President’s Letter 2004 Annual Report 1 Net income increased by  48% to $10.4  million, while earn- ings per share increased 45%. The NextGen  division accounted for 77% of FY 2004 Company revenue. I am pleased to report that FY 2004 was another year of progress for  your Company. On the financial front, total revenue for the year was $70.9 million, an increase of 30% over last year. Net income increased by 48% to $10.4 million, while earnings per share increased 45% to $1.60 as compared to $1.10 in the prior year. The NextGen Healthcare Information Systems unit was responsible for the majority of this growth as the division posted a 46% increase in revenue and a 77% increase in operating income for the year. The NextGen division accounted for 77% of FY 2004 Company revenue. The Company set new revenue and profit records in each quarter of the year. At fiscal year end, we had $51.4 million in cash, up from $36.4 million at the end of last year. During Fiscal 2004, Pat Cline, President of the NextGen Healthcare Information Systems division, and Greg Flynn, Executive Vice President and General Manager of the QSI division continued to ably lead their teams. These experienced executives are valued and capable operators who continue to perform well for both our clients and our shareholders, while providing enlightened and effective leadership within our divisions. My thanks go out to them. Within the corporate office, our staff worked diligently throughout the year on a number of value-added projects. We have and will continue to invest in this area. My thanks go out to these dedicated professionals as well. The Company’s strong performance was not limited to the financial arena. During the year, QSI was #36 on the  Forbes Magazine list of The 200 Best Small Companies in America. This was the third consecutive year we have been recognized by  Forbes . Our growth has also been recently recognized by Business Week and  Fortune magazines, which included the Company in their publications’ lists of high performing growth companies. NextGen’s flagship EPM and EMR products earned first prize honors for the second consecutive year at the 2004 HIMSS/MS–HUG software competition— our industry’s Academy Awards$_{GLYPH<H23006>}$—and was named as a three category finalist for the 2004 TEPR software competition. total revenue growth 30 % Dear Fellow Shareholders, Clients and Associates