due to a lower overall interest rate in 2001. The lower interest expense in
2001 was partially offset by twelve months of increased financing costs
associated with amending our revolving credit facility in July 2000 compared to
six months of financing costs in 2000. We believe interest expense will decrease
in 2002 due to a lower average level of indebtedness and lower interest rates.

     Income Taxes

     Our effective tax rate was approximately 40.8%, 40.6% and 40.6% for 1999,
2000 and 2001, respectively. The effective tax rate in 2000 decreased from the
1999 rate primarily due to an increase in the proportionate amount of income in
states with lower average tax rates. This reduction was partially offset by a
valuation allowance for certain deferred tax assets and other permanent book to
tax differences. The effective tax rate in 2001 remained consistent with 2000.
We anticipate the effective tax rate for 2002 to decrease below historic levels.

Liquidity and Capital Resources

     We have financed our operating and capital needs, including cash used for
acquisitions and affiliations, capital expenditures and working capital, from
sales of equity securities, borrowings under our revolving line of credit and
cash generated from operations.

     From January 1, 2000 through December 31, 2001, we completed 12 dental
practice affiliations for aggregate consideration of $16.0 million in cash, $1.3
million in subordinated promissory notes and $0.6 million in deferred payments.

     For the years ended December 31, 2000 and 2001, cash provided by operating
activities amounted to $10,203,000 and $10,253,000, respectively. Cash from
operations was affected by an increase in receivables due from affiliated dental
groups of $7,889,000 in 2000 as compared to $2,273,000 in 2001. This reflects
improved receivable collections at the affiliate level in 2001. However, this
improvement from 2000 was offset by lower net earnings for 2001, impacted by the
contract terminations previously discussed. Approximately $553,000 and $339,000
was paid in 2001 for special charges and other unusual expenses, respectively.

     For the years ended December 31, 2000 and 2001, cash used in investing
activities amounted to $25,251,000 and $8,386,000, respectively. Cash used for
investing activities included cash used for affiliations and for capital
expenditures. Cash used for affiliations, net of cash acquired, was $14,912,000
and $1,079,000 for 2000 and 2001, respectively. Cash used for capital
expenditures was $9,391,000 and $6,801,000 for 2000 and 2001, respectively.
Capital expenditures for 2000 included costs associated with the addition of one
new dental facility and the relocation and/or expansion of 15 dental facilities.
Capital expenditures for 2001 included costs associated with the development of
three dental facilities and the relocation and expansion of nine dental
facilities. Although we expect to continue to make meaningful capital
expenditures, we do not expect capital expenditures in 2002 to continue at the
same levels as 2000 and 2001.

     For the year ended December 31, 2000, cash provided by financing activities
amounted to $13,195,000. For the year ended December 31, 2001, cash used for
financing activities amounted to $799,000. Cash provided by financing activities
in 2000 resulted from net borrowings under our revolving line of credit of
$15,560,000 and proceeds from the issuance of Common Stock for the employee
stock purchase plan of $376,000, offset by the repayment of indebtedness of
$1,645,000, payment of debt issuance costs of $808,000 and the repurchase of
40,000 shares of our Common Stock for $288,000. Cash used for financing
activities in 2001 resulted from the repayment of indebtedness of $1,656,000 and
the repurchase of 112,500 shares of Common Stock for $630,000 offset by the net
borrowings under our revolving line of credit of $1,100,000, proceeds from the
issuance of Common Stock for the employee stock purchase plan of $283,000 and
proceeds from the issuance of Common Stock from stock option exercises of
$104,000.

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     In July 2000, we amended our existing revolving line of credit, increasing
the total available amount from $50 million to $75 million. The credit facility
is being used for general corporate purposes, including affiliations and capital
expenditures. Borrowings under this line of credit bear interest at either prime
or LIBOR plus a margin, at our option. The margin is based upon our debt
coverage ratio and ranges from 0.00% to 0.75% for prime loans and 1.75% to 2.75%
for LIBOR loans. In addition, we pay a commitment fee which ranges from 0.25% to
0.375% of the average daily balance of the unused line. Borrowings are limited
to an availability formula based on adjusted EBITDA. The credit facility is
secured by a first lien on substantially all of our assets, including a pledge
of the stock of our subsidiaries. We are also required to comply with certain
financial and other covenants. The line of credit matures in July 2004. The
outstanding balance under this line as of December 31, 2001 was $50,157,000. The
unused balance at December 31, 2001 was $24,843,000 and based on borrowing
covenants $370,000 was available for borrowing. The amounts available for
borrowing were reduced in 2001 as a result of the special charges and unusual
expenses being included in calculations of the trailing twelve month borrowing
covenants. The amounts available for borrowing are expected to be greater in
2002.

     We have a Shelf Registration Statement on file with the Securities and
Exchange Commission (Registration No. 333-56941) covering a total of 750,000
shares of Common Stock and $25,000,000 aggregate principal amount of
subordinated promissory notes to be issued in connection with future dental
practice affiliations and acquisitions. As of December 31, 2001, 679,878 shares
and $20,666,500 of notes remain available for issuance under this Shelf
Registration Statement.

     Our growth to date has resulted in large measure from our ability to
affiliate with additional dental practices. Although we have affiliated with
many dental practices since our initial affiliation in November 1996, there can
be no assurance that additional affiliation candidates can be identified or the
affiliations consummated or successfully integrated into our operations. We have
used a combination of cash, common stock and subordinated debt as consideration
for past acquisitions and affiliations and plan to continue to use these sources
in the future. In recent years, the consideration paid has consisted of a higher
percentage of cash and subordinated debt and a lower percentage of Common Stock.
In the event that our Common Stock does not maintain sufficient valuation or if
potential affiliation candidates are unwilling to accept our securities as
consideration, we will be required to use more cash resources to continue our
affiliation program. In addition, if sufficient financing is not available as
needed on terms acceptable to us, our affiliation strategy will be modified.
While we continue to evaluate new affiliation opportunities, we intend to
continue to focus more on our internal operations. As a result, while the number
of new affiliations over the next twelve months could be more than in 2001, they
are expected to be less than levels in 1999 and 2000.

     Any excess cash will be used to reduce indebtedness or to repurchase Common
Stock through our previously announced repurchase program, pursuant to which
approximately $1.1 million remains available to repurchase additional shares.

     We believe that cash generated from operations and amounts available under
our current revolving credit facility will be sufficient to fund our anticipated
cash needs for working capital, capital expenditures and affiliations for at
least the next twelve months. Furthermore, we believe the amount available to
borrow under our revolving credit facility covenant restrictions will increase
throughout 2002.

Critical Accounting Policies and Estimates

     The preparation of consolidated financial statements requires management to
make estimates and judgments that affect the reported amounts of assets,
liabilities and revenues and expenses. On an on-going basis management evaluates
its estimates, including those related to carrying value of receivables due from
affiliated dental groups, intangible assets, income taxes and any potential
future impairment. Management bases its estimates on historical experience and
on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgements about
carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.

     We have identified the policies below as critical to our business
operations and the understanding of our results of operations.

..    Valuation of receivables due from affiliated dental groups. The Company's
     carrying amount of receivables due from affiliated dental groups requires
     management to assess the collectibility of our affiliates' service fees. We
     review the cash flows and economic viability of the dentist-owned
     Professional Corporations (PC's) when assessing the collectibility of our
     receivables. We have not recorded any losses related to our historical
     experience with receivables due from affiliated dental groups.

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<PAGE>

..    Goodwill and other intangibles. Our business acquisitions typically result
     in goodwill and other intangible assets, which affect the amount of future
     period amortization expense and possible impairment expense that we may
     incur. The determination of the value of such intangible assets requires
     management to make estimates and assumptions that affect our consolidated
     financial statements. Management performs an impairment test on goodwill
     and intangibles when facts and circumstances exist which would suggest that
     the goodwill or intangibles may be impaired (loss of key personnel, change
     in legal factors, competition, etc.) If impairment was determined, we would
     make the appropriate adjustment to goodwill or the intangible assets to
     reduce the asset's carrying value. We review the cash flows and projected
     revenue streams when performing the impairment test on goodwill and
     intangible assets. We have not needed to record any impairment charges or
     writedowns related to our historical experience with goodwill and other
     intangible assets.

..    Income Taxes. Our income tax policy records the estimated future tax
     effects of temporary differences between the tax basis of assets and
     liabilities and amounts reported in the accompanying consolidated balance
     sheets, as well as tax credit carryforwards. We follow very specific and
     detailed guidelines regarding the recoverability of any tax assets recorded
     on the balance sheet and provide any necessary allowances as required.

Recent Accounting Pronouncements

     In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations," which supersedes Accounting Principles Board ("APB") Opinion No.
16, "Business Combinations." SFAS No. 141 requires that the purchase method of
accounting be used for business combinations initiated after June 30, 2001, and
eliminates the pooling-of-interests method. In addition, SFAS No. 141
establishes specific criteria for the recognition of intangible assets
separately from goodwill and requires unallocated negative goodwill to be
written off immediately as an extraordinary gain. The provisions of this
statement apply to all business combinations initiated after June 30, 2001, and
apply to all business combinations accounted for using the purchase method for
which the date of the acquisition is July 1, 2001, or later. The adoption of
SFAS No. 141 will not change the method of accounting we used in previous
business combinations.

     In June 2001, the FASB also issued SFAS No. 142, "Goodwill and Other
Intangible Assets," which is effective for fiscal years beginning after December
15, 2001. SFAS No. 142 supersedes APB Opinion No. 17 "Intangible Assets," and
requires, among other things, the discontinuance of amortization related to
goodwill and indefinite-lived intangible assets. These assets will then be
subject to an impairment test at least annually. Separable intangible assets
that are not deemed to have an indefinite life will continue to be amortized
over their useful lives. In addition, the standard includes provisions upon
adoption for the reclassification of certain existing recognized intangibles as
goodwill, reassessment of the useful lives of existing recognized intangibles
and reclassification of certain intangibles out of previously reported goodwill.

     The amortization provisions of SFAS No. 142 apply to goodwill and
intangible assets acquired after June 30, 2001. With respect to goodwill and
intangible assets aquired prior to July 1, 2001, American Dental Partners was
required to adopt SFAS No. 142 effective January 1, 2002. At December 31, 2001,
American Dental Partners had approximately $2.7 million of goodwill related to
the Orthocare, Ltd. acquisition in October 1997. Application of the
non-amortization provisions of SFAS No. 142 for goodwill is expected to result
in the elimination of amortization expense of approximately $130,000 in 2002.

     At December 31, 2001, American Dental Partners had intangibles with
indefinite lives of approximately $85.1 million related to affiliations from
November 1996 through 2001. The change from definite lives to indefinite lives
in the estimated useful lives of intangible assets is expected to result in the
elimination of amortization expense of approximately $3.8 million in 2002.

     Pursuant to SFAS No. 142, American Dental Partners will test its goodwill
and intangibles with indefinite lives for impairment upon adoption and, if
impairment is indicated, we will record such impairment as a cumulative effect
of an accounting change. American Dental Partners is currently evaluating the
effect that the adoption may have on its consolidated results of operations and
financial position, however, management does not expect there to be any
impairment charges in 2002.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. It applies to legal
obligations associated with the retirement of long-lived assets that result from
the acquisition, construction, development and (or) the normal operation of a
long-lived asset, except for certain obligations of lessees. This Statement is
effective for financial statements issued for fiscal years beginning after June
15, 2002. SFAS No. 143 does not apply to us.

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     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
This Statement supersedes FASB SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for the Long-Lived Assets to Be Disposed Of," and the
accounting and reporting provisions of APB Opinion No. 30, "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," for the disposal of a segment of a business. The provisions of
this Statement are effective for financial statements issued for fiscal years
beginning after December 15, 2001. The provisions of this Statement generally
are to be applied prospectively. We anticipate that the adoption of SFAS No. 144
will not have a material impact on our consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     In the ordinary course of business, we are exposed to interest rate risk.
With regard to our revolving credit facility, we are also exposed to variable
rate interest for the banks' applicable margins, ranging from 1.00% to 2.75%
based upon our debt coverage ratio. As a result of amending our revolving credit
facility in July 2000, the banks' margin increased by 1.00% from historical
levels. For fixed rate debt, interest rate changes affect the fair value but do
not impact earnings or cash flow. Conversely, for floating rate debt, interest
rate changes generally do not affect the fair market value but do impact future
earnings and cash flow. We do not believe a one percentage point change in
interest rates would have a material impact on the fair market value of our
fixed rate debt. The pre-tax earnings and cash flow impact for one year based
upon the amounts outstanding at December 31, 2001 under our variable rate
revolving credit facility for each one percentage point change in interest rates
would be approximately $502,000 per annum. We do not presently undertake any
specific actions to cover our exposure to interest rate risk and we are not
party to any interest rate risk management transactions.

                                       26

<PAGE>

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          Index to Financial Statements
                          -----------------------------

<TABLE>
<CAPTION>
                                                                                                            Page
                                                                                                            ----
<S>                                                                                                          <C>
Consolidated Financial Statements

   Independent Auditors' Report ..........................................................................   28

   Consolidated Balance Sheets as of December 31, 2000 and 2001 ..........................................   29

   Consolidated Statements of Operations for the Years Ended December 31, 1999, 2000 and 2001.............   30

   Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1999, 2000
      and 2001 ...........................................................................................   31

   Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 2000 and 2001.............   32

   Notes to Consolidated Financial Statements ............................................................   33

Financial Statement Schedules

   Not applicable
</TABLE>

                                       27

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
American Dental Partners, Inc.:

     We have audited the accompanying consolidated balance sheets of American
Dental Partners, Inc. (the "Company") as of December 31, 2000 and 2001, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 2001.
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 audits.

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

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of American
Dental Partners, Inc. as of December 31, 2000 and 2001, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 2001 in conformity with accounting principles generally
accepted in the United States of America.

/S/KPMG LLP


Boston, Massachusetts
February 15, 2002

                                       28

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

                           CONSOLIDATED BALANCE SHEETS
               (in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                                           December 31,
                                                                                                     ----------------------
                                                                                                        2000        2001
                                                                                                     ---------    ---------
<S>                                                                                                  <C>          <C>
ASSETS
Current assets:
   Cash and cash equivalents ..................................................................      $     472    $   1,540
   Accounts receivable ........................................................................            222          250
   Receivables due from affiliated dental groups ..............................................         17,331       19,366
   Income taxes receivable ....................................................................            255          821
   Inventories ................................................................................          1,764        1,816
   Prepaid expenses and other receivables .....................................................          1,962        1,972
   Deferred income taxes ......................................................................            472          486
                                                                                                     ---------    ---------
      Total current assets ....................................................................         22,478       26,251
                                                                                                     ---------    ---------

Property and equipment, net ...................................................................         27,840       29,605
                                                                                                     ---------    ---------
Non-current assets:
   Goodwill, net ..............................................................................          2,832        2,704
   Intangible assets, net .....................................................................         87,793       85,146
   Other assets ...............................................................................            871          629
                                                                                                     ---------    ---------
      Total non-current assets ................................................................         91,496       88,479
                                                                                                     ---------    ---------
      Total assets ............................................................................      $ 141,814    $ 144,335
                                                                                                     =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable ...........................................................................      $   7,198    $   7,608
   Accrued compensation, benefits and taxes ...................................................          4,573        3,686
   Accrued expenses ...........................................................................          5,051        3,981
   Accrued special charges ....................................................................             --          256
   Current maturities of debt .................................................................          1,593        1,597
                                                                                                     ---------    ---------
      Total current liabilities ...............................................................        18,415       17,128
                                                                                                     ---------    ---------
Non-current liabilities:
   Long-term debt .............................................................................         55,330       54,840
   Deferred income taxes ......................................................................          9,231       10,324
   Other liabilities ..........................................................................            352          267
                                                                                                     ---------    ---------
      Total non-current liabilities ...........................................................         64,913       65,431
                                                                                                     ---------    ---------
      Total liabilities .......................................................................         83,328       82,559
                                                                                                     ---------    ---------

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,
      7,600,532 and 7,754,893 shares issued and 7,130,532 and 7,172,393
      shares outstanding ......................................................................             76           78
   Additional paid-in capital .................................................................         46,959       47,606
   Retained earnings ..........................................................................         14,695       17,966
   Treasury stock, at cost, 470,000 and 582,500 shares ........................................         (3,244)      (3,874)
                                                                                                     ---------    ---------
      Total stockholders' equity ..............................................................         58,486       61,776
                                                                                                     ---------    ---------
Commitments and contingencies
      Total liabilities and stockholders' equity ..............................................      $ 141,814    $ 144,335
                                                                                                     =========    =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       29

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                         Years Ended December 31,
                                                      ------------------------------
                                                        1999       2000       2001
                                                      --------   --------   --------
<S>                                                   <C>        <C>        <C>
Net revenue .......................................   $117,352   $143,644   $147,410
                                                      --------   --------   --------
Operating expenses:
   Salaries and benefits ..........................     57,417     68,135     70,341
   Lab fees and dental supplies ...................     15,866     21,078     22,681
   Office occupancy ...............................     11,321     14,784     16,669
   Other operating expenses .......................      9,235     10,990     12,370
   General corporate expenses .....................      4,814      5,364      5,660
   Depreciation ...................................      3,642      4,708      5,088
   Amortization of goodwill and intangible assets        3,016      3,822      3,955
   Special charges ................................         --         --        844
                                                      --------   --------   --------
      Total operating expenses ....................    105,311    128,881    137,608
                                                      --------   --------   --------
Earnings from operations ..........................     12,041     14,763      9,802
   Interest expense, net ..........................      1,877      4,378      4,295
                                                      --------   --------   --------
Earnings before income taxes ......................     10,164     10,385      5,507
   Income taxes ...................................      4,151      4,216      2,236
                                                      --------   --------   --------
   Net earnings ...................................   $  6,013   $  6,169   $  3,271
                                                      ========   ========   ========

Net earnings per common share:
   Basic ..........................................   $   0.80   $   0.87   $   0.46
   Diluted ........................................   $   0.78   $   0.84   $   0.45
Weighted average common shares outstanding:
   Basic ..........................................      7,513      7,119      7,183
   Diluted ........................................      7,745      7,320      7,343
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       30

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                                 (in thousands)

<TABLE>
<CAPTION>
                                        Number of Shares
                                        -----------------
                                        Common    Common             Additional                             Treasury      Total
                                         Stock   Stock In   Common    Paid-in      Unearned      Retained   Stock at   Stockholders'
                                        Issued   Treasury   Stock      Capital    Compensation   Earnings    Cost         Equity
                                        ------   --------   ------   ----------   ------------   --------   --------   -------------
<S>                                      <C>      <C>        <C>      <C>           <C>          <C>        <C>          <C>
Balance at December 31, 1998 .........   7,436      --       $74      $45,742       $   (24)     $  2,513   $     --     $ 48,305
   Issuance of common stock for
      acquisitions and affiliations ..      50      --         1          351            --            --         --          352
   Issuance of common stock for
      employee stock purchase plan ...      51      --        --          491            --            --         --          491
   Repurchase of common stock ........      --    (430)       --           --            --            --     (2,956)      (2,956)
   Amortization of unearned
      Compensation ...................      --      --        --           --            24            --         --           24
   Net earnings ......................      --      --        --           --            --         6,013         --        6,013
                                         -----    ----       ---      -------       -------      --------   --------     --------
Balance at December 31, 1999 .........   7,537    (430)       75       46,584            --         8,526     (2,956)      52,229
   Issuance of common stock for
      employee stock purchase plan ...      64      --         1          375            --            --         --          376
   Repurchase of common stock ........      --     (40)       --           --            --            --       (288)        (288)
   Net earnings ......................      --      --        --           --            --         6,169         --        6,169
                                         -----    ----       ---      -------       -------      --------   --------     --------
Balance at December 31, 2000 .........   7,601    (470)       76       46,959            --        14,695     (3,244)      58,486
   Issuance of common stock for
      employee stock purchase ........      62      --        --          283            --            --         --          283
   Issuance of common stock for
      exercised stock options,
      including tax benefit of
      $262,000 .......................      92      --         2          364            --            --         --          366
   Repurchase of common stock ........      --    (112)       --           --            --            --       (630)        (630)
   Net earnings ......................      --      --        --           --            --         3,271         --        3,271
                                         -----    ----       ---      -------       -------      --------   --------     --------
Balance at December 31, 2001 .........   7,755    (582)      $78      $47,606       $    --      $ 17,966   $ (3,874)    $ 61,776
                                         =====    ====       ===      =======       =======      ========   ========     ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       31

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (in thousands, except shares)

<TABLE>
<CAPTION>
                                                                                       Years Ended December 31,
                                                                                     1999        2000        2001
                                                                                   --------    --------    --------
<S>                                                                                <C>         <C>         <C>
Cash flows from operating activities:
    Net earnings ...............................................................   $  6,013    $  6,169    $  3,271
    Adjustments to reconcile net earnings to net cash provided by
        operating activities:
        Depreciation ...........................................................      3,642       4,708       5,088
        Amortization of goodwill and intangible assets .........................      3,016       3,822       3,955
        Other amortization .....................................................        106         156         229
        Deferred income taxes ..................................................        420         183         685
        (Gain)loss on disposal of property and equipment .......................         --          (4)        147
        Changes in assets and liabilities, net of acquisitions and affiliations:
             Accounts receivable ...............................................        621          39         (18)
             Receivables due from affiliated dental groups .....................     (4,103)     (7,889)     (2,273)
             Other current assets ..............................................     (1,590)        717         (74)
             Accounts payable and accrued expenses .............................      2,277       2,026         135
             Accrued compensation, benefits and taxes ..........................        151         115        (879)
             Accrued special charges ...........................................         --          --         291
             Income taxes payable and receivable, net ..........................     (1,356)        161        (304)
                                                                                   --------    --------    --------
                Net cash provided by operating activities ......................      9,197      10,203      10,253
                                                                                   --------    --------    --------

Cash flows from investing activities:
    Acquisitions and affiliations, net of cash acquired ........................    (19,855)    (14,912)     (1,079)
    Capital expenditures, net ..................................................    (11,166)     (9,391)     (6,801)
    Contingent and deferred payments ...........................................       (794)       (501)       (530)
    Proceeds from the sale of property and equipment ...........................         --         641          --
    Other ......................................................................     (2,522)     (1,088)         24
                                                                                   --------    --------    --------
                Net cash used for investing activities .........................    (34,337)    (25,251)     (8,386)
                                                                                   --------    --------    --------

Cash flows from financing activities:
    Borrowings under (repayments of) revolving line of credit, net .............     29,197      15,560       1,100
    Repayment of borrowings ....................................................     (1,673)     (1,645)     (1,656)
    Common stock issued for the employee stock purchase plan ...................        491         376         283
    Proceeds from the exercise of stock options ................................         --          --         104
    Repurchase of common stock .................................................     (2,956)       (288)       (630)
    Payment of debt issuance costs .............................................        (14)       (808)         --
                                                                                   --------    --------    --------
                Net cash provided by (used for) financing activities ...........     25,045      13,195        (799)
                                                                                   --------    --------    --------

Decrease in cash and cash equivalents ..........................................        (95)     (1,853)      1,068
Cash and cash equivalents at beginning of year .................................      2,420       2,325         472
                                                                                   --------    --------    --------
Cash and cash equivalents at end of year .......................................   $  2,325    $    472    $  1,540
                                                                                   ========    ========    ========

Supplemental disclosure of cash flow information:
    Cash paid during the year for interest, net ................................   $  1,572    $  3,996    $  4,081
                                                                                   ========    ========    ========
    Cash paid during the year for income taxes, net ............................   $  5,087    $  3,866    $  2,347
                                                                                   ========    ========    ========

Acquisitions and affiliations:
    Assets acquired ............................................................   $ 27,630    $ 17,714    $  1,149
    Liabilities assumed and issued .............................................     (7,256)     (2,802)        (70)
    Common stock issued ........................................................       (352)         --          --
                                                                                   --------    --------    --------
    Cash paid ..................................................................     20,022      14,912       1,079
    Less cash acquired .........................................................       (167)         --          --
                                                                                   --------    --------    --------
                Net cash paid for acquisitions and affiliations ................   $ 19,855    $ 14,912    $  1,079
                                                                                   ========    ========    ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       32

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              For the Years Ended December 31, 1999, 2000 and 2001

(1) Description of Business

     American Dental Partners, Inc. (the "Company") was formed in December 1995
to provide business services to dental groups and commenced operations in
January 1996. The Company acquires selected assets of the dental practices with
which it affiliates and enters into long-term service agreements with these
affiliated dental groups. The Company provides all services necessary for the
administration of the non-clinical aspects of the dental operations. Services
provided to the affiliated dental groups include sharing the best practices of
its affiliates and 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 groups. Accordingly, the
consolidated financial statements of the affiliated dental groups are not
consolidated with those of the Company.

     Certain reclassifications have been made to the consolidated financial
statements for the years ended December 31, 1999 and 2000 in order to conform
with the December 31, 2001 presentation. The Company increased its intangible
assets and deferred tax liabilities by $9.2 million and $9.1 million, to reflect
the difference between non-deductible intangibles for tax and book purposes for
2000 and 2001, respectively, in accordance with SFAS 109 "Accounting for Income
Taxes."

     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 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 groups
requires management to make estimates and assumptions regarding the
collectability of fees from affiliates that affect the consolidated financial
statements. The Company's business acquisitions typically result in goodwill and
other intangible assets, which affect the amount of future period amortization
expense and possible impairment expense that we will incur. The determination of
the value of such intangible assets requires management to make estimates and
assumptions that affect the consolidated financial statements. There can be no
assurance that actual results will not differ from those estimates.

     Cash and Cash Equivalents

     For purposes of the statement of cash flows, the Company considers all
highly liquid instruments with an original maturity of three months or less to
be cash equivalents.

     Fair Value of Financial Instruments

     The Company believes the carrying amount of cash and cash equivalents,
accounts receivable, receivables due from affiliated dental groups, 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.

                                       33

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000 and 2001

     Net Revenue

     The Company's net revenue represents primarily reimbursement of expenses
and fees charged to affiliated dental groups pursuant to the terms of the
service agreements. Under such agreements, the affiliated dental groups
reimburse the Company for 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. The Company's service fee consists of either
(i) a variable monthly fee which is based upon a specified percentage, (ii) a
fixed monthly fee and an additional variable fee or (iii) a fixed monthly fee.
Additionally, the Company's net revenue includes amounts from dental benefit
providers related to the arrangement of the provision of care to patients. The
Company records all revenue as services are provided.

     Inventories

     Inventories consist primarily of dental supplies and are stated at the
lower of cost or market.

     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.

     Goodwill and Intangible Assets

     Goodwill resulted from the excess of the purchase price of an acquisition
over the estimated fair value of the tangible assets acquired and liabilities
assumed. Goodwill is amortized on a straight-line basis over 25 years.
Accumulated amortization amounted to $303,000, $436,000 and $564,000 at December
31, 1999, 2000 and 2001, respectively.

     Identifiable intangible assets result from service agreements with the
affiliated dental groups. The estimated fair value of the service agreements is
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 is generally required to purchase, at the
Company's option, the unamortized balance of intangible assets at the current
book value, as well as all related other assets associated with the affiliated
dental group. Accumulated amortization amounted to $5,615,000, $9,304,000 and
$13,131,000 at December 31, 1999, 2000 and 2001, respectively.

     The Company reviews the carrying value of goodwill and intangible assets on
an entity by entity basis to determine if facts and circumstances exist which
would suggest that the goodwill and/or intangible assets may be impaired or that
the amortization period needs to be modified. Among the factors the Company
considers in making the evaluation are changes in the groups' profitability,
market position, geographical penetration and reputation. If conditions are
present which indicate impairment is probable, the Company prepares a projection
of the undiscounted cash flows of the specific practice and determines if the
goodwill and/or intangible assets are recoverable based on these undiscounted
cash flows. If impairment is indicated, then an adjustment is made to reduce the
carrying amount of the goodwill and/or intangible assets to their fair value
based on discounted cash flows.

                                       34

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000 and 2001

     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 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.

     Stock Option Plans

     Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
for Stock-Based Compensation," 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 No. 123.

     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 June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141, "Business Combinations," which supersedes APB Opinion No. 16, "Business
Combinations." SFAS No. 141 requires that the purchase method of accounting be
used for business combinations initiated after June 30, 2001, and eliminates the
pooling-of-interests method. In addition, SFAS No. 141 establishes specific
criteria for the recognition of intangible assets separately from goodwill and
requires unallocated negative goodwill to be written off immediately as an
extraordinary gain. The provisions of this statement apply to all business
combinations initiated after June 30, 2001, and apply to all business
combinations accounted for using the purchase method for which the date of the
acquisition is July 1, 2001, or later. The adoption of SFAS No. 141 will not
change the method of accounting we used in previous business combinations.

     In June 2001, the FASB also issued SFAS No. 142, "Goodwill and Other
Intangible Assets," which is effective for fiscal years beginning after December
15, 2001. SFAS No. 142 supersedes APB Opinion No. 17 "Intangible Assets," and
requires, among other things, the discontinuance of amortization related to
goodwill and indefinite-lived intangible assets. These assets will then be
subject to an impairment test at least annually. Separable intangible assets
that are not deemed to have an indefinite life will continue to be amortized
over their useful lives. In addition, the standard includes provisions upon
adoption for the reclassification of certain existing recognized intangibles as
goodwill, reassessment of the useful lives of existing recognized intangibles
and reclassification of certain intangibles out of previously reported goodwill.

                                       35

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000 and 2001

     The amortization provisions of SFAS No. 142 apply to goodwill and
intangible assets acquired after June 30, 2001. With respect to goodwill and
intangible assets aquired prior to July 1, 2001, American Dental Partners was
required to adopt SFAS No. 142 effective January 1, 2002. At December 31, 2001,
American Dental Partners had approximately $2.7 million of goodwill related to
the Orthocare, Ltd. acquisition in October 1997. Application of the
non-amortization provisions of SFAS No. 142 for goodwill is expected to result
in the elimination of amortization expense of approximately $130,000 in 2002.

     At December 31, 2001, American Dental Partners had intangibles with
indefinite lives of approximately $85.1 million related to affiliations from
November 1996 through 2001. The change from definite lives to indefinite lives
in the estimated useful lives of intangible assets is expected to result in the
elimination of amortization expense of approximately $3.8 million in 2002.

     Pursuant to SFAS No. 142, American Dental Partners will test its goodwill
and intangibles with indefinite lives for impairment upon adoption and, if
impairment is indicated, we will record such impairment as a cumulative effect
of an accounting change. American Dental Partners is currently evaluating the
effect that the adoption may have on its consolidated results of operations and
financial position, however, management does not expect there to be any
impairment charges in 2002.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. It applies to legal
obligations associated with the retirement of long-lived assets that result from
the acquisition, construction, development and (or) the normal operation of a
long-lived asset, except for certain obligations of lessees. This Statement is
effective for financial statements issued for fiscal years beginning after June
15, 2002, SFAS No. 143 does not apply to us.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
This Statement supersedes FASB SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for the Long-Lived Assets to Be Disposed Of," and the
accounting and reporting provisions of APB Opinion No. 30, "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," for the disposal of a segment of a business. The provisions of
this Statement are effective for financial statements issued for fiscal years
beginning after December 15, 2001. The provisions of this Statement generally
are to be applied prospectively. We anticipate that the adoption of SFAS No. 144
will not have a material impact on our consolidated financial statements.

(3) Accounts Receivable and Net Revenue

     Accounts Receivable

     Accounts receivable represent amounts due from dental benefit providers
related to the arrangement of the provision of care to patients.

     Receivables Due From Affiliated Dental Groups

     Receivables due from affiliated dental groups represent amounts due
pursuant to the terms of the service agreements as described below.

     Adjusted Gross Revenue--Affiliated Dental Groups

     The affiliated dental groups record revenue at established rates reduced by
contractual adjustments and allowances for doubtful accounts to arrive at
adjusted gross revenue. Contractual adjustments represent the difference between
gross billable charges at established rates and the portion of those charges
reimbursed pursuant to certain dental benefit plan provider contracts.

                                       36

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000 and 2001

     The Company does not consolidate the financial statements of its affiliated
dental groups with those of the Company. The adjusted gross revenue and amounts
retained by the affiliated dental groups in total and that of our largest
affiliate, Park Dental, are presented below for illustrative purposes only (in
thousands):

<TABLE>
<CAPTION>
                                                                               Years Ended December 31,
                                                    ------------------------------------------------------------------------------
                                                              1999                       2000                       2001
                                                    ------------------------   ------------------------   ------------------------
                                                     Park     All Affiliated    Park     All Affiliated    Park     All Affiliated
                                                    Dental        Groups       Dental        Groups       Dental        Groups
                                                    -------   --------------   -------   --------------   -------   --------------
<S>                                                 <C>          <C>           <C>          <C>           <C>          <C>
Adjusted gross revenue-affiliated dental groups
  (unaudited)....................................   $52,393      $151,965      $61,352      $194,572      $63,729      $207,736

Amounts retained by affiliated dental groups
  (unaudited)....................................    12,416        44,565       14,936        62,020       15,693        71,090
                                                    -------      --------      -------      --------      -------      --------
Net revenue earned by the Company under service
  agreements.....................................   $39,977      $107,400      $46,416      $132,552      $48,036      $136,646
                                                    =======      ========      =======      ========      =======      ========
</TABLE>

     Net Revenue

     The Company's net revenue represents primarily reimbursement of expenses
and fees charged to affiliated dental groups pursuant to the terms of the
service agreements. Under such agreements, the affiliated dental groups
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, the
Company's service fee consists of a variable monthly fee which is based upon a
specified percentage of the amount by which the PC's adjusted gross revenue
exceeds expenses incurred in connection with the operation and administration of
the dental facilities. Under certain service agreements, the Company's 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 the Company in the amount of such excess up
to budgeted operating income and a percentage of such excess over budgeted
operating income. Under certain service agreements, the Company's service fee
consists entirely of a fixed monthly fee. The fixed monthly fees are determined
by agreement of the Company and the affiliated dental groups in a formal
budgeting process. Additionally, the Company's net revenue includes amounts from
dental benefit providers related to the arrangement of the provision of care to
patients.

     For the years ended December 31, 1999, 2000 and 2001, net revenue consisted
of the following (in thousands):

<TABLE>
<CAPTION>
                                                                            1999       2000       2001
                                                                          --------   --------   --------
<S>                                                                       <C>        <C>        <C>
Reimbursement of expenses:
    Clinic salaries and benefits ......................................   $ 42,625   $ 51,188   $ 53,730
    Lab and dental supplies ...........................................     15,866     21,078     22,681
    Office occupancy ..................................................     10,293     13,623     15,539
    Depreciation expense ..............................................      3,040      4,004      4,304
    Other operating expenses ..........................................      7,650      9,046     10,254
                                                                          --------   --------   --------
          Total reimbursement of expenses .............................     79,474     98,939    106,508
                                                                          --------   --------   --------
Service fees:
    Monthly fee .......................................................     26,335     30,460     29,391
    Additional variable fee ...........................................      1,591      3,153        747
                                                                          --------   --------   --------
          Total service fees ..........................................     27,926     33,613     30,138
                                                                          --------   --------   --------
          Net revenue earned by the Company under service agreements ..    107,400    132,552    136,646
Revenue related to the arrangement of the provision of care to patients
   and other ..........................................................      9,952     11,092     10,764
                                                                          --------   --------   --------
          Total net revenue ...........................................   $117,352   $143,644   $147,410
                                                                          ========   ========   ========
</TABLE>

     Net revenue from the Company's service agreement with Park Dental
represented approximately 34%, 32% and 33% of its consolidated net revenue for
the year ended 1999, 2000 and 2001, respectively.

                                       37

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000 and 2001

(4)  Special Charges and Other Unsual Expenses

     Special Charges

     In January 2001, three of the Company's affiliated dental groups,
Associated Dental Care Providers, Park Dental, and University Dental Associates,
received notices of contract terminations from Cigna Dental, and Associated
Dental Care Providers received a notice of contract termination from Protective
Life Corporation. These affiliated dental groups subsequently received proposals
from Cigna Dental and Protective Life to continue as dental care providers but
on financial terms that were materially different from their existing
agreements. These groups chose not to continue as participants in the dental
plans offered by Cigna Dental and Protective Life and the three Cigna Dental
contracts terminated as follows: (i) July 31, 2001 for Park Dental; (ii) March
31, 2001 for University Dental Associates and (iii) March 31, 2001 for
Associated Dental Care Providers. The Protective Life contract terminated April
8, 2001 for Associated Dental Care Providers. These contracts represented
approximately $24.1 million of affiliate adjusted gross revenue in 2000.

     The Company believes the contract terminations should have minimal
long-term impact on Park Dental and University Dental Associates. However, given
that several of the Company's offices in Phoenix were acquired from Cigna Dental
and previously operated by Cigna Dental as staff model dental practices,
Associated Dental's financial performance was heavily dependent upon its
contract with Cigna Dental. As a result, Associated Dental and the Company took
decisive action to bring costs in line with expected financial performance.
Specifically, Associated Dental and the Company decided to close three dental
offices and are operating others on less than a full time schedule. In addition,
the Company made various changes to its management structure, including a
consolidation of its administrative resource centers. The Company and Associated
Dental notified 43 employees prior to March 31, 2001 of their termination. The
Company and Associated Dental provided severance to 26 of the 43 employees,
comprised of 14 clinical staff, six dentists and six administrative positions;
the remaining 17 employees were not eligible for severance. Severance was
provided based on length of employment and continued employment through the
separation date. The Company also accrued for certain provisions for facility
closure costs, consisting primarily of lease exit costs, abandoned leasehold
improvements and computer and dental equipment. Total special charges recorded
in the first quarter of 2001 were $1,004,000.

The following table summarizes the recorded accruals and uses of the above
special charges:

<TABLE>
<CAPTION>
                                                                           Patient
                                                          Reduction in   Communication
                                      Facility Closures    Work Force     and Other         Total
                                      -----------------   ------------   -------------   -----------
<S>                                      <C>               <C>             <C>           <C>
Balance as of December 31, 2000          $      --         $      --       $     --      $        --
New charges .......................        540,000           425,000         39,000        1,004,000
Non-cash items ....................        (35,000)               --             --          (35,000)
Cash payments .....................       (222,000)         (267,000)       (64,000)        (553,000)
Reversal of charges ...............        (77,000)          (83,000)            --         (160,000)
Other adjustments .................             --           (25,000)        25,000               --
                                         ---------         ---------       --------      -----------
Balance as of December 31, 2001 ...      $ 206,000         $  50,000       $     --      $   256,000
                                         =========         =========       ========      ===========
</TABLE>

                                       38

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000 and 2001

     During the fourth quarter of 2001, the Company reversed $160,000 of special
charges. This resulted from the Company negotiating a lump sum buyout on two
facility leases and severance payouts being less than anticipated.

     It is expected that approximately $154,000 of the remaining $256,000 of
special charges will be paid in the first quarter of 2002 and the remaining
balance will be paid over the terms of the leases through April 2004 and the
employment contract through December 2002.

Other Unusual Expenses

     In the first quarter of 2001, in addition to the special charges described
above, the Company accrued $470,000 for other unusual expenses. These costs
included $143,000 for patient communication costs and deinstallation costs for
certain computer equipment and $327,000 for management restructuring and
relocation. During the fourth quarter of 2001, the Company reversed $131,000 of
unusual expenses. This resulted from the deinstallation costs being less than
anticipated and a relocation not occurring within the period anticipated by the
Company. $147,000 of these unusual costs have been included in other operating
expenses and $192,000 have been included in general corporate expenses in the
Company's consolidated statement of operations for the year ended December 31,
2001.

(5)  Acquisitions and Affiliations

     During the year ended December 31, 2000, the Company acquired selected
assets of nine dental practices and simultaneously entered into 40-year service
agreements with two of the affiliated dental groups (seven practices joined
existing affiliates). The aggregate purchase price paid in connection with these
transactions consisted of approximately $14.9 million in cash, $1.3 million in
subordinated promissory notes and $0.5 million in deferred payments. All
transactions completed in 2000 are referred to as the "2000 Transactions."

     During the year ended December 31, 2001, the Company acquired selected
assets of three dental practices that joined existing affiliates. The aggregate
purchase price paid in connection with these transactions consisted of
approximately $1.1 million in cash, $70,000 in subordinated promissory notes and
$25,000 in deferred payments. All transactions completed in 2001 are referred to
as the "2001 Transactions."

     The 2000 and 2001 Transactions are as follows:

<TABLE>
<CAPTION>
Date                 Affiliated Dental Practice     Location(s)
----                -----------------------------   -----------
<S>                 <C>                             <C>
January 2000.....   Western New York Dental Group   Buffalo, NY
February 2000....   Columbia Dental Associates      Columbia, MD
February 2000....   Robert E. Ford, D.M.D.          Birmingham, AL
April 2000.......   The Dental Center               Gadsden, AL
June 2000........   Nathan Bell, D.D.S.             Charlotte and Raleigh-Durham, NC
June 2000........   Ronald G. White, D.D.S.         Riverside, CA
July 2000........   Ronald L. Moore, D.D.S.         Corona, CA
September 2000...   American Family Dentistry       Knoxville, Memphis and Nashville, TN
November 2000....   Carol E. Layton, D.M.D.         Robinson Township, PA
January 2001.....   Daniel V. Dracup, D.D.S.        Buffalo, NY
June 2001........   Southern Tier Dental            Boston, Buffalo and Holland, NY
September 2001...   Mark J. Wanezek, D.D.S.         Milwaukee, WI
</TABLE>

                                       39

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000 and 2001

     The accompanying consolidated financial statements include the results of
operations under the service agreements from the date of acquisition. The excess
of the purchase price associated with all of the 2000 and 2001 Transactions over
the estimated fair value of net assets (liabilities) acquired and assumed has
been recorded as intangible assets which are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                                            2000      2001
                                                                                           -------   ------
<S>                                                                                        <C>       <C>
Total consideration paid ...............................................................   $16,741   $1,148
Fair value of net tangible assets (liabilities) acquired and assumed ...................     1,448      172
                                                                                           -------   ------
    Excess of consideration paid over the fair value of net tangible assets acquired ...   $15,293   $  976
                                                                                           =======   ======
</TABLE>

(6)  Property and Equipment

     Property and Equipment

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

                                                           2000           2001

Land, buildings and leasehold improvements .........     $ 20,790      $ 23,533
Equipment ..........................................       18,727        21,551
Furniture and fixtures .............................        5,839         6,344
                                                         --------      --------
    Total property and equipment ...................       45,356        51,428
Less accumulated depreciation ......................      (17,516)      (21,823)
                                                         --------      --------
    Property and equipment, net ....................     $ 27,840      $ 29,605
                                                         ========      ========

     Operating Leases

     The Company is obligated under non-cancelable operating leases for premises
and equipment expiring in various years through the year 2014. Rent expense for
the years ended December 31, 1999, 2000 and 2001 amounted to $8,998,000,
$11,418,000 and $13,071,000, respectively, of which $8,201,000, $10,601,000 and
$12,171,000 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, 2001 are as
follows (in thousands):

<TABLE>
<CAPTION>

                                                            Amount to be
                                                             Reimbursed
                                             Total Amount   Under Service     Net
                                                 Due         Agreements     Amount
                                             ------------   -------------   ------
<S>                                            <C>             <C>          <C>
2002 .....................................     $12,859         $12,214      $  645
2003 .....................................      11,835          11,416         419
2004 .....................................      10,274          10,113         161
2005 .....................................       9,243           9,163          80
2006 .....................................       7,250           7,250          --
Thereafter ...............................      33,873          33,873          --
                                               -------         -------      ------
       Total minimum lease payments ......     $85,334         $84,029      $1,305
                                               =======         =======      ======
</TABLE>

                                       40

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000 and 2001

(7)  Income Taxes

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

                                               1999          2000          2001
                                              ------        ------        ------
Current:
    Federal ..........................        $3,018        $3,347        $1,187
    State ............................           713           686           366
                                              ------        ------        ------
                                               3,731         4,033         1,553
                                              ------        ------        ------
Deferred:
    Federal ..........................           297           154           636
    State ............................           123            29            47
                                              ------        ------        ------
                                                 420           183           683
                                              ------        ------        ------
       Total income taxes ............        $4,151        $4,216        $2,236
                                              ======        ======        ======

     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):

                                                             2000         2001
                                                           -------      -------
Deferred tax assets:
    Operating loss and other carryforwards ...........     $    32      $   107
    Property and equipment ...........................         766          454
    Organization and start-up costs ..................         484          272
    Accrued expenses and other liabilities ...........       1,038          635
                                                           -------      -------
       Total deferred tax assets .....................       2,320        1,468
                                                           -------      -------
Deferred tax liabilities:
    Intangibles ......................................     (11,000)     (11,281)
    Other ............................................         (79)         (25)
                                                           -------      -------
       Total deferred tax liabilities ................     (11,079)     (11,306)
                                                           -------      -------
       Net deferred tax assets (liabilities) .........     $(8,759)     $(9,838)
                                                           =======      =======

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

<TABLE>
<CAPTION>
                                                                2000                           2001
                                                     ---------------------------    ---------------------------
                                                     Federal    State     Total     Federal    State     Total
                                                     -------    -----    -------    -------    -----    -------
<S>                                                  <C>        <C>      <C>        <C>        <C>      <C>
Deferred tax assets:
    Current ......................................   $   373  $    99    $   472    $   387  $    99   $    486
    Non-current ..................................     1,402      446      1,848        608      374        982
                                                     -------    -----    -------    -------    -----    -------
       Total deferred tax assets .................     1,775      545      2,320        995      473      1,468
                                                     -------    -----    -------    -------    -----    -------
Deferred tax liabilities:
    Current ......................................        --       --         --         --       --         --
    Non-current ..................................    (9,054)  (2,025)   (11,079)    (9,118)  (2,188)   (11,306)
                                                     -------    -----    -------    -------    -----    -------
        Total deferred tax liabilities ...........    (9,054)  (2,025)   (11,079)    (9,118)  (2,188)   (11,306)
                                                     -------    -----    -------    -------    -----    -------
        Net deferred tax assets (liabilities)  ...   $(7,279) $(1,480)   $(8,759)   $(8,123) $(1,715)   $(9,838)
                                                     =======    =====    =======    =======    =====    =======
</TABLE>

     At December 31, 2000, and 2001, the Company had net operating loss
carryforwards for state income tax purposes of approximately $414,000 and
$3,361,000 respectively. The 2001 carryforwards will expire as follows: $4,000
in 2002, $204,000 in 2003, $345,000 in 2004, $1,069,000 in 2005, and $1,739,000
in 2006.

                                       41

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000 and 2001

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

                                                        1999     2000     2001
                                                        ----     ----     ----
Income taxes at Federal statutory rate ..............   35.0%    35.0%    35.0%
Differential due to graduated rate ..................   (0.8)    (0.8)    (0.6)
State taxes, net of Federal benefit .................    5.3      4.5      4.9
Other permanent differences .........................    1.3      1.9      1.3
                                                        ----     ----     ----
   Effective income tax rate ........................   40.8%    40.6%    40.6%
                                                        ====     ====     ====

     The Company reclassified certain expenses in accordance with SFAS 109
"Accounting for Income Taxes" to reflect the difference between non-deductible
intangibles for tax and book purposes. As a result amortization expense
increased and income tax expense decreased by $437,000 for 1999, 2000 and 2001.

(8)  Debt

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

<TABLE>
<CAPTION>

                                                                                        2000      2001
                                                                                       -------   -------
<S>                                                                                    <C>       <C>
Revolving line of credit advances, collateralized by substantially all assets of the
   Company, LIBOR-based and prime interest rates ranging from approximately 4.8%
   to 5.5% .........................................................................   $49,057   $50,157
Mortgages payable, secured, interest rate of 8% payable in installments through
2015 ...............................................................................       343       326
Note payable, unsecured, interest rate of 5% payable in installments, maturing
   in 2004 .........................................................................        29        22
Subordinated notes payable to stockholders and former owners, bearing interest
    at 7%, maturing through 2008 ...................................................     7,419     5,901
Capital lease obligations ..........................................................        75        31
                                                                                       -------   -------
   Total long-term debt and capital lease obligations ..............................    56,923    56,437
   Less current maturities .........................................................     1,593     1,597
                                                                                       -------   -------
   Long-term debt and capital lease obligations, excluding current maturities ......   $55,330   $54,840
                                                                                       =======   =======
</TABLE>

     Annual maturities of long-term debt and future minimum lease payments under
capital leases as of December 31, 2001 are as follows (in thousands):

                                                           Long-term   Capital
                                                              Debt     Leases
                                                           ---------   -------
2002 ...................................................    $ 1,566     $32
2003 ...................................................      1,584      --
2004 ...................................................     51,387      --
2005 ...................................................        883      --
2006 ...................................................        582      --
Thereafter .............................................        404      --
                                                            -------     ---
                                                            $56,406      32
                                                            =======     ===
Less amounts representing interest .....................                  1
                                                                        ---
     Total obligations under capital leases ............                $31
                                                                        ===

                                       42

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000 and 2001

     Revolving Line of Credit

     The Company has a $75 million line of credit. The unused balance at
December 31, 2001 was $24,843,000 and based on borrowing covenants $370,000 was
available for borrowing. The credit facility is being used for general corporate
purposes including affiliations and capital expenditures. Borrowings under this
line of credit bear interest at either prime or LIBOR plus a margin, at the
Company's option. The margins are based upon the Company's debt coverage ratio
and range from 0.00% to 0.75% for prime borrowings and 1.75% to 2.75% for LIBOR
borrowings. In addition, the Company pays a commitment fee which ranges from
0.25% to 0.375% of the average daily balance of the unused line. Borrowings are
limited to an availability formula based on adjusted EBITDA. The credit facility
is secured by a first lien on substantially all of the Company's assets,
including a pledge of the stock of the Company's subsidiaries. The Company is
also required to comply with certain financial and other covenants. The line of
credit matures in July 2004.

(9) Related Party Transactions

     The Company acquired PDHC, Ltd. ("Park") in 1996 and Innovative Practice
Concepts, Inc. ("IPC") in 1998. As part of the consideration paid pursuant to
these acquisitions, the Company issued subordinated promissory notes to the
former stockholders of Park and IPC in the aggregate principal amount of
$2,000,000. Certain former stockholders of Park and IPC are current
stockholders, director and officers of the Company. The aggregate principal
balance outstanding to these stockholders, director and officers of the Company
as of December 31, 2000 and 2001 was $530,000 and $402,000, respectively. These
notes bear interest at 7% and mature through 2005.

     In connection with the Park and IPC transactions, the Company entered into
service agreements with two affiliated dental groups owned in part by these
certain stockholders, a director and an officer of the Company. These service
agreements are on substantially the same terms and conditions as all of the
Company's other service agreements. The aggregate net revenue earned by
subsidiaries of the Company under the service agreements with these dental
groups in 1999, 2000 and 2001 were $50,615,000, $56,531,000 and $53,293,000,
respectively, of which $39,755,000, $44,336,000 and $43,941,000 were
reimbursements for expenses incurred in connection with the operation and
administration of the related dental facilities.

(10) 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 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, 2000 and 2001, there were no shares of Preferred
Stock issued or outstanding.

                                       43

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000 and 2001

     Common Stock

     The Company is authorized to issue up to 25,000,000 shares of Common Stock,
$0.01 par value, of which 7,600,532 shares were issued and 7,130,532 shares were
outstanding at December 31, 2000; 7,754,893 shares were issued and 7,172,393
shares were outstanding at December 31, 2001. In January 1996, the Company sold
300,000 shares of its Common Stock, which were subject to certain restrictions,
for $500. In connection with this transaction, the Company has recorded
compensation expense ratably as the restrictions have lapsed. Compensation
expense amounted to $24,228 for the year ended December 31, 1999. No
compensation expense was recorded in 2000 and 2001.

     Shelf Registration Statement

     The Company has a Shelf Registration Statement on file with the Securities
and Exchange Commission covering a total of 750,000 shares of Common Stock and
$25,000,000 aggregate principal amount of subordinated promissory notes to be
issued in connection with future dental practice affiliations and acquisitions.
As of December 31, 2001, 679,878 shares and $20,666,500 of notes remain
available for issuance under this Shelf Registration Statement.

     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, 2001 at a cost of $3,874,000. All treasury shares at December 31,
2001 are outstanding.

     Dividend Restriction

     The Company has not paid any cash dividends on its Common Stock and does
not plan to pay any cash dividends on its Common Stock in the foreseeable
future. Additionally, the terms of the Company's revolving credit facility
prohibit it from paying dividends or making other payments with respect to its
Common Stock without the lenders' consent.

(11) 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, 2001, 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 expire ten years after the date of grant. At December
31, 2001, options for a total of 1,202,490 shares were reserved for issuance and
options for 948,754 shares were outstanding under this Plan.

                                       44

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000 and 2001

     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 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. These options vest at the end of the
ninth year, but are subject to accelerated vesting based on achievement of
certain performance measures. At December 31, 2001, options for a total of
339,360 shares were reserved for issuance and options for 303,480 shares were
outstanding under this Plan. All outstanding options to purchase such shares
became exercisable at the completion of the IPO.

     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 groups. 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 expire ten years after the date of grant.
At December 31, 2001, options for a total of 110,000 shares were reserved for
issuance and options for 78,846 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 expire ten years after the date of grant. At December 31, 2001, options for
a total of 85,000 shares were reserved for issuance and options for 81,800
shares were outstanding under this Plan.

     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 pay
withheld and applied to the purchase of shares at the end of the option period.
The ESPP imposes a maximum of $10,000 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 176,503 shares have been
issued through 2001 and 32,302 shares were committed for issuance as of December
31, 2001.

     Stock Option Activity

     A summary of stock option activity under all the Company's stock option
plans for the years ended December 31, 1999, 2000 and 2001 follows:

<TABLE>
<CAPTION>
                                           1999                   2000                   2001
                                   --------------------   --------------------   --------------------
                                               Weighted               Weighted               Weighted
                                                 Avg.                   Avg.                   Avg.
                                               Exercise               Exercise               Exercise
                                    Options     Price      Options      Price     Options     Price
                                   ---------   --------   ---------   --------   ---------   --------
<S>                                <C>         <C>        <C>         <C>        <C>         <C>
Outstanding at beginning of year   1,205,978   $   8.92   1,345,148   $   8.66   1,578,310   $   8.04
Granted                              177,515       7.36     432,420       7.03     226,373       7.62
Exercised                                 --         --          --         --     (91,756)      1.13
Cancelled                            (38,345)     10.91    (199,258)      9.99    (300,047)     10.56
                                   ---------   --------   ---------   --------   ---------   --------
Outstanding at end of year         1,345,148   $   8.66   1,578,310   $   8.04   1,412,880   $   7.95
                                   =========   ========   =========   ========   =========   ========
Exercisable at end of year           813,014   $   7.12     967,939   $   7.84     932,923   $   8.23
                                   =========   ========   =========   ========   =========   ========
</TABLE>

                                       45

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000 and 2001

The following table summarizes information about stock options outstanding at
December 31, 2001:

<TABLE>
<CAPTION>
                               Options Outstanding                   Options Exercisable
                   -----------------------------------------   ------------------------------
                                     Weighted
                                     Average        Weighted
                                     Remaining      Average
    Range of         Number      Contractual Life   Exercise     Number      Weighted Average
 Exercise Prices   Outstanding      (in years)       Price     Exercisable    Exercise Price
----------------   -----------   ----------------   --------   -----------   ----------------
<S>                 <C>                <C>          <C>          <C>             <C>
$ 0.33                271,770          3.0          $  0.33      271,770         $  0.33
$ 4.78 - $ 7.13       373,342          8.7          $  7.01       83,650         $  7.04
$ 7.25 - $ 8.33       350,002          6.7          $  7.85      174,518         $  8.02
$ 8.56 - $ 12.50       44,435          5.7          $ 12.00       39,185         $ 12.24
$13.00 - $ 14.17      373,331          5.6          $ 14.06      363,800         $ 14.08
                    ---------          ---          -------      -------         -------
                    1,412,880          6.2          $  7.95      932,923         $  8.23
                    =========          ===          =======      =======         =======
</TABLE>

     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
financial statements for stock compensation plans. Pro forma information
regarding net earnings and earnings per share is required by SFAS No. 123 and
has been determined as if the Company had accounted for its stock compensation
plans under the fair value method. 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:

<TABLE>
<CAPTION>
                                                                 1999                    2000                     2001
                                                         ---------------------   ---------------------   ---------------------
                                                         Stock Options   ESPP    Stock Options   ESPP    Stock Options   ESPP
                                                         -------------   -----   -------------   -----   -------------   -----
<S>                                                          <C>         <C>         <C>         <C>         <C>         <C>
Risk-free interest rate..............................          5.3%        4.9%        6.2%        6.2%        4.5%        4.6%
Expected dividend yield..............................          0.0%        0.0%        0.0%        0.0%        0.0%        0.0%
Expected volatility..................................           53%         63%         64%         67%         69%         73%
Expected life (years)................................          4.0         0.5         4.0         0.5         4.0         0.5
Weighted average fair value of options/purchase rights
    granted during the year.........................         $3.45       $3.48       $3.81       $2.24       $4.20       $1.39
</TABLE>

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because the Company's stock options and purchase rights have
characteristics significantly different from those of traded options and changes
in the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its stock options and
purchase rights.

     For purposes of pro forma disclosures, the estimated fair value of the
options and purchase rights is amortized to expense over the options' vesting
period and the purchase rights' option period. The Company's pro forma net
earnings and earnings per share are as follows (in thousands, except per share
amounts) for the years ended December 31:

                                                    1999        2000       2001
                                                   ------      ------     ------
Net earnings, as reported.................         $6,013      $6,169     $3,271
Net earnings, pro forma...................         $5,803      $5,860     $2,883
Diluted earnings per share, as reported...         $ 0.78      $ 0.84     $ 0.45
Diluted earnings per share, pro forma.....         $ 0.75      $ 0.80     $ 0.39

                                       46

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000 and 2001

(12) 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. Additionally, at December 31, 2001, the
Company had five other defined contribution retirement plans which were acquired
in connection with affiliation transactions. Total plan expense for the years
ended December 31, 1999, 2000 and 2001 was $682,000, $880,000 and $804,000,
respectively.

(13) 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):

                                                       1999      2000      2001
                                                      ------    ------    ------
Basic Earnings Per Share:
Net earnings available to common stockholders ....    $6,013    $6,169    $3,271
                                                      ======    ======    ======
Weighted average common shares outstanding .......     7,513     7,119     7,183
                                                      ======    ======    ======
Net earnings per share ...........................    $ 0.80    $ 0.87    $ 0.46
                                                      ======    ======    ======
Diluted Earnings Per Share:
Net earnings available to common stockholders ....    $6,013    $6,169    $3,271
                                                      ======    ======    ======
Weighted average common shares outstanding .......     7,513     7,119     7,183
Add:  Dilutive effect of options (1) .............       232       201       160
                                                      ------    ------    ------
Weighted average common shares as adjusted .......     7,745     7,320     7,343
                                                      ======    ======    ======
Net earnings per share ...........................    $ 0.78    $ 0.84    $ 0.45
                                                      ======    ======    ======

----------
(1)  In 2001, 756,362 options were excluded from the computation of diluted
     earnings per share due to their antidilutive effect.

                                       47

<PAGE>

                         AMERICAN DENTAL PARTNERS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

              For the Years Ended December 31, 1999, 2000, and 2001

(14)  Selected Quarterly Operating Results (unaudited)

     Certain reclassifications have been made to the consolidated quarterly
financial statements to conform with current period presentation. The following
table sets forth summary quarterly results of operations for the Company for the
years ended December 31, 2000 and 2001 (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                 First    Second     Third    Fourth
                                                Quarter   Quarter   Quarter   Quarter
                                                -------   -------   -------   -------
<S>                                             <C>       <C>       <C>       <C>
2000
----
Net revenue..................................   $34,130   $35,227   $36,901   $37,386
Operating expenses...........................    30,809    31,450    33,075    33,547
Earnings from operations.....................     3,321     3,777     3,826     3,839
Earnings before income taxes.................     2,475     2,827     2,581     2,502
Income taxes.................................     1,007     1,168     1,057       984
Net earnings.................................   $ 1,468   $ 1,659   $ 1,524   $ 1,518
Net earnings per share:
    Basic....................................   $  0.21   $  0.23   $  0.21   $  0.21
    Diluted..................................   $  0.20   $  0.23   $  0.21   $  0.21
Weighted average common shares outstanding:
    Basic....................................     7,125     7,099     7,122     7,131
    Diluted..................................     7,325     7,307     7,325     7,325

2001
----
Net revenue..................................   $38,096   $36,568   $36,405   $36,341
Operating expenses...........................    36,241    33,698    34,029    33,640
Earnings from operations.....................     1,855     2,870     2,376     2,701
Earnings before income taxes.................       568     1,729     1,334     1,876
Income taxes.................................       201       718       543       774
Net earnings.................................   $   367   $ 1,011   $   791   $ 1,102
Net earnings per share:
    Basic....................................   $  0.05   $  0.14   $  0.11   $  0.15
    Diluted..................................   $  0.05   $  0.14   $  0.11   $  0.15
Weighted average common shares outstanding:
    Basic....................................     7,179     7,218     7,162     7,171
    Diluted..................................     7,405     7,362     7,304     7,318
</TABLE>

                                       48

<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     Not applicable.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information relating to the executive officers of the Company is included
under the caption "Executive Officers of the Registrant" in Part I of this
Report.

     The information set forth under the captions "Elections of Directors" and
"Compliance with Section 16(a) of the Exchange Act" in the American Dental
Partners, Inc. Proxy Statement to be filed with the Commission in connection
with the 2002 Annual Meeting of Stockholders (the "Proxy Statement") is
incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

Compensation of Executive Officers

     The information set forth under the caption "Executive Compensation" in the
Proxy Statement, except for the Report of the Compensation Committee and the
Performance Graph, is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the Proxy Statement is incorporated herein
by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information set forth under the caption "Certain Transactions" and the
information set forth under the caption "Compensation Committee Interlocks and
Insider Participation" in the Proxy Statement are incorporated herein by
reference.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     The following documents are filed as part of this report:

          (a)(1) Consolidated Financial Statements (See Item 8)

          (a)(2) Financial Statement Schedules

          All schedules are omitted as the required information is not
          applicable or is included in the consolidated financial statements or
          related notes.

          (a)(3) Exhibits

          The exhibits which are filed with this Form 10-K or which are
          incorporated herein by reference are set forth in the Exhibit Index
          which appears in this report beginning at page 51.

          (b)  Reports on Form 8-K

          No Current Reports on Form 8-K were filed during the three-month
          period ended December 31, 2001.

                                       49

<PAGE>

                                   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 22nd day of March, 2002.

                            AMERICAN DENTAL PARTNERS, INC.


                            By:/s/ GREGORY A. SERRAO
                               -------------------------------------------------
                                   Gregory A. Serrao
                                Chairman, 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.

<TABLE>
<CAPTION>
        Signature               Capacity In Which Signed                  Date
        ---------               ------------------------                  -----
<S>                          <C>                                        <C>


/s/ GREGORY A. SERRAO        Chairman, President and Chief              March 22, 2002
---------------------        Executive Officer and Director
    Gregory A. Serrao        (principal executive officer)


/s/ BREHT T. FEIGH           Vice President - Chief Financial Officer   March 22, 2002
------------------
    Breht T. Feigh           accounting officer)


/s/ DR. GREGORY T. SWENSON   Director                                   March 22, 2002
--------------------------
    Dr. Gregory T. Swenson


/s/ MARTIN J. MANNION        Director                                   March 22, 2002
---------------------
    Martin J. Mannion


/s/ JAMES T. KELLY           Director                                   March 22, 2002
------------------
    James T. Kelly


/s/ DERRIL W. REEVES         Director                                   March 22, 2002
--------------------
    Derril W. Reeves
</TABLE>

                                       50

<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number                                                  Exhibit Description
-------                                                 -------------------
<S>                <C>

           +3(a)   Second Amended and Restated Certificate of Incorporation of American Dental Partners, Inc.

           +3(b)   Amended and Restated By-laws of American Dental Partners, Inc.

           +4(a)   Form of Stock Certificate.

          **4(b)   Form of Subordinated Promissory Note and Form of Subordination Agreement.

         +         10(a) Registration Rights Agreement dated January 8, 1996,
                   among American Dental Partners, Inc., Summit Venture IV,
                   L.P., Summit Investors III, L.P., Gregory A. Serrao, and
                   others, as amended by Amendment to Registration Rights
                   Agreement dated November 1, 1996.

   (alpha)o10(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.

         +o10(c)   American Dental Partners, Inc. 1996 Time Accelerated Stock Option Plan, as amended by Amendment No.1.

   (alpha)o10(d)   American Dental Partners, Inc. Amended and Restated 1996 Affiliate Stock Option Plan, as amended by
                   Amendments No.1, No. 2 and No. 3.

   (alpha)o10(e)   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.

         xo10(f)   American Dental Partners, Inc. 1999 Restricted Stock Plan.

          o10(g)   Amended and Restated Employment and Non-Competition Agreement dated January 2, 2001, between
                   American Dental Partners, Inc. and Gregory A.
                   Serrao.

         #o10(i)   Amended and Restated Employment and Noncompetition Agreement dated May 15, 2001 between PDHC, Ltd.
                   and Gregory T. Swenson, D.D.S.

          +10(j)   Registration Rights Agreement dated November 11, 1996, among American Dental Partners, Inc. and
                   certain of its stockholders (the former stockholders of PDHC, Ltd.).

          &10(o)   Amended and Restated Service Agreement dated January 1, 1999, between PDHC, Ltd. and PDG, P.A.

(upsilon)1000(q)   Second Amended and Restated Revolving Credit Agreement dated July 31, 2000, among American
                   Dental Partners, Inc., the Lenders Party Thereto and Fleet National Bank as Agent and Sovereign
                   Bank as Documentation Agent.

          +10(t)   Registration Rights Agreement dated October 1, 1997, among American Dental Partners, Inc. and Karl
                   H. Biewald, D.D.S. and Terri M. Lawler.

          o10(u)   Employment and Noncompetition Agreement dated January 1, 1999, between American Dental Partners,
                   Inc. and Joseph V. Errante, D.D.S.

         @ 10(v)   Amendment No. 5  to American Dental Partners, Inc. Amended and Restated 1996 Stock Option Plan.

          @10(w)   Amendment No. 1 to American Dental Partners, Inc. Amended and Restated 1999 Restricted Stock Plan.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number                                      Exhibit Description
-------                                     -------------------
<S>      <C>
*10(x)   First Amendment to Amended and Restated Service Agreement dated January 1, 2001, between PDHC, Ltd.
         and PDG, P.A.

  *21    Subsidiaries of American Dental Partners, Inc.

  *23    Consent of KPMG LLP.
</TABLE>

----------
*    Filed herewith.
**   Previously filed as an exhibit to the Company's Registration Statement on
     Form S-4 (Registration No.333-56941) and incorporated herein by reference.
+    Previously filed as an exhibit to the Company's Registration Statement on
     Form S-1 (Registration No. 333-39981) and incorporated herein by reference.
x    Previously filed as Exhibit 10(b) to the Company's Quarterly Report on Form
     10-Q filed with the Securities and Exchange Commission on November 10, 1999
     and incorporated herein by reference.
o    Management contracts or compensatory plans or arrangements.
(alpha) Previously filed as an Exhibit to the Company's Annual Report on Form
     10-K filed with the Securities and Exchange Commission on March 16, 2000
     and incorporated herein by reference.
(upsilon) Previously filed as Exhibit 10(q) to the Company's Quarterly Report on
     Form 10-Q filed with the Securities and Exchange Commission on August 9,
     2000 and incorporated herein by reference.
#    Previously filed as an Exhibit to the Company's Quarterly Report on Form
     10-Q filed with the Securities and Exchange Commission on August 13, 2001 a
     nd incorporated herein by reference.
@    Previously filed as an Exhibit to the Company's Quarterly Report on Form
     10-Q filed with the Securities and Exchange Commission on November 13, 2001
     and incorporated herein by reference.
&    Previously filed as Exhibit 10(o) to the Company's Annual Report on Form
     10-K filed with the Securities and Exchange Commission on March 9, 1999.