Form 6-K Norbord Inc. For: Oct 03

November 5, 2020 7:18 AM EST

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2020
Commission file number: 001-37694
NORBORD INC.
(Exact name of registrant as specified in its charter)


1 Toronto Street, Suite 600
Toronto, Ontario, Canada, M5C 2W4
(416) 365-0705
(Address and Telephone Number of Registrant’s Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F  ☐            Form 40-F  ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐
The information contained in Exhibits 99.2 and 99.3 of this Form 6-K is incorporated by reference into the registrant’s following registration statements on Form F-10: File No. 333-230459, Form F-3: File No. 333-220258 and Form S-8: File Nos. 333-213179 and 333-211895.





EXHIBIT INDEX
The following documents, which are attached as exhibits hereto, are incorporated by reference herein:
Exhibit
Description
99.1Press Release, dated November 5, 2020
99.2Unaudited Condensed Interim Consolidated Financial Statements
99.3
Management’s Discussion and Analysis
99.4Form 52 - 109F2 - Certification of Interim Filings – CEO
99.5Form 52 - 109F2 - Certification of Interim Filings – CFO






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 5, 2020
NORBORD INC.
By:
/s/ Tracy Connelly McGilley
Name: Tracy Connelly McGilley
Title: Corporate Secretary


Exhibit 99.1
                                            norborda061.jpg



News Release
NORBORD REPORTS RECORD RESULTS IN THIRD QUARTER 2020; DECLARES C $0.60 PER SHARE QUARTERLY DIVIDEND

Note: Financial references in US dollars unless otherwise indicated.

Q3 2020 HIGHLIGHTS
Adjusted EBITDA of $322 million and Adjusted earnings of $2.52 per diluted share
Liquidity of $654 million at quarter-end
Declared quarterly variable dividend of C $0.60 per share for shareholders of record on December 1, 2020
100 Mile House, British Columbia mill to close permanently

TORONTO, ON (November 5, 2020) – Norbord Inc. (TSX and NYSE: OSB) today reported Adjusted EBITDA of $322 million for the third quarter of 2020 compared to $84 million in the second quarter of 2020 and $33 million in the third quarter of 2019. The increases versus all comparative periods were primarily driven by significantly higher realized North American oriented strand board (OSB) prices partially offset by higher North American profit share attributed to higher earnings. North American operations generated Adjusted EBITDA of $310 million compared to $84 million in the second quarter of 2020 and $24 million in the third quarter of 2019, and European operations delivered Adjusted EBITDA of $16 million compared to $2 million in the prior quarter and $11 million in the same quarter last year.

“The third quarter of 2020 was Norbord’s strongest quarter ever,” said Peter Wijnbergen, Norbord’s President & CEO. “The recovery in economic activity that unfolded in the latter stages of Q2 carried into Q3, driving strong new housing construction and repair-and-remodelling demand that helped lift North American benchmark OSB prices to all-time highs. Our European results also benefitted from higher quarter-over-quarter panel prices and continued recovery of UK panel demand that had been significantly impacted by the pandemic in the second quarter. Adjusted EBITDA increased nearly tenfold from year-ago levels and was 18% above Norbord’s previous best quarterly result in the second quarter of 2018. I remain particularly pleased with our team’s ability to remain focused on working safely within the strict protocols required by the pandemic while at the same time containing manufacturing costs.”

“Customer demand has been significantly stronger than expected during this unusual period of economic uncertainty. We are optimistic, but we also recognize that our business is cyclical and that it is not yet clear whether the worst of the pandemic is behind us. Today we announce the permanent closure of the 100 Mile House mill in British Columbia, which will reduce Norbord’s North American stated capacity, as the ongoing wood supply shortage in that region makes the reopening of that mill uneconomic. As always, we will remain vigilant, focused on the health and safety of our employees as well as our customers’ needs, and we will manage the business to be resilient and flexible.”

Norbord recorded Adjusted earnings of $204 million or $2.52 per share (basic and diluted) versus Adjusted earnings of $31 million or $0.38 per share (basic and diluted) in the second quarter of 2020 and an Adjusted loss of $9 million or $0.11 per share (basic and diluted) in the third quarter of 2019. Earnings in the current quarter include $10 million of costs related to closure of the 100 Mile House, British Columbia mill. Adjusted earnings (loss) exclude non-recurring or other items and use a normalized income tax rate:


1

Exhibit 99.1
                                            norborda061.jpg


$ millions
Q3 2020
Q2 2020
Q3 2019
9 mos 20209 mos 2019
Earnings (loss)203 18 (17)241 (30)
Adjusted for:
Costs related to 100 Mile House closure10 — — 10 — 
Impairment of assets
 16 10 16 10 
Loss on disposal of assets
 — 3 
Stock-based compensation and related costs
2 — 4 
Costs on early extinguishment of 2020 Notes
 — —  
Costs related to 100 Mile House indefinite curtailment
 — —  10 
Reported income tax expense (recovery)
61 (6)72 (21)
Adjusted pre-tax earnings (loss)276 42 (13)346 (26)
Income tax (expense) recovery at statutory rate(1)
(72)(11)(90)
Adjusted earnings (loss)(2)
204 31 (9)256 (19)
(1) Represents Canadian combined federal and provincial statutory rate.
(2) Non-IFRS measure.

Market Conditions
In North America, US new home construction activity, the single largest driver of OSB demand, has recovered from the economic impact of COVID-19 seen early in the second quarter. The September seasonally adjusted annualized rate of US housing starts was 1.42 million, which is an 11% year-over-year improvement. The pace of single-family starts, which use approximately three times more OSB than multi-family starts, improved 22% to 1.11 million. The pace of permits (the more forward-looking indicator) was 1.55 million in September, an increase of 8% versus the same period in 2019. The 2020 consensus forecast from US housing economists is approximately 1.36 million starts, 5% higher than 2019 despite the pullback to a seasonally-adjusted pace of 0.93 million in April. Throughout the ongoing pandemic, demand from the repair-and-remodelling sector has continued at record pace.

Reflecting the stronger than expected recovery in North American OSB demand, North American benchmark OSB prices increased significantly as the quarter progressed. Average benchmark prices were higher than all comparative periods and were, for most of the quarter, at record highs. The table below summarizes average benchmark OSB prices by region for the relevant quarters:

North American region% of Norbord’s operating capacityQ3 2020Q2 2020Q3 2019
North Central15%578270217
South East36%572262168
Western Canada29%579224164

In Europe, UK panel demand continued to recover from the COVID 19-related pullback in April and May. Continental demand, which was not impacted by the pandemic, particularly in Germany, remained steady throughout the quarter. In local currency terms, average panel prices were up 6% quarter-over-quarter and down 9% year-over-year.

Performance

In North America, third quarter shipments were up 9% quarter-over-quarter but declined 8% year-over-year. Excluding the Chambord, Quebec mill, Norbord’s North American mills produced at 86% of available capacity in the third quarter of 2020 compared to 74% in the second quarter and 92% in the third quarter of 2019.
2

Exhibit 99.1
                                            norborda061.jpg


Norbord’s third quarter North American OSB cash production costs per unit (excluding mill profit share and freight costs) increased by 4% compared to the prior quarter and were unchanged compared to the same quarter last year.

In Europe, third quarter shipments were up 23% quarter-over quarter, reflecting a strong recovery after the significant curtailments across the Company’s UK mills in the second quarter in response to reduced customer demand due to government-imposed pandemic restrictions. Year-over-year, shipments were up 12%, reflecting the continued ramp-up of the Inverness, Scotland mill. Norbord’s European mills produced at 97% of stated capacity in the third quarter of 2020, compared to 70% in the second quarter and 84% in the third quarter of 2019.

The Company generated net Margin Improvement Program (MIP) gains of $43 million year-to-date due to improved mill productivity and lower controllable manufacturing and overhead costs.

Investment in property, plant and equipment and intangible assets was $28 million in the third quarter ($67 million year-to-date), including $5 million ($44 million project-to-date) in the Inverness Phase 2 project and $1 million ($54 million project-to-date of the $71 million budget) in the Chambord mill rebuild project. At Inverness, the installation of the second wood room, heat energy and drying line is now complete and commissioning is well advanced, and the state-of-the-art continuous press is continuing to ramp up towards its targeted Phase 2 capacity of 945 million square feet (MMsf) (3/8-inch basis).

As part of Norbord's initial COVID-19 Response Plan, Norbord’s budgeted 2020 investment in property, plant and equipment had been reduced from $100 million to $75 million. Based on the strong third quarter results and in line with Norbord’s capital allocation priorities, 2020 investment in property, plant and equipment is now forecast to return to its original budget of $100 million. Looking ahead to next year, while the Company is still in the process of finalizing its capital plans, 2021 capital expenditures are targeted at approximately $150 million. This will include maintenance of business projects, projects focused on reducing manufacturing costs and enhancing process safety across the mills. It also includes further investments to support the Company's strategy to increase the production of specialty products for industrial applications and exports, as well as a portion of the Chambord mill rebuild. The Company has not yet made a restart decision for the Chambord mill, and will only do so when it is sufficiently clear that customers require the production from this mill.

At quarter-end, the Company had unutilized liquidity of $654 million, comprising $240 million in cash and cash equivalents and $414 million in unused credit lines. Operating working capital was $191 million compared to $139 million at the same quarter-end last year, owing primarily to higher accounts receivable, which were attributed to significantly higher North American OSB prices. The Company’s tangible net worth was $1,183 million and net debt to capitalization on a book basis was 27%, with both values well within bank covenants.

Operational Update

Well Positioned to Respond to Changing Conditions

During the third quarter, North American demand for OSB remained extremely strong, resulting in significantly higher benchmark OSB prices. The key indicators for the US housing market, including strong new home sales, housing permits and single family starts, minimal new home inventories, and low mortgage rates, provide a positive outlook for OSB demand. Similarly, repair-and-remodelling demand has been robust and demand from industrial customers has normalized following pandemic-imposed restrictions. Excluding the curtailed 100 Mile House and Chambord mills, Norbord’s operating North American mills ran as close as possible to full operating rates in the third quarter, producing at 92% of capacity. In August, the Company restarted Cordele Line 1 on a limited operating schedule to meet customer orders that Norbord would not have otherwise been able to satisfy. Notwithstanding these positive trends, there remains considerable uncertainty in the broader economic environment as a predicted second wave of the COVID-19 global pandemic appears to be underway. As the
3

Exhibit 99.1
                                            norborda061.jpg


typical seasonally slower period for OSB demand approaches, it is not yet clear what impact this seasonality and the pandemic will have on the Company’s core markets. Should conditions change, Norbord is well positioned to respond.

100 Mile House Permanent Closure

Earlier this year and in reaction to the pandemic, Norbord recognized the need to implement a more flexible operating strategy across its manufacturing platform. The objective was to be more agile in responding to changing market conditions and customer requirements while containing manufacturing costs through more efficient maintenance planning and execution. This strategy has proven to have significant merit and has been adopted as the Company’s standard operating approach. At the same time, it became clear that the 100 Mile House OSB mill was unlikely to have a role to play in the future. As the Company’s highest cost operation, this mill had been indefinitely curtailed since August 2019 in response to a wood supply shortage and rising fibre costs. The Cariboo region in which the mill is located has been under wood supply pressure for the past decade as a result of the mountain pine beetle epidemic and more recently significant wildfires, leading to a 50% reduction in the region’s annual allowable harvest. Taken together, the current and expected ongoing wood supply shortage makes operation of the mill uneconomic and Norbord has decided to permanently close 100 Mile House.

Dividend

The Board of Directors declared a quarterly variable dividend of C $0.60 per common share, payable on December 21, 2020 to shareholders of record on December 1, 2020. Consistent with Norbord’s variable dividend policy and historically balanced approach to capital allocation, the dividend is being increased from the prior quarter’s level of C $0.30 per common share to reflect the Company’s record financial results and improving end-market demand. At the same time, the Company continues to focus on balance sheet flexibility given the economic uncertainty from the ongoing COVID-19 pandemic, the US election and the upcoming Brexit deadline. Any dividends reinvested on December 22, 2020 under the Company’s Dividend Reinvestment Plan will be used by the transfer agent to purchase common shares on the open market.

Norbord’s dividends are declared in Canadian dollars; however, shareholders may opt to receive their dividends in the US dollar equivalent. Details regarding this option are available on Norbord’s website at https://www.norbord.com/investors/shareholder-information/dividends.

Norbord’s variable dividend policy targets the payment to shareholders of a portion of free cash flow
based upon the Company’s financial position, results of operations, cash flow, capital requirements and restrictions under the Company’s revolving bank lines, as well as the market outlook for the Company’s principal products and broader market and economic conditions, among other factors. The Board retains the discretion to amend the Company’s dividend policy in any manner and at any time as it may deem necessary or appropriate in the future. For these reasons, as well as others, the Board in its sole discretion can decide to increase, maintain, decrease, suspend or discontinue the payment of cash dividends in the future.

Normal Course Issuer Bid

Under its Normal Course Issuer Bid (NCIB) that commenced on November 5, 2019 and expired November 4, 2020, Norbord repurchased $6 million worth of shares during the third quarter and acquired 1.4 million common shares under the bid in the past 12 months at a weighted average price of C$33.17 per common share, representing a total cost of $33 million. Norbord has not renewed the NCIB since it expired on November 4, 2020.


4

Exhibit 99.1
                                            norborda061.jpg


Additional Information

Norbord’s Q3 2020 news release, management’s discussion and analysis, consolidated unaudited financial statements and notes to the financial statements have been filed on SEDAR (www.sedar.com), EDGAR (www.sec.gov) and are available in the investor section of the Company’s website at www.norbord.com. Shareholders may receive a hard copy of Norbord’s audited annual financial statements free of charge upon request. The Company has also made available on its website presentation materials containing certain historical and forward-looking information relating to Norbord, including materials that contain additional information about the Company’s financial results. Shareholders are encouraged to read this material.

Conference Call

Norbord will hold a conference call for analysts and institutional investors on Thursday, November 5, 2020 at 11:00 a.m. ET. The call will be broadcast live over the internet via www.norbord.com and www.newswire.ca. An accompanying presentation will be available in the “Investors/Conference Call” section of the Norbord website prior to the start of the call. A replay number will be available approximately one hour after completion of the call and will be accessible until December 5, 2020 by dialing 1-888-203-1112 or 647-436-0148 (passcode 1415831 and pin 2870). Audio playback and a written transcript will be available on the Norbord website.

Norbord Profile

Norbord Inc. is a leading global manufacturer of wood-based panels and the world’s largest producer of oriented strand board (OSB). In addition to OSB, Norbord manufactures particleboard, medium density fibreboard and related value-added products. Norbord has assets of approximately $2.1 billion and employs approximately 2,400 people at 17 plant locations in the United States, Canada and Europe. Norbord is a publicly traded company listed on the Toronto Stock Exchange and New York Stock Exchange under the symbol “OSB”.


-end-

Contact:
Robert B. Winslow, CFA
Vice President, Investor Relations & Corporate Development
Tel. (416) 777-4426
investors@norbord.com

or
Heather Colpitts
Director, Corporate Affairs
Tel. (416) 643-8838
investors@norbord.com

This news release contains forward-looking statements, as defined by applicable securities legislation, including statements related to the Company’s strategy, projects, plans, future financial or operating performance and other statements that express management’s expectations or estimates of future performance. Often, but not always, forward-looking statements can be identified by the use of words such as “set up,” “on track,” “expect,” “estimate,” “forecast,” “target,” “outlook,” “schedule,” “represent,” “continue,” “intend,” “should,” “would,” “could,” “will,” “can,” “might,” “may,” and other expressions which are predictions of or indicate future events, trends or prospects and which do not relate to historical matters identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Norbord to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Although Norbord believes it has a reasonable basis for making these forward-looking statements, readers are cautioned not to place undue reliance on such forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both
5

Exhibit 99.1
                                            norborda061.jpg


general and specific, which contribute to the possibility that the predictions, forecasts and other forward-looking statements will not occur. These factors include, but are not limited to: (1) developments related to COVID-19 or any other plague, epidemic, pandemic, outbreak of infectious disease or any other public health crisis, including health and safety measures instituted to protect the Company’s employees, government-imposed restrictions or other restrictions that may apply to the Company’s employees and/or operations (including quarantine), the impact on customer demand, supply and distribution and other factors; (2) assumptions in connection with the economic and financial conditions in the US, Europe, Canada and globally; (3) risks inherent to product concentration and cyclicality; (4) effects of competition and product pricing pressures; (5) risks inherent to customer dependence; (6) effects of variations in the price and availability of manufacturing inputs, including continued access to fibre resources at competitive prices and the impact of third-party certification standards; (7) availability of transportation services, including truck and rail services, and port facilities; (8) various events that could disrupt operations, including natural, man-made or catastrophic events and ongoing relations with employees; (9) impact of changes to, or non-compliance with, environmental or other regulations; (10) government restrictions, standards or regulations intended to reduce greenhouse gas emissions; (11) impact of weather and climate change on Norbord’s operations or the operations or demand of its suppliers and customers; (12) impact of any product liability claims in excess of insurance coverage; (13) risks inherent to a capital intensive industry; (14) impact of future outcomes of tax exposures; (15) potential future changes in tax laws, including tax rates; (16) effects of currency exposures and exchange rate fluctuations; (17) future operating costs; (18) availability of financing, bank lines, securitization programs and/or other means of liquidity; (19) impact of future cross-border trade rulings or agreements; (20) implementation of important strategic initiatives and identification, completion and integration of acquisitions; (21) ability to implement new or upgraded information technology infrastructure; (22) impact of information technology service disruptions or failures; and (23) changes in government policy and regulation.

The above list of important factors affecting forward-looking information is not exhaustive. Additional factors are noted elsewhere, and reference should be made to the other risks discussed in filings with Canadian and US securities regulatory authorities. Except as required by applicable law, Norbord does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by, or on behalf of, the Company, whether as a result of new information, future events or otherwise, or to publicly update or revise the above list of factors affecting this information. See the “Forward-Looking Statements” section in the February 4, 2020 Annual Information Form and the cautionary statement contained in the “Forward-Looking Statements” section of the 2019 Management’s Discussion and Analysis dated February 4, 2020 and Q3 2020 Management’s Discussion and Analysis dated November 4, 2020.

In evaluating the Company’s business, management uses non-International Financial Reporting Standards (IFRS) financial measures which, in management’s view, are important supplemental measures of the Company’s performance and believes that they are frequently used by investors, securities analysts and other interested persons in the evaluation of Norbord and other similar companies. In this news release, the following non-IFRS financial measures have been used: Adjusted EBITDA, Adjusted earnings (loss), Adjusted earnings (loss) per share, operating working capital, tangible net worth, and net debt to capitalization, book basis. Norbord defines Adjusted EBITDA as earnings (loss) determined in accordance with IFRS before finance costs, interest income, income taxes, depreciation, amortization and non-recurring or other items; Adjusted earnings (loss) as earnings (loss) determined in accordance with IFRS before non-recurring or other items and using a normalized income tax rate; Adjusted earnings (loss) per share is Adjusted earnings (loss) divided by the weighted average number of common shares outstanding (on a basic or diluted basis, as specified); operating working capital as accounts receivable plus inventory and prepaids less accounts payable and accrued liabilities; tangible net worth as shareholders’ equity including certain adjustments; net debt to capitalization, book basis as net debt for financial covenant purposes divided by the sum of net debt for financial covenant purposes and tangible net worth; net debt for financial covenant purposes as net debt excluding other long-term debt and including other liabilities classified as debt for financial covenant purposes, letters of credit and guarantees outstanding, and any bank advances; and net debt as the principal value of long-term debt, including the current portion, other long-term debt and bank advances, if any, less cash and cash equivalents. Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies that may have different financing and capital structures, and/or tax rates. See “Non-IFRS Financial Measures” in Norbord’s 2019 Management’s Discussion and Analysis dated February 4, 2020 and Q3 2020 Management’s Discussion and Analysis dated November 4, 2020 for a quantitative reconciliation of these non-IFRS financial measures to the most directly comparable IFRS measure.
6

Exhibit 99.1

Interim Consolidated Balance Sheets
 
(Unaudited)
(US $ millions)
Oct 3, 2020Dec 31, 2019
Assets
Current assets
Cash and cash equivalents$240 $20 
Accounts receivable246 136 
Taxes receivable6 63 
Inventory216 230 
Prepaids10 13 
718 462 
Non-current assets
Property, plant and equipment1,366 1,427 
Intangible assets19 21 
Deferred income tax assets1 
Other assets8 
 1,394 1,459 
 $2,112 $1,921 
Liabilities and shareholders’ equity
Current liabilities
Accounts payable and accrued liabilities$281 $259 
Taxes payable49 
330 260 
Non-current liabilities
Long-term debt658 657 
Other long-term debt 68 
Other liabilities41 40 
Deferred income tax liabilities202 192 
 901 957 
Shareholders’ equity881 704 
 $2,112 $1,921 
7

Exhibit 99.1

Interim Consolidated Statements of Earnings (Loss)
 
(Unaudited)
Periods ended Oct 3 and Oct 5 (US $ millions, except per share information)
Q3 2020Q3 20199 mos 20209 mos 2019
Sales$725 $435 $1,613 $1,358 
Cost of sales(399)(400)(1,123)(1,240)
General and administrative expenses(6)(2)(13)(9)
Depreciation and amortization(36)(35)(103)(104)
Loss on disposal of assets — (3)(1)
Impairment of assets
 (10)(16)(10)
Costs related to 100 Mile House closure(10)— (10)— 
Costs related to 100 Mile House indefinite curtailment
 —  (2)
Operating income (loss)274 (12)345 (8)
Non-operating items:
Finance costs(10)(11)(32)(34)
Interest income —  
Costs on early extinguishment of 2020 Notes —  (10)
Earnings (loss) before income tax264 (23)313 (51)
Income tax (expense) recovery(61)(72)21 
Earnings (loss)$203 $(17)$241 $(30)
Earnings (loss) per common share
Basic and diluted$2.51 $(0.21)$2.98 $(0.37)

Interim Consolidated Statements of Comprehensive Income (Loss)
 
(Unaudited)
Periods ended Oct 3 and Oct 5 (US $ millions)
Q3 2020Q3 20199 mos 20209 mos 2019
Earnings (loss)$203 $(17)$241 $(30)
Other comprehensive income (loss), net of tax
Items that will not be reclassified to earnings (loss):
Actuarial loss on post-employment obligations — (1)(5)
Items that may be reclassified subsequently to earnings (loss):
Foreign currency translation gain (loss) on foreign operations13 (7)(6)(13)
Other comprehensive income (loss), net of tax13 (7)(7)(18)
Comprehensive income (loss)$216 $(24)$234 $(48)

8

Exhibit 99.1

Interim Consolidated Statements of
Changes in Shareholders’ Equity
 
(Unaudited)
Periods ended Oct 3 and Oct 5 (US $ millions)
Q3 2020Q3 20199 mos 20209 mos 2019
Share capital
Balance, beginning of period$1,264 $1,280 $1,278 $1,280 
Issue of common shares upon exercise of options4 — 5 — 
Common shares repurchased and cancelled(3)— (18)(24)
Reverse accrual for common shares repurchased and cancelled under ASPP —  24 
Balance, end of period$1,265 $1,280 $1,265 $1,280 
Merger reserve$(96)$(96)$(96)$(96)
Contributed surplus
Balance, beginning of period$4 $$4 $
Stock based compensation1 — 1 — 
Stock options exercised(1)— (1)— 
Balance, end of period$4 $$4 $
Retained deficit
Balance, beginning of period$(283)$(231)$(299)$(168)
Earnings (loss)203 (17)241 (30)
Common share dividends(19)(24)(34)(73)
Common shares repurchased and cancelled(3)— (10)(19)
Reverse accrual for common shares repurchased and cancelled under ASPP —  18 
Balance, end of period(i)
$(102)$(272)$(102)$(272)
Accumulated other comprehensive loss
Balance, beginning of period$(203)$(208)$(183)$(197)
Other comprehensive income (loss)13 (7)(7)(18)
Balance, end of period$(190)$(215)$(190)$(215)
Shareholders’ equity$881 $701 $881 $701 



 

(i) Retained deficit comprised of:
Deficit arising on cashless exercise of warrants in 2013$(263)$(263)
All other retained earnings (deficit)161 (9)
$(102)$(272)
9

Exhibit 99.1

Interim Consolidated Statements of Cash Flows
 
(Unaudited)
Periods ended Oct 3 and Oct 5 (US $ millions)
Q3 2020Q3 20199 mos 20209 mos 2019
CASH PROVIDED BY (USED FOR):
Operating activities
Earnings (loss)$203 $(17)$241 $(30)
Items not affecting cash:
Depreciation and amortization36 35 103 104 
Deferred income tax6 (13)13 19 
Impairment of assets
 10 16 10 
Costs related to 100 Mile House closure10 — 10 — 
Costs related to 100 Mile House indefinite curtailment
 (1) 
Costs on early extinguishment of 2020 Notes —  10 
Loss on disposal of assets, net — 3 
Other items 8 16 
255 23 394 131 
Net change in non-cash operating working capital balances(46)13 (69)(59)
Net change in taxes receivable and taxes payable53 16 101 (81)
 262 52 426 (9)
Investing activities
Investment in property, plant and equipment(19)(28)(63)(105)
Investment in intangible assets(1)(2)(3)(3)
 (20)(30)(66)(108)
Financing activities
Accounts receivable securitization (repayments) drawings (55)(68)27 
Issuance of debt —  350 
Repayment of debt (240) (240)
Common share dividends paid(19)(24)(34)(73)
Debt issuance costs (2)(1)(6)
Premium on early extinguishment of 2020 Notes (9) (9)
Issue of common shares3 — 4 — 
Repurchase of common shares(6)— (28)(43)
Repayment of lease obligations(3)(2)(9)(8)
 (25)(332)(136)(2)
Foreign exchange revaluation on cash and cash equivalents
held
3 (2)(4)(6)
Cash and cash equivalents
Increase (decrease) during period220 (312)220 (125)
Balance, beginning of period20 315 20 128 
Balance, end of period$240 $$240 $

10
Exhibit 99.2

Interim Consolidated Balance Sheets
 
(Unaudited)
(US $ millions)
 Note
Oct 3, 2020Dec 31, 2019
Assets
Current assets
Cash and cash equivalents$240 $20 
Accounts receivable3246 136 
Taxes receivable6 63 
Inventory4216 230 
Prepaids10 13 
718 462 
Non-current assets
Property, plant and equipment7, 171,366 1,427 
Intangible assets19 21 
Deferred income tax assets1 
Other assets8 
 1,394 1,459 
 $2,112 $1,921 
Liabilities and shareholders’ equity
Current liabilities
Accounts payable and accrued liabilities$281 $259 
Taxes payable49 
330 260 
Non-current liabilities
Long-term debt5658 657 
Other long-term debt3 68 
Other liabilities641 40 
Deferred income tax liabilities202 192 
 901 957 
Shareholders’ equity881 704 
 $2,112 $1,921 
(See accompanying notes)
Commitments and Contingencies (note 15)
Subsequent Event (note 3)
1

Exhibit 99.2

Interim Consolidated Statements of Earnings (Loss)
 
(Unaudited)
Periods ended Oct 3 and Oct 5 (US $ millions, except per share information)
Note  Q3 2020Q3 20199 mos 20209 mos 2019
Sales17$725 $435 $1,613 $1,358 
Cost of sales(399)(400)(1,123)(1,240)
General and administrative expenses(6)(2)(13)(9)
Depreciation and amortization17(36)(35)(103)(104)
Loss on disposal of assets — (3)(1)
Impairment of assets
9 (10)(16)(10)
Costs related to 100 Mile House closure10(10)— (10)— 
Costs related to 100 Mile House indefinite curtailment10 —  (2)
Operating income (loss)274 (12)345 (8)
Non-operating items:
Finance costs(10)(11)(32)(34)
Interest income —  
Costs on early extinguishment of 2020 Notes —  (10)
Earnings (loss) before income tax264 (23)313 (51)
Income tax (expense) recovery11(61)(72)21 
Earnings (loss)$203 $(17)$241 $(30)
Earnings (loss) per common share12
Basic and diluted$2.51 $(0.21)$2.98 $(0.37)
(See accompanying notes)
Interim Consolidated Statements of Comprehensive Income (Loss)
 
(Unaudited)
Periods ended Oct 3 and Oct 5 (US $ millions)
Q3 2020Q3 20199 mos 20209 mos 2019
Earnings (loss)$203 $(17)$241 $(30)
Other comprehensive income (loss), net of tax
Items that will not be reclassified to earnings (loss):
Actuarial loss on post-employment obligations — (1)(5)
Items that may be reclassified subsequently to earnings (loss):
Foreign currency translation gain (loss) on foreign operations
13 (7)(6)(13)
Other comprehensive income (loss), net of tax13 (7)(7)(18)
Comprehensive income (loss)$216 $(24)$234 $(48)
(See accompanying notes)

2

Exhibit 99.2

Interim Consolidated Statements of
Changes in Shareholders’ Equity
 
(Unaudited)
Periods ended Oct 3 and Oct 5 (US $ millions)
Note Q3 2020Q3 20199 mos 20209 mos 2019
Share capital8
Balance, beginning of period$1,264 $1,280 $1,278 $1,280 
Issue of common shares upon exercise of options4 — 5 — 
Common shares repurchased and cancelled(3)— (18)(24)
Reverse accrual for common shares repurchased and cancelled under ASPP —  24 
Balance, end of period$1,265 $1,280 $1,265 $1,280 
Merger reserve8$(96)$(96)$(96)$(96)
Contributed surplus8
Balance, beginning of period$4 $$4 $
Stock-based compensation1 — 1 — 
Stock options exercised(1)— (1)— 
Balance, end of period8$4 $$4 $
Retained deficit
Balance, beginning of period$(283)$(231)$(299)$(168)
Earnings (loss)203 (17)241 (30)
Common share dividends(19)(24)(34)(73)
Common shares repurchased and cancelled8(3)— (10)(19)
Reverse accrual for common shares repurchased and cancelled under ASPP8 —  18 
Balance, end of period(i)
$(102)$(272)$(102)$(272)
Accumulated other comprehensive loss
Balance, beginning of period$(203)$(208)$(183)$(197)
Other comprehensive income (loss)13 (7)(7)(18)
Balance, end of period8$(190)$(215)$(190)$(215)
Shareholders’ equity$881 $701 $881 $701 
(See accompanying notes)
 
 
 
(i) Retained deficit comprised of:
Deficit arising on cashless exercise of warrants in 2013$(263)$(263)
All other retained earnings (deficit)161 (9)
$(102)$(272)
3

Exhibit 99.2

Interim Consolidated Statements of Cash Flows
 
(Unaudited)
Periods ended Oct 3 and Oct 5 (US $ millions)
NoteQ3 2020Q3 20199 mos 20209 mos 2019
CASH PROVIDED BY (USED FOR):
Operating activities
Earnings (loss)$203 $(17)$241 $(30)
Items not affecting cash:
Depreciation and amortization1736 35 103 104 
Deferred income tax116 (13)13 19 
Impairment of assets9 10 16 10 
Costs related to 100 Mile House closure1010 — 10 — 
Costs related to 100 Mile House indefinite curtailment
 (1) 
  Costs on early extinguishment of 2020 Notes —  10 
Loss on disposal of assets, net — 3 
Other items13 8 16 
255 23 394 131 
Net change in non-cash operating working capital balances13(46)13 (69)(59)
Net change in taxes receivable and taxes payable53 16 101 (81)
  262 52 426 (9)
Investing activities
Investment in property, plant and equipment(19)(28)(63)(105)
Investment in intangible assets(1)(2)(3)(3)
 (20)(30)(66)(108)
Financing activities
Accounts receivable securitization (repayments) drawings3 (55)(68)27 
Issuance of debt —  350 
Repayment of debt (240) (240)
Common share dividends paid(19)(24)(34)(73)
Debt issuance costs (2)(1)(6)
Premium on early extinguishment of 2020 Notes (9) (9)
Issue of common shares83 — 4 — 
Repurchase of common shares8(6)— (28)(43)
Repayment of lease obligations7(3)(2)(9)(8)
 (25)(332)(136)(2)
Foreign exchange revaluation on cash and cash equivalents held
3 (2)(4)(6)
Cash and cash equivalents
Increase (decrease) during period220 (312)220 (125)
Balance, beginning of period20 315 20 128 
Balance, end of period$240 $$240 $
(See accompanying notes, including note 13 for supplemental cash flow information)

4

Exhibit 99.2

Notes to the Interim Consolidated Financial Statements
(in US $, unless otherwise noted)
In these unaudited condensed consolidated interim financial statements (interim financial statements) notes, “Norbord” means Norbord Inc. and all of its consolidated subsidiaries and affiliates, and “Company” means Norbord Inc. as a separate corporation, unless the context implies otherwise. “Brookfield” means Brookfield Asset Management Inc., or any of its consolidated subsidiaries and affiliates, which are related parties by virtue of holding a significant equity interest in the Company.
NOTE 1. NATURE AND DESCRIPTION OF THE COMPANY
Norbord is an international producer of wood-based panels with 17 mills in the United States, Canada and Europe. Norbord is a publicly traded company listed on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE). The ticker symbol on both exchanges is “OSB”. The Company is incorporated under the Canada Business Corporations Act and is headquartered in Toronto, Ontario, Canada.
At period-end, Brookfield's interest was approximately 43% of the outstanding common shares of the Company.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
(a)      Statement of Compliance
These interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, on a basis consistent with the accounting policies Norbord disclosed in its audited consolidated financial statements as at, and for the year ended, December 31, 2019 unless noted otherwise in note 2(c). These interim financial statements do not contain all of the disclosures that are required in annual financial statements prepared under International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and should be read in conjunction with Norbord’s 2019 audited annual financial statements which include information necessary or useful to understanding Norbord’s business and financial statement presentation. Norbord’s interim results are not necessarily indicative of its results for a full year.

These interim financial statements were authorized for issuance by the Board of Directors of the Company on November 4, 2020.
(b)      Basis of Presentation
These interim financial statements include the accounts of the Company and all of its wholly-owned subsidiaries.
(c) Changes in Accounting Policies
(i)Financial Instruments
In September 2019, the IASB issued amendments to IFRS 9 with regards to the interest rate benchmark reform. These amendments provide targeted relief for financial instruments qualifying for hedge accounting to address uncertainties related to the ongoing reform of interbank offered rates. The amendments became effective for the Company on January 1, 2020 and did not have any impact on its interim financial statements.

(d) Future Changes in Accounting Policies
(i)Property, Plant and Equipment
In May 2020, the IASB issued amendments to IAS 16 with regards to sale proceeds before property, plant and equipment is available for intended use. These amendments include the requirement to recognize in earnings any proceeds and related costs from selling items produced while an asset is being prepared for its intended use, and clarify the requirement to capitalize costs of testing whether an asset is functioning properly. The amendments are effective on January 1, 2022. The Company is currently assessing the impact of these amendments on its financial statements.

5

Exhibit 99.2

NOTE 3. ACCOUNTS RECEIVABLE
The Company has the ability to draw up to $125 million under a multi-currency accounts receivable securitization program with a third-party trust sponsored by a highly rated Canadian financial institution. The program is revolving and has an evergreen commitment subject to termination on 12 months’ notice. Under the program, the Company has transferred substantially all of its present and future trade accounts receivable to the trust, on a fully serviced basis, for proceeds consisting of cash and deferred purchase price. However, the asset derecognition criteria under IFRS have not been met and the transferred accounts receivable remain recorded as an asset.
At period-end, the Company had transferred but continued to recognize $228 million (December 31, 2019 – $110 million) in trade accounts receivable, and the Company recorded $nil drawings as other long-term debt (December 31, 2019 – $68 million) relating to this financing program. The level of accounts receivable transferred under the program fluctuates with the level of shipment volumes, product prices and foreign exchange rates. The amount the Company is able to draw under the program at any point in time depends on the level of accounts receivable transferred and timing of cash settlements, concentration limits and enhancement ratios. At period-end, the maximum available drawings under the program was $124 million. The amount the Company chooses to draw under the program will fluctuate with the Company’s cash requirements at that point in time. Any drawings are presented as other long-term debt on the balance sheet and are excluded from the net debt to total capitalization calculation for financial covenant purposes (note 5). The utilization charge, which is based on money market rates plus a margin, and other program fees are recorded as finance costs. Year-to-date, the utilization charges on drawings ranged from 1.6% to 2.8% (2019 – 1.6% to 4.1%).
The securitization program contains no financial covenants; however, the program is subject to minimum credit-rating requirements. The Company must maintain a long-term issuer credit rating of at least single B (mid) or the equivalent. As at November 4, 2020, the Company’s ratings were BB (Standard & Poor’s Ratings Services) and Ba1 (Moody’s Investors Service).

NOTE 4. INVENTORY
(US $ millions)
 
Oct 3, 2020Dec 31, 2019
Raw materials$57 $62 
Finished goods75 81 
Operating and maintenance supplies84 87 
 $216 $230 
At period-end, the provision to reflect inventories at the lower of cost and net realizable value was $20 million (December 31, 2019 – $18 million).

NOTE 5. LONG-TERM DEBT
(US $ millions)Oct 3, 2020Dec 31, 2019
Principal value
6.25% senior secured notes due April 2023$315 $315 
5.75% senior secured notes due July 2027350 350 
665 665 
Less: Unamortized debt issue costs(7)(8)
 $658 $657 
Revolving Bank Lines
In May 2020, the Company completed an amendment to its committed revolving bank lines to extend the maturity date of the total aggregate commitment to May 2022 and to increase the aggregate commitment from $245 million to $300 million. The facility bears interest at money market rates plus a margin that varies with the Company's credit rating. The bank lines are secured by a first lien on the Company’s North American OSB inventory and property, plant and equipment. This lien is shared pari passu with holders of the 2023 and 2027 senior secured notes.
6

Exhibit 99.2

At period-end, none (December 31, 2019 – none) of the revolving bank lines were drawn as cash, $10 million (December 31, 2019 – $8 million) was utilized for letters of credit and guarantees and $290 million (December 31, 2019 – $237 million) was available to support short-term liquidity requirements.
The revolving bank lines contain two quarterly financial covenants: minimum tangible net worth of $500 million and maximum net debt to total capitalization, book basis, of 65%. The Company was in compliance with the financial covenants at period-end.

NOTE 6. OTHER LIABILITIES
(US $ millions)Oct 3, 2020Dec 31, 2019
Defined benefit pension obligations$19 $16 
Lease obligations12 12 
Accrued employee benefits5 
Reforestation obligations4 
Unrealized monetary hedge loss 
Other 1 
  $41 $40 

NOTE 7. LEASES
During the quarter and year-to-date, less than $1 million (2019 – less than $1 million) and $2 million (2019 – $2 million), respectively, of payments related to short-term leases was included in cost of sales. During the quarter and year-to-date, finance costs include less than $1 million (2019 – less than $1 million) and $1 million (2019 – $1 million), respectively, related to lease liabilities.
During the quarter and year-to-date, total cash outflows related to all leases were $4 million (2019 – $4 million) and $12 million (2019 – $11 million), respectively.
Leases of certain production equipment contain residual value guarantees of the right-of-use assets at the end of the contract term. At period-end, the expected amount payable under these residual value guarantees was less than $1 million (2019 – less than $1 million).

NOTE 8. SHAREHOLDERS’ EQUITY
Share Capital
  9 mos 20209 mos 2019
Shares
(millions)
 Amount
(US $ millions)
Shares
(millions)
Amount
(US $ millions)
Common shares outstanding, beginning of period81.5 $1,278 81.7 $1,280 
Issuance of common shares upon exercise of options
0.3 5 — — 
Reverse accrual for shares repurchased and/or cancelled in 2019
  1.6 24 
Shares repurchased in 2018 and cancelled in 2019
  (0.2)(2)
Shares repurchased and cancelled in 2020 and 2019
(1.1)(18)(1.4)(22)
Common shares outstanding, end of period80.7 $1,265 81.7 $1,280 
Normal Course Issuer Bid (NCIB)
In October 2019, the Company renewed its NCIB in accordance with TSX rules. Under the NCIB, the Company may purchase up to 4,083,429 of its common shares, representing 5% of Norbord’s issued and outstanding common shares of 81,668,583 as of October 22, 2019, pursuant to TSX rules. Daily purchases of common shares may not exceed 72,970 shares subject to the Company’s ability to make “block” purchases under the rules of the TSX. In response to the COVID-19 pandemic, the TSX had temporarily doubled the daily purchase limit such that Norbord was permitted to purchase up to 145,940 shares per day until June 30, 2020.

7

Exhibit 99.2

In September 2020, the Company entered into an automatic share purchase plan (ASPP) in order to facilitate the repurchase of its common shares under its NCIB during the regularly scheduled quarterly trading blackout period. During the quarter, the Company repurchased and cancelled 0.2 million common shares under the ASPP for a total cost of $6 million, $3 million of which represents a reduction in share capital and the remaining $3 million was charged to retained earnings.

Under its prior ASPP entered into in December 2019, the Company repurchased and cancelled 0.1 million common shares under the ASPP for a total cost of $2 million, $1 million of which represents a reduction in share capital and the remaining $1 million was charged to retained earnings during the first quarter of 2020.

During the first quarter of 2020, after expiry of the December 2019 ASPP, the Company also repurchased and cancelled an additional 0.9 million common shares under the current NCIB for a total cost of $20 million. Of the total cost, $14 million represents a reduction in share capital and the remaining $6 million was charged to retained earnings.

Under its prior NCIB that commenced on November 5, 2018 and expired on November 4, 2019, the Company previously sought and received approval from the TSX to purchase up to 5,191,965 of its common shares, representing 10% of Norbord’s public float of 51,919,654 as of October 22, 2018, pursuant to TSX rules. Daily purchases of common shares could not exceed 79,704 subject to the Company’s ability to make “block” purchases under the rules of the TSX. The Company had exhausted its prior NCIB limit.

During the first quarter of 2019, the Company repurchased and cancelled 1.4 million common shares under the ASPP entered into in December 2018 for a total cost of $39 million. Of the total cost, $22 million represented a reduction in share capital and the remaining $17 million was charged to retained earnings. During the first quarter of 2019, 0.2 million shares purchased and accrued for in 2018 were also cancelled. Total cost relating to these shares was $4 million, of which $2 million represented a reduction in share capital and the remaining $2 million was charged to retained earnings.

Purchases were made on the open market by the Company through the facilities of the TSX, the NYSE or Canadian or US alternative trading systems, if eligible, in accordance with the requirements of the TSX and applicable securities laws. The price that the Company paid for any such common shares was the market price of such shares at the time of acquisition.
Merger Reserve
On March 31, 2015, the Company and Ainsworth Lumber Co. Ltd. (Ainsworth) completed an arrangement under which the Company acquired all of the outstanding common shares of Ainsworth in an all-share transaction. The Company elected not to account for this transaction as a business combination under IFRS 3, Business Combinations, as the transaction represented a combination of entities under common control of Brookfield. Accordingly, the book values of the two entities were combined and no adjustments were made to reflect fair values or to recognize any new assets or liabilities of either entity.

The merger reserve represents the difference between the fair value of the Norbord common shares on the date of issuance as consideration and the book value of Ainsworth’s net assets exchanged.
Stock Options
Year-to-date, no stock options were granted (2019 – no stock options) and stock option expense of $1 million was recorded with a corresponding increase in contributed surplus (2019 – less than $1 million).

Year-to-date, 0.3 million common shares (2019 – less than 0.1 million common shares) were issued as a result of options exercised under the stock option plan for total cash proceeds of $4 million (2019 – less than $1 million) in addition to $1 million (2019 – less than $1 million) representing the vested amount of stock options transferred from contributed surplus.
Accumulated Other Comprehensive Loss
 
(US $ millions)
Oct 3, 2020Dec 31, 2019
Foreign currency translation loss on foreign operations, net of tax of $(3) 
(December 31, 2019 – $(4))
$(151)$(145)
Net loss on hedge of net investment in foreign operations, net of tax of $3
(December 31, 2019 – $3)
(8)(8)
Actuarial loss on defined benefit pension obligations, net of tax of $9
(December 31, 2019 – $9)
(31)(30)
Accumulated other comprehensive loss, net of tax$(190)$(183)

8

Exhibit 99.2

NOTE 9. IMPAIRMENT OF ASSETS
During the second quarter of 2020, the Company recorded a non-cash impairment loss of $16 million related to idle production assets at the Grande Prairie, Alberta mill. These assets were deemed to be surplus following a review of the likelihood of their future use based on factors including relevant operating plans, raw material availability and the limited potential for redeployment of these assets.

NOTE 10. 100 MILE HOUSE PERMANENT CLOSURE
In the fourth quarter of 2018, an impairment loss of $80 million was recorded with respect to the Company's mill in 100 Mile House, British Columbia reflecting the reduction in the annual allowable cut and the longer-term trend of high wood costs in the region. During the third quarter of 2019, the Company indefinitely curtailed this mill as a result of a wood supply shortage and high wood prices. A $2 million charge was recognized for severance and related costs in the second quarter of 2019..

The Company has decided to permanently close this mill. As a result, an additional $10 million charge has been recognized representing an impairment on the remaining carrying values of this mill's property, plant and equipment to their recoverable amount determined based on fair value less costs of disposal and inventory as the indicators of impairment existed at October 3, 2020, as well as to provide for severance and related costs.

NOTE 11. INCOME TAX
Income tax (expense) recovery recognized in the statement of earnings comprises the following:
(US $ millions)
 
Q3 2020Q3 20199 mos 20209 mos 2019
Current income tax (expense) recovery$(55)$(7)$(59)$40 
Deferred income tax (expense) recovery(6)13 (13)(19)
$(61)$$(72)$21 

NOTE 12. EARNINGS (LOSS) PER COMMON SHARE
(US $ millions, except share and per share information, unless otherwise noted)Q3 2020Q3 20199 mos 20209 mos 2019
Earnings (loss) available to common shareholders$203 $(17)$241 $(30)
Common shares (millions):
Weighted average number of common shares outstanding80.8 81.7 81.0 81.8 
Dilutive stock options(1)
0.2 —  — 
Diluted number of common shares81.0 81.7 81.0 81.8 
Earnings (loss) per common share:
Basic and diluted$2.51 $(0.21)$2.98 $(0.37)
(1)    Applicable if dilutive and when the weighted average daily closing share price for the period was greater than the exercise price for stock options. For the quarter and year-to-date period, there were stock options of 0.2 million and 0.9 million, respectively (quarter and year-to-date ended October 5, 2019 – 0.7 million and 0.5 million, respectively), that were not taken into account in the calculation of diluted earnings per share because their effect was anti-dilutive.

9

Exhibit 99.2

NOTE 13. SUPPLEMENTAL CASH FLOW INFORMATION
Other items comprise:
(US $ millions)Q3 2020Q3 20199 mos 20209 mos 2019
Stock-based compensation$ $$3 $
Pension funding greater than expense — (1)(2)
Cash interest paid less (greater) than interest expense (1)10 
Amortization of debt issue costs — 1 
Unrealized foreign exchange loss on translation of monetary balances
2 — 8 
Other(2)(1)(2)— 
 $ $$8 $16 
The net change in non-cash operating working capital balances comprises:
(US $ millions)Q3 2020Q3 20199 mos 20209 mos 2019
Cash (used for) provided by:
Accounts receivable$(105)$(7)$(114)$
Prepaids(2)(8)3 (8)
Inventory(5)15 11 
Accounts payable and accrued liabilities66 13 31 (53)
 $(46)$13 $(69)$(59)
Cash interest and income taxes comprises:
(US $ millions)Q3 2020Q3 20199 mos 20209 mos 2019
Cash interest paid$(10)$(1)$(34)$(21)
Cash interest received —  
Cash income taxes paid(2)(3)(3)(69)
Cash income taxes received 12 45 27 
The net change in financial liabilities arising from financing activities comprises:
(US $ millions)Q3 2020Q3 20199 mos 20209 mos 2019
Long-term debt$ $(240)$ $106 
Other long-term debt (55)(68)27 
Net (decrease) increase in financial liabilities$ $(295)$(68)$133 
Cash and non-cash movements of changes in financial liabilities arising from financing activities comprises:
(US $ millions)Q3 2020Q3 20199 mos 20209 mos 2019
Cash movements:
  Accounts receivable securitization (repayments) drawings$ $(55)$(68)$27 
  Issuance of debt —  350 
  Repayment of debt (240) (240)
  Debt issuance costs (2)(1)(6)
 (297)(69)131 
Non-cash movements:
  Amortization of debt issue costs — 1 
  Debt issuance costs  
 1 
Net (decrease) increase in financial liabilities$ $(295)$(68)$133 

10

Exhibit 99.2

NOTE 14. FINANCIAL INSTRUMENTS
Non-Derivative Financial Instruments
The net book values and fair values of non-derivative financial instruments were as follows:
    Oct 3, 2020Dec 31, 2019
(US $ millions)
 
Financial Instrument Category
 
 
Net Book
Value
 
Fair
Value
 
Net Book
Value
 
Fair
Value
 
Financial assets:
Cash and cash equivalentsFair value through profit or loss$240 $240 $20 $20 
Accounts receivableAmortised cost246 246 136 136 
Other assets(1)
Amortised cost  
  $486 $486 $157 $157 
Financial liabilities:
Accounts payable and accrued liabilitiesAmortised cost$281 $281 $259 $259 
Long-term debt(2)
Amortised cost665 709 665 702 
Other long-term debtAmortised cost  68 68 
Other liabilities(1)
Amortised cost10 10 12 12 
  $956 $1,000 $1,004 $1,041 
(1)    Excludes lease obligations, defined benefit pension asset and obligations scoped out of IFRS 9, Financial instruments (note 6).
(2)    Principal value of long-term debt excluding debt issue costs of $7 million (2019 – $8 million) (note 5).
The carrying values of the Company's non-derivative financial instruments approximate fair value, except where disclosed below. As at October 3, 2020, the provision for doubtful accounts was less than $1 million (December 31, 2019 – less than $1 million).
Derivative Financial Instruments
Canadian Dollar Monetary Hedge
At period-end, the Company had foreign currency forward contracts representing a notional amount of C $14 million (December 31, 2019 – C $52 million) in place to buy Canadian dollars and sell US dollars with maturities in October 2020 (December 31, 2019 – buy US dollars and sell Canadian dollars). The fair value of these contracts at period-end is an unrealized loss of less than $1 million (December 31, 2019 – an unrealized loss of $1 million); the carrying value of the derivative instrument is equivalent to the unrealized loss at period-end. During the quarter, net realized gains on the Company's matured hedges were less than $1 million (2019 – net realized gains of less than $1 million). Year-to-date, net realized gains on the Company's matured hedges were $2 million (2019 – less than $1 million).

Euro Cash Flow Hedge
At period-end, the Company had foreign currency options representing a notional amount of €35 million (December 31, 2019 – €30 million notional amount) in place to buy Pounds Sterling and sell Euros with maturities between December 2020 and June 2021. The fair value of these contracts at period-end is an unrealized loss of less than $1 million (December 31, 2019 – unrealized gain of less than $1 million). During the quarter, net realized losses on the Company's matured hedges were $nil (2019 – less than $1 million). Year-to-date, net realized losses on the Company's matured hedges were less than $1 million (2019 – less than $1 million).
Derivative instruments are measured at fair value as determined using valuation techniques under Level 2 of the fair value hierarchy. The fair values of over-the-counter derivative financial instruments are based on broker quotes or observable market rates. Those quotes are tested for reasonableness by discounting expected future cash flows using market interest and exchange rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument for the Company and counterparty when appropriate. Realized and unrealized gains and losses on derivative financial instruments are offset by realized and unrealized losses and gains on the underlying exposures being hedged and are recorded in earnings as they occur.
NOTE 15. COMMITMENTS AND CONTINGENCIES
The Company has provided certain guarantees, commitments and indemnifications, including those related to former businesses. The maximum amounts from many of these items cannot be reasonably estimated at this time. However, in certain circumstances, the Company has recourse against other parties to mitigate the risk of loss. In the normal course of its business
11

Exhibit 99.2

activities, the Company is subject to claims and legal actions that may be made by its customers, suppliers and others. While the final outcome with respect to actions outstanding or pending as at period-end cannot be predicted with certainty, the Company believes the resolution will not have a material effect on the Company’s financial position, financial performance, or cash flows.
The Company has entered into various commitments as follows:
 
  
 
Payments Due by Period
 
(US $ millions)
 
 
Less than 1 Year
 
        1–5 Years
 
    Thereafter
 
            Total
 
Purchase commitments$37 $30 $41 $108 
Lease obligations10 22 
Reforestation obligations
 $47 $41 $46 $134 

Purchase commitments relate to the purchase of property, plant and equipment and long-term purchase contracts with minimum fixed payment amounts.
NOTE 16. RELATED PARTY TRANSACTIONS
In the normal course of operations, Norbord enters into various transactions with related parties which have been measured at exchange value and recognized in the interim financial statements. The following transactions have occurred between Norbord and its related parties during the normal course of business.
Brookfield
Norbord periodically engages the services of Brookfield and its affiliates for various financial, real estate and other business services. During the quarter and year-to-date, the fees for services rendered were less than $1 million (2019 – less than $1 million) and $1 million, respectively (2019 – less than $1 million).
Other
Sales to Asian markets are handled by Interex Forest Products Ltd. (Interex), a cooperative sales company over which Norbord, as a 25% shareholder, has significant influence. During the quarter and year-to-date, net sales of $8 million (2019 – $20 million) and $36 million (2019 – $55 million), respectively, were made to Interex. At period-end, $1 million (December 31, 2019 – $4 million) due from Interex was included in accounts receivable. At period-end, the investment in Interex was less than $1 million (December 31, 2019 – less than $1 million) and is included in other assets.

12

Exhibit 99.2

NOTE 17. GEOGRAPHIC SEGMENTS
The Company operates principally in North America and Europe. Sales by geographic segment are determined based on the origin of shipment.
Q3 2020
(US $ millions)North AmericaEurope  Unallocated
 Total
Sales$599 $126 $ $725 
EBITDA(1)
300 16 (6)310 
Depreciation and amortization30 6  36 
Additions to property, plant and equipment15 12  27 
        Q3 2019
(US $ millions)North AmericaEurope  Unallocated
 
Total
Sales$319 $116 $— $435 
EBITDA(1)
14 11 (2)23 
Depreciation and amortization29 — 35 
Additions to property, plant and equipment19 12 — 31 
        9 mos 2020
(US $ millions)North AmericaEurope  Unallocated
 
Total
Sales$1,275 $338 $ $1,613 
EBITDA(1)
433 28 (13)448 
Depreciation and amortization85 18  103 
Additions to property, plant and equipment38 26  64 
Property, plant and equipment1,080 286  1,366 
9 mos 2019
(US $ millions)North AmericaEurope  Unallocated
 
Total
Sales$966 $392 $— $1,358 
EBITDA(1)
52 53 (9)96 
Depreciation and amortization85 19 — 104 
Additions to property, plant and equipment63 27 — 90 
Property, plant and equipment(2)
1,147 280 — 1,427 
 (1)    EBITDA is a non-IFRS financial measure, which the Company uses to assess segment performance and operating results. The Company defines EBITDA as earnings before finance costs, interest income, income tax, depreciation and amortization, and costs on early extinguishment of debt. Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies.
(2)    Balance as at December 31, 2019.
NOTE 18. IMPACT OF COVID-19
As the severity and duration of the COVID-19 pandemic remains uncertain, the Company's business, financial results and financial condition could be negatively impacted in the future. The Company could experience other future impacts as a result of COVID-19, including, but not limited to, the carrying values of the Company's property, plant and equipment, the measurement of the assets and obligations under its defined benefit pension plans, its estimate of the annual effective tax rate for the year, and its allowance for expected credit losses. At this time, the Company is unable to estimate with a reasonable degree of confidence the extent of the impact of the COVID-19 pandemic on the Company’s future operating financial performance.
13
Exhibit 99.3

NOVEMBER 4, 2020
 
Management’s Discussion and Analysis
INTRODUCTION
This Management’s Discussion and Analysis (MD&A) provides a review of the significant developments that impacted Norbord’s performance during the period. The information in this section should be read in conjunction with the unaudited condensed consolidated interim financial statements (interim financial statements) for the period ended October 3, 2020 and the audited consolidated financial statements and annual MD&A in the 2019 annual report.
In this MD&A, “Norbord” or “the Company” means Norbord Inc. and all of its consolidated subsidiaries and affiliates, unless the context implies otherwise. “Brookfield” means Brookfield Asset Management Inc. or any of its consolidated subsidiaries and affiliates, a related party by virtue of holding a significant equity interest in the Company.
Annual financial data provided within has been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (the IASB) and interim financial data has been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting. Additional information on Norbord, including the Company’s annual information form and other documents publicly filed by the Company, is available on the Company’s website at www.norbord.com, the System for Electronic Document Analysis and Retrieval (SEDAR) administered by the Canadian Securities Administrators (the CSA) at www.sedar.com and on the Electronic Data Gathering, Analysis and Retrieval System (EDGAR) section of the US Securities and Exchange Commission (the SEC) website at www.sec.gov/edgar.shtml.
Some of the statements included or incorporated by reference in this MD&A constitute forward-looking statements within the meaning of applicable securities legislation. Forward-looking statements are based on various assumptions and are subject to various risks. See the cautionary statement contained in the Forward-Looking Statements section.
The Company has prepared this MD&A with reference to National Instrument 51-102 – Continuous Disclosure Obligations of the CSA. The Company is an eligible issuer under the Multijurisdictional Disclosure System (MJDS) and complies with the US reporting requirements by filing its Canadian disclosure documents with the SEC. As an MJDS issuer, the Company is permitted to prepare this MD&A in accordance with the disclosure requirements of the CSA, whose requirements are different from those of the SEC.
This MD&A provides financial and operating results for the three month and nine month periods ended October 3, 2020 and additional disclosure of material information up to and including November 4, 2020. All financial references in the MD&A are stated in US dollars unless otherwise noted.
In evaluating the Company’s business, management uses non-IFRS financial measures which, in management’s view, are important supplemental measures of the Company’s performance and believes that they are frequently used by investors, securities analysts and other interested persons in the evaluation of Norbord and other similar companies. In this MD&A, the following non-IFRS financial measures have been used: Adjusted EBITDA, Adjusted earnings (loss), Adjusted earnings (loss) per share, cash provided by (used for) operating activities per share, operating working capital, total working capital, capital employed, return on capital employed (ROCE), return on equity (ROE), net debt, net debt for
1

Exhibit 99.3

financial covenant purposes, tangible net worth, net debt to capitalization, book basis, and net debt to capitalization, market basis. These non-IFRS financial measures are described in the Non-IFRS Financial Measures section. Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies that may have different financing and capital structures, and/or tax rates. Where appropriate, a quantitative reconciliation of the non-IFRS financial measure to the most directly comparable IFRS measure is also provided.

BUSINESS OVERVIEW & STRATEGY
Norbord is a leading global manufacturer of wood-based panels with 17 mills in the United States (US), Canada and Europe. Norbord is the largest global producer of oriented strand board (OSB) with annual capacity of 9 billion square feet (Bsf) (3⁄8-inch basis). In North America, Norbord owns 13 OSB mills located in the Southern region of the US, Western Canada, Quebec, Ontario and Minnesota. In Europe, the Company operates one OSB mill, two particleboard production facilities and one medium density fibreboard (MDF) production facility in the United Kingdom (UK) and one OSB mill in Belgium, and is the UK’s largest panel producer. The Company reports its operations in two geographic segments, North America and Europe, with 79% of its panel production capacity in North America and 21% in Europe.

Norbord’s business strategy is focused entirely on the wood-based panels sector – in particular OSB – in North America, Europe and Asia. Norbord’s financial goal is to achieve top-quartile ROCE among North American forest products companies over the business cycle. Since 2002, Norbord's ROCE has averaged 24% annually.
Maintaining balance sheet flexibility is an important element of Norbord’s financing strategy. Management believes that its record of superior operational performance, disciplined capital allocation and prudent balance sheet management will enable it to access public and private capital markets (subject to financial market conditions). At October 3, 2020, Norbord had unutilized available liquidity of $654 million, comprising $240 million in cash and cash equivalents, $290 million in revolving bank lines and $124 million in available drawings under its accounts receivable securitization program. The Company’s tangible net worth was $1,183 million and net debt to total capitalization on a book basis was 27%, with both ratios well within bank covenants.


SUMMARY OF THIRD QUARTER 2020
Norbord's third quarter results were the strongest ever in the Company's history, reflecting all-time high North American benchmark OSB prices, with the North Central benchmark price averaging $578 per thousand square feet (Msf) (7/16-inch basis) for the quarter, up 114% from the previous quarter and 166% against the same quarter last year. South East benchmark prices increased 118% and 240%, and Western Canada increased 158% and 253%, respectively. Driving these record increases is strong pent-up demand from US homebuilding. The seasonally adjusted annualized rate of US housing starts recovered from a low of 0.93 million in April to 1.42 million in September. In addition, strong demand continued from repair-and-remodelling. As a result, Norbord’s third quarter North American shipments were up 9% quarter-over-quarter. Quarterly shipments were down 8% year-over-year and year-to-date shipments were down 9% primarily due to the indefinite curtailment of the 100 Mile House, British Columbia mill in August 2019 and limited production from Line 1 at the Cordele, Georgia mill (which was originally curtailed in November 2019, but resumed production in August 2020 on a limited operating schedule in response to stronger than expected North American OSB demand).
In the UK, Norbord's largest European market, demand has recovered from the significant curtailments taken in the second quarter in response to reduced customer demand due to government-imposed pandemic restrictions. Norbord’s European segment quarterly Adjusted EBITDA increased $14 million versus the prior quarter and $5 million versus the same quarter last year primarily due to higher shipment volumes. Quarterly shipments were up 23% quarter-over-quarter and 12% year-over-year, and year-to-date shipments were down 3%.
2

Exhibit 99.3

Norbord generated operating income of $274 million in the third quarter of 2020, versus $31 million in the prior quarter and an operating loss of $12 million in the same quarter last year. Year-to-date, Norbord generated operating income of $345 million versus an operating loss of $8 million in the same period last year. Norbord generated Adjusted EBITDA of $322 million in the third quarter of 2020 versus $84 million in the prior quarter and $33 million in the same quarter last year. Year-to-date, Norbord generated Adjusted EBITDA of $481 million versus $111 million in the same period last year. The increase against all prior year comparative periods was primarily due to higher North American OSB prices, partially offset by higher North American profit share costs attributed to higher earnings. The quarter-over-quarter increase is also due to higher shipment volumes. The year-to-date increase was also due to lower input prices, which were offset by lower shipment volumes.
The following table reconciles Adjusted EBITDA to the most directly comparable IFRS measure:
(US $ millions)
Q3 2020
Q2 2020
Q3 2019
9 mos 20209 mos 2019
Earnings (loss)
$203 $18 $(17)$241 $(30)
Add: Finance costs
10 10 11 32 34 
Less: Interest income
 — —  (1)
Add: Costs on early extinguishment of 2020 Notes
 — —  10 
Add: Depreciation and amortization
36 32 35 103 104 
Add: Income tax expense (recovery)
61 (6)72 (21)
EBITDA
310 63 23 448 96 
Add: Costs related to 100 Mile House closure
10 — — 10 — 
Add: Impairment of assets
 16 10 16 10 
Add: Loss on disposal of assets
 — 3 
Add: Stock-based compensation and related costs
2 — 4 
Add: Costs related to 100 Mile House indefinite curtailment
 — —  
Adjusted EBITDA(1)
$322 $84 $33 $481 $111 
(1)Non-IFRS measure; see Non-IFRS Financial Measures section.
Norbord recorded earnings of $203 million ($2.51 per basic and diluted share) in the third quarter of 2020, up from earnings of $18 million ($0.22 per basic and diluted share) in the second quarter of 2020 and up from a loss of $17 million ($0.21 per basic and diluted share) in the third quarter of 2019. Year-to-date, Norbord recorded earnings of $241 million ($2.98 per basic and diluted share) versus a loss of $30 million ($0.37 per basic and diluted share) in the same period last year. Excluding the impact of non-recurring or other items and using a normalized Canadian statutory tax rate, Norbord recorded Adjusted earnings of $204 million ($2.52 per basic and diluted share) in the third quarter of 2020, compared to $31 million ($0.38 per basic and diluted share) in the second quarter of 2020 and an Adjusted loss of $9 million ($0.11 per basic and diluted share) in the third quarter of 2019. Year-to-date, Norbord recorded Adjusted earnings of $256 million ($3.16 per basic and diluted share), compared to an Adjusted loss of $19 million ($0.23 per basic and diluted share). The fluctuations in Adjusted earnings versus all comparative periods were driven primarily by the fluctuations in Adjusted EBITDA, as discussed above.
3

Exhibit 99.3

The following table reconciles Adjusted earnings (loss) to the most directly comparable IFRS measure:
(US $ millions)
Q3 2020Q2 2020Q3 20199 mos 20209 mos 2019
Earnings (loss)
$203 $18 $(17)$241 $(30)
Add: Costs related to 100 Mile House closure
10 — — 10 — 
Add: Impairment of assets
 16 10 16 10 
Add: Loss on disposal of assets
 — 3 
Add: Stock-based compensation and related costs
2 — 4 
Add: Costs on early extinguishment of 2020 Notes
 — —  10 
Add: Costs related to 100 Mile House indefinite curtailment
 — —  
Add: Reported income tax expense (recovery)
61 (6)72 (21)
Adjusted pre-tax earnings (loss)
276 42 (13)346 (26)
Less: Income tax (expense) recovery at statutory rate