SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION

TEMPORARY INVESTMENTS

ACCOUNTS AND NOTES RECEIVABLE

Accounts and notes receivable, net of allowances, by classification were:



In millions at December 31	2012		2011
Accounts and notes receivable:
Trade	$	3,316	$	3,039
Other	246		447
Total	$	3,562	$	3,486

INVENTORIES



In millions at December 31	2012		2011
Raw materials	$	360	$	368
Finished pulp, paper and packaging products	1,728		1,503
Operating supplies	588		390
Other	54		59
Inventories	$	2,730	$	2,320

The last-in, first-out inventory method is used to value most of International Paper’s U.S. inventories. Approximately 64% of total raw materials and finished products inventories were valued using this method. If the first-in, first-out method had been used, it would have increased total inventory balances by approximately $381 million and $350 million at December 31, 2012 and 2011, respectively.

PLANTS, PROPERTIES AND EQUIPMENT



In millions at December 31	2012		2011
Pulp, paper and packaging facilities
Mills	$	23,625	$	22,494
Packaging plants	7,184		6,358
Other plants, properties and equipment	2,074		1,556
Gross cost	32,883		30,408
Less: Accumulated depreciation	18,934		18,591
Plants, properties and equipment, net	$	13,949	$	11,817



In millions	2012		2011		2010
Depreciation expense	$	1,399	$	1,263	$	1,396

INTEREST

Cash payments related to interest were as follows:



In millions	2012		2011		2010
Interest payments	$	740	$	629	$	657

Amounts related to interest were as follows:



In millions	2012		2011		2010
Interest expense (a)	$	743	$	596	$	643
Interest income (a)	71		55		35
Capitalized interest costs	37		22		14


(a)	Interest expense and interest income exclude approximately $49 million, $49 million and $44 million in 2012, 2011 and 2010, respectively, related to investments in and borrowings from variable interest entities for which the Company has a legal right of offset (see Note 11).

SALE OF FORESTLANDS

On September 23, 2010, the Company finalized the sale of 163,000 acres of properties located in the southeastern United States to an affiliate of Rock Creek Capital (the Partnership) for $199 million, resulting in a $50 million pre-tax gain ($31 million after taxes), after expenses. Cash of $160 million was received at closing, with the balance of $39 million, plus interest, to be received no later than three years from closing. In addition, the Company has retained a 20% profit interest in the Partnership. The gain on this sale is included in Cost of products sold in the accompanying consolidated statement of operations.

In millions at December 31

Temporary Investments