are also exposed to the impact of foreign exchange fluctuations on our investments in wholly−owned foreign subsidiaries denominated in a currency other than the U.S. dollar, which could adversely impact the U.S. dollar value of these investments and therefore the value of future repatriated earnings. During fiscal 2008, we began to hedge certain net investment positions in Euro−functional currency foreign subsidiaries to mitigate the effects of foreign exchange fluctuations on net investments with the effect of preserving the value of future repatriated earnings. In accordance with the accounting standards for derivatives and hedging, the effective portion of the change in fair value of the forward contracts designated as net investment hedges is recorded in the cumulative translation adjustment component of accumulated other comprehensive income. Any ineffective portion, which was not material for any period presented, is immediately recognized in earnings as a component of other (income) expense, net. To minimize credit risk, we have structured these net investment hedges to be generally less than six months in duration. Upon maturity, the hedges are settled based on the current fair value of the forward contracts with the realized gain or loss remaining in OCI; concurrent with settlement, we enter into new forward contracts at the current market rate. The fair value of outstanding net investment hedges at May 31, 2010 and 2009 were $32 million in assets and $23 million in liabilities, respectively. Cash flows from net investment hedge settlements totaled $5 million and $191 million in the years ended May 31, 2010 and 2009, respectively.

Liquidity and Capital Resources

Cash Flow Activity

Cash provided by operations was $3.2 billion for fiscal 2010 compared to $1.7 billion for fiscal 2009. Our primary source of operating cash flow for fiscal 2010 was net income of $1.9 billion as well as positive cash flows from working capital. Our working capital provided a net positive cash flow of $0.7 billion for fiscal 2010 as compared to a net cash outflow of $0.4 billion for fiscal 2009. The increase in cash flows from working capital was primarily due to an increase in accounts payable and accrued liabilities, driven by timing of fourth quarter expenses, a decrease in accounts receivable as a result of a shorter collection cycle and slightly lower revenues, and a decrease in inventories, reflective of tighter inventory buys compared to fiscal 2009.

Cash used by investing activities was $1.3 billion during fiscal 2010, compared to $0.8 billion for fiscal 2009. The year−over−year increase was primarily due to net purchases of short−term investments of $0.9 billion (net of sales and maturities) in fiscal 2010 compared to $0.5 billion in net purchases of short−term investments during fiscal 2009. Also contributing to the year−over−year increase in cash used by investing activities in fiscal 2010 was a reduction in proceeds for the settlement of net investment hedges compared to the prior year period. These increases were partially offset by a reduction in cash used for purchases of property, plant and equipment.

Cash used by financing activities