CA is uniquely positioned by virtue of its experience and broad set of technologies to be the company that enables businesses to govern, manage and secure their IT environment — and align that environment to business priorities. Some of our competitors have competing priorities within their businesses. Others don't have the breadth of technology. CA stands apart for having the expertise and solutions to manage the complexity of heterogeneity that is pervasive in our customers' IT environments.

I joined CA about a year ago, and realized that my top priority would be to implement the basics in core processes — an area where the company needed the most improvement. Over the course of the year, I've focused on building a forecasting process off of the actuals, shortening the time to close the books and instituting a fully interlocked top-down and bottom-up budgeting process. I am encouraged by CA's progress, including the conclusion of the Deferred Prosecution Agreement and remediation of prior outstanding material weaknesses.

Prior to 2004, the company was thought of as a serial acquirer of mainframe technologies, with acquisitions viewed primarily as financial transactions. Upon John's arrival, the company reviewed its strategic focus and developed its Enterprise IT Management (EITM) focus. Our acquisitions during the last several years have been made to fill out the gaps in our technology portfolio and support our EITM vision, and have included acquisitions of key technologies such as Netegrity, Concord, NIKU, and Wily. CA has learned from each subsequent acquisition how to best integrate acquired assets. We seek to achieve the right balance between maintaining the entrepreneurial spirit of acquired companies — while doing together what neither company could have done alone — and allowing them to leverage the benefits of a large sales force.

Our capital allocation policy is as follows: First, we want to ensure we have adequately funded the internal business to realize the EITM opportunity. Second, we want to make select acquisitions that fill in our EITM vision. We believe this build-versus-buy consideration is required to maintain a competitive product portfolio. After this, we will periodically review our remaining options of paying down debt, paying out dividends and buying back shares. As reflected in our FY08 guidance, our recent decision to continue the repurchase program reflects our most recent assessment.

CA has many opportunities to rationalize its cost structure. Some of these opportunities are a result of redundancies associated with acquisitions. As CA continues to implement process improvements and looks for ways to do everything better, our cost structure should continue to improve. In FY07, our operating margin improved 1 point to 20 percent from the prior year on a non-GAAP basis and by the same amount on a GAAP basis.

I point investors to our guidance metrics — revenue, earnings per share and cash flow. As CA seeks to increase market share from its current 10 percent share of its addressable markets, we can grow revenue in two ways, (1) by selling new products and solutions and, (2) increasing the pricing yield of renewals on CA's existing book of business. Next, CA continues to explore ways to optimize its cost structure. Competitive benchmarking analysis has led the company to implement restructuring and other cost-savings initiatives that we expect will flow down to earnings per share. Lastly, cash flow from operations stands to benefit from the combination of improved revenue and expenses.