National Dentex reports net income of $429,000 for fourth-quarter of 2009

National Dentex Corporation (NASDAQ: NADX), one of the largest owner/operators of dental laboratories in the United States, today announced its results for the fourth quarter and year ended December 31, 2009. For the full year ended December 31, 2009, National Dentex reported sales of $161,195,000, a 6.1% decline from reported sales of $171,674,000 for the same period in 2008. Net income for 2009 increased to $5,877,000, or $1.02 per diluted share, from a net loss of $877,000, or a $.16 loss per diluted share, for fiscal 2008. Non-GAAP net income was $6,141,000 for fiscal 2009, or $1.07 per diluted share, compared to $5,240,000 for fiscal 2008, or $.93 per diluted share. Non-GAAP net income excludes non-cash goodwill impairment charges, including the tax effect. National Dentex recorded non-cash goodwill impairment charges of $6,950,000 in the fourth quarter of 2008 and $264,000 in the third quarter of 2009. These charges were taken with respect to certain laboratories in connection with management’s assessment of goodwill on its balance sheet and did not affect the Company’s cash flow. A reconciliation of Non-GAAP net income to net income is included at the end of this press release.

For the fourth quarter of 2009, National Dentex reported sales of $38,174,000, which was 7.5% lower than the fourth quarter sales in 2008 of $41,264,000. Net income for the quarter was $429,000, or $.07 per diluted share, compared to a net loss of $5,286,000, or a loss of $.93 per diluted share in 2008. Non-GAAP net income was $429,000, or $.07 per diluted share, for the fourth quarter of 2009 compared to $831,000, or $.15 per diluted share, for the same period in 2008. The difference is primarily attributable to a tax credit related to research activities from tax year 2002, recorded in the fourth quarter of 2008 as a result of the expiration of the final statute of limitations for IRS modification. The after tax effect on net income in the fourth quarter of 2008 for this item was $468,000, or $.08 per diluted share.

Commenting on today’s announcement, David Brown, Chairman and CEO, stated: “As a result of a very difficult consumer market, 2009 has been a challenging year for the dental laboratory industry. While we are beginning to see improving trends, we continue to feel the effects of the industry-wide slowdown in revenues brought on by a decline in discretionary consumer spending. In response, we have made great strides in controlling our production and operating costs, in particular our labor and related payroll expenses. As a result, we have improved profitability in 2009. In addition, we have continued to make advances with newer technologies that we believe will enhance our competitive advantages in the future.”

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, specifically Non-GAAP net income and Non-GAAP net income per share. Non-GAAP net income equals net income plus non-cash goodwill impairment charges, including the tax effect, which comprise of the goodwill impairment charges described above taken in the fourth quarter of 2008 and the third quarter of 2009. We believe that the use of these non-GAAP financial measures in this press release helps investors gain an understanding of our underlying operating results without the effect of these non-cash charges, particularly when comparing to prior periods. These non-GAAP financial measures are not meant to be considered superior to or a substitute for the results of operations prepared in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included at the end of this press release.