Exhibit 99.1
National Dentex Corporation Announces Revised Fourth Quarter and Full
Year 2004 Results;
Will Be Restating First Three Quarters Of 2004
WAYLAND, Mass.--(BUSINESS WIRE)--May 9, 2005--National Dentex
Corporation (NASDAQ:NADXE), one of the largest owner/operators of
dental laboratories in the United States, today announced it had
substantially completed the process of closing its accounting records
for fiscal 2004, the final step needed before it can finalize the
preparation of its Annual Report on Form 10-K for filing with the
United States Securities and Exchange Commission ("SEC"). As
previously announced, National Dentex has been unable to file its Form
10-K for its fiscal year ended December 31, 2004 by the extended due
date of March 31, 2005 as it is in the process of reviewing, in
conjunction with its independent auditors PricewaterhouseCoopers LLP
("PwC"), the valuation and accounting for intangible assets recorded
in connection with certain acquisitions. National Dentex believes that
today's announcement represents an important step necessary before it
can finalize and file its Form 10-K and thus regain compliance with
Nasdaq's continued listing standards.
In connection with its completion of this review, the closing of
its accounting records and preparing its Annual Report on Form 10-K,
management and the audit committee have concluded to restate the
financial statements contained in its previously filed Quarterly
Reports on Form 10-Q for each of the first three fiscal quarters of
2004 to adjust the accounting for intangible assets recorded in
connection with certain acquisitions. During this process National
Dentex, in consultation with an independent third party valuation
firm, analyzed all the subject acquisitions and identified two
intangible assets it had not previously recognized apart from
goodwill: customer relationships and trade names. The accounting
treatment for these intangible assets requires amortization expense
over the estimated economic useful life for customer relationships and
impairment testing and associated expense, if any, for trade names. In
addition, National Dentex will revise the classification of these
intangible assets in the consolidated balance sheets of the financial
statements previously issued.
National Dentex has concluded that the adjustments required by
this restatement are not material to any of its previously filed
Quarterly Reports on Form 10-Q. However, the significance of the
cumulative adjustment of approximately $292,000, or $.06 per share on
a diluted basis, precludes it from being recorded in the fourth
quarter of 2004, thereby necessitating amendments to the SEC filings
on Form 10-Q made with respect to the previous three quarters. In
light of this conclusion, National Dentex has determined that this
accounting adjustment is not, in itself, a material weakness in
internal control over financial reporting. Management is currently
finalizing its Report on Internal Control over Financial Reporting.
This report is expected to be included in National Dentex's Annual
Report on Form 10-K for the fiscal year ended December 31, 2004 when
ready for submission to the SEC.
National Dentex also announced that to reflect these changes it
needed to update its financial results for the fourth quarter and year
ended December 31, 2004 from the results originally announced in its
press release dated February 25, 2005. National Dentex currently
believes that no other previously filed periodic report, financial
statement, or press release needs to be amended to reflect these
adjustments to its purchase accounting of identified intangible
assets.
The effect of today's announcements on net income and net income
per share on a fully diluted basis (as adjusted for a three-for-two
stock split effected on December 31, 2004) from previously reported
results is summarized in the following table:
Quarter Ended Fiscal Year
(unaudited) Ended
(unaudited)
--------------------------------------- -----------
03-31-04 06-30-04 09-30-04 12-31-04 12-31-04
--------- --------- --------- --------- -----------
Net income:
As previously
reported on Form
10-Q $1,705 $2,058 $980
As previously
reported on
earnings release
dated 02-25-05 $708 $5,451
Less purchase
accounting
adjustment (124) (36) (45) (87) (292)
--------- --------- --------- --------- -----------
Net income as
restated $1,581 $2,022 $935 $621 $5,159
Net income per
fully diluted
share:
As previously
reported on Form
10-Q $.32 $.37 $.18
As previously
reported on
earnings release
dated 02-25-05 $.13 $1.00
Less: Purchase
accounting
adjustment (.03) - (.01) (.02) (.06)
--------- --------- --------- --------- -----------
Net income per
fully diluted
share as restated $.29 $.37 $.17 $.11 $.94
Commenting on today's announcement, David Brown, President and CEO
of National Dentex, stated: "We have restated our income figures for
the first three quarters of 2004 from what had been previously filed
with the SEC. We will be amending our Quarterly Reports on Form 10-Q
as promptly as possible to reflect this fact. This will involve our
preparation of amended reports and a review of those reports by our
independent auditors. The results we are announcing today for each of
our fiscal 2004 quarters and for the full year include additional
charges relating to purchase accounting and the valuation and
separation of customer relationship and trade name value from
goodwill. Notwithstanding the accounting treatment of these non cash
items on an ongoing basis, we will continue to pursue what we believe
to be a sound and sensible business goal of acquiring high quality,
service oriented and technically proficient laboratories to enhance
our existing network. This additional expense and the previously
reported initial costs associated with the compliance of various new
disclosure requirements mandated by the Sarbanes-Oxley Act have
exerted a negative pull on our earnings in 2004. However, looking
forward, we believe that our overall acquisition program and our
continued emphasis on internal improvements will allow us to proceed
with our expansion plans which we believe will afford us good
opportunities for profitable growth."
Mr. Brown added: "I want to thank our shareholders for their
patience and our employees for their dedication and commitment as we
worked through the lengthy year-end financial reporting process. We
were disappointed that some of our previously reported numbers need to
be restated to better reflect certain accounting pronouncements. We
wish the process had not taken as long as it has, but remain committed
to squaring our corners, rather than cutting them, and are fully
resolved to comply with all applicable accounting and disclosure
requirements. Through it all, we remain true to our values and
principles and have great hope for continued success in the future."
About National Dentex
National Dentex Corporation serves an active customer base of over
22,000 dentists through 45 dental laboratories located in 30 states.
National Dentex's dental laboratories provide a full range of
custom-made dental prosthetic appliances, including dentures, crowns
and fixed bridges, and other dental specialties.
Safe Harbor Statement
This press release contains forward-looking statements within the
meaning of the federal securities laws, including statements regarding
our future performance, opportunities, and expected courses of action,
that are based on our current expectations, beliefs, assumptions,
estimates, forecasts and projections about the industry and markets in
which National Dentex operates. The statements contained in this
release are not guarantees of future performance and involve certain
risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual outcomes and results may differ materially from what
is expressed in such forward-looking statements. Important factors
that may affect future operating and financial results include the
timing, duration and effects of adverse changes in overall economic
conditions; National Dentex's ability to acquire and successfully
operate additional laboratories; governmental regulation of health
care; trends in the dental industry towards managed care; increases in
labor, benefits and material costs; product development risks;
technological innovations; compliance with evolving federal
securities, accounting, and marketplace rules and regulations
applicable to publicly-traded companies on the Nasdaq National Market;
and other risks indicated from time to time in National Dentex's
filings with the Securities and Exchange Commission.
National Dentex Corporation
Earnings Results
(In Thousands, except per share data)
Quarter Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2003 2004 2003 2004
(Unaudited) (Unaudited)
-------- ----------- -------- -----------
Net Sales $25,769 $27,599 $99,274 $111,753
Cost of Goods Sold 15,459 17,059 59,534 66,953
-------- ----------- -------- -----------
Gross Profit 10,310 10,540 39,740 44,800
Operating Expenses 7,650 9,375 30,102 35,755
-------- ----------- -------- -----------
Operating Income 2,660 1,165 9,638 9,045
Other Expense 78 117 296 405
Interest (Income) Expense - 14 (21) 42
-------- ----------- -------- -----------
Income Before Tax 2,582 1,034 9,363 8,598
Income Taxes 1,084 413 3,606 3,439
-------- ----------- -------- -----------
Net Income $1,498 $621 $5,757 $5,159
======== =========== ======== ===========
Weighted Average
Shares Outstanding:
- Basic 5,145 5,220 5,131 5,187
- Diluted 5,296 5,516 5,216 5,465
Net Income per Share:
- Basic $0.29 $0.12 $1.12 $.99
- Diluted $0.28 $0.11 $1.10 $.94
National Dentex Corporation
Selected Balance Sheet Data
(In thousands)
December 31, December 31,
2003 2004
------------ ------------
(Unaudited)
Cash and Equivalents $1,835 $2,216
Accounts Receivable - net 11,914 12,992
Current Assets 21,930 23,527
Current Liabilities 9,678 9,777
Working Capital 12,252 13,750
Total Assets 73,989 81,831
Long Term Obligations 4,171 5,171
Stockholders' Equity $60,140 $66,883
CONTACT: National Dentex Corporation
Richard F. Becker, 508-358-4422
Vice President, Treasurer & CFO