Selected Consolidated Financial Data Management's Discussion and Analysis Consolidated Statements Income Balance Sheets Cash Flows Stockholder's Equity Notes to Consolidated Financial Services Report of Independent Auditors Printable 2004 Overview Download PDF Printable Financials Download PDF	PRESIDENT'S MESSAGE In CorVel's fiscal 2004, a soft claims market, legislative changes in two states and our delayed response to these changes, combined to create a year of transition. At this time, we are working on both the response to these new conditions and our plans to deliver an expanded product line in the future. As we enter fiscal 2005, the Company is adding to the breadth of its product line and continuing its investment in innovation. The markets served by CorVel are undergoing change as well. Healthcare insurance is increasingly becoming a transaction processing industry, with automation increasing each year. Just as the commercial banking industry automated its transaction processing, today's healthcare insurers must compete with much increased efficiency and speed. CorVel's existing position in the review and processing of healthcare transactions positions the Company to be a leader in the changes coming to this market. During the year we added to our ability to process transactions electronically, as well as our ability to scan and process the paper that still dominates the workers' compensation marketplace. Our long term investment in CareMC, CorVel's transaction processing website, continues to position us to participate in the ongoing expansion in the automation employed in our markets. During the year the addition of a large number of customers to our newest software caused a slowdown in processing speeds. "Scalability" has always been a concern for any company selling technology. That is, can software operating well at one level of activity, perform equally well at a larger scale. Both our software development and systems operations staff put in extensive hours and endless days under the constant pressure of customer service requirements. Their efforts and talent quickly returned processing speeds to normal and paved the way to further expansions of capacity. Although last year was a challenge, our organization was productive. A key ingredient in our success over the years has been a large, core group of people. By staying together in both the good times and the difficult years, these people have built CorVel over a fifteen year period. The size of our Company, and our ever more visible role in healthcare, attracts talented people. This next generation in our organization brings new talents, new visions. We are more vibrant than at any time in our past. Throughout the year we added new data center facilities, expanded analytic capabilities and moved most of our legacy processing to new software. The wisdom of prior years' investments in accounting and enterprise management software became more evident as recent legislation expanded the requirement for internal business controls. Artificial intelligence, scanning, rules engines, the internet, new processors and storage networks. Innovation. New services. New markets and new positions in our current markets. While these sound like the building blocks of CorVel's future, in lieu of internal development, all can be purchased. But in the end, people make the difference. The CorVel difference is that we have been together through all of this. And remain together as we define the best paths forward. The combination of our veterans and next generation of product developers has been critical to CorVel's expanding use of artificial intelligence. Automated processing is becoming a part of an ever increasing portion of CorVel applications. "Rules engines" have added consistency and sophistication to processing. Taking full and proper advantage of this power remained an unfinished project during the year. The performance of these tools has exceeded our expectations. There is still work to be done to have the power of our applications be appropriately appreciated by current and prospective customers. Also, as is often the case with evolving technology, future possibilities do not become sufficiently clear until after we reach the next plateau in development. We find that as we reach a higher level of technology and performance, we usually see subsequent opportunities. Our organization's longevity is the foundation for our ongoing progress. In challenging times we depend upon their commitment and determination. In the best of times we share their joys. Always, we are thrilled by their humanity and talents. The Company's long term success is the visible evidence of our team's collective accomplishments. Building an effective position within the complex world of healthcare financing and transaction processing requires both penetrating intellectual skills and a steady persistence.