HP 2009 Annual Report Download - page 74

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
competitive pricing pressure. The loss from operations in Corporate Investments was also impacted by
expenses carried in the segment associated with corporate development, global alliances and HP Labs,
which declined from fiscal 2008.
In fiscal 2008, the majority of the net revenue in Corporate Investments related to network
infrastructure products sold under the brand ‘‘ProCurve Networking,’’ which grew 26.2% from fiscal
2007 as the result of continued increased sales of enterprise class gigabit and 10 gigabit Ethernet switch
products. Fiscal 2008 network infrastructure revenue included a small amount of revenue from
Colubris.
Corporate Investments reported earnings from operations in fiscal 2008 as compared to losses in
fiscal 2007 due primarily to increased earnings from operations generated by network infrastructure
products, and operating expenses related to HP Labs was flat as compared to fiscal 2007.
LIQUIDITY AND CAPITAL RESOURCES
Our cash balances are held in numerous locations throughout the world, including substantial
amounts held outside of the United States. Most of the amounts held outside of the United States
could be repatriated to the United States but, under current law, would be subject to United States
federal income taxes, less applicable foreign tax credits. Repatriation of some foreign balances is
restricted by local laws. We have provided for the United States federal tax liability on these amounts
for financial statement purposes, except for foreign earnings that are considered indefinitely reinvested
outside of the United States. Repatriation could result in additional United States federal income tax
payments in future years. Where local restrictions prevent an efficient intercompany transfer of funds,
our intent is that cash balances would remain outside of the United States and we would meet United
States liquidity needs through ongoing cash flows, external borrowings, or both. We utilize a variety of
tax planning and financing strategies in an effort to ensure that our worldwide cash is available in the
locations in which it is needed.
The information discussed below is presented based on our historical results, which include the
results of EDS for the period following the August 26, 2008 closing date of the acquisition.
LIQUIDITY
We use cash generated by operations as our primary source of liquidity; we believe that internally
generated cash flows are generally sufficient to support business operations, capital expenditures and
the payment of stockholder dividends, in addition to a level of discretionary investments and share
repurchases. We are able to supplement this near-term liquidity, if necessary, with broad access to
capital markets and credit line facilities made available by various foreign and domestic financial
67