Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Norfolk Southern Corp., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net income	3,005)	2,013)	2,722)	2,666)	5,404)
Depreciation	1,181)	1,154)	1,139)	1,104)	1,059)
Deferred income taxes	184)	142)	330)	173)	(2,859)
Gains and losses on properties	(86)	(39)	(42)	(171)	(92)
Loss on asset disposal	—)	385)	—)	—)	—)
Impairment of investment	—)	99)	—)	—)	—)
Accounts receivable	(133)	71)	87)	(70)	(41)
Materials and supplies	3)	23)	(37)	15)	35)
Other current assets	(6)	3)	(4)	(46)	(71)
Current liabilities other than debt	283)	34)	(185)	223)	135)
Changes in assets and liabilities affecting operations	147)	131)	(139)	122)	58)
Other, net	(176)	(248)	(118)	(168)	(317)
Reconciliation of net income to net cash provided by operating activities	1,250)	1,624)	1,170)	1,060)	(2,151)
Net cash provided by operating activities	4,255)	3,637)	3,892)	3,726)	3,253)
Property additions	(1,470)	(1,494)	(2,019)	(1,951)	(1,723)
Property sales and other transactions	159)	333)	377)	204)	202)
Investment purchases	(10)	(13)	(18)	(10)	(7)
Investment sales and other transactions	99)	(1)	(104)	99)	47)
Net cash used in investing activities	(1,222)	(1,175)	(1,764)	(1,658)	(1,481)
Dividends	(1,028)	(960)	(949)	(844)	(703)
Common Stock transactions	17)	69)	27)	40)	89)
Purchase and retirement of Common Stock	(3,390)	(1,439)	(2,099)	(2,781)	(1,012)
Proceeds from borrowings, net of issuance costs	1,676)	784)	2,192)	2,023)	290)
Debt repayments	(584)	(381)	(1,188)	(750)	(702)
Other	—)	—)	23)	—)	—)
Net cash used in financing activities	(3,309)	(1,927)	(1,994)	(2,312)	(2,038)
Net increase (decrease) in cash and cash equivalents	(276)	535)	134)	(244)	(266)
Cash and cash equivalents, at beginning of year	1,115)	580)	446)	690)	956)
Cash and cash equivalents, at end of year	839)	1,115)	580)	446)	690)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The financial trajectory between 2017 and 2021 reveals a company with robust operating cash generation that consistently exceeds net income, providing a substantial cushion for capital expenditures and shareholder distributions. While net income exhibited significant volatility, peaking in 2017 and reaching a trough in 2020, the net cash provided by operating activities maintained a general upward trend, growing from 3,253 million US$ to 4,255 million US$.

Operating Cash Flow Stability: A notable divergence is observed between net income and net cash from operations. Despite a dip in net income during 2020, operating cash flow remained resilient. This stability is supported by consistent depreciation charges, which rose steadily from 1,059 million US$ in 2017 to 1,181 million US$ in 2021, reflecting the capital-intensive nature of the business and providing a non-cash add-back that bolsters liquidity.
Capital Expenditure and Investment Trends: Investment activities are dominated by property additions, which peaked at 2,019 million US$ in 2019 before declining to 1,470 million US$ by 2021. The net cash used in investing activities remained consistently negative, typically ranging between 1.1 billion and 1.8 billion US$, indicating a sustained commitment to infrastructure maintenance and expansion, although the intensity of spending moderated in the final two years of the period.
Shareholder Return Strategy: A strong preference for returning capital to shareholders is evident through both dividends and share repurchases. Dividend payments increased every year, rising from 703 million US$ in 2017 to 1,028 million US$ in 2021. Concurrently, the purchase and retirement of common stock showed aggressive volatility, with significant outflows of 2,781 million US$ in 2018 and a peak of 3,390 million US$ in 2021, suggesting that stock buybacks are used as a primary tool for capital management.
Financing and Debt Management: Financing activities consistently resulted in net cash outflows, with the most significant deficit occurring in 2021 at 3,309 million US$. This was driven by the aforementioned stock repurchases. To fund these activities and operational needs, the company utilized fluctuations in debt, with substantial proceeds from borrowings in 2018 and 2019 exceeding 2 billion US$ annually, followed by varying levels of debt repayment.
Liquidity Position: The cash and cash equivalents balance fluctuated throughout the period, ending at 839 million US$ in 2021. The volatility in the ending cash balance is primarily a result of the timing of large-scale share repurchases and debt issuance, rather than a deficiency in operating cash generation.

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Norfolk Southern Corp. (NYSE:NSC)

Cash Flow Statement