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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-K

For the transition period from                     to

Commission file number 000-23092

National Dentex Corporation

(508) 358-4422

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01 per share

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

      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 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.  o

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).  Yes þ          No o

      As of February 18, 2003, the aggregate market value of the 3,321,914 outstanding shares of voting stock held by non-affiliates of the registrant was $58,731,440, based upon the last reported sale of the Common Stock on the Nasdaq National Market on such date.

      As of February 18, 2003, 3,665,209 shares of the registrant’s Common Stock, par value $.01 per share, were issued and 3,403,009 were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

      The Registrant’s definitive Proxy Statement for the Registrant’s Special Meeting in Lieu of Annual Meeting of Stockholders to be held on April 8, 2003 is incorporated by reference into Part III.

PART I

Item 1.     Business

General

      National Dentex Corporation (the “Company”) was founded in 1982 as H&M Laboratories Services, Inc., a Massachusetts corporation, which acquired six full-service dental laboratories and related branch laboratories from Healthco, Inc. In 1983, the Company changed its name to National Dentex Corporation and acquired 20 additional full-service dental laboratories and related branch laboratories from Lifemark Corporation. The Company’s acquisition strategy is to consolidate within the dental laboratory industry and use its financial and operational synergies to create a competitive advantage. Over the last five years the Company has acquired the following stand-alone laboratory facilities; in 1998 Continental Dental Laboratory, in 1999 Advanced Dental Arts, in 2000 Oral Arts and Ideal Dental, in 2001 Creative Dental Ceramics, Bauer Dental Laboratory, Aronovitch Dental Laboratory, Crown Dental Laboratory and The Freeman Center and in 2002 Fox Dental Company and E&S Dental Laboratory. In addition, various smaller laboratories were acquired and consolidated into existing operations.

      The Company today owns and operates 37 dental laboratories, consisting of 34 full-service dental laboratories and three branch laboratories located in 27 states throughout the United States. The Company’s dental laboratories custom design and fabricate dentures, crowns and fixed bridges, and other dental prosthetic appliances. Each dental laboratory operates under its own business name. The Company’s principal executive offices are located at 526 Boston Post Road, Wayland, MA 01778, telephone number (508) 358-4422. Its corporate web site is located at www.nationaldentex.com. We make available free of charge through our website our annual Form 10-K, current reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 as soon as practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.

Information as to Industry Segments

      The Company’s business consists of only one industry segment, which is the design, fabrication, marketing and sale of custom dental prosthetic appliances for and to dentists.

Description of Business

      The Company’s dental laboratories design and fabricate custom dental prosthetic appliances such as dentures, crowns and bridges. These products are produced by trained technicians working in dental laboratories in accordance with work orders and cases (consisting of impressions, models and occlusal registrations of a patient’s teeth) provided by the dentist. Dentists are the direct purchasers of the Company’s products.

      The Company’s products are grouped into the following three main categories:

	Restorative Products. Restorative products sold by the Company’s dental laboratories consist primarily of crowns and bridges. A crown replaces the part of a tooth that is visible, and is usually made of gold or porcelain. A bridge is a restoration of one or more missing teeth that is permanently attached to the natural teeth or roots. In addition to the traditional crown, the Company also makes porcelain jackets, which are crowns constructed entirely of porcelain; onlays, which are partial crowns which do not cover all of the visible tooth; and precision crowns, which are restorations designed to receive and connect a removable partial denture. The Company also makes inlays, which are restorations made to fit a prepared tooth cavity and then cemented into place.
	Reconstructive Products. Reconstructive products sold by the Company’s dental laboratories consist primarily of partial dentures and full dentures. Partial dentures are removable dental prostheses that replace missing teeth and associated structures. Full dentures are dental prostheses that substitute for the total loss of teeth and associated structures. The Company also sells precision attachments, which

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	connect a crown and an artificial prosthesis, and implants, which are fixtures anchored securely in the bone of the mouth to which a crown, partial or full denture is secured by means of screws or clips.
	Cosmetic Products. Cosmetic products sold by the Company’s dental laboratories consist primarily of porcelain veneers and ceramic crowns. Porcelain veneers are thin coverings of porcelain cemented to the front of a tooth to enhance personal appearance. Ceramic crowns are crowns made from ceramic materials that most closely replicate natural teeth. The Company also sells composite inlays and onlays, which replace silver fillings for a more natural appearance, and orthodontic appliances, which are products fabricated to move existing teeth to enhance function and appearance.

Laboratory and Corporate Operations

      The Company’s full-service dental laboratories design and fabricate a full range of custom-made dental prosthetic appliances. These custom products are manufactured from raw materials, such as high noble, noble and predominantly base alloys, dental resins, composites and porcelain. There are different production processes for the various types of prosthetic appliances depending upon the product and the materials used in the type of appliance being fabricated, each of which requires different skills and levels of training. The Company’s dental laboratories perform numerous quality control checks throughout the production cycle to improve the quality of its products and to make certain the design and appearance satisfy the needs of the dentist and the patient. The Company’s branch dental laboratories are smaller in size and offer a limited number of products. When a branch receives an order that it cannot fill, the branch refers the business to its affiliated full-service dental laboratory.

      The Company operates each of its dental laboratories as a stand-alone facility under the direction of a local manager responsible for operation of the dental laboratory, supervision of its technical and sales staff and delivery of quality products and services. Each of the Company’s dental laboratories markets and sells its products through its own direct sales force, supported by regional managers and Company-wide marketing programs. Employees at each dental laboratory have a direct stake in the financial success of the dental laboratory through participation in the Company’s cash and stock incentive plans.

      The Company’s corporate management provides overall strategy, direction and financial management for the Company and negotiates all acquisitions. Corporate personnel also support the operations of its dental laboratories by performing functions which are not directly related to the production and sale of dental laboratory products, such as processing payroll and related benefit programs, obtaining insurance and procuring financing. The Company’s corporate management provides marketing, financial and administrative services, negotiates Company-wide purchasing arrangements, and sets quality and performance standards for the dental laboratories.

Sales and Marketing

      The Company’s local dental laboratories market and sell their products through their own direct sales force. The sales force interacts with dentists within its market area, primarily through visits to dentists’ offices, to introduce the dental laboratory’s services and products offered, and to promote new products and techniques that can assist dentists in expanding their practices. The Company’s customer-focused marketing and sales program, entitled the “NDX Reliance Program”^TM, is specifically designed to make choosing a dental laboratory a risk free decision for dentists. Its five components — Practice Support, Laboratory Systems, Quality Assurance, Reliance Restorations and a Continuing Education Series — differentiate its qualified laboratories from their many competitors. The Company believes that this unique approach to assist the dentist and his or her staff to improve chairtime efficiencies while providing exceptional service, superior quality and product delivery every time they deliver a case, will enhance its ability to expand its base of business by establishing lasting professional relationships with its customers. The Company presently has a total of 29 sales representatives. In addition, the dental laboratories, either alone or with local dental societies, dental schools or study clubs, sponsor technical training clinics for dentists on topics such as advanced clinical techniques. The local dental laboratories also exhibit at state and local dental conventions.

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Competition

      The dental laboratory industry is highly competitive and fragmented. A typical dental laboratory’s business originates from dentists located within 50 miles of the dental laboratory. There are approximately 12,000 dental laboratories in the United States, ranging in size from one to approximately 200 technicians. The Company estimates that presently its sales represent less than 3% of the total sales of custom-made dental prosthetic appliances in the United States. Competition is primarily from other dental laboratories in the respective local market areas. The vast majority of dental laboratories consist of single units, although the Company believes there is one national chain, the Sentage Corporation Dental Services Group, which competes with the Company in two market areas. There is also limited competition from mail order dental laboratories.

      Most dentists use a limited number of dental laboratories, relying on those laboratories which produce quality products delivered on a timely basis and which carry all of the products which the dentist may need, even if a particular item is a newer specialty product used only sporadically by the dentist. While price is one of the competitive factors in the dental laboratory industry, the Company believes that most dentists consider product quality, service, and breadth of product line to be more important. The Company believes that it competes favorably with respect to these factors. The Company considers that its ability to produce quality products locally and to deliver such products on a timely basis, the convenience for dentists offered by the breadth of its product line, the use of innovative marketing programs, and its sponsorship of educational clinics provide a competitive advantage over other dental laboratories in the local markets in which its dental laboratories operate. The Company’s ability to provide newer specialty products for implantology, adult orthodontics and cosmetic dentistry, which require highly skilled technicians, more extensive inventories, additional working capital, and investment in both training and capital equipment, also distinguishes it from many smaller dental laboratories which do not have comparable resources to provide these products. While such specialty products presently represent less than 20% of the Company’s business, the Company believes that the ability to offer these products is essential for dental laboratories to remain competitive.

Employees

      As of December 31, 2002, the Company had 1,528 employees, 1,499 of whom worked at individual laboratories. Corporate management and administrative staff totaled 29 people. None of the Company’s employees is covered by a collective bargaining agreement. Management considers the Company’s employee relations to be good.

Intellectual Property

      The Company’s general technological know-how and experience are important to the conduct of the Company’s business. The Company has several trademarks and licenses to use trademarks, but does not deem any of such trademarks or licenses to be material to the conduct of its business. Each of its dental laboratories operates under its own trade name, and the Company considers these trade names to be important to the goodwill of its dental laboratories.

Backlog

      Largely due to the individualized and customized nature of most dental products, there was no significant backlog of orders existing at December 31, 2002 and 2001.

Item 2.     Properties

      The Company currently leases a total of approximately 213,000 square feet of space. As of December 31, 2002, the future aggregate minimum annual rent payable for all of its leased real properties was approximately $9,006,000. The Company considers these properties to be modern, well maintained and suitable for its purposes and believes that its current facilities are adequate to meet its needs for the foreseeable future. The Company also believes that suitable substitute or replacement space is readily available at reasonable rental rates. The Company’s principal executive and administrative offices occupy approximately 10,200 square feet

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      The Company owns seven dental laboratory facilities, which are located in Denver, Colorado; Metairie, Louisiana; Dallas, Texas; Houston, Texas; Jacksonville, Florida; Waukesha, Wisconsin and Shreveport, Louisiana. These locations total approximately 100,000 square feet and range in building size from 4,000 to 33,000 square feet.

Item 3.     Legal Proceedings

      The Company is involved from time to time in litigation incidental to its business. Management believes that the outcome of current litigation will not have a material adverse effect upon the operations or financial condition of the Company and will not disrupt the normal operations of the Company.

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

      None.

PART II

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

Trading Market

      The Company’s Common Stock, $.01 par value, is traded on the over-the-counter market, on the Nasdaq National Market System, under the symbol “NADX”. The following table presents low and high bid information for the time periods specified. The over-the-counter market quotations reflect inter-dealer prices, without retail markup, markdown or commission and may not necessarily represent actual transactions. The over-the-counter market quotations have been furnished by the Nasdaq Stock Market, Inc. The Company’s Common Stock became publicly-traded on December 21, 1993.

      The Company has paid no cash dividends in the past and has no plans to pay cash dividends in the foreseeable future.

      On February 18, 2003, there were approximately 419 registered record holders of the Company’s Common Stock, which the Company believes represented approximately 1,131 beneficial holders. On February 18, 2003, the low and high bid prices of the Common Stock were $17.63 and $18.11, respectively.

Stock Plan Disclosure

      The Company maintains two incentive stock option plans that were approved by the Company’s Board of Directors (the “Board”). In 1992 the Board and Stockholders adopted the 1992 Long-Term Incentive Plan (“1992 LTIP”). Key employees, officers and directors were eligible to receive grants under the plan. Effective May 2002, no additional options may be granted under this plan. In January 2001 the Board adopted the 2001

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      The following selected financial data for the five years ended December 31, 2002 are derived from the audited consolidated financial statements of the Company. The consolidated financial statements for fiscal years 1998 through 2001 were audited by Arthur Andersen LLP (“Andersen”) who has ceased operations. A copy of the report previously issued by Andersen on our consolidated financial statements as of December 31, 2001 and 2000 and for each of the years in the period ended December 31, 2001 is included elsewhere in this report. Such report has not been reissued by Andersen. The data should be read in conjunction with the consolidated financial statements and the related notes included in this Report and in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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Liquidity and Capital Resources

      The Company’s working capital increased from $15,060,000 at December 31, 2001 to $15,499,000 at December 31, 2002. Cash and equivalents decreased $570,000 from $6,378,000 at December 31, 2001 to $5,808,000 at December 31, 2002. Operating activities provided $7,309,000 in cash flow for the year ended December 31, 2002.

      Cash flows from operating activities were more than sufficient to cover cash used in investing activities. Cash outflows related to dental laboratory acquisitions totaled $4,696,000 for the year ended December 31, 2002 compared to $9,106,000 for the year ended December 31, 2001. The decrease was primarily attributable to a lower level of acquisition activity in 2002 compared to 2001. During 2001, the Company acquired approximately $12,889,000 in assets compared to $4,039,000 in 2002. Capital expenditures for 2002 were $2,156,000 compared to $1,641,000 in 2001. The increase was primarily attributable to the investment in a replacement facility for the Company’s operations in Minneapolis, Minnesota.

      During the year ended December 31, 2002, the Company repurchased an aggregate of 83,400 shares of common stock at a total cost of $1,625,000, under its stock repurchase program. The Company may repurchase stock from time to time in open-market or privately negotiated transactions. The Company is authorized to repurchase an additional 137,800 shares as of December 31, 2002.

      The Company maintains a financing agreement (the “Agreement”) with Citizens Bank of Massachusetts (formerly State Street Bank and Trust Company) (the “Bank”). The Agreement, as amended and extended on December 31, 2001, includes revolving lines of credit of $4,000,000 and $8,000,000. The interest rate on both revolving lines of credit is the prime rate minus 0.5% or the London Interbank Offered Rate (“LIBOR”) rate plus 1.5%, at the Company’s option. Both revolving lines of credit mature on June 30, 2004.

      A commitment fee of one eighth of 1% is payable on the unused amount of both lines of credit. At December 31, 2002, the full principal amount was available to the Company under both revolving lines of credit. The Agreement requires compliance with certain covenants, including the maintenance of specified net worth and other financial ratios. As of December 31, 2002, the Company was in compliance with these covenants.

      Management believes that cash flow from operations and existing financing will be sufficient to meet contemplated operating and capital requirements, including costs associated with anticipated acquisitions, if any, in the foreseeable future.

Commitments and Contingencies

      The following table represents a list of the Company’s contractual obligations and commitments as of December 31, 2002:

Payments Due By Period

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      Laboratory purchase obligations totaling $3,870,000 classified as deferred acquisition costs are presented in the liability section of the balance sheet. The Company is committed under various non-cancelable operating lease agreements covering its office space and dental laboratory facilities, vehicles and certain equipment. Certain of these leases also require the Company to pay maintenance, repairs, insurance and related taxes.

Results of Operations

      The following table sets forth for the periods indicated the percentage of net sales represented by certain items in the Company’s Consolidated Financial Statements:

Year Ended December 31, 2002 Compared with Year Ended December 31, 2001

      For the year ended December 31, 2002, net sales increased $9,460,000 or 11.0% over the prior year. Net sales increased by approximately $9,995,000 as a result of acquisitions, measured by business at dental laboratories owned less than one year. Net sales declined approximately $535,000 at dental laboratories owned for both the year ended December 31, 2002 and the comparable year ended December 31, 2001.

      The Company’s cost of goods sold increased by $5,917,000 or 11.8% in the fiscal year ended December 31, 2002 over the prior fiscal year, attributable primarily to increased unit sales. As a percentage of sales, cost of goods sold increased from 58.7% to 59.0%. Increases in labor and related expenses were partially offset by decreases in materials costs. The increase in labor cost as a percentage of sales was primarily attributable to increasing health insurance costs as well as declining internal sales growth that led to an increase in excess production capacity. The decrease in material cost as a percentage of sales was primarily attributable to the stabilization of alloy prices and the implementation of various pricing strategies.

      Operating expenses, which consist of selling, delivery and administrative expenses both at the laboratory and corporate level, increased by $3,701,000 or 14.4% in the year ended December 31, 2002 over 2001. During the same period operating expenses increased as a percentage of net sales from 29.9% in 2001 to 30.9% in 2002. Selling and corporate overhead expenses increased as the Company implemented a national marketing program, “the NDX Reliance Program”, that was introduced during October 2001. During 2001 and 2002, the Company incurred advertising and marketing expenses related to the NDX Reliance program of approximately $141,000 and $878,000, respectively.

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      Administrative expense at both the laboratory and corporate level has increased by approximately $2,700,000. In addition to the added administrative costs from laboratories acquired during 2001 and 2002, the Company has sought to increase both the depth and the breadth of its management team.

      Amortization expense declined approximately $987,000. The decline in amortization expense was attributable to the implementation of SFAS No. 142.

      As a result of expenses related to the development of the NDX Reliance Program, investments in the strengthening of the Company’s management team, and increases in health and other insurance costs, coupled with the current economic climate, the Company’s operating income declined by $159,000 to $9,657,000 for the year ended December 31, 2002 from $9,816,000 for the prior year. As a percentage of net sales, operating income declined from 11.4% in 2001 to 10.1% for 2002.

      Interest income decreased by $150,000 in the year ended December 31, 2002 from 2001. The decrease was due to lower investment principal and lower interest rates.

      The provision for income taxes decreased to $3,644,000 in 2002 from $3,939,000 in 2001. This $295,000 decrease was the result of decreased income and a lower effective tax rate. The 39.7% effective tax rate for fiscal year 2001 decreased to 38.3% for fiscal year 2002. The decrease in the effective tax rate is due to non-deductible expenses, primarily goodwill amortization, constituting a smaller portion of taxable income as a result of the elimination of such amortization due to the adoption of FAS 142 on January 1, 2002.

      As a result of all the factors discussed above, net income decreased to $5,882,000 or $1.66 per share on a diluted basis in 2002 from $5,978,000 or $1.68 per share on a diluted basis in 2001.

Year Ended December 31, 2001 Compared with Year Ended December 31, 2000

      For the year ended December 31, 2001, net sales increased $10,045,000 or 13.3% over the prior year. Approximately $8,615,000 of this increase was attributable to business at dental laboratories owned less than one year, with the remaining increase representing sales growth at dental laboratories owned both the year ended December 31, 2001 and the comparable year ended December 31, 2000.

      The Company’s cost of goods sold increased by $6,075,000 or 13.7% in the fiscal year ended December 31, 2001 over the prior fiscal year, attributable primarily to increased unit sales. As a percentage of sales, cost of goods sold increased from 58.4% to 58.7%. Increases in labor and laboratory overhead expenses were partially offset by decreases in materials costs. Materials costs decreased as the cost of palladium, a component of dental alloys, declined after several years of steep increases. Additionally, during 2001 the Company reduced its reliance on palladium through the substitution of alternative metals.

      Operating expenses, which consist of selling, delivery and administrative expenses both at the laboratory and corporate level, increased by $3,498,000 or 15.8% in the year ended December 31, 2001 over 2000. During this same period operating expenses increased as a percentage of net sales from 29.3% in 2000 to 29.9% in 2001. Selling and Corporate Overhead expenses increased as the Company developed a national marketing

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      Due to the increase in net sales, partially offset by increases in operating expenses as a percent of net sales, operating income increased $472,000 or 5.1% in fiscal year 2001 over fiscal year 2000.

      Interest income decreased by $339,000 in the year ended December 31, 2001 from 2000. The decrease was due to lower investment principal and falling interest rates.

      The provision for income taxes increased to $3,939,000 in 2001 from $3,869,000 in 2000. This $70,000 increase was the result of increased income and a higher effective tax rate. The 39.4% effective tax rate for fiscal year 2000 increased to 39.7% for fiscal year 2001.

      As a result of all the factors discussed above, net income increased to $5,978,000 or $1.68 per share on a diluted basis in 2001 from $5,961,000 or $1.66 per share on a diluted basis in 2000.

Critical Accounting Policies

      Financial Reporting Release No. 60 as released by the Securities and Exchange Commission requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. While the preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of expenses during the reporting period, we do not believe the Company’s financial statements are significantly affected by complex accounting policies and methods. A summary of the Company’s significant accounting policies is presented below.

Summary of Significant Accounting Policies

      Revenue is recognized as the dentists’ orders are shipped. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements”. This bulletin established additional guidelines for revenue recognition. The Company’s revenue recognition policy complies with this pronouncement. Shipping and handling fees charged to customers are recognized upon shipment. Shipping and handling costs totaling approximately $6,396,000, $7,091,000 and $7,690,000 for the years ended December 31, 2000, 2001 and 2002, respectively, are included in selling, general and administrative expense.

      Advertising, promotional and marketing costs are charged to earnings in the period in which they are incurred, in accordance with AICPA Statement of Position (SOP) 93-7, “Reporting on Advertising Costs.” These costs were approximately $551,000, $748,000 and $1,480,000 for the years ended December 31, 2000, 2001 and 2002, respectively.

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      The Company considers all highly liquid investments purchased with maturities of 90 days or less to be cash equivalents. The Company has cash investments with financial institutions in excess of the $100,000 insured limit of the Federal Deposit Insurance Corporation.

      Inventories, consisting principally of raw materials, are stated at the lower of cost (first-in, first-out) or market.

      Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the following estimated depreciable lives:

      Leasehold improvements and capital leases are amortized over the lesser of the assets’ estimated useful lives or the lease terms.

      Gains and losses are recognized upon the disposal of property and equipment, and the related accumulated depreciation and amortization are removed from the accounts. Maintenance, repairs and betterments that do not enhance the value of or increase the life of the assets are charged to operations as incurred.

      Depreciation expense totaled approximately $1,095,000, $1,264,000 and $1,436,000 for the years ended December 31, 2000, 2001 and 2002, respectively.

      At each balance sheet date, management periodically evaluates the recoverability of the long-lived assets, including property, plant and equipment and intangible assets, using certain financial indicators, such as historical and future ability to generate income from operations. The Company’s policy is to record an impairment loss in the period when it is determined that the carrying amount of the asset may not be recoverable. The determination is based on an evaluation of such factors as the occurrence of a significant event, a significant change in the environment in which the business operates or if the expected future undiscounted cash flows would become less than the carrying amount of the asset. The Company believes that no impairment of long-lived assets existed as of December 31, 2001 and 2002.

      Included in other assets are the costs of noncompetition agreements, which are deferred and amortized on a straight-line basis according to the terms of the agreements over 5 to 10 years. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, goodwill amortization ceased on December 31, 2001. The Company continually evaluates whether events and circumstances have occurred that indicate that the value of goodwill has been impaired. In accordance with SFAS No. 142, goodwill is evaluated for possible impairment on an annual basis, based on a two-step process. The first step is to compare the fair value of the reporting unit to its carrying amount to determine if there is potential impairment. If the fair value of the reporting unit is less than its carrying value, the second step would be to record an impairment loss of the extent of that difference. As of December 31, 2002, there has been no impairment of goodwill.

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      The Company follows Statement of Financial Accounting Standards (SFAS) No. 109, “Accounting for Income Taxes”. Under SFAS No. 109, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. The amount of deferred tax asset or liability is based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

      Effective January 1, 1996, the Company adopted the disclosure provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.” The Company has elected to continue to account for employee stock options at intrinsic value, in accordance with Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” with disclosure of the effects of fair value accounting on net income and earnings per share on a pro forma basis for the years ended December 31, 2000, 2001 and 2002.

      The Company has implemented a stock repurchase program as approved by the Company’s Board of Directors. The program authorizes the purchase of up to 400,000 shares of common stock in open market or privately negotiated transactions, subject to market conditions. For the years ended December 31, 2000, 2001 and 2002, the Company repurchased 17,200 shares, 161,600 shares and 83,400 shares respectively, which have been classified as treasury stock on the accompanying consolidated balance sheet.

      In July 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (SFAS 146), which nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS 146 requires a liability for a cost associated with an exit or disposal activity be recognized and measured initially at its fair value in the period in which the liability is incurred. If fair value cannot be reasonably estimated, the liability shall be recognized initially in the period in which fair value can be reasonably estimated. The provisions of SFAS 146 will be effective for the Company prospectively for exit or disposal activities initiated after December 31, 2002. The Company does not believe that the adoption of this pronouncement will have a material effect on the results of the Company.

      In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (FIN 45). FIN 45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. FIN 45 does not prescribe a specific approach for subsequently measuring the guarantor’s recognized liability over the term of the related guarantee. This Interpretation also incorporates, without change, the guidance in FASB Interpretation No. 34, “Disclosure of Indirect Guarantees of Indebtedness of Others”, which is being superseded. The Company has adopted the disclosure provisions of this pronouncement as of December 31, 2002. The Company is currently assessing the financial impact of adopting this pronouncement in fiscal year 2003.

      In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation” (SFAS 148), to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of SFAS 123 to require prominent disclosure in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The amended disclosure provisions are effective for fiscal years ending after December 15, 2002 and the Company has adopted the amended disclosure provisions as of December 31,

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Forward-Looking Statements and Risk Factors

      This Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company’s actual results could differ materially from those set forth in the forward-looking statements. Certain factors that could affect capital expenditures, the Company’s requirements for capital, the costs associated with anticipated acquisitions and the Company’s results of operations include general economic conditions, the availability of laboratories for purchase by the Company, the ability of the Company to acquire and successfully operate additional laboratories, governmental regulation of health care, trends in the dental industry towards managed care, other factors affecting patient visits to the Company’s clients, increases in labor and materials costs and other risks indicated from time to time in filings with the Securities and Exchange Commission.

      The Company’s market risk exposure includes potential price volatility of commodities used by the Company in its manufacturing processes. The Company purchases dental alloys that contain gold, palladium and other precious metals. The Company has not participated in hedging transactions. The Company has relied on pricing practices that attempt to pass increased costs on to the customer, in conjunction with materials substitution strategies.

Quarterly Results

      The following table sets forth certain selected financial information for the Company for its eight most recent fiscal quarters. In the opinion of the Company, this unaudited information has been prepared on the same basis as the audited financial information and includes all adjustments (consisting of only normal, recurring adjustments) necessary to present this information fairly when reviewed in conjunction with the Company’s Consolidated Financial Statements and notes thereto contained herein. The consolidated financial statements for fiscal years 1998 through 2001 were audited by Arthur Andersen LLP (“Andersen”) who has ceased operations. A copy of the report previously issued by Andersen on our consolidated financial statements as of December 31, 2001 and 2000 and for each of the years in the period ended December 31, 2001 is included elsewhere in this Report. Such report has not been reissued by Andersen.

      The Company’s results of operations have historically fluctuated on a quarterly basis and are expected to be subject to quarterly fluctuations in the future. As a result, the Company believes that the results of operations for the interim periods are not necessarily indicative of the results to be expected for any future period or for a full year. Quarterly results are subject to fluctuations resulting from a number of factors, including the number of working days in the quarter for both dentists and Company employees, the number of paid vacation days and holidays in the period and general economic conditions. Historically, the second

12

Location of Financial Statements

      The consolidated financial statements furnished in connection with this Report are attached immediately following Part IV.

      Effective as of July 31, 2002, the Company’s Board of Directors, upon recommendation of its Audit Committee, engaged PricewaterhouseCoopers LLP (“PwC”) as the Company’s auditors, to replace Arthur Andersen LLP, which was ceasing operations.

      During the Company’s two most recent fiscal years and the interim period through July 31, 2002, neither the Company, nor anyone on its behalf consulted with PwC regarding any of the matters or reportable events listed in Items 304(a)(2)(i) and (ii) of Regulation S-K.

PART III

      (a) Directors. The information with respect to directors required by this item is incorporated herein by reference from the Company’s Proxy Statement dated March 10, 2003 for the Special Meeting in Lieu of Annual Meeting of Shareholders to be held on April 8, 2003 (the “2003 Proxy Statement”).

      (b) Executive Officers. The information with respect to executive officers required by this item is incorporated herein by reference from the 2003 Proxy Statement.

      The information required by this item is incorporated herein by reference from the 2003 Proxy Statement.

      The information required by this item is incorporated herein by reference from the 2003 Proxy Statement.

      The information required by this item is incorporated herein by reference from the 2003 Proxy Statement.

      (a) Explanation of disclosure controls and procedures. Within the 90 days prior to the filing date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer and its Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule 13a-14 of the Securities Exchange Act of 1934. Based on that evaluation, such officers concluded that the Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in reports it files or submits under the Securities and Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms and are operating in an effective manner.

13

      (b) Changes in internal controls. There have been no significant changes in the Company’s internal controls or in other factors which could significantly affect internal controls subsequent to the date the Company carried out its evaluation.

PART IV

Item 15.     Exhibits, Financial Statement Schedules and Reports on Form 8-K

      (a),(d) Financial Statements and Schedules.

	(1) The financial statements set forth in the list below are filed as part of this Report.
	(2) The financial statement schedules set forth in the list below are filed as part of this Report.
	(3) Exhibits filed herewith or incorporated herein by reference are set forth in Item 15(c) below.

     List of Financial Statements and Schedules Referenced in this Item 15

      The consolidated financial statements of National Dentex Corporation included herein are as listed below:

     Financial Statement Schedule included herewith:

      Schedule II: Valuation and Qualifying Accounts

      All other schedules are omitted because they are not applicable or not required, or because the required information is shown either in the financial statements or in the notes thereto.

      (b) Reports on Form 8-K.

	During the Company’s fiscal quarter ended December 31, 2002, the Company did not file any Current Reports on Form 8-K.

      (c) Exhibits.

	(i) The following exhibits, required by Item 601 of Regulation S-K, are filed herewith:

14

	(ii) The following exhibit was filed with the Company’s Form S-8 Registration Statement (File No. 333-66446) and is herein incorporated by reference:

	(iii) The following exhibit was filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2001 and is herein incorporated by reference:

	(iv) The following exhibits were filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2000 and are herein incorporated by reference:

	(v) The following exhibits were filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 and are herein incorporated by reference:

	(vi) The following exhibits were filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 1995 and are herein incorporated by reference:

15

	(vii) The following exhibits were filed as part of the Company’s Form S-1 Registration Statement (File No. 33-70440) declared effective by the Securities and Exchange Commission on December 21, 1993 and are herein incorporated by reference:

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

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NATIONAL DENTEX CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

      All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are not material and therefore have been omitted.

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and

      In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of National Dentex Corporation and its subsidiaries (the “Company”) at December 31, 2002, and the results of their operations and their cash flows for the year ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule for the year ended December 31, 2002 listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The consolidated financial statements of the Company as of December 31, 2001 and for each of the two years in the period ended December 31, 2001 were audited by other independent accountants who have ceased operations. Those independent accountants expressed an unqualified opinion on those consolidated financial statements in their report dated February 8, 2002. In addition, the financial statement schedule listed in the accompanying index for each of the two years in the period ended December 31, 2001 was audited by other independent accountants who have ceased operations. Those independent accountants expressed an unqualified opinion on that financial statement schedule in their report dated February 8, 2002.

      As disclosed in Note 4, the Company changed the manner in which it accounts for goodwill and other intangible assets upon adoption of the accounting guidance of Statement of Financial Accounting Standards No. 142 effective on January 1, 2002.

      As discussed above, the consolidated financial statements of the Company as of December 31, 2001, and for each of the two years in the period ended December 31, 2001, were audited by other independent accountants who have ceased operations. As described in Note 4, these financial statements have been revised to include the transitional disclosures required by Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”, which was adopted by the Company as of January 1, 2002. We audited the transitional disclosures for 2001 and 2000 in Note 4. In our opinion, the transitional disclosures for 2001 and 2000 in Note 4 are appropriate. However, we were not engaged to audit, review, or apply any procedures to the 2001 or 2000 financial statements of the Company other than with respect to such disclosures and, accordingly, we do not express an opinion or any other form of assurance on the 2001 or 2000 financial statements taken as a whole.

	PricewaterhouseCoopers LLP

Boston, Massachusetts

F-2

The following report is a copy of the report previously issued by Arthur Andersen LLP

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of National Dentex Corporation:

      We have audited the accompanying consolidated balance sheets of National Dentex Corporation (a Massachusetts corporation) as of December 31, 2001 and 2000, and the related consolidated statements of income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2001. These consolidated financial statements and the schedule referred to below are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits.

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

      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of National Dentex Corporation as of December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

      Our audits were made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The schedule listed in the index to consolidated financial statements is presented for purposes of complying with Securities and Exchange Commission’s rules and is not a part of the basic consolidated financial statements. The schedule has been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

	ARTHUR ANDERSEN LLP

Boston, Massachusetts

F-3

NATIONAL DENTEX CORPORATION

CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these consolidated financial statements.

F-4

NATIONAL DENTEX CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

The accompanying notes are an integral part of these consolidated financial statements.

F-5

NATIONAL DENTEX CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY