Percentage of inventories valued using last-in, first-out inventory method

[Table of Contents](#i988dd6b5140d4a1b8c6b4c50f020743f_10)ACCOUNTS AND NOTES RECEIVABLE  
Accounts and notes receivable, net, by classification were: 

|  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |
| In millions at December 31 | 2021 | 2020 |
| Accounts and notes receivable: |  |  |
| Trade | $ | 3,027  |  | $ | 2,365  |  |
| Other | 205  |  | 267  |  |
| Total | $ | 3,232  |  | $ | 2,632  |  |

  
The allowance for expected credit losses was $34 million and $44 million at December 31, 2021 and 2020, respectively. Based on the Company's accounting estimates and the facts and circumstances available as of the reporting date, we believe our allowance for expected credit losses is adequate.   
INVENTORIES   


|  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |
| In millions at December 31 | 2021 | 2020 |
| Raw materials | $ | 245  |  | $ | 211  |  |
| Finished pulp and packaging products | 1,014  |  | 876  |  |
| Operating supplies | 486  |  | 501  |  |
| Other | 69  |  | 38  |  |
| Inventories | $ | 1,814  |  | $ | 1,626  |  |

  
The last-in, first-out inventory method is used to value most of International Paper’s U.S. inventories. Approximately 80% of total raw materials and finished products inventories were valued using this method. The last-in, first-out inventory reserve was $195 million and $183 million at December 31, 2021 and 2020, respectively.  
CURRENT INVESTMENTS  
As a result of the spin-off of Sylvamo Corporation, the Company retained 19.9% of the shares of Sylvamo. The intent is to monetize its investment and to provide additional proceeds to the Company. The Company is accounting for its ownership interest in Sylvamo at fair value as an investment in equity securities. As of December 31, 2021 the investment was valued at $245 million and is recorded in Current investments on the accompanying balance sheet.  
PLANTS, PROPERTIES AND EQUIPMENT 

|  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |
| In millions at December 31 | 2021 | 2020 |
| Pulp and packaging facilities | $ | 27,025  |  | $ | 26,706  |  |
| Other properties and equipment | 972  |  | 1,047  |  |
| Gross cost | 27,997  |  | 27,753  |  |
| Less: Accumulated depreciation | 17,556  |  | 16,808  |  |
| Plants, properties and equipment, net | $ | 10,441  |  | $ | 10,945  |  |

 Non-cash additions to plants, property and equipment included within accounts payable were $106 million, $41 million and $164 million at December 31, 2021, 2020 and 2019, respectively.    
Amounts invested in capital projects in the accompanying condensed consolidated statement of cash flows are presented net of insurance recoveries of $17 million and $42 million received during the years ended December 31, 2021 and 2020, respectively. There were no insurance recoveries received during the year ended December 31, 2019.   
Annual straight-line depreciable lives generally are, for buildings - 20 to 40 years, and for machinery and equipment - 3 to 20 years. Depreciation expense was $1.1 billion for each of the years ended December 31, 2021 and 2020 and $1.0 billion for the year ended December 31, 2019. Cost of products sold excludes depreciation and amortization expense.  
INTEREST  
Interest payments of $473 million, $682 million and $748 million were made during the years ended December 31, 2021, 2020 and 2019, respectively.  
Amounts related to interest were as follows: 

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
| In millions | 2021 | 2020 | 2019 |
| Interest expense | $ | 430  |  | $ | 597  |  | $ | 701  |  |
| Interest income  | 93  |  | 151  |  | 202  |  |
| Capitalized interest costs | 12  |  | 31  |  | 28  |  |

ASSET RETIREMENT OBLIGATIONS  
At December 31, 2021 and 2020, we had recorded liabilities of $107 million and $94 million, respectively, related to asset retirement obligations.  
[NOTE 10 LEASES](#i988dd6b5140d4a1b8c6b4c50f020743f_178)  
International Paper leases various real estate, including certain operating facilities, warehouses, office space and land. The Company also leases material handling equipment, vehicles, and certain other equipment. The Company's leases have remaining lease terms of up to 32 years.   
COMPONENTS OF LEASE EXPENSE  


|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
| In millions | 2021 | 2020 | 2019 |
| Operating lease costs, net | $ | 138  |  | $ | 132  |  | $ | 121  |  |
| Variable lease costs  | 40  |  | 43  |  | 51  |  |
| Short-term lease costs, net | 53  |  | 46  |  | 46  |  |
| Finance lease cost |  |  |  |
| Amortization of lease assets | 11  |  | 10  |  | 9  |  |
| Interest on lease liabilities | 3  |  | 3  |  | 3  |  |
| Total lease cost, net | $ | 245  |  | $ | 234  |  | $ | 230  |  |

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