Depreciation represents an expense that is non-cash in nature. Depreciation is recognized on the operating statement. Since it does not result in a cash flow, but merely reflects the "wear and tear" on an asset, depreciation is shown as a reconciling item in the statement of cash flows.
Since depreciation decreases operating income, but does not result in a cash outflow, it is added back to operating income to reconcile net cash provided from operating activities.
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