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.

Northrop Grumman Corp., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net earnings	4,896)	7,005)	3,189)	2,248)	3,229)
Depreciation and amortization	1,342)	1,239)	1,267)	1,265)	800)
Mark-to-market pension and OPB (benefit) expense	(1,232)	(2,355)	1,034)	1,800)	655)
Stock-based compensation	99)	94)	90)	127)	86)
Deferred income taxes	(321)	603)	210)	(509)	234)
Gain on sale of business	—)	(1,980)	—)	—)	—)
Net periodic pension and OPB income	(1,193)	(1,091)	(802)	(432)	—)
Pension and OPB contributions	(136)	(141)	(887)	(263)	—)
Accounts receivable, net	(44)	(10)	(285)	122)	202)
Unbilled receivables, net	(646)	(414)	160)	(335)	(297)
Inventoried costs, net	(205)	(52)	18)	(135)	(37)
Prepaid expenses and other assets	2)	66)	(147)	(78)	(56)
Accounts payable and other liabilities	572)	376)	719)	617)	381)
Income taxes payable, net	(279)	215)	(238)	(63)	(258)
Retiree benefits	—)	—)	—)	—)	(1,083)
Changes in assets and liabilities	(600)	181)	227)	128)	(1,148)
Other, net	46)	12)	(23)	(67)	(29)
Adjustments to reconcile to net cash provided by operating activities	(1,995)	(3,438)	1,116)	2,049)	598)
Net cash provided by operating activities	2,901)	3,567)	4,305)	4,297)	3,827)
Divestiture of IT services business	—)	3,400)	—)	—)	—)
Acquisition of Orbital ATK, net of cash acquired	—)	—)	—)	—)	(7,657)
Capital expenditures	(1,435)	(1,415)	(1,420)	(1,264)	(1,249)
Proceeds from sale of equipment to a customer	155)	84)	205)	—)	—)
Other, net	39)	(11)	4)	57)	28)
Net cash (used in) provided by investing activities	(1,241)	2,058)	(1,211)	(1,207)	(8,878)
Net proceeds from issuance of long-term debt	—)	—)	2,239)	—)	—)
Payments of long-term debt	—)	(2,236)	(1,027)	(500)	(2,276)
Payments to credit facilities	—)	—)	(78)	(31)	(320)
Net borrowings on (repayments of) commercial paper	—)	—)	—)	(198)	198)
Common stock repurchases	(1,504)	(3,705)	(490)	(744)	(1,263)
Cash dividends paid	(1,052)	(983)	(953)	(880)	(821)
Payments of employee taxes withheld from share-based awards	(50)	(34)	(66)	(65)	(85)
Other, net	(7)	(44)	(57)	(6)	(28)
Net cash provided by (used in) financing activities	(2,613)	(7,002)	(432)	(2,424)	(4,595)
Increase (decrease) in cash and cash equivalents	(953)	(1,377)	2,662)	666)	(9,646)
Cash and cash equivalents, beginning of year	3,530)	4,907)	2,245)	1,579)	11,225)
Cash and cash equivalents, end of year	2,577)	3,530)	4,907)	2,245)	1,579)

Based on: 10-K (reporting date: 2022-12-31), 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).

Net earnings: Net earnings showed fluctuations over the five-year period, declining notably in 2019 compared to 2018, followed by a recovery in 2020 and a peak in 2021. However, there was a decrease again in 2022, indicating variability in profitability.
Depreciation and amortization: Depreciation and amortization expenses generally increased from 2018 to 2022, implying a growing investment in fixed assets or intangible assets being amortized over these years.
Mark-to-market pension and OPB (benefit) expense: This expense rose substantially through 2019, then showed a reduction in 2020, and turned into benefits in 2021 and 2022. This pattern indicates significant pension-related accounting adjustments influencing reported earnings and expenses in later years.
Stock-based compensation: Stock-based compensation remained relatively stable with a slight upward trend across the years, reflecting moderate increases in equity-based employee incentives.
Deferred income taxes: Deferred income taxes fluctuated, with negative values in 2019 and 2022 suggesting tax asset realizations or changes that decreased tax liabilities. Positive values in other years reflect increases in deferred tax liabilities.
Gain on sale of business: A significant gain was recorded in 2021 from the sale of a business, which negatively impacted that year's operating adjustments but provided a one-time cash inflow related to divestitures.
Net periodic pension and OPB income: Net periodic pension and OPB income consistently showed negative values where data was available, indicating ongoing pension expense recognition affecting profitability.
Pension and OPB contributions: Contributions to pension and other postretirement benefits varied over the years, with a notable peak in 2020 and lower contributions in subsequent years, highlighting changes in funding practices.
Changes in working capital items (accounts receivable, unbilled receivables, inventoried costs, prepaid expenses, accounts payable, income taxes payable): Working capital changes displayed variability and irregular movements year over year. Accounts receivable reversed from positive to negative, unbilled receivables fluctuated without a clear trend, and accounts payable showed increases with temporary declines. The patterns indicate variable cash flow impacts from operating cycles.
Adjustments to reconcile to net cash provided by operating activities: These adjustments peaked in 2019 but changed to significant negative values in 2021 and 2022, reflecting large non-cash charges and gains impacting cash flow reconciliation in those years.
Net cash provided by operating activities: Operating cash flow remained positive throughout the period, peaking in 2019 and 2020, before declining in 2021 and 2022, which may point to lower cash generation from operating efficiencies or working capital changes.
Investing activities: Investing cash flows were significantly negative in earlier years, linked to acquisitions and capital expenditures, with a notable positive inflow in 2021 related to a major divestiture transaction. However, 2022 again showed net outflows, mainly from capital expenditures and other investing activities.
Capital expenditures: Capital expenditures were consistently high and relatively stable across all years, indicating ongoing investment in property, plant, and equipment.
Financing activities: Financing cash flows were predominantly negative, with significant repayments of debt in several years. Notable issuance of long-term debt occurred in 2020. Stock repurchases peaked sharply in 2021, reflecting aggressive capital return strategies prior to a decline in 2022. Dividend payments steadily increased, suggesting steadily growing shareholder returns.
Change in cash and cash equivalents: Cash balances saw large fluctuations, with a steep decline in 2018, increases in 2019 and 2020, followed by decreases in 2021 and 2022. This behavior reflects the combined impact of operating, investing, and financing activities driving cash reserves.

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Northrop Grumman Corp. (NYSE:NOC)

Cash Flow Statement