Norbord 2012 AR Linked

NORBORD 2012
ANNUAL REPORT

NORBORD AT-A-GLANCE
Norbord Inc. is an international producer of
wood-based panels with assets of $1 billion.
We employ approximately 1,900 people at 13
plant locations in the US, Europe and Canada.
Norbord is a publicly traded company listed on
the Toronto Stock Exchange (TSX) under the
symbols NBD and NBD.WT.
OVERVIEW
NORTH AMERICA
9 1,000
Mills Employees
Norbord manufactures oriented strand board (OSB) for
construction, repair and remodelling and industrial use.
One of the worlds largest OSB producers, Norbord
owns nine OSB mills in North America (six in the
Southern US, one in the US Midwest and two in Quebec,
Canada). Norbord employs approximately 1,000 people
in North America.
EUROPE
4 900
Mills Employees
Norbord is the UKs largest producer of wood-based panel
products, and its European mills manufacture a range of
OSB, medium density breboard (MDF) and particleboard
products for the construction, furniture and do-it-yourself
markets. In Europe, the Company employs approximately
900 people and operates three mills in the UK and one
in Belgium.
CONTENTS
FINANCIAL HIGHLIGHTS 1 | LETTER TO SHAREHOLDERS 2 | 2012 FINANCIAL PERFORMANCE 6
MANAGEMENTS DISCUSSION AND ANALYSIS 7 | CONSOLIDATED FINANCIAL STATEMENTS 42
SELECTED QUARTERLY INFORMATION 70 | EIGHT-YEAR HISTORICAL REVIEW 72 | PRINCIPAL OPERATING INTERESTS 74
GLOSSARY 75 | BOARD OF DIRECTORS 76 | SENIOR MANAGEMENT 76 | CORPORATE INFORMATION inside back cover
1
FINANCIAL HIGHLIGHTS
(1)
Years ended December 31 2012 2011 2010
(US $ millions, except per share information, unless otherwise noted) IFRS IFRS IFRS
Key performance metrics
Return on capital employed (ROCE) 23% 5% 12%
Return on equity (ROE) 21% (3)% 4%
Cash provided by (used for) operating activities 136 (13) 127
Cash provided by (used for) operating activities per share 3.12 (0.30) 2.93
Sales and earnings
Sales
(2)
1,149 965 962
EBITDA 188 45 107
Earnings 72 (11) 13
Per common share
Earnings (diluted) 1.59 (0.25) 0.29
Stock price (TSX) (CAD $)
High 30.65 16.44 21.45
Low 8.28 7.13 10.70
Close 30.19 8.10 14.64
Average daily stock trading volume (in thousands) 86 79 170
Key statistics
Shipments (MMsf
3
8")
North America 3,111 2,885 2,989
Europe 1,574 1,547 1,405
Indicative average OSB pricing
North Central ($/Msf
7
16") 271 186 219
South East ($/Msf
7
16") 241 169 198
Europe (/m
3
)
(3)
260 264 244
(1)
See the Non-IFRS Financial Measures section of the MD&A on page 36.
(2)
Outbound freight costs are no longer netted against sales; 2010 restated as a result of the adoption of IFRS.
(3)
European indicative average OSB price represents the gross delivered price to the largest Continental market; restated as a result of the adoption of IFRS. The 2011
comparative has been restated to gross delivered price.
This report makes use of non-IFRS measures as disclosed further in the Non-IFRS Financial Measures section of the MD&A on page 36.
2 NORBORD 2012 ANNUAL REPORT
TO OUR SHAREHOLDERS,
Norbords 2012 result was our best since
US housing rst began its unprecedented decline
in 2006. We generated earnings of $1.65 per
share on EBITDA of $188 million a substantial
improvement over the $45 million of EBITDA and
negative earnings of the previous year.
Last year, I told you the US housing market was at an inection point and I was optimistic about the positive signs we were
starting to see in our business. But I also said OSB pricing would move sideways for most of 2012 as the structural impediments
to a housing recovery were worked through. So now Im particularly pleased to tell you that our nancial results were much better
than I had expected. And whats even more encouraging is that this upside is carrying over into 2013 and will be reected in our
bottom line again this year.
Our results reect a US housing recovery that is now well entrenched. Housing starts the largest driver of OSB demand
jumped 28% last year. In North America, we ran more of our capacity, increased shipments and were able to benet from 46%
higher OSB prices. At the same time, our European panel business delivered a third straight year of strong results.
Im also pleased to see our improving nancial performance reected in our stock. Norbords share price has rebounded, starting
the year at CAD $8.10 and nishing at CAD $30.19. Thats almost four times higher, making Norbord the Top Gainer on the
Toronto Stock Exchange in 2012.
Record Operating Performance
Our panelboard mills performed well in 2012. Five of our eight operating OSB facilities set annual production records and overall
shipments were up 6%. To meet recovering North American OSB demand, we ran more of our capacity than the prior year and
this additional volume was sold at higher prices as the year progressed.
In 2012, we delivered $23 million in Margin Improvement Program (MIP) gains. Our North American mills continued to build on the
raw material usage and productivity benets achieved from the resin conversion and nes screening projects. Our Chief Operating
Ofcer, Peter Wijnbergen, has a simple MIP goal: maintain competitiveness by being better tomorrow than we are today. His
operating team continues to push hard on new MIP initiatives each year to deliver on this goal.
Europe Is Holding Steady
In Europe, panel markets remained surprisingly stable in spite of the challenging macroeconomic environment. Our operations
had another strong year and we continued to run our mills at capacity. While OSB prices were off their 2011 peak levels,
particleboard and MDF prices held rm. The Pound Sterling drifted weaker against the Euro in the second half of the year and
this kept our UK-based business competitive.
LETTER TO SHAREHOLDERS 3
Balance Sheet Is Improving
In 2012, our Chief Financial Ofcer, Robin Lampard, successfully renanced our $240 million bond maturity with new three-year
senior notes that will save $10 million in interest over the life of the bonds. She pursued this shorter-term solution based on our
expectation that Norbords improving nancial performance would enable a more opportunistic renancing in 2015.
Our balance sheet is de-levering quickly. Last year, we generated $136 million of operating cash ow and we took the opportunity
to fully repay our accounts receivable securitization program. At year-end, we had more than $450 million of cash and unutilized
liquidity, allowing us to commit to a more ambitious capital reinvestment program in 2013.
New Home Construction Demand Growing
A decade ago, we purposely diversied away from new home construction by growing our big box, industrial and export volumes.
This strategy served us well through what turned out to be a protracted housing downturn by providing a customer channel that
is far less cyclical and has steadier annual growth. However, we have always maintained relationships with the large national
pro-dealers who service homebuilders. Last year, our strongest growth came from this market segment. Norbords shipments
to pro-dealers grew by 35% in 2012 and now represent almost half of our total sales volume.
World-Class Safety Remains the Goal
We believe that safety and operating performance go hand in hand. Our safety record continued to improve in 2012 with a best-ever
Occupational Safety and Health Administration (OSHA) rate of 0.74. Our Joanna, South Carolina and Guntown, Mississippi mills each
completed the year without a single recordable injury and our Nacogdoches, Texas facility achieved 10 years without a lost-time
incident. In addition, three of our sites (La Sarre, Quebec; Inverness, Scotland; and South Molton, England) obtained Norbord Safety
Star certications, a rigorous program based on standards that go well beyond regulatory requirements. These industry-leading
achievements bring our mills another step closer to the goal of world-class safety performance.
ENCOURAGING OUTLOOK FOR 2013
In the fourth quarter, all the housing indicators we follow continued to strengthen. Foreclosures and existing home inventories are
trending down, while home prices and builder condence are improving. Public homebuilder order backlogs are outpacing
expectations, growing 40% year-over-year. The more credible housing economists are now forecasting 2013 housing starts at the
1.0 million level another 28% increase over the 2012 number. In January, in what is normally the slowest season for
construction activity, OSB prices remained surprisingly strong with the North Central benchmark price averaging more than
$400 per Msf. This all points to strengthening OSB markets in 2013.
-100
-50
0
50
100
150
200
45
188
0 (60)
107
EBITDA
(1)
(US $ millions)
(1)
EBITDA is a non-IFRS financial measure and is described in the
Non-IFRS Financial Measures section of the MD&A.
2011
IFRS
2012
IFRS
2009
CGAAP
2008
CGAAP
2010
IFRS
0
5
10
15
20
25
30
December
2012
January
2012
June
2012
30.19
8.10
NORBORD WAS THE TOP GAINER
ON THE TSX IN 2012
Share price (CAD $)
Some of our competitors have announced capacity restarts and we are advancing our own plans to bring our Jefferson, Texas
mill online by mid-2013. Norbords timeline for adding back capacity continues to be dictated by the long lead times required
for equipment deliveries, the hiring and training of a new workforce and the rebuilding of a log supply infrastructure. These
challenges and the extended timeline suggest to me that improving OSB demand will continue to outstrip supply for at least the
next three quarters.
Im expecting another good result from our European panel business. In the UK, where three of our four mills are located, housing
starts, mortgage lending and home prices are below trend but remain stable. Both our January order les and panel prices
indicate we are off to a positive start this year.
We continue to monitor pricing trends that impact our manufacturing costs. We will likely see upward pressure on our raw material
input prices, particularly wood bre and resin, as the broader US economy improves. However, we should be able to offset these
higher costs through ongoing MIP initiatives.
DISCIPLINED CAPITAL ALLOCATION
With the bottom of the cycle now behind us and peak earnings years ahead of us, we need to prioritize capital allocation alternatives.
However, our framework for making these decisions hasnt changed. Our highest priority is to reinvest in our existing OSB business
through low-risk, high-return projects at our mills. We will also look for opportunities to grow our OSB business through attractive
acquisitions. Further, we will consider paying down debt and returning surplus cash to shareholders if it makes nancial sense to do
so. Long-term investors will recall that during previous peak earnings years, we paid dividends and bought back shares.
After ve years of constraining capital and in keeping with these priorities, we are ramping up capital expenditures to $150 million
over the next three years. The $70 million we are planning to spend in 2013 is focused on reducing costs and improving
productivity, and includes a $10 million investment to restart our Jefferson mill.
NORBORD IS WELL POSITIONED
Im pleased that we delivered strong earnings and a much improved 21% return on equity in 2012. And I rmly believe that 2013
will be even better.
Our mills are performing well and productivity is at an all-time high. We have strong customer partnerships. Demand from US
new home construction is accelerating. Our European business is stable and continues to provide a reliable earnings contribution.
And we have a solid balance sheet that is de-levering quickly. Norbord will generate robust cash ow now that OSB demand is
gaining momentum.
On behalf of everyone at Norbord, I thank you for your ongoing support during the past ve challenging years. We remain focused
on maximizing shareholder value and I am delighted that your patience is nally being rewarded.
I look forward to reporting on our progress throughout the year.
J. Barrie Shineton
President and Chief Executive Ofcer
This letter includes forward-looking statements, as dened by applicable securities legislation including statements related to our strategy, projects, plans, future nancial
or operating performance and other statements that express managements expectations or estimates of future performance. Often, but not always, forward-looking
statements can be identied by the use of words such as expect, suggest, support, believe, should, potential, likely, continue, forecast, point to,
plan, indicate, consider, would, or variations of such words and phrases or statements that certain actions may, could, must, would, might, or will
be undertaken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results,
performance or achievements of Norbord to be materially different from any future results, performance or achievement expressed or implied by the forward-looking
statements. See the cautionary language in the Forward-Looking Statements section of the 2012 Managements Discussion and Analysis dated January 30, 2013.
5
2012 FINANCIAL TABLE OF CONTENTS
MANAGEMENTS DISCUSSION
AND ANALYSIS
Introduction 7
Business Overview 8
Strategy 9
Summary 11
Outlook for 2013 13
Results of Operations 14
Interest, Depreciation and Income Taxes 19
Liquidity and Capital Resources 21
Investments and Divestitures 23
Capitalization 24
Selected Quarterly Information 25
Fourth Quarter Results 26
Transactions with Related Parties 28
Financial Policies 29
Changes in Accounting Standards 30
Future Changes in Accounting Policies 30
Signicant Accounting Policies, Judgements
and Estimates 31
Risks and Uncertainties 32
Assessment and Changes in Internal Controls and
Disclosure Controls over Financial Reporting 35
Non-IFRS Financial Measures 36
Forward-Looking Statements 39
CONSOLIDATED
FINANCIAL STATEMENTS
Managements Responsibility for the
Financial Statements 40
Independent Auditors Report 41
Consolidated Balance Sheets 42
Consolidated Statements of Earnings 43
Consolidated Statements of Comprehensive
Income/(Loss) 43
Consolidated Statements of Changes in
Shareholders Equity 44
Consolidated Statements of Cash Flows 45
Notes to the Consolidated Financial Statements 46
2012 FINANCIAL PERFORMANCE
-50
0
50
100
150
2011
IFRS
2012
IFRS
2009
CGAAP
2008
CGAAP
2010
IFRS
(13)
136
(35) (13)
127
CASH PROVIDED BY OPERATING ACTIVITIES
(US $ millions)
-100
-50
0
50
100
150
200
45
188
0 (60)
107
EBITDA
(1)
(US $ millions)
(1)
2011
IFRS
2012
IFRS
2009
CGAAP
2008
CGAAP
2010
IFRS
-150
-100
-50
0
50
100
2011
IFRS
2012
IFRS
2009
CGAAP
2008
CGAAP
2010
IFRS
(11)
72
(58) (115)
13
EARNINGS
(US $ millions)
100
150
200
250
300
Five-year average
2011 2012 2009 2008 2010
Source: Company estimates
(1)
European indicative average OSB price represents the gross delivered
price to the largest Continental market; restated as a result of the adoption
of IFRS. The 2011 comparative has been restated to gross delivered price.
EUROPEAN INDICATIVE OSB PRICE
(1)

(/m
3
)
264
260
190
227
244
100
150
200
250
300
Five-year average
2011 2012 2009 2008 2010
Source: Random Lengths
NORTH AMERICAN OSB PRICE
North Central Benchmark Price (US $/Msf
7
/16-inch basis)
186
271
163
172
219
0
250
500
750
1,000
1,250
965
1,149
718
943
962
SALES
(1)
(US $ millions)
(1)
Outbound freight costs are no longer netted against sales; 2010 restated
as a result of the adoption of IFRS.
2011
IFRS
2012
IFRS
2009
CGAAP
2008
CGAAP
2010
IFRS
0.0
0.5
1.0
1.5
Five-year average
2011 2012 2009 2008 2010
Source: US Department of Commerce
0.61
0.78
0.55
0.90
0.59
US HOUSING STARTS
(Million units)
0
2,000
4,000
6,000
2011 2012 2009 2008 2010
4,432
4,685
4,064
5,026
4,394
2012 PANEL SHIPMENTS
(MMsf
3
/8-inch basis)
Some of the statements included in this MD&A constitute forward-looking statements that are based on various assumptions and are subject to various risks. See the
cautionary statement contained in the Forward-Looking Statements section.
7
MANAGEMENTS DISCUSSION AND ANALYSIS
JANUARY 30, 2013
INTRODUCTION
This Managements Discussion and Analysis
(MD&A) provides a review of the signicant
developments that impacted Norbords
performance during 2012 relative to 2011.
The information in this section should be read
in conjunction with the audited nancial
statements, which follow this MD&A.
In this MD&A, Norbord means Norbord Inc. and all of its consolidated subsidiaries and afliates, and Company means
Norbord Inc. as a separate corporation, unless the context implies otherwise. Brookeld means Brookeld Asset Management
Inc. or any of its consolidated subsidiaries and afliates, a related party by virtue of a controlling equity interest in the Company.
Additional information on Norbord, including documents publicly led by the Company, is available on the Companys website at
www.norbord.com or the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com.
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.
To enhance shareholders understanding, certain ve-year historical nancial and statistical information is presented. Norbords
signicant accounting policies and other nancial disclosures are contained in the audited nancial statements and accompanying
notes, which follow this MD&A. All nancial references in the MD&A are stated in US dollars unless otherwise noted.
Earnings before interest, taxes, depreciation and amortization (EBITDA), EBITDA margin, operating working capital, total working
capital, capital employed, return on capital employed (ROCE), return on equity (ROE), total shareholder return, net debt, tangible
net worth, net debt to capitalization, book basis, and net debt to capitalization, market basis, are non-IFRS nancial measures
described in the Non-IFRS Financial Measures section. Non-IFRS nancial measures do not have any standardized meaning
prescribed by International Financial Reporting Standards (IFRS) and are therefore unlikely to be comparable to similar measures
presented by other companies. Where appropriate, a quantitative reconciliation of the non-IFRS nancial measure to the most
directly comparable IFRS measure is also provided.
BUSINESS OVERVIEW
Norbord is an international producer of wood-based panels with 13 plant locations in the United States, Europe and Canada.
Norbord is one of the worlds largest producers of oriented strand board (OSB) with an annual capacity of 5.0 billion square feet
(Bsf) (
3
8-inch basis). The core assets of Norbords OSB business are located in the South East region of the US. The Company
is also a signicant producer of wood-based panels in the United Kingdom. Wood bre is purchased from third parties which
include private landowners and government-owned and -managed timberlands. Norbord employed approximately 1,900 people at
December 31, 2012.
Operations include 11 OSB mills, two particleboard mills, one medium density breboard (MDF) mill and one furniture plant. The
Company reports all operations as a single operating segment wood-based panels.
CANADA
UNITED STATES
OSB MDF Particleboard Furniture
GERMANY
FRANCE
BELGIUM
UNITED
KINGDOM
NORTH AMERICA EUROPE
PRINCIPAL END USES FOR NORBORDS
PANEL PRODUCTS
OSB
New home construction Light commercial construction
Repair and remodel Industrial applications
PARTICLEBOARD
New home construction Furniture
Repair and remodel Fixtures
MDF
Furniture Mill work
Fixtures
OSB (EU)
12%
Particleboard (EU)
10%
OSB (NA)
72%
MDF (EU)
6%
NA = North America
EU = Europe
OSB ACCOUNTS FOR ALMOST 85%
OF NORBORDS BUSINESS
(Production capacity by product)
MANAGEMENT S DI SCUSSI ON AND ANALYSI S 9
STRATEGY
Norbords business strategy is focused entirely on the wood panels sector in particular OSB in North America and Europe.
Pricing and demand for Norbords principal product OSB has been signicantly affected by the US housing market downturn
that began in 2006. This environment, while not altering the long-term strategy of the business, required management to focus on
certain short-term objectives starting in 2008.
In this regard, Norbord accomplished the following in 2012:
Short-Term Strategic Priority 2012 Performance
1. Generate cash. Achieved EBITDA of $188 million.

Increased EBITDA at North American operations to $165 million from $14 million in 2011.

Ramped up the Companys North American shipments by 8%, beneting from 46% higher
North Central average benchmark OSB prices during the year.
Generated EBITDA of $39 million at European operations despite 11% lower OSB prices
and higher raw material input prices.
Ongoing minimal investment in capital expenditures and operating working capital.
2. Strengthen the balance sheet.
Successfully renanced $240 million 2012 bond maturity with issuance of senior notes due
in 2015 and reduced interest rate from 7.25% to 6.25%.
Renewed $245 million committed revolving bank lines and extended term to May 2015.
The actions taken by Norbord over the past ve years to recapitalize, increase liquidity, reduce losses and conserve cash have
stabilized the Companys balance sheet, an important element of Norbords ongoing nancial strategy.
At the end of the year, the Company had unutilized liquidity of $455 million, net debt to capitalization on a book basis of 43% and
tangible net worth of $422 million. Management believes that its record of superior operational performance and prudent balance
sheet management should enable it to access public and private capital markets, subject to nancial market conditions.
Norbords long-term strategic priorities remain unchanged from prior years, and the following table provides updates on the
Companys 2012 achievements in each area:
Long-Term Strategic Priority 2012 Performance
1. Develop a world-class Maintained industry-leading safety performance with a Company best-ever Occupational
safety culture. Safety and Health Administration (OSHA) recordable rate of 0.74.
Completed OSHA recordable injury-free year at the Joanna, South Carolina and Guntown,
Mississippi mills.
Completed 10 years without a lost-time incident at the Nacogdoches, Texas mill.

Achieved Norbord Safety Star certication at the La Sarre, Quebec, Inverness, Scotland
and South Molton, England mills.
2. Pursue growth in OSB. Improved productivity at North American OSB mills by 3%.
Set annual production records at ve of the Companys eight operating OSB mills in
North America and Europe.
Continued to evaluate opportunities to grow OSB business through acquisition.
3. Own high-quality assets
Indenitely curtailed production at the Val-dOr, Quebec mill and consolidated the
with low-cost positions. Companys Canadian OSB production at the La Sarre, Quebec mill.
Completed the Companys pilot investment in nes screening technology at the
Nacogdoches, Texas OSB mill. The project has exceeded its return expectations to-date.
Developed plans for $150 million three-year capital reinvestment strategy for the
North American OSB mills, focused on reducing manufacturing costs.
4. Maintain a margin-focused
Generated margin improvements of $23 million from reduced raw materials usage and
operating culture. improved production efciencies.
5. Focus on growth customers.
Increased North American pro-dealer sales volume by 35% as US housing starts improved
28%. The Companys sales volume to customers supplying the new home construction
segment represented 45% of total sales volume compared to 35% in 2011.
Increased shipments of North American value-added products by 29%.
Increased European sales volume by 2%.
6. Allocate capital with
Constrained capital investments to less than 50% of depreciation at $26 million.
discipline.
Fully paid down $82 million drawn under the Companys accounts receivable
securitization program.
Put a plan in place to commence a normal course issuer bid, providing the option to
purchase up to 5% of its outstanding common shares.
SUMMARY
2012 2011 2010 2009 2008
(US $ millions, except per share information, unless otherwise noted) IFRS IFRS IFRS CGAAP CGAAP
Return on capital employed (ROCE) 23% 5% 12% 0% (6)%
Return on equity (ROE) 21% (3)% 4% (19)% (37)%
Cash provided by (used for) operating activities 136 (13) 127 (35) (13)
Cash provided by (used for) operating activities per share 3.12 (0.30) 2.93 (0.82) (0.86)
Sales and earnings
Sales
(1)
1,149 965 962 718 943
EBITDA 188 45 107 (60)
Earnings 72 (11) 13 (58) (115)
Per common share earnings
Basic 1.65 (0.25) 0.30 (1.35) (7.62)
Diluted 1.59 (0.25) 0.29 (1.35) (7.62)
Common dividends 3.68
Total assets 1,115 1,070 1,118 1,043 1,044
Long-term debt 433 438 443 471 542
Net debt for nancial covenant purposes
(2)
315 360 337 454 477
Net debt to capitalization, market basis
(2)
32% 42% 35% 48% 32%
Net debt to capitalization, book basis
(2)
43% 51% 49% 58% 61%
Key statistics
Shipments (MMsf
3
8")
North America 3,111 2,885 2,989 2,780 3,624
Europe 1,574 1,547 1,405 1,284 1,402
Indicative average OSB price
7
16") 271 186 219 163 172
South East ($/Msf
7
16") 241 169 198 148 143
Europe (/m
3
)
(3)
260 264 244 190 227
(1)
(2)
2010 has not been restated for IFRS and shows the originally disclosed ratios under Canadian GAAP.
(3)
The long-awaited US housing market recovery is well
underway. Higher US housing starts and OSB demand in
2012, especially in the second half of the year, are clear and
positive indicators. In 2012, US housing starts were 28%
higher compared to 2011. The North American North Central
OSB benchmark price averaged at its highest level in seven
years at $271 per thousand square feet (Msf) (
7
16-inch basis)
in 2012, up 46% over 2011. Norbord ran more of its North
American capacity during the year, operating at approximately
70% of capacity compared to 65% in 2011. Norbords
European panel business continued to deliver consistently
strong results and remains resilient despite broader economic
and currency concerns in Europe.
Against this improving market backdrop, Norbord generated
EBITDA of $188 million in 2012 versus $45 million in 2011.
EBITDA margins were 16%, compared to 5% for the prior year.
Earnings were $72 million or $1.65 per share (basic) versus
negative $11 million or $0.25 per share (basic) in 2011.
Pre-tax ROCE averaged 23% compared to 5% in the prior year.
ROCE is a measurement of nancial performance, focusing on
cash generation and the efcient use of capital. As Norbord
operates in a cyclical commodity business, it interprets ROCE
over the cycle as a useful means of comparing businesses in
terms of efciency of management and viability of products.
ROCE has remained positive in three of the past ve years and
Norbord has generated an average annual ROCE of 7%
through this cyclical trough.
Signicantly higher North American OSB prices and shipment volumes were the primary drivers of the year-over-year EBITDA
improvement in 2012. In addition, 2012 results include $23 million of Margin Improvement Program (MIP) gains primarily
generated from lower raw material input usages and higher productivity.
The US housing recovery is expected to gain further momentum as the underlying demographics drive more robust demand for
new homes. During the US housing market downturn which began in 2006, the Company prudently focused on preserving cash
and stabilizing its balance sheet. 2012 has marked a turning point in the cycle as Norbord generated $136 million in operating
cash ow and had $455 million of unutilized liquidity at the end of the year. Norbord is well positioned and will continue to benet
from the housing market recovery.
0.0
0.5
1.0
1.5
Five-year average
2011 2012 2009 2008 2010
0.61
0.78
0.55
0.90
0.59
US HOUSING STARTS
(Million units)
100
150
200
250
300
Five-year average
2011 2012 2009 2008 2010
Source: Random Lengths
NORTH AMERICAN OSB PRICE
North Central Benchmark Price (US $/Msf
7
/16-inch basis)
186
271
163
172
219
OUTLOOK FOR 2013
Norbord expects the overall business environment to continue to be positive in 2013. The recovery in the US housing market
which took hold in the second half of 2012 is expected to continue to accelerate in 2013. Industry experts are forecasting 2013
US housing starts in the range of 900,000 to 1.2 million. While starts still remain below the long-term annual average of
1.5 million, it will be another year of robust growth in housing activity. Unemployment, foreclosures, existing home inventories
and mortgage rates are all trending down and home prices and builder condence are rising. On the other hand, mortgage
lending standards are likely to become more restrictive as new regulations take effect this year and this is expected to be a
headwind. In response to increased customer demand for OSB, Norbord intends to restart its mill in Jefferson, Texas by
mid-2013, which represents 9% of the Companys annual OSB production capacity in North America. This mill was indenitely
shut in the rst quarter of 2009 in response to the unprecedented deterioration in US housing activity. Norbord will continue to
monitor market conditions, but does not currently expect to restart its mills in Huguley, Alabama or Val-dOr, Quebec in 2013.
These two mills represent 19% of Norbords annual OSB production capacity in North America.
Heading into 2013, despite the challenging macroeconomic environment, Norbords European operations are expected to
continue delivering strong results as panel markets remain stable. In the UK, where the majority of Norbords European assets are
located, the Companys view suggests no material change in the panel market drivers housing starts, mortgage lending and
home prices are below trend but continue to be stable. Norbords core UK mills also remain signicantly advantaged by a weaker
Pound Sterling relative to the Euro. This currency trend makes imports into the UK less competitive and provides the Company
with further export opportunities to continental Europe.
On the input cost side, as the US economic recovery picks up speed, management expects to see continued upward pressure on
global commodity prices, which would affect panel producers raw material costs, specically bre, resin and energy. Norbord will
continue to pursue aggressive MIP initiatives to reduce raw material usages and improve productivity to offset these potentially
higher uncontrollable costs.
Norbord is planning to increase capital investments to $70 million in 2013, which represents 127% of depreciation. Key strategic
capital projects are planned at the North American OSB mills focused on reducing manufacturing costs and increasing productivity.
Norbord has strong nancial liquidity and no debt maturities until 2015. Combined with the Companys competitive cost position,
diversied sales strategy and solid customer partnerships, Norbord is well positioned for the accelerating recovery in housing
markets and will benet from stronger OSB demand in the years ahead.
RESULTS OF OPERATIONS
2012 2011 2010 2009 2008
(US $ millions, unless otherwise noted) IFRS IFRS IFRS CGAAP CGAAP
Sales
(1)
1,149 965 962 718 943
EBITDA 188 45 107 (60)
EBITDA margin 16% 5% 11% 0% (6)%
Depreciation 53 51 51 48 68
Investment in property, plant and equipment 26 25 16 14 27
Shipments (MMsf
3
8") 4,685 4,432 4,394 4,064 5,026
Indicative Average OSB Price
7
16") 271 186 219 163 172
South East ($/Msf
7
16") 241 169 198 148 143
Europe (/m
3
)
(2)
260 264 244 190 227
(1)
(2)
Markets
North America is the principal market destination for Norbords
products. North American OSB comprises approximately 66%
of Norbords panel shipments by volume. Therefore, results of
operations are most affected by volatility in North American
OSB prices. European panel prices are less volatile than
North American prices. Europe comprises approximately 34%
of Norbords shipments by volume, affecting Norbords results
to a lesser degree.
SHIPMENTS
MMsf
3
8" 2012 2011 2010 2009 2008
North America 3,111 2,885 2,989 2,780 3,624
Europe 1,574 1,547 1,405 1,284 1,402
Total 4,685 4,432 4,394 4,064 5,026
NORTH AMERICA
2012 marked a turning point in the US housing market and in turn the OSB market. Reecting increased demand from new home
construction, North American OSB prices improved steadily throughout the year and gained momentum in the second half of the
year. North Central benchmark OSB prices strengthened from a February low of $188 per Msf (
7
16-inch basis) to nish the year
at an annual high of $370 per Msf. The North Central benchmark price averaged $271 per Msf in 2012 compared to $186 per
Msf in 2011, a 46% increase. In the South East region, where approximately 55% of Norbords North American OSB capacity is
located, prices averaged $241 per Msf, compared to $169 per Msf in the prior year.
2012 PANEL SHIPMENTS
(Volume by market)
European
Panels
34%
North
American
OSB
66%
According to APA The Engineered Wood Association (APA),
new home construction is still the primary end use for the OSB
industry in North America, accounting for approximately 50%
of OSB demand in 2012. US housing starts were approximately
780,000 in 2012, up 28% from 610,000 in 2011, while
permits were 30% higher than in the previous year. More
importantly for the OSB industry, single family starts (which
use approximately three times more OSB than multifamily)
increased by 24% in 2012. Despite these notable gains, total
starts remain below the long-term annual average of
1.5 `million. For context, 100,000 housing starts represent
approximately 1 Bsf (
3
8-inch basis) of OSB demand.
Norbords North American OSB shipment volume increased by
8% in 2012 compared to 2011. Approximately 45% of Norbords
OSB sales volume went to the new home construction sector in
2012, up from 35% in 2011. The other 55% went into repair and
remodelling, light commercial construction and industrial
applications. Management believes that this distribution channel
diversity provides opportunities to maximize protability while
limiting the Companys relative exposure to the new home
construction segment during periods of soft housing activity.
Management expects the Companys sales volume to the new
home construction sector will continue to grow as US housing
recovers to more normal levels.
According to the APA, North American OSB demand increased
in 2012 to approximately 16.8 Bsf (
3
8-inch basis), representing
almost 60% of total North American OSB and plywood structural
panel demand and 60% of industry OSB production capacity.
Norbords North American OSB mills operated at approximately
70% of capacity in 2012, up from 65% in 2011.
EUROPE
Norbords European panel markets remained resilient in 2012 in
spite of persistent economic and currency concerns in Europe.
In the UK, where the majority of Norbords European assets are
located, housing starts decreased by 9% compared to 2011, but
the housing market nonetheless remained steady overall with
stable home prices and modestly increased mortgage lending.
In Germany, Norbords largest continental European market,
housing starts averaged approximately 7% higher than 2011. In
this stable environment, Norbords European panel mills
produced 3% more volume and increased shipments by 2%
versus the prior year. Norbords mills produced at approximately
95% of capacity in both 2012 and 2011.
0.0
0.5
1.0
1.5
Five-year average
2011 2012 2009 2008 2010
0.61
0.78
0.55
0.90
0.59
US HOUSING STARTS
(Million units)
100
150
200
250
300
Five-year average
2011 2012 2009 2008 2010
Source: Company estimates
(1)
European indicative average OSB price represents the gross delivered
price to the largest Continental market; restated as a result of the adoption
of IFRS. The 2011 comparative has been restated to gross delivered price.
EUROPEAN INDICATIVE OSB PRICE
(1)

(/m
3
)
264
260
190
227
244
0
20
40
60
80
100
2012 1990 1996 2002 2008
OSB REPRESENTS 60% OF NORTH AMERICAN
STRUCTURAL PANEL PRODUCTION
(% Market share)
Plywood OSB Source: APA The Engineered Wood Association
European panel prices decreased modestly in 2012. OSB prices declined 11% from 2011 peak levels while particleboard and
MDF prices rmed up throughout the year, increasing 1% and 3%, respectively.
Historically, the UK has been a net importer of panel products. For the past several years, the Pound Sterling has traded in a
range relative to the Euro that has been advantageous to Norbords primarily UK-based manufacturing operations as it has
improved sales opportunities within the UK, slowed the ow of Continental European imports and supported Norbords export
program into the Continent. The Pound Sterling traded between 1.18 and 1.28 versus the Euro during 2012, a range that
continued to benet Norbord.
SALES
(1)
2012 2011 2010 2009 2008
(US $ millions) IFRS IFRS IFRS CGAAP CGAAP
North America $ 701 $ 507 $ 586 $ 406 $ 538
Europe 448 458 376 312 405
Total $ 1,149 $ 965 $ 962 $ 718 $ 943
(1)
Total sales increased by $184 million or 19% in 2012 compared to 2011. In North America, sales increased by 38% due to
signicantly higher OSB prices and shipment volumes. Average North Central and South East OSB benchmark prices per Msf
(
7
/16-inch basis) increased by $85 and $72, respectively, in 2012, which is an increase of 46% and 43%, respectively, compared
to 2011. In Europe, sales declined by a modest 2% due to lower OSB prices that were only partially offset by higher shipment
volumes and moderately higher particleboard and MDF prices. European panel shipment volumes increased by 3% for OSB, 2%
for MDF, and remained relatively at for particleboard.
PRODUCTION
(MMsf
3
8") 2012 2011 2010 2009 2008
North America 3,123 2,864 2,993 2,785 3,645
Europe 1,576 1,537 1,437 1,266 1,332
Total 4,699 4,401 4,430 4,051 4,977
Total production volume increased by 7% or 298 million square feet (MMsf) (
3
8-inch basis) as the Company ran more of its
North American capacity to meet increased OSB demand. The Companys European panel mills continued to produce at full
production schedules.
NORTH AMERICA
North American production volume increased by 9% or 259 MMsf (
3
8-inch basis) in 2012 in response to higher OSB demand
and improved productivity. Three of Norbords six operating mills set annual production records in 2012.
Effective April 2012, the older of the two production lines at Norbords Cordele, Georgia mill restarted. The line was temporarily
shut down at the end of 2010 and did not operate during 2011.
Effective July 2012, Norbord indenitely suspended production at its OSB mill in Val-dOr, Quebec to conserve cash and improve
earnings. The decision to suspend production was made to optimize the Companys operating conguration in Canada given
managements assessment that the housing market recovery will be gradual. Customers continue to be serviced without
disruption. Approximately 120 employees were affected by this decision. The Company did not incur any material one-time
charges as a result of this decision. The mill represents approximately 8% of Norbords annual OSB production capacity in North
America. Prior to this indenite curtailment, the mill had been operating in a partially curtailed mode for the last ve years.
In the rst quarter of 2009, Norbord indenitely suspended production at its OSB mills in Huguley, Alabama and Jefferson, Texas.
These two mills represent approximately 20% of Norbords annual OSB production capacity in North America. In response to
increased customer demand for OSB, Norbord intends to restart its mill in Jefferson, Texas by mid-2013. Norbord will continue to
monitor market conditions, but does not currently expect to restart its mills in Huguley, Alabama or Val-dOr, Quebec in 2013.
Norbords North American OSB mills operated at approximately 95% of their capacity in 2012, compared to 80% in 2011.
Including the indenitely closed mills, Norbords North American OSB mills operated at approximately 70% of capacity in 2012,
compared to 65% in 2011.
In 2010, production at the hardwood plywood joint-venture operation in Cochrane, Ontario ceased (see Investments and
Divestitures section). Norbord held a 50% joint-venture interest in this non-core business, which represented less than 1% of
total assets and approximately 1% of Norbords total annual production capacity.
EUROPE
European production volume increased by 3% or 39 MMsf (
3
8-inch basis) in 2012 reecting similar volume gains across the
Companys three panel products and annual production records at the two OSB mills. All of Norbords panel mills ran on full
production schedules in 2012 excluding maintenance and holiday shutdowns. The Companys particleboard mill in Cowie,
Scotland was shut for three weeks in 2011 during a signicant capital project.
In Europe, mills operated at approximately 95% of capacity in both 2012 and 2011, reecting higher production in 2012 offset by
the 6% increase in Norbords stated European panel capacity effective December 31, 2011. Norbord increased the stated annual
capacity of the Genk, Belgium mill from 260 MMsf (
3
8-inch basis) to 350 MMsf effective for 2012, a 35% gain due to
improvements from both capital investment and operating efciencies.
Operating Results
Norbord generated EBITDA of $188 million in 2012, compared
to $45 million in 2011. North American OSB generated
EBITDA of $165 million, compared to $14 million in the prior
year, a year-over-year improvement of $151 million. Norbords
European panel operations generated EBITDA of $39 million, a
year-over-year decline of $5 million. Unallocated costs were
$3 million higher due to higher incentive compensation
attributed to the improved results and a higher mark-to-market
valuation for certain share-based compensation due to the
increase in Norbords share price.
-50
0
50
100
150
200
Total Europe North America Unallocated
(13)
165
188
188
(16)
39 44
14
45
EBITDA
(1)
(US $ millions)
2011 2012
(1)
NORTH AMERICA
Norbords North American OSB operations delivered signicantly improved EBITDA results in 2012. EBITDA increased by
$151 million primarily driven by higher OSB prices, higher sales volumes and lower usages for all key inputs, partially offset by
higher raw material input prices and higher prot share costs attributed to the improved results. Average North Central and
South East OSB benchmark prices per Msf increased by $85 and $72, respectively, which is an increase of 46% and 43%,
respectively, compared to 2011. On the cost side, higher raw material prices negatively impacted operating costs as bre, resin
and wax prices increased year-over-year.
EUROPE
Norbords European operations continued to deliver consistently strong results and remained resilient despite economic and
currency concerns in Europe. The EBITDA decline of $5 million in 2012 was primarily driven by lower OSB prices and higher key
input prices, particularly bre and energy. This was partially offset by the benet of lower raw material usages, higher particleboard
and MDF prices, and higher panel shipment volumes. European panel prices decreased by 11% for OSB and increased 3% and
1% for MDF and particleboard, respectively. The weak Pound Sterling relative to the Euro continued to be advantageous for
Norbord, improving sales opportunities within the UK and slowing the ow of imports from Continental Europe.
EBITDA VARIANCE
The components of the EBITDA change are summarized in the variance chart below:
(1)
The mill nets variance represents the change in realized pricing across all products. Mill nets are calculated as sales (net of outbound freight costs) divided
by shipment volume.
(2)
The volume variance represents the impact of shipment volume changes across all products.
(3)
The key inputs include bre, resin, wax and energy.
(4)
The Other category covers all remaining variances including labour and benets (including incentive compensation), supplies and maintenance and the
impact of foreign exchange.
On the sales side, housing market activity, particularly in the US, inuences OSB demand and pricing. Fluctuations in North
American OSB demand and prices signicantly affect Norbords results. Average North Central benchmark OSB prices increased
by $85 per Msf or 46% in 2012. These signicantly higher North American prices combined with higher shipment volume in
both North America and Europe more than offset lower European OSB prices.
On the cost side, uctuations in raw material input prices signicantly impact operating costs. All key input prices, with the
exception of North American energy, increased in 2012. The direct impact on operating costs of rising energy prices continues to
be mitigated by the use of biomass for all of Norbords heat energy requirements. Norbords reduced reliance on fossil fuels has
generated signicant energy-cost savings in both North America and Europe.
0
50
100
150
200
250
HIGHER MILL NETS AND VOLUME DRIVE HIGHER EBITDA
EBITDA variance (US $ millions)
Key input
usage
(3)
2012 Mill nets
(1)
2011 Volume
(2)
Other
(4)
Key input
prices
(3)
188
45
135
25
10 (18)
(9)
Fibre prices increased in both North America and Europe in
2012. Norbord does not own any timberlands; therefore, it
purchases timber, wood chips and bre as well as other wood
recycled materials on the open market, in competition with
other users of such resources, where prices are inuenced by
factors beyond Norbords control.
The prices of bre, resin, wax and energy, which account for
approximately 65% of Norbords cash production costs, have
risen in the past two years. MIP gains of $23 million in 2012,
measured relative to 2011 at constant prices and exchange
rates, mitigated the impact of higher raw material prices on
Norbords earnings in 2012. Contributions to MIP included raw
material usage reduction initiatives, improved production efciencies and a richer added-value product mix. Approximately 75%
of MIP gains were attributed to the North American operations. The largest contributor to 2012 MIP gains was the Companys
North American resin technology change which started in 2011. In addition, the Companys pilot capital investment in nes
screening technology in North America was completed in 2012 and also contributed to MIP.
In 2012, Norbords North American OSB cash production costs per unit (excluding incentive compensation) decreased 1% over
the prior year. Excluding the impact of higher raw material prices and higher maintenance costs, production cost per unit
decreased by 3%. Norbords European operations are disproportionately impacted by rising resin and global energy prices
because the products are more resin and energy intensive. A number of initiatives have been undertaken to address these cost
pressures, including the permanent closure of a particleboard line at the Genk, Belgium site in 2008 and the installation of
biomass heat energy systems at the Companys OSB mill in Genk and MDF mill in Cowie, Scotland in 2007.
INTEREST, DEPRECIATION AND INCOME TAXES
2012 2011 2010 2009 2008
Interest and other income $ $ $ $ $ 3
Interest expense (36) (33) (34) (36) (49)
Depreciation (53) (51) (51) (48) (68)
Income tax (expense) recovery (27) 28 (1) 33 95
Interest
Interest expense in 2012 was $3 million higher than in 2011 due to higher amortization of debt issue costs related to the 2012
bond renancing and lower gains on interest rate swaps that matured in 2012. This was partially offset by lower coupon rates on
the renanced $240 million senior notes and on the 2017 bonds due to the upgraded secured credit rating (see Liquidity and
Capital Resources section).
Interest expense was $13 million lower in 2009 compared to 2008 due to three main factors. First, Norbord paid down
borrowings under the Companys committed revolving bank lines and Brookeld debt facility with proceeds from the Rights
Offering completed in the rst quarter of 2009. Second, average interest rates in 2009 were lower than in 2008 due to low US
Federal Reserve rates. Lastly, interest was higher in 2008 due to the 8
1
8% debentures repurchased in the rst quarter of 2008.
0
5
10
15
20
25
30
35
2011 2012 2009 2008 2010
25
23
29
14
16
MIP GAINS HELP TO OFFSET IMPACT
OF HIGHER RAW MATERIAL PRICES
MIP gains (US $ millions)
The effective interest rate on Norbords debt-related obligations, including the impact of interest rate swaps, was 6.9% as at
December 31, 2012, compared to 5.8% as at December 31, 2011. None of Norbords net debt was subject to oating interest
rates as at December 31, 2012, compared to 23% as at December 31, 2011.
From time to time, the Company has recouponed its portfolio of interest rate swaps to more efciently manage cash ow and
credit exposure. Any gains or losses realized were deferred and amortized over the remaining term of the debt against which the
swaps were designated as hedges. As at December 31, 2012, all interest rate swaps had matured and no amounts were deferred
and included in the carrying value of long-term debt in the consolidated balance sheet. Amortization of $1 million in 2012 and
$2 million in 2011 was included in interest expense.
Depreciation
Depreciation expense in 2012 was $2 million higher than in 2011 due to higher production volumes. Effective March 29, 2009,
the Company prospectively changed its depreciation of production equipment from straight-line to units-of-production.
Income Tax
A tax expense of $27 million was recorded in 2012 on a pre-tax income of $99 million. The effective tax rate of 27% is marginally
higher than the Canadian statutory rate principally due to rate differences on foreign activities and uctuations in relative currency
values. In 2011, the effective tax rate of 72% was higher than the statutory rate due principally to non-recurring tax recoveries
(noted below), rate differences on foreign activities and uctuations in relative currency values. In 2011, the income tax recovery
included: (i) a $7 million ($0.16 per share) recovery due to the recognition of a non-recurring income tax benet in the second
quarter of 2011; and (ii) a $5 million ($0.11 per share) non-recurring income tax recovery due to the favourable resolution of a tax
authority audit in the rst quarter of 2011 previously provided for in the Companys deferred income tax provision.
In 2012 and 2011, the Company paid net taxes of $nil and $1 million, respectively. In 2010, 2009 and 2008, the Company
received tax refunds of $52 million, $10 million and $85 million, respectively, related to losses carried back and over installments.
At December 31, 2012, the Company had tax operating loss carryforwards of approximately 38 million from operations in
Belgium. These losses can be carried forward indenitely to offset future taxable income in Belgium. The Company also has tax
operating losses of CAD $85 million and US $145 million from operations in Canada and the US, respectively, which expire
between 2028 and 2033. In addition, the Company has capital losses of CAD $18 million which can be carried forward
indenitely. The Company also has approximately CAD $3 million worth of Investment Tax Credits (ITCs) available to reduce future
Canadian tax liabilities. The ITCs expire between 2019 and 2031. The loss carryforwards and credits may be utilized over the next
several years to eliminate cash taxes otherwise payable, and will protect future cash ows. Certain deferred tax assets in respect
of its tax losses and attributes have been recognized and included in deferred income taxes in the consolidated nancial
statements. The Company reviews its deferred income tax assets at each balance date and reduces the amount recognized to the
extent, in the judgement of management, is not probable to be realized.
LIQUIDITY AND CAPITAL RESOURCES
2012 2011 2010 2009 2008
(US $ millions, except per share information, unless otherwise noted) IFRS IFRS IFRS CGAAP CGAAP
Cash provided by (used for) operating activities $ 136 $ (13) $ 127 $ (35) $ (13)
Cash provided by (used for) operating activities
per share 3.12 (0.30) 2.93 (0.82) (0.86)
Operating working capital 50 28 10 (42) (53)
Total working capital 178 116 127 36 (20)
Investment in property, plant and equipment 26 25 16 14 27
Net debt to capitalization, market basis
(1)
32% 42% 35% 48% 32%
Net debt to capitalization, book basis
(1)
43% 51% 49% 58% 61%
(1)
2010 has not been restated for IFRS and shows the originally disclosed ratios under Canadian GAAP.
At year-end, the Company had unutilized liquidity of $455 million, comprising $242 million in revolving bank lines, $85 million
undrawn under its accounts receivable securitization program and $128 million in cash. Norbord has no investments in, or other
direct exposure to, US sub-prime mortgages, US auction rate securities or Canadian asset-backed commercial paper.
The Companys outstanding long-term debt has a weighted average term of 3.2 years. Norbords net debt for nancial covenant
purposes was $315 million at December 31, 2012, which includes long-term debt of $440 million less cash and cash equivalents
of $128 million plus letters of credit of $3 million.
Senior Notes Due 2015
In June 2012, the Company issued $240 million in senior notes due in 2015 with an interest rate of 6.25%. The notes comprise
two tranches. The rst tranche consists of $165 million of senior secured notes that rank pari passu with the Companys existing
senior secured notes due in 2017 and committed revolving bank lines. The second tranche consists of $75 million of senior
unsecured notes. The Company used the proceeds to repay the $240 million 7.25% debentures due on July 1, 2012.
Senior Secured Notes Due 2017
The Companys senior secured notes due in 2017 bear an interest rate that varies with the Companys credit ratings. In June
2012, Moodys Investors Service upgraded the ratings on the Companys senior secured debt from Ba3 to Ba2, and, accordingly,
the interest rate on the 2017 notes decreased by 0.25% from 7.95% to 7.70% effective February 15, 2012.
Revolving Bank Lines
In July 2012, the Company renewed its committed revolving bank lines, extending the maturity by one year and reducing the
aggregate commitment by $25 million. All other material terms of the bank lines remain unchanged. As a result, the Company now
has a total aggregate commitment of $245 million which matures in May 2015 and bears interest at money market rates plus a margin
that varies with the Companys credit rating. The bank lines are secured by a rst lien on the Companys North American OSB
inventory and property, plant and equipment. This lien is shared pari passu with holders of the 2015 and 2017 senior secured notes.
The bank lines contain two quarterly nancial covenants: minimum tangible net worth of $250 million and maximum net debt to total
capitalization, book basis, of 65%. The IFRS transitional adjustments to shareholders equity of $21 million at January 1, 2011 are
added back for the purposes of the tangible net worth calculation. In addition, other comprehensive income movement subsequent to
January 1, 2011 is excluded from the tangible net worth calculation. Net debt includes total debt, principal value, less cash and cash
equivalents plus letters of credit issued. At period-end, the Companys tangible net worth was $422 million for nancial covenant
purposes, and net debt for nancial covenant purposes was $315 million. Net debt to total capitalization, book basis, was 43%.
Accounts Receivable Securitization
The Company has an $85 million accounts receivable securitization program with a third-party trust sponsored by a highly rated
Canadian nancial institution. The program is revolving and has an evergreen commitment subject to termination on 12 months
notice. Under the program, Norbord 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 December 31, 2012,
Norbord had transferred but continued to recognize $112 million in accounts receivable but had no drawings on this program.
The securitization program contains no nancial 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
January 30, 2013, Norbords ratings were BB(low) (DBRS), BB- (Standard & Poors Ratings Services) and Ba3 (Moodys
Investors Service).
Other Liquidity and Capital Resources
Operating working capital, consisting of accounts receivable and inventory less accounts payable and accrued liabilities,
increased by $22 million during the year to $50 million at year-end, compared to $28 million at December 31, 2011. The
year-over-year increase was primarily due to higher accounts receivable mainly as a result of higher North American OSB prices.
The Company aims to minimize the amount of capital held as operating working capital and continued to manage it at minimal
levels throughout the year.
Total working capital, which includes operating working capital plus cash and cash equivalents and income tax receivable, was
$178 million as at December 31, 2012, compared to $116 million in the prior year. The increase is attributed to a higher cash
balance and higher operating working capital balances.
Operating activities generated $136 million of cash or $3.12 per share in 2012, compared to consuming $13 million or $0.30 per
share in 2011. In 2012, higher EBITDA was the primary driver of the improved cash generation.
The Company realized a gain of $3 million on its matured net investment hedges in 2012, compared to a loss of $1 million in
2011. The realized gain and loss were offset by an unrealized loss and gain on the net investments being hedged.
The following table summarizes the aggregate amount of future cash outows for contractual obligations:
Payments Due by Period
(US $ millions) 2013 2014 2015 2016 2017 Thereafter Total
Long-term debt,
including interest $ 32 $ 32 $ 264 $ 15 $ 208 $ $ 551
Purchase obligations 44 32 20 20 6 5 127
Operating leases 3 2 2 1 8
Total $ 79 $ 66 $ 286 $ 36 $ 214 $ 5 $ 686

Note: The above table does not include pension and post-employment benets plan obligations, which are discussed in the Risks and Uncertainties Dened Benet
Pension Plan Funding section.
INVESTMENTS AND DIVESTITURES
INVESTMENT IN PROPERTY, PLANT AND EQUIPMENT
(US $ millions) 2012 2011 2010 2009 2008
Increased productivity $ 16 $ 15 $ 7 $ 4 $ 3
Environmental 3 2 4 6 13
Maintenance of business 7 8 5 4 11
Total $ 26 $ 25 $ 16 $ 14 $ 27
Investment in property, plant and equipment in 2012 was $26 million, representing approximately 50% of depreciation, which
included the Companys pilot investment in nes screening technology at its Nacogdoches, Texas mill.
Due to market conditions, investment in property, plant and equipment has been constrained in the past ve years to essential
projects and, more recently, modest investments in technology that further improve Norbords cost position.
Norbords 2013 investment in property, plant and equipment is expected to be $70 million which will include essential capital
projects of approximately $10 million to restart the Jefferson, Texas mill. The plan also includes investment in certain key strategic
capital projects to improve production efciency and reduce manufacturing costs at the North American mills. These investments
will be funded with cash on hand, cash generated from operations and, if necessary, drawings under the Companys committed
revolving bank lines.
Divestitures
In January 2011, True North Hardwood Plywood Inc. announced the winding down of its hardwood plywood operation in
Cochrane, Ontario. Norbord held a 50% joint-venture interest in this non-core business, which represented less than 1% of total
assets. Approximately 200 employees were affected by this decision. In 2010, the Company recorded an $8 million non-cash
provision for the write-down of its investment in the joint venture.
CAPITALIZATION
COMMON SHARE INFORMATION
At December 31 2012 2011 2010 2009 2008
Shares outstanding (millions) 44.0 43.6 43.5 43.2 26.9
Dividends (US $ millions) $ $ $ $ $ 56
Market price at year-end (CAD $) $ 30.19 $ 8.10 $ 14.64 $ 14.66 $ 7.00
At January 30, 2013, there were 44.0 million common shares outstanding. In 2012, the total return on Norbord shares was
positive 273%, compared to negative 45% in 2011. The average daily volume traded during 2012 was approximately
86,000 shares, compared to approximately 80,000 shares in 2011.
On November 10, 2008, the Company announced the suspension of quarterly dividend payments on its common shares until
further notice. No dividends have been paid since that date.
In January 2013, Norbord applied to the Toronto Stock Exchange (TSX) for approval to commence a normal course issuer bid in
accordance with TSX rules. Under the previous bid which expired on December 20, 2012, the Company could have purchased
up to 2,178,705 of its common shares, which represented approximately 5% of the 43.6 million issued and outstanding common
shares as at November 30, 2011. No share purchases were made under the Companys previous bid.
Secondary Offering
In March 2010, Brookeld and the Company entered into an agreement with a syndicate of investment dealers to complete a
secondary offering of Norbords common shares. Under the agreement, the syndicate purchased 9 million common shares at
a price of CAD $16.70 per common share, for gross proceeds of CAD $150 million, on March 30, 2010. Brookeld offered
8.7 million shares and the Companys senior management offered 0.3 million shares. Upon completion of the secondary
offering, Brookelds ownership decreased from approximately 73% to 52% of common shares outstanding. Norbord did not
receive any proceeds from the offering.
Warrants
As at December 31, 2012, there were 135.2 million warrants outstanding, entitling the holders to purchase 13.5 million common
shares. Ten whole warrants entitle the holder to purchase one common share at a price of CAD $13.60 at any time prior to
December 24, 2013. In 2012, approximately 1.1 million common share purchase warrants were exercised, resulting in the
issuance of 0.1 million common shares for total proceeds of $1 million.
Stock Options
As at December 31, 2012, options on 2.2 million common shares were outstanding, with 32% vested. The exercise prices for the
outstanding options range from CAD $6.50 to CAD $111.30, with expiry on various dates up to 2022. In 2012, 0.3 million stock
options were exercised resulting in the issuance of 0.3 million common shares for total proceeds of $3 million.
SELECTED QUARTERLY INFORMATION
2012 2011
(US $ millions, except per share information,
unless otherwise noted) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Return on capital employed (ROCE) 33% 32% 15% 10% 4% 6% 5% 6%
Return on equity (ROE) 42% 36% 8% 0% (11)% (1)% 2% (2)%
Cash provided by (used for)
operating activities 86 52 25 (27) 31 (14) 3 (33)
Cash provided by (used for)
operating activities per share 1.98 1.19 0.57 (0.62) 0.73 (0.32) 0.05 (0.76)
Sales and earnings
Sales
(1)
322 302 272 253 229 242 241 253
EBITDA 70 66 31 21 9 12 10 14
Earnings 38 28 6 (9) (1) 1 (2)
Basic 0.86 0.64 0.14 (0.21) (0.02) 0.03 (0.05)
Diluted 0.76 0.61 0.14 (0.21) (0.02) 0.03 (0.05)
Key statistics
Shipments (MMsf
3
8")
North America 779 799 805 728 695 747 721 721
Europe 380 396 384 414 372 373 400 402
Indicative average OSB price
7
16") 332 313 235 203 190 184 173 198
South East ($/Msf
7
16") 296 274 204 190 166 169 162 177
Europe (/m
3
)
(2)
259 260 260 261 259 265 271 260
(1)
Outbound freight costs are no longer netted against sales.
(2)
European indicative average OSB price represents the gross delivered price to the largest Continental market. Prior period comparatives from Q1 2011 to Q4 2011
have been restated to gross delivered price.
Quarterly results are impacted by seasonal factors such as weather and building activity. Market demand varies seasonally, as
homebuilding activity and repair and renovation work the principal end uses of Norbords products are generally stronger in
the spring and summer months. Adverse weather can also limit access to logging areas, which can affect the supply of bre to
Norbords operations. Shipment volumes and commodity prices are affected by these factors as well as by global supply and
demand conditions.
Operating working capital is typically built up in the rst quarter of the year due primarily to log inventory purchases in the
Northern regions of North America and Europe. Logs are generally consumed in the spring and summer months. Prior to the
second quarter of 2012, operating working capital also uctuated based on the timing of coupon payments on the 2012
debentures and 2017 notes that normally fell in the rst and third quarters. Starting in the third quarter of 2012, coupon
payments on the 2015 notes, which renanced the 2012 debentures, fall in the second and fourth quarters.
The price of and demand for OSB in North America are signicant variables affecting the comparability of Norbords results over
the past eight quarters. Fluctuations in earnings during that time mirror uctuations in the price of and demand for OSB in North
America. The Company estimates that the annualized impact on EBITDA of a $10 per Msf (
7
16-inch basis) change in the North
American OSB price, when operations are running at full capacity, is approximately $36 million or $0.82 per share (pre-tax).
Regional pricing variations, particularly in the Southern US, make the North Central benchmark price a useful, albeit imperfect,
proxy for overall North American OSB pricing. Similarly in Europe, regional pricing variations and product mix make the European
OSB indicative price a useful, albeit imperfect, proxy for overall European OSB pricing. Further, competition premiums obtained
on value-added products, the pricing lag effect of maintaining an order le, and volume and trade discounts cause realized prices
to differ from the benchmarks for both North America and Europe.
Global commodity prices affect the prices of key input costs, primarily resin, wax, energy and bre. In 2010, commodity prices
increased in the rst half of the year and then levelled off for the remainder of the year. In 2011, resin prices and European bre and
energy prices were signicantly higher than in 2010. In 2012, all input prices except North American energy increased compared to
2011. In 2013, as the US economic recovery picks up speed, upward pressure on input costs is expected to continue.
Norbord has relatively low exposure to the Canadian dollar due to a comparatively small manufacturing base in Canada, which
comprises 12% of its panel production capacity. The Company estimates that the unfavourable impact of a one-cent (US)
increase in the value of the Canadian dollar would negatively impact annual EBITDA by approximately $1 million when Norbords
Canadian OSB mills operate at capacity.
Items not related to ongoing business operations that had a signicant impact on quarterly results include:
Income taxes In the second quarter of 2011, the Company recorded an income tax recovery of $7 million ($0.16 per share)
related to the recognition of a non-recurring income tax benet. Earnings in the rst quarter of 2011 included a $5 million
($0.11 per share) non-recurring income tax recovery due to the favourable resolution of a tax authority audit previously provided
for in the Companys deferred income tax provision.
FOURTH QUARTER RESULTS
In the fourth quarter of 2012, Norbord achieved its highest sustained quarterly EBITDA result since the second quarter of 2006,
driven by higher North American OSB prices.
In the quarter, North Central benchmark OSB prices averaged $332 per Msf (
7
16-inch basis), up $19 per Msf from the prior
quarter and up $142 per Msf from the fourth quarter of 2011. In the South East region, where approximately 55% of Norbords
North American OSB capacity is located, prices averaged $296 per Msf in the quarter, up $22 from the prior quarter and up
$130 from the fourth quarter of 2011. European OSB and MDF prices both increased by 1% relative to the third quarter of 2012,
while particleboard prices decreased by 1%. Year-over-year, European OSB, particleboard and MDF prices decreased by 8%, 3%
and 2%, respectively.
In North America, several mills took scheduled maintenance shutdowns during the fourth quarter resulting in lower shipments
and higher costs versus the prior quarter but beneted from higher OSB prices. Year-over-year, North American OSB prices and
shipments rose. In Europe, the normal seasonal slowdown was evident as shipment volumes decreased over the prior quarter but
were up compared to the same quarter last year. European panel prices remained relatively in line with the prior quarter but
compared to the same quarter last year OSB prices were signicantly lower, while both MDF and particleboard prices were
moderately lower.
Sales in the quarter were $322 million, compared to $302 million and $229 million in the third quarter of 2012 and fourth quarter
of 2011, respectively. Quarter-over-quarter, sales increased by $20 million mainly due to higher North American OSB prices. Year-
over-year, sales increased by $93 million primarily due to signicantly higher North American OSB prices and a 12% increase in
shipment volumes.
In the fourth quarter of 2012, Norbords North American OSB mills operated at approximately 70% of capacity and its European
mills operated at approximately 90% of capacity, compared to 60% and 90%, respectively, in the fourth quarter of 2011. In the
third quarter of 2012, North American OSB mills operated at 70% of capacity and European mills operated at 95% of capacity.
Norbord recorded earnings of $38 million ($0.86 per share) in the fourth quarter of 2012. The Company recorded earnings of
$28 million ($0.64 per share) in the third quarter of 2012 and a loss of $9 million ($0.21 per share) in the fourth quarter of 2011.
Quarter-over-quarter and year-over-year, higher earnings were primarily driven by higher North American EBITDA results.
In the quarter, Norbord recorded EBITDA of $70 million, versus $66 million in the previous quarter and $9 million in the fourth
quarter of 2011. EBITDA changes are summarized in the variance table below:
(US $ millions) Q4 2012 vs. Q3 2012 Q4 2012 vs. Q4 2011
EBITDA current period $ 70 $ 70
EBITDA comparative period 66 9
Variance 4 61
Mill nets
(1)
20 63
Volume
(2)
(5) 12
Key input prices
(3)
(1) (2)
Key input usage
(3)
(1)
Other
(4)
(9) (12)
Total $ 4 $ 61
(1)
The mill nets variance represents the change in realized pricing across all products. Mill nets are calculated as sales (net of outbound freight costs) divided by
shipment volume.
(2)
The volume variance represents the impact of shipment volume changes across all products.
(3)
The key inputs include bre, resin, wax and energy.
(4)
The Other category covers all remaining variances including labour and benets (including incentive compensation), supplies and maintenance and the impact of
foreign exchange.
EBITDA
Q4 Q3 Q4
(US $ millions) 2012 2012 2011
North America $ 67 $ 58 $ 2
Europe 9 10 10
Unallocated (6) (2) (3)
Total $ 70 $ 66 $ 9
Norbords North American operations generated EBITDA of $67 million in the fourth quarter of 2012, versus $58 million in the
third quarter of 2012 and $2 million in the fourth quarter of 2011. Quarter-over-quarter, the increase in EBITDA of $9 million was
attributed to higher OSB prices partially offset by lower shipment volumes and higher supplies and maintenance costs. The
year-over-year increase of $65 million was attributed to signicantly higher OSB prices and shipment volumes partially offset by
higher bre and resin prices and higher incentive compensation attributed to the improved results.
In the fourth quarter, Norbords North American OSB cash production costs per unit (excluding incentive compensation) increased
by 8% over the third quarter of 2012 due to lower production volume and higher supplies and maintenance costs related to annual
maintenance shutdowns. Year-over-year, OSB cash production costs per unit (excluding incentive compensation) increased by 4%
over the fourth quarter of 2011. The benet of higher production volume was more than offset by higher bre and resin prices.
Norbords European operations generated EBITDA of $9 million in the fourth quarter of 2012, versus $10 million in both the third
quarter of 2012 and fourth quarter of 2011. The quarter-over-quarter decrease of $1 million is primarily attributed to seasonally
higher bre and energy usages. The year-over-year decrease of $1 million is primarily attributed to lower panel prices partially
offset by higher shipment volumes.
Quarter-over-quarter and year-over-year, unallocated costs increased by $4 million and $3 million, respectively, due to higher
incentive compensation attributed to the improved results, and a higher mark-to-market valuation for certain share-based
compensation due to the increase in Norbords share price.
TRANSACTIONS WITH RELATED PARTIES
In the normal course of operations, the Company enters into various transactions on market terms with related parties which have
been measured at exchange value and are recognized in the consolidated nancial statements. The following transactions have
occurred between the Company and its related parties during the normal course of business:
Standby Term Loan Commitment
In 2011, Brookeld committed to put in place a $120 million standby term loan to be used to repay up to half of the 2012
debentures, which were due July 1, 2012, if necessary. Since the 2012 debentures were renanced through the issuance of
senior notes during the year, the standby term loan commitment automatically terminated.
Secondary Offering
In March 2010, upon completion of the secondary offering (see Capitalization section), Brookelds ownership decreased from
approximately 73% to 52% of common shares outstanding.
Indemnity Commitment
As at December 31, 2012, total future costs related to a 1999 asset purchase agreement between the Company and Brookeld,
for which Norbord provided an indemnity, are estimated at less than $1 million and are included in other liabilities in the
consolidated balance sheet.
Other
The Company provides certain administrative services to Brookeld which are charged on a cost recovery basis. In addition,
the Company periodically purchases goods from or engages the services of Brookeld for various nancial, real estate and
other business advisory services. In 2012, the fees for services rendered and cost of goods purchased were $4 million
(2011 $5 million) and were charged at market rates.
FINANCIAL POLICIES
Capital Allocation
Norbord considers effective capital allocation to be critical to its success. Capital is invested only when Norbord expects
returns to exceed pre-determined thresholds, taking into consideration both the degree and magnitude of the relative risks and
rewards and, if appropriate, strategic considerations in the establishment of new business activities or maintenance of existing
business activities. Post-investment reviews are conducted on capital investment decisions to assess the results against planned
project returns.
Liquidity
Norbord strives to maintain sufcient nancial liquidity at all times in order to participate in attractive investment opportunities as
they arise, and to withstand sudden adverse changes in economic circumstances. Management forecasts cash ows for its
current and subsequent scal years to identify nancing requirements. These requirements are then addressed through a
combination of committed credit facilities and access to capital markets.
At year-end, the Company had unutilized liquidity of $455 million, comprising $128 million in cash, $85 million undrawn under its
accounts receivable securitization program and $242 million in unutilized committed revolving bank lines with eight international
nancial institutions, available to support its liquidity requirements.
Credit Ratings
Maintaining a stable balance sheet is an important element of Norbords nancing strategy. Norbord believes that its record of
superior operational performance and prudent balance sheet management should enable it to access public and private capital
markets, subject to nancial market conditions.
At January 30, 2013, Norbords long-term debt and issuer ratings were:
Standard & Poors Moodys
DBRS Ratings Services Investors Service
Secured Notes BB BB- Ba2
Unsecured Notes B B+ B2
Issuer BB(low) BB- Ba3
Outlook Stable Stable Stable
In September 2012, Standard & Poors Ratings Services revised their outlook on Norbords issuer rating from negative to stable,
citing improved North American housing market conditions.
Credit ratings are intended to provide investors with an independent measure of the credit quality of any securities issue. The credit
ratings accorded to debt securities by the rating agencies are not recommendations to purchase, hold or sell the debt securities, as
such ratings do not comment on market price or suitability for a particular investor. There is no assurance that any rating will remain
in effect for any given period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future if, in its
judgement, circumstances warrant.
Use of Financial Instruments
Norbord uses derivative nancial instruments solely for the purpose of managing its interest rate, foreign exchange and
commodity price exposures, as further detailed in the Risks and Uncertainties section. These activities are governed by Board-
approved nancial policies that cover risk identication, tolerance, measurement and reporting. Derivative transactions are
executed only with approved, high-quality counterparties under master netting agreements. Derivative contracts that are deemed
to be highly effective in offsetting changes in the fair value, net investment or cash ows of hedged items are designated as
hedges of specic exposures and, accordingly, all gains and losses on these instruments are recognized in the same manner as
the item being hedged.
CHANGES IN ACCOUNTING STANDARDS
Transfers of Financial Assets
In October 2010, the IASB amended IFRS 7, Financial Instruments: Disclosures and added additional disclosure requirements for
nancial assets that have been transferred but not derecognized in accordance with IAS 39, Financial Instruments: Recognition
and Measurement (IAS 39). The Companys accounts receivable securitization program met the denition of a transferred
nancial asset that is not derecognized when the amendments became effective for the Company on January 1, 2012, and the
disclosures on the program were amended accordingly in note 3 to the consolidated nancial statements.
FUTURE CHANGES IN ACCOUNTING POLICIES
Employee Future Benets
In June 2011, the IASB amended IAS 19, Employee Benets. The main amendments include the requirement to immediately
recognize actuarial gains and losses in Other Comprehensive Income/(Loss) (OCI); the replacement of the calculation of both the
expected return on the plan assets and the interest cost of the pension obligation with the interest cost on the net decit; the
clarication of specic measurement issues; and enhanced disclosure requirements. The amendments are effective for the year
ending December 31, 2013. The Company is currently assessing the impact of this amendment on its nancial statements.
Fair Value Measurement
In May 2011, the IASB issued IFRS 13, Fair Value Measurement (IFRS 13), which provides a revised denition of fair value,
establishes a framework for measuring fair value and sets out disclosure requirements for when fair value measurement is
required or permitted under IFRS. IFRS 13 is effective for the year ending December 31, 2013. The Company is currently
assessing the impact of IFRS 13 on its nancial statements.
Other Comprehensive Income
In June 2011, the IASB amended IAS 1, Presentation of Financial Statements to require the grouping together of OCI items that
may be reclassied to the Statement of Earnings within OCI. The amendment is effective for the year ending December 31, 2013.
The Company is currently assessing the impact of this amendment on its nancial statements.
Consolidation
In May 2011, the IASB issued the following new standards:
IFRS 10, Consolidated Financial Statements, which will replace SIC-12, Consolidation Special Purpose Entities and parts of
IAS 27, Consolidated and Separate Financial Statements;
IFRS 11, Joint Arrangements, which will replace IAS 31, Interests in Joint Ventures and SIC-13, Jointly Controlled
Entities Non-monetary Contributions by Venturers; and
IFRS 12, Disclosure of Interests in Other Entities
These new standards provide more guidance on the identication of entities and joint arrangements that should be included in
the consolidated statements of a parent company, and also require additional disclosure of all forms of interests that an entity
holds. The standards are effective for the year ending December 31, 2013. The Company does not expect these standards to
have any impact on its nancial statements.
Financial Instruments
IFRS 9, Financial Instruments (IFRS 9) was issued by the IASB on November 12, 2009 and will replace IAS 39. IFRS 9 uses a
single approach to determine whether a nancial asset is measured at amortized cost or fair value, replacing the multiple rules in
IAS 39. The approach in IFRS 9 is based on how an entity manages its nancial instruments in the context of its business model
and the contractual cash ow characteristics of its nancial assets. The new standard requires a single impairment method to be
used, replacing the multiple impairment methods in IAS 39. IFRS 9 also provides for new measurement guidance for nancial
liabilities designated at fair value through prot or loss. In December 2011, the IASB deferred the mandatory effective date of
IFRS 9 to annual periods beginning on or after January 1, 2015, so it will be effective for the year ending December 31, 2015.
The Company is currently assessing the impact of IFRS 9 on its nancial statements.
SIGNIFICANT ACCOUNTING POLICIES, JUDGEMENTS AND ESTIMATES
The preparation of nancial statements in conformity with IFRS requires management to select appropriate accounting policies to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the nancial statements, and the reported amounts of revenues and expenses during the reporting period.
In particular, signicant accounting policies, judgements and estimates utilized in the normal course of preparing the Companys
nancial statements require management to make critical determinations that affect the reported amounts of assets, liabilities,
revenues, expenses and disclosure of contingent assets and liabilities. Actual results could materially differ from those estimates.
In making estimates and judgements, management relies on external information and observable conditions where possible,
supplemented by internal analysis as required. These estimates and judgements have been applied in a manner consistent with
prior periods and there are no known trends, commitments, events or uncertainties that we believe will materially affect the
methodology or assumptions utilized in making these estimates and judgements in these nancial statements. For further
information on the Companys signicant accounting policies, refer to note 2 of the consolidated nancial statements.
RISKS AND UNCERTAINTIES
Norbord is exposed to a number of risks and uncertainties in the normal course of its business which could have a material
adverse effect on the Companys business, nancial position, operating results and cash ows. A discussion of some of the major
risks and uncertainties follows.
Product Concentration and Cyclicality
OSB accounts for almost 85% of Norbords panel production capacity. The price of OSB is one of the most volatile in the
wood-based panels industry. Norbords concentration on OSB increases its sensitivity to product pricing and may result in a high
degree of sales and earnings volatility.
Norbords nancial performance is principally dependent on the selling price of its products. Most of Norbords products are globally
traded commodities for which no liquid futures markets exist. The markets for most of Norbords products are highly cyclical and
characterized by periods of supply and demand imbalance, during which its product prices have tended to uctuate signicantly. In
addition, since many of Norbords products are used for new home construction, seasonal and annual weather changes can affect
demand and sales volumes. These imbalances, which may affect different areas of Norbords business at different times, are
inuenced by numerous factors that are beyond Norbords control and include: changes in global and regional production capacity for
a particular product or group of products; changes in the end use of those products, or the increased use of substitute products; and
the overall level of economic activity in the regions in which Norbord conducts business. In the past, Norbord has been negatively
affected by declines in product pricing and has taken production downtime to manage working capital and minimize cash losses.
Severe and prolonged weakness in the markets for Norbords products, particularly OSB, could seriously harm the Companys
nancial position, operating results and cash ows, including the ability to satisfy interest and principal payments on outstanding debt.
Based on operations running at full capacity, the following table shows the approximate annualized impact of changes in product
prices on EBITDA:
Impact on EBITDA
Sensitivity Factor (US $ millions)
OSB North America $10 per Msf
7
16" $ 36
OSB Europe 10 per m
3
7
Liquidity
Norbord relies on long-term borrowings, access to revolving bank lines and an accounts receivable securitization program to fund
its ongoing operations. The Companys ability to renance or renew such facilities is dependent upon nancial market conditions.
Although Norbord has notes maturing in 2015 and 2017 and has bank lines that are committed to 2015, nancing may not be
available when required or may not be available on commercially favourable or otherwise satisfactory terms in the future.
Competition
The wood-based panels industry is a highly competitive business environment in which companies compete, to a large degree, on
the basis of price. Norbords principal market is the US, where it competes with North American and, in some instances, foreign
producers. Norbords European operations compete primarily with other European producers. Certain competitors may have
lower-cost facilities than Norbord. Norbords ability to compete in these and other markets is dependent on a variety of factors,
such as manufacturing costs, availability of key production inputs, continued free access to markets, customer service, product
quality, nancial resources and currency exchange rates. In addition, competitors could develop new cost-effective substitutes for
Norbords wood-based panels, or building codes could be changed to make the use of Norbords products less attractive for
certain applications.
Customer Dependence
Norbord sells its products primarily to major retail chains, contractor supply yards and industrial manufacturers, and faces strong
competition for the business of signicant customers. In 2012, Norbord had one customer whose purchases represented greater
than 10% of total sales. Norbord generally does not have contractual assurances of future sales. As a result, the loss of a
signicant customer or any signicant customer order cancellations could negatively affect Norbords sales and earnings.
Continued consolidation in the retail industry could expose Norbord to increased concentration of customer dependence and
increase customers ability to exert pricing pressure on Norbord.
Manufacturing Inputs
Norbord is exposed to commodity price risk on most of its manufacturing inputs, which principally comprise wood bre, resin,
wax and energy. These manufacturing inputs are purchased primarily on the open market in competition with other users of such
resources, and prices are inuenced by factors beyond Norbords control. Norbord may not be able to hedge the purchase price
of manufacturing inputs or pass increased costs on to its customers.
Fibre Resource
As Norbord does not own any timberlands, it purchases timber, wood chips and bre as well as other wood recycled materials on
the open market, in competition with other users of such resources, where prices are inuenced by factors beyond Norbords
control. Adverse weather can also limit access to logging areas, which can affect the supply of bre to Norbords operations. In
addition, Norbords supply and cost of bre may be negatively impacted by increased demand resulting from market-based or
legislative initiatives to use wood-based biomass materials in the production of heat, electricity and other bio-based products.
Norbords wood bre supply comes from several different sources. In the US, roundwood logs are primarily sourced from private
and industry-owned woodlands. In Europe, wood bre is purchased from the government and private landowners. Fibre for OSB
comes from roundwood logs while the MDF and particleboard mills source bre in the form of roundwood logs, wood chips,
sawdust and recycled wood. Norbords Canadian mills source roundwood logs primarily from private landholders and hold forestry
licences and agreements to source aspen and birch from Crown timberlands in Quebec. Most of this Crown volume is harvested
and delivered by third parties that also hold licences to operate in these areas.
The Crown licences require the payment of stumpage fees for the timber harvested and compliance with specied rehabilitation and
silvicultural management practices. The licences cover periods ranging from 20 to 25 years and are renewed or extended every ve
years. They can be revoked or cancelled for non-performance and contain terms and conditions that could, under certain
circumstances, result in a reduction of annual allowable timber that may be harvested by Norbord without any compensation.
Employee Retention and Labour Relations
Norbords success depends in part on the Companys ability to attract and retain senior management and other key employees.
Competition for qualied personnel depends on economic and industry conditions, competitors hiring practices and the
effectiveness of Norbords compensation programs. The loss of, or inability to recruit and retain, any such personnel could impact
the Companys ability to execute on its strategy.
Norbords US employees are non-unionized while its UK, Belgian and most of its Canadian employees are unionized
representing just under one-half of the workforce. All of Norbords UK and Belgian union contracts are evergreen. Canadian union
contracts typically cover a three- to ve-year term.
In 2009, a seven-year agreement, expiring June 30, 2016, was negotiated with the Communications, Energy and Paperworkers
Union representing members at the OSB mill in La Sarre, Quebec. In 2008, a ve-year agreement, expiring December 31, 2012,
was negotiated with the Teamsters Union representing members at the now indenitely curtailed mill in Val-dOr, Quebec. Strikes
or work stoppages could result in lost production and sales, higher costs or supply constraints if Norbord is unable to negotiate
acceptable contracts with its various trade unions upon expiry.
Environmental Matters
Norbords operations are subject to a range of general and industry-specic environmental laws and regulations relating to air
emissions, wastewater discharges, solid and hazardous waste management, plant and wildlife protection and site remediation.
Failure to comply with applicable environmental laws and regulations could result in nes, penalties or other enforcement actions
that could impact Norbords production capacity or increase Norbords production costs. The Company has incurred, and
expects to continue to incur, capital expenditures and operating costs to comply with applicable environmental laws and
regulations. In addition, environmental laws and regulations could become more stringent in the future.
Product Liability and Legal Proceedings
Norbord produces a variety of wood-based panels that are used in new home construction, repair and remodelling of existing
homes, furniture and xtures, and industrial applications. In the normal course of business, the end users of Norbords products
have in the past made, and could in the future make claims with respect to the tness for use of its products, or related to
product quality or performance issues. In addition, Norbord has in the past been, and may in the future be, involved in legal
proceedings related to antitrust, negligence, personal injury, property damage and other claims against the Company or its
predecessors. Norbord could face increased costs if any future claims exceed purchased insurance coverage.
Natural Events
Norbords business is exposed to numerous natural events, such as forest res, adverse weather conditions, insect infestation,
disease, prolonged drought and other natural disasters, that are not insurable events. If such an event occurs, Norbord may need
to curtail production or incur increased bre or other costs.
Capital Intensity
The production of wood-based panels is capital intensive. There can be no assurance that key pieces of equipment will not need
to be repaired or replaced. In certain circumstances, the costs of repairing or replacing equipment, and the associated downtime
of the affected production line, may not be insurable.
Tax Exposures
Norbord takes various tax-ling positions in the normal course of business, and there can be no assurance that tax authorities will
not challenge such ling positions. In addition, Norbord is subject to further uncertainties concerning the interpretation and
application of tax laws in various operating jurisdictions. Norbord provides for known estimated tax exposures in all jurisdictions.
These exposures are settled primarily through the closure of audits with the jurisdictional taxing authorities. However, future
settlements could differ materially from the Companys estimated liabilities.
Currency Exposures
Norbord reports its nancial results in US dollars. A portion of Norbords product prices and costs are inuenced by relative
currency values (particularly the Canadian dollar, Pound Sterling and Euro). Signicant uctuations in relative currency values
could negatively affect the cost competitiveness of the Companys facilities, the value of its foreign investments, the results of its
operations and its nancial position.
Norbords foreign exchange exposure arises from the following sources:
Net investments in foreign operations, limited to Norbords investment in its European operations
Net Canadian dollardenominated monetary assets and liabilities
Committed or anticipated foreign currencydenominated transactions, primarily Canadian dollar costs in Norbords Canadian
operations and Euro revenues in Norbords UK operations
Dened Benet Pension Plan Funding
Although Norbords dened benet pension plans are all closed to future service accrual, the Company continues to be subject to
market risk on the plan assets and obligations related to past service. Dened benet pension plan funding requirements are
based on actuarial valuations that make assumptions about the long-term expected rate of return on assets, salary escalation, life
expectancy and discount rates. The Companys latest funding valuations indicate the plans are in a solvency decit position and
therefore Norbord is required to make accelerated cash funding contributions. If actual experience differs from these assumptions
or any of these assumptions change such that the solvency decit increases, the Company would be required to increase cash
funding contributions, reducing the availability of such funds for other corporate purposes.
ASSESSMENT AND CHANGES IN INTERNAL CONTROLS AND
DISCLOSURE CONTROLS OVER FINANCIAL REPORTING
In accordance with the requirements of National Instrument 52-109, Certication of Disclosure in Issuers Annual and Interim
Filings, the Companys management, including the Chief Executive Ofcer (CEO) and Chief Financial Ofcer (CFO), has evaluated
the operating effectiveness of the Companys internal control over nancial reporting. Management of Norbord is responsible for
establishing and maintaining adequate internal control over nancial reporting. Internal control over nancial reporting is a
process designed by, or under the supervision of, the CEO and CFO, and it is effected by management and other personnel to
provide reasonable assurance regarding the reliability of nancial reporting and the preparation of nancial statements for external
purposes in accordance with IFRS. Management assessed the effectiveness of the Companys internal control over nancial
reporting as of December 31, 2012. Based on this assessment, management believes that, as of December 31, 2012, the
Companys internal control over nancial reporting is operating effectively. Management determined that there were no material
weaknesses in the Companys internal control over nancial reporting as of December 31, 2012. There have been no changes in
Norbords internal control over nancial reporting during the year ended December 31, 2012 that have materially affected, or are
reasonably likely to materially affect, its internal control over nancial reporting.
Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and
reported to senior management, including the CEO and CFO, on a timely basis so that appropriate decisions can be made
regarding annual and interim nancial statement disclosure. An evaluation of the effectiveness of the design and operation of
disclosure controls and procedures was conducted as of December 31, 2012 by Norbords management, including the CEO
and CFO. Based on this evaluation, the CEO and CFO have concluded that Norbords disclosure controls and procedures, as
dened in National Instrument 52-109, Certication of Disclosure in Issuers Annual and Interim Filings, are effective.
NON-IFRS FINANCIAL MEASURES
The following non-IFRS nancial measures have been used in this MD&A. Non-IFRS nancial measures do not have any
standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other
companies. Each non-IFRS nancial measure is dened below. Where appropriate, a quantitative reconciliation of the non-IFRS
nancial measure to the most directly comparable IFRS measure is provided.
EBITDA is earnings determined in accordance with IFRS before interest, provision for non-core operation, foreign exchange loss,
litigation settlement, income tax, depreciation and amortization. As Norbord operates in a cyclical commodity business, Norbord
interprets EBITDA over the cycle as a useful indicator of the Companys ability to incur and service debt and meet capital
expenditure requirements. In addition, Norbord views EBITDA as a measure of gross prot and interprets EBITDA trends as
indicators of relative operating performance.
The following table reconciles EBITDA to the most directly comparable IFRS measure:
2012 2011 2010 2009 2008
Earnings $ 72 $ (11) $ 13 $ (58) $ (115)
Add: Interest expense 36 33 34 36 49
Less: Interest and other income (3)
Add: Provision for non-core operation 8 4 4
Add: Foreign exchange loss 3
Add: Litigation settlement 32
Add: Depreciation 53 51 51 48 68
Add: Income tax expense (recovery) 27 (28) 1 (33) (95)
EBITDA $ 188 $ 45 $ 107 $ $ (60)
EBITDA margin (%) is EBITDA as a percentage of sales. When compared with industry statistics and prior periods, EBITDA margin
can be a useful indicator of operating efciency and a companys ability to compete successfully with its peers. Norbord
interprets EBITDA margin trends as indicators of relative operating performance.
Operating working capital is accounts receivable plus inventory less accounts payable and accrued liabilities. Operating working
capital is a measure of the investment in accounts receivable, inventory, accounts payable and accrued liabilities required to
support operations. The Company aims to minimize its investment in operating working capital; however, the amount will vary with
seasonality, and sales expansions and contractions.
2012 2011 2010 2009 2008
Accounts receivable $ 125 $ 102 $ 90 $ 27 $ 12
Inventory 98 88 84 71 81
Accounts payable and accrued liabilities (173) (162) (164) (140) (146)
Operating working capital $ 50 $ 28 $ 10 $ (42) $ (53)
Total working capital is operating working capital plus cash and cash equivalents and tax receivable less bank advances, if any.
2012 2011 2010 2009 2008
Operating working capital $ 50 $ 28 $ 10 $ (42) $ (53)
Cash and cash equivalents 128 83 111 21 20
Tax receivable 5 6 57 13
Total working capital $ 178 $ 116 $ 127 $ 36 $ (20)
Capital employed is the sum of property, plant and equipment, operating working capital, tax receivable and other assets less any
unrealized balance sheet losses included in other liabilities. Capital employed is a measure of the total investment in a business in
terms of property, plant and equipment, operating working capital, tax receivable and other assets.
2012 2011 2010 2009 2008
Property, plant and equipment $ 764 $ 787 $ 814 $ 860 $ 885
Accounts receivable 125 102 90 27 12
Tax receivable 5 6 57 13
Inventory 98 88 84 71 81
Accounts payable and accrued liabilities (173) (162) (164) (140) (146)
Other assets 5 13 7 33
Unrealized net investment hedge losses
(1)
(8)
Capital employed $ 814 $ 825 $ 843 $ 882 $ 870
(1)
Included in other liabilities.
ROCE (return on capital employed) is EBITDA divided by average capital employed. ROCE is a measurement of nancial
performance, focusing on cash generation and the efcient use of capital. As Norbord operates in a cyclical commodity business,
it interprets ROCE over the cycle as a useful means of comparing businesses in terms of efciency of management and viability of
products. Norbord targets top-quartile ROCE among North American forest products companies over the cycle.
ROE (return on equity) is earnings available to common shareholders divided by common shareholders equity. ROE is a measure
that allows common shareholders to determine how effectively their invested capital is being employed. As Norbord operates in a
cyclical commodity business, it looks at ROE over the cycle and targets top-quartile performance among North American forest
products companies.
Total shareholder return is a useful measure of the return on an investment in Norbord common shares, including share-price
appreciation and dividends. The calculation assumes the reinvestment of all dividends in shares of Norbord.
Net debt is the principal value of long-term debt, including the current portion and bank advances, if any, less cash and cash
equivalents. Net debt is a useful indicator of a companys debt position. Net debt comprises:
2012 2011 2010 2009 2008
(US $ millions) IFRS IFRS CGAAP
(1)
CGAAP CGAAP
Long-term debt, principal value $ 440 $ 440 $ 440 $ 467 $ 532
Less: Cash and cash equivalents (128) (83) (113) (21) (20)
Less: Drawings under Brookeld debt facility
(2)
(35)
Net debt 312 357 327 446 477
Add: Letters of credit 3 3 10 8
Net debt for nancial covenant purposes $ 315 $ 360 $ 337 $ 454 $ 477
(1)
2010 has not been restated for IFRS and shows the originally disclosed gures under Canadian GAAP.
(2)
Facility was cancelled in July 2010.
Tangible net worth consists of shareholders equity. A minimum tangible net worth is one of two nancial covenants contained in
the Companys committed bank lines. For nancial covenant purposes, effective January 1, 2011, tangible net worth excludes all
IFRS transitional adjustments and all movement in cumulative other comprehensive income subsequent to January 1, 2011.
2012 2011 2010 2009 2008
(US $ millions) IFRS IFRS CGAAP
(1)
CGAAP CGAAP
Shareholders equity $ 386 $ 300 $ 352 $ 334 $ 268
Add: IFRS transitional adjustments 21 21
Add: Other comprehensive income movement
(2)
15 22
Add: Drawings under Brookeld debt facility
(3)
35
Tangible net worth $ 422 $ 343 $ 352 $ 334 $ 303
(1)
2010 has not been restated for IFRS and shows the originally disclosed gures under Canadian GAAP.
(2)
Cumulative subsequent to January 1, 2011.
(3)
Facility was cancelled in July 2010.
Net debt to capitalization, book basis, is net debt divided by the sum of net debt and tangible net worth. Net debt to capitalization
on a book basis is a measure of a companys relative debt position. Norbord interprets this measure as an indicator of the relative
strength and exibility of its balance sheet. In addition, a maximum net debt to capitalization, book basis, is one of two nancial
covenants contained in the Companys committed bank lines.
Net debt to capitalization, market basis, is net debt divided by the sum of net debt and market capitalization. Market
capitalization is the number of common shares outstanding at period-end multiplied by the trailing 12-month average per share
market price. Net debt to capitalization, market basis, is a key measure of a companys relative debt position and Norbord
interprets this measure as an indicator of the relative strength and exibility of its balance sheet. While the Company considers
both book and market basis metrics, it believes the market basis to be superior to the book basis in measuring the true strength
and exibility of its balance sheet.
FORWARD-LOOKING STATEMENTS
This document includes forward-looking statements, as dened by applicable securities legislation. Often, but not always,
forward-looking statements can be identied by the use of words such as believes, expects, does not expect, is expected,
targets, outlook, plans, scheduled, estimates, forecasts, intends, aims, predicts, anticipates or does not
anticipate or variations of such words and phrases or statements that certain actions, events or results may, could, would,
should, might or will be taken, occur or be achieved. 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.
Examples of such statements include, but are not limited to, comments with respect to: (1) outlook for the markets for products;
(2) expectations regarding future product pricing; (3) outlook for operations; (4) expectations regarding mill capacity;
(5) objectives; (6) strategies to achieve those objectives; (7) expected nancial results including the expected results of the MIP;
(8) sensitivity to changes in product prices, such as the price of OSB; (9) sensitivity to key input prices, such as the price of bre,
resin, wax and energy; (10) sensitivity to changes in foreign exchange rates; (11) expectations regarding income tax rates;
(12) expectations regarding compliance with environmental regulations; (13) expectations regarding contingent liabilities and
guarantees, including the outcome of pending litigation; and (14) expectations regarding the amount, timing and benets of
capital investments.
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 general and specic, 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) assumptions in
connection with the economic and nancial conditions in the US, Europe, Canada and globally; (2) risks inherent to product
concentration; (3) effects of competition and product pricing pressures; (4) risks inherent to customer dependence; (5) effects of
variations in the price and availability of manufacturing inputs, including continued access to bre resources at competitive
prices; (6) various events that could disrupt operations, including natural events and ongoing relations with employees; (7) impact
of changes to, or non-compliance with, environmental regulations; (8) impact of any product liability claims in excess of insurance
coverage; (9) risks inherent to a capital intensive industry; (10) impact of future outcomes of certain tax exposures; and
(11) effects of currency exposures and exchange rate uctuations.
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 lings with Canadian 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.
MANAGEMENTS RESPONSIBILITY
FOR THE FINANCIAL STATEMENTS
The accompanying consolidated nancial statements and all information in this annual report are the responsibility of
management and have been approved by the Board of Directors.
The consolidated nancial statements have been prepared by management in accordance with International Financial Reporting
Standards. Financial statements are not precise since they include certain amounts based upon estimates and judgements. When
alternative methods exist, management has chosen those it deems to be the most appropriate in the circumstances in order to
ensure that the consolidated nancial statements are presented fairly, in all material respects, in accordance with International
Financial Reporting Standards.
The Company maintains systems of internal controls, which are designed to provide reasonable assurance that accounting
records are reliable and to safeguard the Companys assets.
The Board of Directors is responsible for ensuring that management fullls its responsibilities for nancial reporting and is
ultimately responsible for reviewing and approving the nancial statements. The Board carries out this responsibility principally
through its Audit Committee.
The Audit Committee is appointed by the Board and reviews the consolidated nancial statements and Managements Discussion
and Analysis, considers the report of the external auditors, assesses the adequacy of the internal controls of the Company,
approves the services provided by the external auditors, examines the fees and expenses for audit services, and recommends to
the Board the independent auditors for appointment by the shareholders. The Committee reports its ndings to the Board of
Directors for consideration when approving the consolidated nancial statements for issuance to the shareholders.
January 30, 2013
J. Barrie Shineton Robin E. Lampard
President and Chief Executive Ofcer Senior Vice President and Chief Financial Ofcer
41
INDEPENDENT AUDITORS REPORT
To the Shareholders of Norbord Inc.
We have audited the accompanying consolidated nancial statements of Norbord Inc., which comprise the consolidated
balance sheets as at December 31, 2012 and December 31, 2011, the consolidated statements of earnings, comprehensive
income/(loss), changes in equity and cash ows for the years then ended, and notes, comprising a summary of signicant
accounting policies and other explanatory information.
Managements Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated nancial statements in accordance
with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable
the preparation of consolidated nancial statements that are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these consolidated nancial statements based on our audit. We conducted our audit
in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated nancial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated nancial
statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the
consolidated nancial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the entitys preparation and fair presentation of the consolidated nancial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated nancial statements.
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated nancial statements present fairly, in all material respects, the consolidated nancial position of
Norbord Inc. as at December 31, 2012 and December 31, 2011, and its consolidated nancial performance and its consolidated
cash ows for the years then ended in accordance with International Financial Reporting Standards.
Chartered Accountants, Licensed Public Accountants
January 30, 2013
Toronto, Canada
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
(US $ millions) Note 2012 2011
Assets
Current assets
Cash $ 128 $ 83
Accounts receivable 3 125 102
Tax receivable 5
Inventory 4 98 88
351 278
Non-current assets
Property, plant and equipment 5 764 787
Other assets 6 5
764 792
$ 1,115 $ 1,070
Liabilities and Shareholders Equity
Current liabilities
Accounts payable and accrued liabilities $ 173 $ 162
Current portion of long-term debt 7 242
173 404
Non-current liabilities
Long-term debt 7 433 196
Other long-term debt 3 69
Other liabilities 8 40 40
Deferred income taxes 10 83 61
556 366
Shareholders equity 11 386 300
$ 1,115 $ 1,070

(See accompanying notes)
On behalf of the Board:
Robert J. Harding J. Barrie Shineton
Chair President and Chief Executive Ofcer
43
CONSOLIDATED STATEMENTS OF EARNINGS
Years ended December 31 (US $ millions, except per share information) Note 2012 2011
Sales $ 1,149 $ 965
Cost of sales (945) (907)
General and administrative expenses (16) (13)
Earnings before interest, income tax and depreciation 188 45
Interest expense 3, 7 (36) (33)
Earnings before income tax and depreciation 152 12
Depreciation (53) (51)
Income tax (expense) recovery 10 (27) 28
Earnings $ 72 $ (11)
Earnings per common share 12
Basic $ 1.65 $ (0.25)
Diluted 1.59 (0.25)

CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME/(LOSS)
Years ended December 31 (US $ millions) Note 2012 2011
Other comprehensive income (loss), net of tax
Foreign currency translation gain (loss) on foreign operations 10 7 (4)
Net loss on hedge of net investment in foreign operations 10 (1)
Actuarial loss on post-employment obligation 10 (17)
7 (22)
Comprehensive income (loss) $ 79 $ (33)

CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS EQUITY
Share capital
Balance, beginning of year $ 340 $ 340
Issue of common shares, net 11 6
Balance, end of year $ 346 $ 340
Contributed surplus
Balance, beginning of year $ 43 $ 41
Stock-based compensation 11 2 2
Stock options and warrants exercised 11 (1)
Retained earnings
Balance, beginning of year $ (82) $ (54)
Earnings 72 (11)
Other comprehensive loss (17)
Balance, end of year $ (10) $ (82)
Accumulated Other Comprehensive Income (Loss)
Balance, beginning of year $ (1) $ 4
Other comprehensive income (loss) 7 (5)
Balance, end of year 11 $ 6 $ (1)
Shareholders equity $ 386 $ 300

45
CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH PROVIDED BY (USED FOR):
Operating Activities
Items not affecting cash:
Depreciation 53 51
Deferred income tax 10 22 (31)
Other items 3
150 9
Net change in non-cash operating working capital balances 13 (19) (23)
Net change in tax receivable 5 1
136 (13)
Investing Activities
Investment in property, plant and equipment (22) (23)
Realized net investment hedge gain (loss) 15 3 (1)
(19) (24)
Financing Activities
Repayment of debt 7 (240)
Issue of debt 7 240
Accounts receivable securitization (repayments) proceeds (71) 10
Debt issue costs 7 (5) (1)
Issue of common shares, net 11 4
(72) 9
Cash
Increase (decrease) during the year 45 (28)
Balance, beginning of year 83 111

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in US $, unless otherwise noted)
In these notes, Norbord means Norbord Inc. and all of its consolidated subsidiaries and afliates, and Company means
Norbord Inc. as a separate corporation, unless the context implies otherwise. Brookeld means Brookeld Asset Management Inc.
or any of its consolidated subsidiaries and afliates, a related party by virtue of a controlling equity interest in the Company.
NOTE 1. NATURE AND DESCRIPTION OF THE COMPANY
Norbord is an international producer of wood-based panels with 13 plant locations in the United States, Europe and Canada. Norbord
is a publicly traded company listed on the Toronto Stock Exchange under the symbols NBD and NBD.WT. The Company is
incorporated under the Canada Business Corporations Act and is headquartered in Toronto, Ontario, Canada.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
(a) Statement of Compliance
These consolidated nancial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB). These nancial statements were
authorized for issuance by the Board of Directors of the Company on January 30, 2013.
(b) Basis of Presentation
These consolidated nancial statements include the accounts of the Company and all its wholly-owned subsidiaries.
(c) Changes in Accounting Standards
TRANSFERS OF FINANCIAL ASSETS
In October 2010, the IASB amended IFRS 7, Financial Instruments: Disclosures, and added additional disclosure
requirements for nancial assets that have been transferred but not derecognized in accordance with IAS 39, Financial
Instruments: Recognition and Measurement (IAS 39). The Companys accounts receivable securitization program met the
denition of a transferred nancial asset that is not derecognized when the amendments became effective for the Company
on January 1, 2012, and the disclosures on the program were amended accordingly (note 3).
(d) Foreign Currency Translation
The US dollar is the functional and presentation currency of the Company. Each of the Companys subsidiaries determines
its functional currency, and items included in the nancial statements of each subsidiary are measured using that
functional currency.
Assets and liabilities of foreign operations having a functional currency other than the US dollar are translated at the rate of
exchange prevailing at the reporting date and revenues and expenses at average rates during the period. Gains or losses on
translation are included as a component of shareholders equity in accumulated other comprehensive income. Gains or
losses on foreign currencydenominated balances and transactions that are designated as hedges of net investments in
these operations are reported in the same manner.
NOTES TO THE CONSOLI DATED FI NANCI AL STATEMENTS 47
Foreign exchange gains or losses arising from monetary assets or liabilities of a foreign operation, the settlement of which is
neither planned nor likely to occur in the foreseeable future and which in substance is considered to form part of the net
investment in the foreign operation, are recognized in other comprehensive income (OCI). Foreign currencydenominated
monetary assets and liabilities of the Company and its subsidiaries are translated using the rate of exchange prevailing at
the reporting date. Gains or losses on translation of these items are included in earnings. Gains or losses on transactions
that hedge these items are also included in earnings. Revenue and expenses are measured at average rates during the
period. Foreign currencydenominated non-monetary assets and liabilities, measured at historic cost, are translated at the
rate of exchange at the transaction date. Foreign exchange gains or losses arising from monetary assets or liabilities in a
foreign operation, the settlement of which is neither planned nor likely to occur in the foreseeable future and which in
substance is considered to form part of the net investment in the foreign operation, are recognized in OCI.
(e) Cash and Cash Equivalents
Cash and cash equivalents consist of demand deposits, and investment-grade money market securities and bank term
deposits with maturities of 90 days or less from the date of purchase. Cash and cash equivalents are recorded at cost,
which approximates market value.
(f) Inventories
Inventories of nished goods, raw materials and operating and maintenance supplies are valued at the lower of cost and net
realizable value, with cost determined on an average cost basis. The cost of nished goods inventories includes direct
material, direct labour and an allocation of overhead.
(g) Property, Plant and Equipment
Property, plant and equipment are recorded at cost less accumulated depreciation. Property and plant includes land and
buildings. Buildings are depreciated on a straight-line basis over 20 to 40 years. Production equipment is depreciated using
the units-of-production basis. This method amortizes the cost of equipment over the estimated units to be produced during its
estimated useful life, which ranges from 10 to 25 years. When parts of an item of property, plant and equipment have different
useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The rates of
depreciation are intended to fully depreciate manufacturing and non-manufacturing assets over their useful lives. These
periods are assessed at least annually to ensure that they continue to approximate the useful lives of the related assets.
Property, plant and equipment is tested for impairment only when there is an indication of impairment. Impairment testing
is a one-step approach for both testing and measurement, with the carrying value of the asset or group of assets compared
directly to the higher of fair value less costs to sell, and value in use. Fair value is measured at the sales price of the asset or
group of assets in an arms length transaction. Value in use is based on the discounted future cash ows of the asset or
group of assets. The projection of future cash ows takes into account the relevant operating plans and managements best
estimate of the most probable set of conditions anticipated to prevail. Where an impairment loss exists, it is recorded
against earnings. If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the lesser of
the revised estimate of recoverable amount and the carrying value that would have remained had no impairment loss been
recognized previously. IFRS requires such reversals to be recognized in earnings if certain criteria are met.
(h) Employee Future Benets
Norbord sponsors various dened benet and dened contribution pension plans, which cover substantially all employees
and are funded in accordance with applicable plan and regulatory requirements. The benets under Norbords dened
benet pension plans are generally based on an employees length of service and the nal ve years average salary, and
the plans do not provide for indexation of benet payments.
The measurement date for all dened benet pension plans is December 31. The obligations associated with Norbords
dened benet pension plans are actuarially valued using the projected unit credit method, managements best estimate
assumptions for long-term expected rate of return on assets, salary escalation, life expectancy, and a current market
discount rate. For the purpose of calculating the expected return on plan assets, those assets are measured at fair value.
The obligation in excess of plan assets is recorded as a liability. All actuarial gains or losses are recognized immediately
through OCI and in retained earnings.
(i) Financial Instruments
The Company utilizes derivative nancial instruments solely to manage its foreign currency, interest rate and commodity
price exposures in the ordinary course of business. Derivatives are not used for trading or speculative purposes. All hedging
relationships, risk management objectives and hedging strategies are formally documented and periodically assessed to
ensure that the changes in the value of these derivatives are highly effective in offsetting changes in the fair values, net
investments or cash ows of the hedged exposures. Accordingly, all gains and losses (realized and unrealized, as
applicable) on such derivatives are recognized in the same manner as gains and losses on the underlying exposure being
hedged. Any resulting carrying amounts are included in other assets if there is an unrealized gain on the derivative, or in
other liabilities if there is an unrealized loss on the derivative.
The fair values of the Companys derivative nancial instruments are determined by using observable market inputs for
identical assets and liabilities. These fair values reect the estimated amount that the Company would have paid or received
if required to settle all outstanding contracts at period-end. This fair value represents a point-in-time estimate that may not
be relevant in predicting the Companys future earnings or cash ows.
The Company is exposed to credit risk in the event of non-performance by its derivative counterparties. However, the
Companys Board-approved nancial policies require that derivative transactions be executed only with approved, highly
rated counterparties under master netting agreements; therefore, the Company does not anticipate any non-performance.
The fair value measurements of the Companys derivative nancial instruments are classied as Level 2 of a three-level
hierarchy, as fair value of these derivative instruments is based on observable market inputs.
The carrying value of the Companys non-derivative nancial instruments approximates fair value, except where disclosed in
these notes. Fair values disclosed are determined using actual quoted market prices or, if not available, indicative prices
based on similar publicly traded instruments.
(j) Debt Issue Costs
The Company accounts for transaction costs that are directly attributable to the issuance of long-term debt by deducting
such costs from the carrying value of the long-term debt. The capitalized transaction costs are amortized to interest
expense over the term of the related long-term debt using the effective interest rate method.
(k) Income Taxes
The Company uses the liability method of accounting for income taxes and provides for temporary differences between the
tax basis and carrying amounts of assets and liabilities. Accordingly, deferred tax assets and liabilities are recognized for all
deductible temporary differences, carryforward of unused tax credits and unused tax losses to the extent that it is probable
that the deductions, tax credits and tax losses can be utilized. Deferred tax assets and liabilities are measured using
enacted or substantively enacted tax rates expected to apply to the year when the asset is realized or the liability is settled,
based on the tax rates and laws that have been substantively enacted at the balance sheet date. In addition, the effect on
deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the year of enactment or substantive
enactment. Current and deferred income taxes relating to items recognized directly in shareholders equity are also
recognized directly in shareholders equity. The Company assesses recoverability of deferred tax assets based on the
Companys estimates and assumptions. The carrying amount of deferred income tax assets is reviewed at each balance
sheet date and reduced to the extent it is no longer probable that the income tax assets will be recovered.
The Company has certain non-monetary assets and liabilities for which the tax reporting currency is different from its
functional currency. Any translation gains or losses arising on the remeasurement of these items at current exchange rates
versus historic exchange rates which give rise to a temporary difference are recorded as a deferred tax asset or liability.
(l) Share-Based Payments
The Company issues share-based awards to certain employees in the form of stock options that vest evenly over a ve-year
period. The fair value of the options on the grant date is determined using a fair value model (Black-Scholes option pricing
model). Each tranche of the award is considered to be a separate grant based on its respective vesting period. The fair
value of each tranche is determined separately on the date of grant and recognized as compensation expense, net of
forfeiture estimate, over the term of its respective vesting period, with a corresponding increase to contributed surplus.
(m) Warrants
The Company measures the fair value of warrants at the issue date using a fair value model (Black-Scholes option pricing
model) reduced by any related issue costs.
(n) Revenue Recognition
Sales are recognized when the risks and rewards of ownership pass to the purchaser. This is generally when goods are
shipped. Sales are recorded net of discounts.
Sales are governed by contract or by standard industry terms. Revenue is not recognized prior to the completion of those
terms. The majority of product is shipped via third-party transport on a freight-on-board shipping point basis. In all cases,
product is subject to quality testing by the Company to ensure it meets applicable standards prior to shipment.
(o) Critical Judgements and Estimates
The preparation of the consolidated nancial statements in conformity with IFRS requires management to make critical
judgements and estimates that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of
contingent assets and liabilities. Actual results could materially differ from those estimates.
In making estimates and judgements, management relies on external information and observable conditions where
possible, supplemented by internal analysis as required. These estimates and judgements have been applied in a manner
consistent with prior periods and there are no known trends, commitments, events or uncertainties that we believe will
materially affect the methodology or assumptions utilized in making these estimates and judgements in these nancial
statements. The signicant estimates and judgements used in determining the recorded amount for assets and liabilities in
the nancial statements include the following:
(i) INVENTORY
Norbord estimates the net realizable value of its inventory using estimates regarding future selling prices.
(ii) PROPERTY, PLANT AND EQUIPMENT
When determining the value in use of property, plant and equipment during impairment testing, the Company uses
the following critical estimates: the timing of forecasted revenues; future selling prices and margins; future sales
volumes; maintenance and other capital expenditures; discount rates; useful lives; and residual values.
(iii) EMPLOYEE BENEFIT EXPENSE
The net obligations associated with the dened benet pension plans are actuarially valued using: the projected unit
credit method; managements best estimates for long-term expected rate of return on assets, salary escalation and
life expectancy; and a current market discount rate to match the timing and amount of pension payments.
(iv) INCOME TAXES
Current income tax assets and liabilities are measured at the amount expected to be paid to tax authorities, net of
recoveries, based on the tax rates and laws enacted or substantively enacted at the balance sheet date.
Deferred income tax assets are recognized for all deductible temporary differences, carryforward of unused tax
credits and unused tax losses, to the extent that it is probable that the deductions, tax credits and tax losses can be
utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realized or the liability settled, based on the tax rates and laws that have been enacted or
substantively enacted at the balance sheet date.
In the normal course of operations, judgement is required in assessing tax interpretations, regulations and legislation
and in determining the provision for income taxes, deferred tax assets and liabilities. To the extent that a recognition
or derecognition of a deferred tax asset is required, current period earnings or OCI will be affected.
(v) FINANCIAL INSTRUMENTS
The critical assumptions and estimates used in determining the fair value of nancial instruments are: equity and
commodity prices; future interest rates; the relative creditworthiness of the Company to its counterparties; estimated
future cash ows; discount rates; and volatility utilized in option valuations.
(p) Future Changes in Accounting Policies
(i) EMPLOYEE FUTURE BENEFITS
In June 2011, the IASB amended IAS 19, Employee Benets. The main amendments include the requirement to
immediately recognize actuarial gains and losses in OCI; the replacement of the calculation of both the expected
return on the plan assets and the interest cost of the pension obligation with the interest cost on the net decit; the
clarication of specic measurement issues; and enhanced disclosure requirements. The amendments are effective
for the year ending December 31, 2013. The Company is currently assessing the impact of this amendment on its
nancial statements.
(ii) FAIR VALUE MEASUREMENT
In May 2011, the IASB issued IFRS 13, Fair Value Measurement (IFRS 13), which provides a revised denition of fair
value, establishes a framework for measuring fair value and sets out disclosure requirements for when fair value
measurement is required or permitted under IFRS. IFRS 13 is effective for the year ending December 31, 2013. The
Company is currently assessing the impact of IFRS 13 on its nancial statements.
(iii) OTHER COMPREHENSIVE INCOME
In June 2011, the IASB amended IAS 1, Presentation of Financial Statements, to require the grouping together of OCI
items that may be reclassied to the Statement of Earnings within OCI. The amendment is effective for the year
ending December 31, 2013. The Company is currently assessing the impact of this amendment on its nancial
statements.
(iv) CONSOLIDATION
In May 2011, the IASB issued the following new standards:
IFRS 10, Consolidated Financial Statements, which will replace SIC-12, Consolidation Special Purpose Entities,
and parts of IAS 27, Consolidated and Separate Financial Statements;
IFRS 11, Joint Arrangements which will replace IAS 31, Interests in Joint Ventures, and SIC-13, Jointly Controlled
Entities Non-monetary Contributions by Venturers; and
IFRS 12, Disclosure of Interests in Other Entities.
These new standards provide more guidance on the identication of entities and joint arrangements that should be
included in the consolidated statements of a parent company, and also require additional disclosure of all forms of
interests that an entity holds. The standards are effective for the year ending December 31, 2013. The Company
does not expect these standards to have any impact on its nancial statements.
(v) FINANCIAL INSTRUMENTS
IFRS 9, Financial Instruments (IFRS 9), was issued by the IASB on November 12, 2009 and will replace IAS 39.
IFRS 9 uses a single approach to determine whether a nancial asset is measured at amortized cost or fair value,
replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its nancial
instruments in the context of its business model and the contractual cash ow characteristics of its nancial assets.
The new standard requires a single impairment method to be used, replacing the multiple impairment methods in
IAS 39. IFRS 9 also provides for new measurement guidance for nancial liabilities designated at fair value through
prot or loss. In December 2011, the IASB deferred the mandatory effective date of IFRS 9 to annual periods
beginning on or after January 1, 2015 and will be effective for the year ending December 31, 2015. The Company is
currently assessing the impact of IFRS 9 on its nancial statements.
NOTE 3. ACCOUNTS RECEIVABLE
The Company has an $85 million accounts receivable securitization program with a third-party trust sponsored by a highly rated
Canadian nancial institution. The program is revolving and has an evergreen commitment subject to termination on 12 months
notice. Under the program, Norbord 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, Norbord had transferred but continued to recognize $112 million (December 31, 2011 $88 million) in accounts
receivable and the Company did not have any drawings (December 31, 2011 $69 million) relating to this program. The level of
accounts receivable transferred under the program uctuates with the level of shipment volumes, product prices and foreign
exchange rates. The amount of drawings uctuates with the level of accounts receivable transferred, timing of cash settlements
and the Companys cash requirements. Drawings are presented as other long-term debt on the balance sheet and are excluded
from the net debt to capitalization calculation for nancial covenant purposes (note 14). The utilization charge, which is based on
money market rates plus a margin, and other program fees are recorded as interest expense. In 2012, the utilization charge and
program fees included in interest expense totalled $2 million (2011 $2 million).
The securitization program contains no nancial 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
January 30, 2013, Norbords ratings were BB (low) (DBRS), BB- (Standard & Poors Ratings Services) and Ba3 (Moodys
Investors Service).
NOTE 4. INVENTORY
(US $ millions) 2012 2011
Raw materials $ 25 $ 22
Finished goods 40 36
Operating and maintenance supplies 33 30
$ 98 $ 88
At period-end, the provision to reect inventories at the lower of cost and net realizable value was $1 million (December 31,
2011 $2 million).
The amount of inventory recognized as an expense was as follows:
Cost of inventories $ 908 $ 872
Depreciation on property, plant and equipment 53 50
$ 961 $ 922
NOTE 5. PROPERTY, PLANT AND EQUIPMENT
Production
(US $ millions) Land Buildings Equipment Total
Cost
December 31, 2010 $ 11 $ 119 $ 734 $ 864
Additions 25 25
Effect of translation (2) (2)
December 31, 2011 11 119 757 887
Additions 26 26
Disposals (1) (2) (3)
Effect of translation 1 6 7
December 31, 2012 $ 10 $ 120 $ 787 $ 917
Accumulated depreciation
December 31, 2010 $ $ 8 $ 42 $ 50
Depreciation 8 43 51
Effect of translation (1) (1)
December 31, 2011 16 84 100
Disposals (1) (1)
Effect of translation 1 1
December 31, 2012 $ $ 24 $ 129 $ 153
Net
December 31, 2011 $ 11 $ 103 $ 673 $ 787
December 31, 2012 10 96 658 764
NOTE 6. OTHER ASSETS
Unrealized net investment hedge gains 15 $ $ 3
Unrealized interest rate swap gains 15 2
$ $ 5
Unrealized net investment hedge gains and unrealized interest rate swap gains are offset by unrealized losses on the underlying
exposures being hedged.
NOTE 7. LONG-TERM DEBT
Principal value
6.25% senior secured notes due 2015 $ 165 $
6.25% senior unsecured notes due 2015 75
Senior secured notes due 2017 200 200
7.25% secured debentures due 2012 240
440 440
Debt issue costs (7) (5)
Unrealized interest rate swap gains 6 2
Deferred interest rate swap gains 1
433 438
Less: Current portion (242)
$ 433 $ 196
Maturities of long-term debt are as follows:
Maturities of
long-term debt $ $ $ 240 $ $ 200 $ $ 440
As at December 31, 2012, the effective interest rate on the Companys debt-related obligations, including the impact of the
interest rate swaps, was 6.9% (2011 5.8%). Interest expense on long-term debt for the year, including the impact of interest
rate swaps, was $36 million (2011 $33 million). Total interest paid during the year was $41 million (2011 $33 million).
Senior Notes Due 2015
In June 2012, the Company issued $240 million of senior notes due June 2015 with an interest rate of 6.25%. The notes
comprise two tranches. The rst tranche consists of $165 million of senior secured notes that rank pari passu with the Companys
existing senior secured notes due in 2017 and committed revolving bank lines. The second tranche consists of $75 million of
senior unsecured notes. The Company used the proceeds to repay the $240 million 7.25% debentures due on July 1, 2012.
Senior Secured Notes Due 2017
The Companys senior secured notes due in 2017 bear an interest rate that varies with the Companys credit ratings. In June
2012, Moodys Investors Service upgraded the ratings on the Companys senior secured debt from Ba3 to Ba2 and accordingly,
the interest rate on the 2017 notes decreased by 0.25%, from 7.95% to 7.70% effective February 15, 2012.
Revolving Bank Lines
In July 2012, the Company renewed its committed revolving bank lines, extending the maturity by one year and reducing the
aggregate commitment by $25 million. All other material terms of the bank lines remain unchanged. As a result, the Company
now has a total aggregate commitment of $245 million which matures in May 2015 and bears interest at money market rates plus
a margin that varies with the Companys credit rating. The bank lines are secured by a rst lien on the Companys North American
OSB inventory and property, plant and equipment. This lien is shared pari passu with holders of the 2015 and 2017 senior
secured notes.
At period-end, none of the revolving bank lines were drawn as cash, $3 million was utilized for letters of credit and $242 million
was available to support short-term liquidity requirements.
The bank lines contain two quarterly nancial covenants: minimum tangible net worth of $250 million and maximum net debt to
total capitalization, book basis, of 65%. As a result of the bank line renewal completed in 2010, the IFRS transitional adjustments
to shareholders equity of $21 million at January 1, 2011 are added back for the purposes of the tangible net worth calculation. In
addition, OCI movement subsequent to January 1, 2011 is excluded from the tangible net worth calculation. Net debt includes
total debt, principal value, less cash and cash equivalents plus letters of credit issued. At period-end, the Companys tangible net
worth for nancial covenant purposes was $422 million and net debt for nancial covenant purposes was $315 million. Net debt
to total capitalization was 43% on a book basis (note 14).
Debt Issue Costs
In 2012, debt issue costs of $5 million (2011 $1 million) were paid on the issuance of the 2015 senior notes and the renewal of
the revolving bank lines. Amortization expense related to debt issue costs for 2012 was $3 million (2011 $2 million).
Interest Rate Swaps
At period-end, the Company did not have any outstanding interest rate swaps (December 31, 2011 $115 million). The interest
rates swaps matured on July 1, 2012, the same date the underlying hedged debt was repaid. Interest rate swap gains were offset
by losses on the underlying exposures being hedged within interest expense.
NOTE 8. OTHER LIABILITIES
Dened benet pension obligation 9 $ 30 $ 31
Accrued employee benets 10 8
Unrealized monetary hedge loss 15 1
$ 40 $ 40
The unrealized monetary hedge loss is offset by unrealized gains on the underlying exposures being hedged.
NOTE 9. EMPLOYEE BENEFIT PLANS
Pension Plans
Norbord has a number of pension plans in which participation is available to substantially all employees. Norbords obligations
under its dened benet pension plans are determined periodically through the preparation of actuarial valuations. The most
recent actuarial valuation was conducted as of December 31, 2011.
Information about Norbords dened benet pension obligation and assets is as follows:
Change in Accrued Benet Obligation During the Year
Accrued benet obligation, beginning of year $ 88 $ 85
Current service cost 2 2
Interest on accrued benet obligation 4 4
Benets paid (6) (4)
Net actuarial loss 3 5
Curtailment gain (1)
Foreign currency exchange rate impact 2 (3)
Accrued benet obligation, end of year
(1)
$ 93 $ 88
Change in Plan Assets During the Year
Plan assets, beginning of year $ 57 $ 59
Expected return on plan assets 4 4
Employer contributions 5 5
Benets paid (6) (4)
Net actuarial gain (loss) 2 (5)
Foreign currency exchange rate impact 1 (2)
Plan assets, end of year
(1)
$ 63 $ 57
Funded Status
Accrued benet obligation $ 93 $ 88
Plan assets (63) (57)
Accrued benet obligation in excess of plan assets $ 30 $ 31
(1)
All plans have accrued benet obligations in excess of plan assets.
The components of benet expense (income) recognized in the statement of earnings are as follows:
Current service cost $ 2 $ 2
Interest on accrued benet obligation 4 4
Expected return on plan assets (4) (4)
Curtailment gain (1)
Net periodic pension expense $ 2 $ 1
Signicant Weighted Average Actuarial Assumptions 2012 2011
Used in calculation of net periodic pension expense for the year
Discount rate 4.5% 5.2%
Expected long-term rate of return on plan assets 6.8% 7.0%
Rate of compensation increase 2.7% 3.6%
Used in calculation of accrued benet obligation, end of year
Discount rate 4.3% 4.5%
Rate of compensation increase 2.5% 2.7%
The weighted average asset allocation of Norbords dened benet pension plan assets is as follows:
2012 2011
Asset category
Equity investments 62% 60%
Fixed income investments 37% 39%
Cash 1% 1%
Total assets 100% 100%
Operating costs include $7 million (2011 $7 million) related to contributions to Norbords dened contribution pension plans.
The cumulative actuarial losses, net of tax, recognized in retained earnings are as follows:
Cumulative actuarial losses $ 27 $ 27
NOTE 10. INCOME TAX
Deferred income taxes reect the net tax effects of temporary differences between the carrying amounts of assets and liabilities in
the balance sheet and the amounts used for income tax purposes.
The source of deferred income taxes balances is as follows:
Property, plant and equipment, differences in basis $ (161) $ (161)
Benet of tax loss carryforwards 79 87
Investment and other tax credits 3 7
Other differences in basis (4) 6
Deferred income taxes liability $ (83) $ (61)
As at December 31, 2012, the Company had the following approximate tax attributes available to carry forward:
Amount Latest
(millions) Expiry Year
Tax loss carryforwards
Belgium 38 Indenite
Canada non-capital loss CAD $ 85 2031
Canada capital loss CAD $ 18 Indenite
United States US $ 145 2033
Investment and other tax credits
Canada CAD $ 3 2031
The loss carryforwards and credits may be utilized over the next several years to eliminate cash taxes otherwise payable, and they
will protect future cash ows. Certain deferred tax benets relating to the above attributes have been included in deferred income
taxes in the consolidated nancial statements. At each balance sheet date, the Company assesses its deferred income tax assets
position and recognizes and/or derecognizes the amounts that, in the judgement of management, are probable to be realized or
unrealized. During the year, the Company recognized $nil in net deferred tax assets (2011 $8 million) relating to prior years
losses and temporary differences. Concurrently, the Company did not recognize or derecognize any net deferred tax assets
(2011 $7 million deferred tax assets derecognized) which were recorded in OCI.
The expiry date, if applicable, of the unrecognized deferred tax assets is as follows:
2013 $ 2 $ 2
20182033 9 6
Do not expire 32 35
Total $ 43 $ 43
The aggregate amount of temporary differences associated with investments in subsidiaries for which deferred tax assets have not
been recognized as at December 31, 2012 is $209 million (December 31, 2011 $431 million).
Income tax expense (recovery) recognized in the statement of earnings comprises the following:
Current income tax $ 5 $ 3
Deferred income tax 22 (31)
Income tax expense (recovery) $ 27 $ (28)
Income tax expense (recovery) is calculated as follows:
Earnings before income tax $ 99 $ (39)
Income tax expense (recovery) at combined Canadian federal and provincial statutory rate
of 26.5% (2011 28.3%) 26 (11)
Effect of:
Rate differences on foreign activities 7 (2)
Derecognition of the benet of current years tax loss and other deferred tax assets/liabilities 2
Recognition of the benet of prior years tax losses and deferred tax assets (10)
Foreign exchange gain (1) (1)
Other (5) (6)
Income tax expense (recovery) $ 27 $ (28)
Income tax (expense) recovery recognized in the statement of comprehensive income (loss) comprises the following:
Foreign currency translation gain (loss) on foreign operations $ 8 $ (3)
Tax (1) (1)
Net of tax $ 7 $ (4)
Net loss on hedge of net investment in foreign operations $ $ (1)
Tax
Net of tax $ $ (1)
Actuarial loss on post-employment obligation $ (1) $ (11)
Tax 1 (6)
Net of tax $ $ (17)
NOTE 11. SHAREHOLDERS EQUITY
SHARE CAPITAL
2012 2011
Shares Amount Shares Amount
(millions) (US $ millions) (millions) (US $ millions)
Common shares outstanding, beginning of year 43.6 $ 340 43.5 $ 340
Issue of common shares, net 0.4 6 0.1
Common shares outstanding, end of year 44.0 $ 346 43.6 $ 340
As at December 31, 2012, the authorized capital stock of the Company is as follows: an unlimited number of Class A and Class B
preferred shares, an unlimited number of non-voting participating shares and an unlimited number of common shares.
Contributed Surplus
Contributed surplus comprises transactions on account of the warrants issued by Norbord and stock options issued under the
Companys stock option plan.
WARRANTS
2012 2011
Shares Amount Shares Amount
(millions) (US $ millions) (millions) (US $ millions)
Balance, beginning of year 136.3 $ 35 136.3 $ 35
Warrants exercised (1.1)
Balance, end of year 135.2 $ 35 136.3 $ 35
As at December 31, 2012, the Company had 135.2 million common share purchase warrants outstanding, entitling holders to
purchase 13.5 million common shares, at a price of CAD $13.60 per share, at any time prior to December 24, 2013. During the
year, 1.1 million common share purchase warrants were exercised resulting in the issuance of 0.1 million common shares for total
proceeds of $1 million.
STOCK OPTIONS
2012 2011
Weighted Weighted
Average Average
Options Exercise Price Options Exercise Price
(millions) (CAD $) (millions) (CAD $)
Balance, beginning of year 2.0 $ 21.63 1.5 $ 23.73
Options granted 0.5 9.96 0.6 14.93
Options exercised (0.3) 9.34 (0.1) 6.12
Balance, end of year 2.2 $ 20.57 2.0 $ 21.63
Exercisable at year-end 0.7 $ 35.49 0.7 $ 33.30
During the year, 0.3 million stock options were exercised resulting in the issuance of 0.3 million common shares for total proceeds
of $3 million.
Under the Companys stock option plan, the Board of Directors may issue stock options to certain employees of the Company.
These options vest over a ve-year period and expire 10 years from the date of issue. In 2012, stock option expense of $2 million
was recorded against contributed surplus (2011 $2 million).
The following table summarizes the weighted average exercise prices and the weighted average remaining contractual life of the
balances of stock options outstanding at December 31, 2012:
Options Outstanding Options Exercisable
Weighted
Average Weighted Weighted
Remaining Average Average
Contractual Life Exercise Price Exercise Price
Range of Exercise Prices (CAD $) Options (years) (CAD $) Options (CAD $)
$6.50 427,000 6.09 $ 6.50 227,000 $ 6.50
$8.40$12.05 509,230 9.01 9.97 3,230 8.40
$14.93 529,000 8.08 14.93 61,000 14.93
$18.21 514,000 7.09 18.21 190,000 18.21
$38.30 22,030 1.07 38.30 22,030 38.30
$60.90 90,630 5.09 60.90 72,504 60.90
$87.30$111.30 150,910 3.21 97.13 150,910 97.13
2,242,800 7.17 $ 20.57 726,674 $ 35.49
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation gain on foreign operations $ 14 $ 7
Net loss on hedge of net investment in foreign operations (8) (8)
Accumulated other comprehensive income (loss), net of tax $ 6 $ (1)
NOTE 12. EARNINGS PER COMMON SHARE
(US $ millions, except share and per share information, unless otherwise noted) 2012 2011
Earnings available to common shareholders $ 72 $ (11)
Common shares (millions):
Weighted average number of common shares outstanding 43.6 43.6
Stock options
(1)
0.4
Warrants
(1)
1.4
Diluted number of common shares 45.4 43.6
Earnings per common share:
Basic $ 1.65 $ (0.25)
Diluted 1.59 (0.25)
(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 and warrants.
NOTE 13. SUPPLEMENTAL CASH FLOW INFORMATION
The net change in non-cash operating working capital balance comprises:
Cash used for:
Accounts receivable $ (22) $ (11)
Inventory (12) (8)
Accounts payable and accrued liabilities 15 (4)
$ (19) $ (23)
Cash interest and income taxes comprise:
Cash interest paid $ 41 $ 33
Cash taxes paid, net 1
NOTE 14. CAPITAL MANAGEMENT
Norbords capital management objective is to achieve top-quartile return on equity (ROE) and cash return on capital employed
(ROCE) over the business cycle, among North American forest products companies, to enable it to retain access to public and
private capital markets, subject to nancial market conditions. This objective is unchanged from the prior year.
Norbord monitors its capital structure using two key measures of its relative debt position. While the Company considers both
book and market basis metrics, it believes the market basis to be superior to the book basis in measuring the true strength and
exibility of its balance sheet.
Net debt to capitalization, book basis, is net debt divided by the sum of net debt and tangible net worth. Net debt consists of the
principal value of long-term debt, including the current portion and bank advances (if any) less cash and cash equivalents.
Consistent with the treatment under the Companys nancial covenants, letters of credit are included in net debt. Tangible net
worth consists of shareholders equity.
Net debt to capitalization, market basis, is net debt divided by the sum of net debt and market capitalization. Net debt is
calculated, as outlined above, under net debt to capitalization, book basis. Market capitalization is the number of common shares
outstanding at period-end multiplied by the trailing 12-month average per share market price. Market basis capitalization is
intended to correct for the low historical book value of Norbords asset base relative to its fair value.
Norbords capital structure at period-end consisted of the following:
Long-term debt, principal value 7 $ 440 $ 440
Less: Cash and cash equivalents (128) (83)
Net debt 312 357
Add: Letters of credit 3 3
Net debt for nancial covenant purposes 315 360
Shareholders equity 386 300
Add: IFRS transitional adjustments 7 21 21
Less: Other comprehensive income movement
(1)
15 22
Tangible net worth for nancial covenant purposes 422 343
Total capitalization $ 737 $ 703
Net debt to capitalization, book basis 43% 51%
Net debt to capitalization, market basis 32% 42%
(1)
Cumulative subsequent to January 1, 2011.
NOTE 15. FINANCIAL INSTRUMENTS
Norbord has exposure to market, commodity price, interest rate, currency, counterparty credit and liquidity risk. Norbords primary
risk management objective is to protect the Companys balance sheet, earnings and cash ow in support of achieving top-quartile
return on equity (ROE) and cash return on capital employed (ROCE) among North American forest products companies.
Norbords nancial risk management activities are governed by Board-approved nancial policies that cover risk identication,
tolerance, measurement, hedging limits, hedging products, authorization levels and reporting. Derivative contracts that are
deemed to be highly effective in offsetting changes in the fair value, net investment or cash ows of hedged items are designated
as hedges of specic exposures. Gains and losses on these instruments are recognized in the same manner as the item being
hedged. Hedge ineffectiveness, if any, is measured and included in current period earnings.
Market Risk
Norbord purchases commodity inputs, issues debt at xed and oating interest rates, invests surplus cash, sells product, and
purchases inputs in foreign currencies and invests in foreign operations. These activities expose the Company to market risk from
changes in commodity prices, interest rates and foreign exchange rates, which affects the Companys balance sheet, earnings
and cash ows. The Company uses derivatives as part of its overall nancial risk management policy to manage certain exposures
to market risk that result from these activities.
Commodity Price Risk
Norbord is exposed to commodity price risk on most of its manufacturing inputs, which principally comprise wood bre, resin
and energy. These manufacturing inputs are purchased primarily on the open market in competition with other users of such
resources, and prices are inuenced by factors beyond Norbords control.
Norbord monitors market developments in all commodity prices to which it is materially exposed. No liquid futures markets exist
for the majority of Norbords commodity inputs, but, where possible, Norbord will hedge a portion of its commodity price
exposure up to Board-approved limits in order to reduce the potential negative impact of rising commodity input prices. Should
Norbord decide to hedge any of this exposure, it will lock in prices directly with its suppliers or, if unfeasible, purchase nancial
hedges where liquid markets exist.
At December 31, 2012, Norbord has hedged approximately 19% of its 2013 expected natural gas consumption by locking in the
price directly with its suppliers. Approximately 60% of Norbords electricity is purchased in regulated markets, and Norbord has
hedged approximately 31% of its 2013 deregulated electricity consumption. While these contracts are derivatives, they are exempt
from being accounted for as nancial instruments as they were normal purchases for the purpose of receipt.
Interest Rate Risk
Norbords nancing strategy is to access public and private capital markets to raise long-term core nancing, and to utilize the
banking market to provide committed standby credit facilities supporting its short-term cash ow needs. The Company has
xed-rate debt, which subjects it to interest rate price risk, and has oating-rate debt, which subjects it to interest rate cash ow
risk. In addition, the Company invests surplus cash in bank deposits and short-term money market securities.
Historically, the Company entered into interest rate swaps to convert a portion of its debt from xed to oating rates. At period-
end, the Company had no interest rate swaps outstanding (note 7).
From time to time, the Company has recouponed its portfolio of interest rate swaps to more efciently manage cash ow and
credit exposure. Any gains or losses realized are deferred and amortized over the remaining term of the debt against which the
swaps were designated as hedges. At year-end, there were no deferred interest rate swap gains included in the carrying value of
long-term debt in the consolidated balance sheets (note 7). In 2012, amortization of $1 million (2011 $2 million) was included
in interest expense (note 7).
Currency Risk
Norbords foreign exchange exposure arises from the following sources:
Net investments in foreign operations, limited to Norbords investment in its European operations
Net Canadian dollardenominated monetary assets and liabilities
Committed or anticipated foreign currencydenominated transactions, primarily Canadian dollar costs in Norbords Canadian
operations and Euro revenues in Norbords UK operations
The Companys policy is to manage all signicant balance sheet foreign exchange exposures by entering into cross-currency
swaps and forward foreign exchange contracts. The Company may hedge a portion of future foreign currencydenominated cash
ows, using forward foreign exchange contracts or options for periods of up to three years, in order to reduce the potential
negative effect of a strengthening Canadian dollar versus the US dollar, or a weakening Euro versus the Pound Sterling.
Counterparty Credit Risk
Norbord invests surplus cash in bank deposits and short-term money market securities, sells its product to customers on
standard market credit terms and uses derivatives to manage its market risk exposures. These activities expose the Company to
counterparty credit risk that would result if the counterparty failed to meet its obligations in accordance with the terms and
conditions of its contracts with the Company.
Norbord operates in a cyclical commodity business. Accounts receivable credit risk is mitigated through established credit
management techniques, including conducting nancial and other assessments to establish and monitor a customers
creditworthiness, setting customer limits, monitoring exposures against these limits and, in some instances, purchasing credit
insurance or obtaining trade letters of credit. At period-end, the key performance metrics on the Companys accounts receivable are
in line with prior periods. As at December 31, 2012, the provision for doubtful accounts was less than $1 million (December 31,
2011 less than $1 million). In 2012, Norbord had one customer whose purchases represented greater than 10% of total sales.
Under an accounts receivable securitization program, Norbord has transferred substantially all of its present and future trade
accounts receivable to a third-party trust, sponsored by a highly rated Canadian nancial institution, on a fully serviced basis, for
proceeds consisting of cash and deferred purchase price. At December 31, 2012, Norbord had no drawings (December 31,
2011 $69 million) relating to this program. The fair value of the deferred purchase price approximates its carrying value as a
result of the short accounts receivable collection cycle and negligible historical credit losses.
Surplus cash is only invested with counterparties meeting minimum credit quality requirements and issuer and concentration
limits. Derivative transactions are executed only with approved, high-quality counterparties under master netting agreements. The
Company monitors and manages its concentration of counterparty credit risk on an ongoing basis.
The Companys maximum counterparty credit exposure at year-end consists of the carrying amount of cash and cash equivalents
and accounts receivable, which approximate fair value, and the fair value of derivative nancial assets.
Liquidity Risk
Norbord strives to maintain sufcient nancial liquidity at all times in order to participate in investment opportunities as they arise,
as well as to withstand sudden adverse changes in economic circumstances. Management forecasts cash ows for its current
and subsequent scal years to identify nancing requirements. These requirements are then addressed through a combination of
committed credit facilities and access to capital markets.
At period-end, Norbord had $128 million in cash, $85 million undrawn under its accounts receivable securitization program and
$242 million in unutilized committed revolving bank lines.
Financial Liabilities
The following table summarizes the aggregate amount of contractual future cash outows for the Companys nancial liabilities:
Principal $ $ $ 240 $ $ 200 $ $ 440
Interest 32 32 24 15 8 111
Long-term debt,
including interest $ 32 $ 32 $ 264 $ 15 $ 208 $ $ 551

Note: The above table does not include pension and post-employment benets plan obligations.
Non-Derivative Financial Instruments
The net book values and fair values of non-derivative nancial instruments were as follows:
December 31, 2012 December 31, 2011
Net Book Fair Net Book Fair
(US $ millions) Financial Instrument Category Value Value Value Value
Financial assets:
Cash and cash equivalents Fair value through prot or loss $ 128 $ 128 $ 83 $ 83
Accounts receivable Loans and receivables 125 125 102 102
$ 253 $ 253 $ 185 $ 185
Financial liabilities:
Accounts payable and
accrued liabilities Other nancial liabilities $ 173 $ 173 $ 162 $ 162
Long-term debt Other nancial liabilities 433 471 438 433
Other long-term debt Other nancial liabilities 69 69
Other liabilities Other nancial liabilities 40 40 40 40
$ 646 $ 684 $ 709 $ 704
Derivative Financial Instruments
Information about derivative nancial instruments was as follows:
December 31, 2012
Unrealized
Gain at Realized Gain Sensitivity to
(US $ millions, unless otherwise noted) Notional Value Period-End
(1)
for the Year 1% Change
Currency hedges:
Net investment
Belgium $ $ 3 $
UK
Monetary position
Canadian dollar CAD $ 43 1
Cash ow
Euro 40
Interest rate hedges:
Interest rate swaps $ 2
December 31, 2011
Unrealized Realized
Gain (Loss) at (Loss) Gain Sensitivity to
(US $ millions, unless otherwise noted) Notional Value Period-End
(1)
for the Year 1% Change
Currency hedges:
Net investment
Belgium 11 $ 2 $ (2) $
UK 41 1 1 1
Monetary position
Canadian dollar CAD $ 93 (1) 1 1
Interest rate hedges:
Interest rate swaps $ 115 2 1
(1)
The carrying values of the derivative nancial instruments are equivalent to the unrealized gain (loss) at period-end.
Realized and unrealized gains and losses on derivative nancial instruments are offset by realized and unrealized losses and gains
on the underlying exposures being hedged.
NOTE 16. COMMITMENTS AND CONTINGENCIES
Tax Exposures
In the normal course of operations, the Company is subject to various uncertainties concerning the interpretation and application
of tax laws, in the ling of its tax returns in operating jurisdictions that could materially affect the Companys cash ows. There can
be no assurance that the tax authorities will not challenge the Companys ling positions.
Other
The Company has provided certain commitments and indemnications, 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.
The Company has entered into various commitments as follows:
(US $ millions) Less than 1 year 15 years Thereafter Total
Purchase obligations $ 44 $ 78 $ 5 $ 127
Operating leases 3 5 8
$ 47 $ 83 $ 5 $ 135
NOTE 17. RELATED PARTY TRANSACTIONS
In the normal course of operations, the Company enters into various transactions on market terms with related parties which have
been measured at exchange value and recognized in the consolidated nancial statements. The following transactions have
occurred between the Company and its related parties during the normal course of business.
Standby Term Loan Commitment
In 2011, Brookeld committed to put in place a $120 million standby term loan to be used to repay up to half of the 2012
debentures, which were due July 1, 2012, if necessary. Since the 2012 debentures were renanced through the issuance of
senior notes during the year, the standby term loan commitment automatically terminated.
Indemnity Commitment
As at December 31, 2012, total future costs related to a 1999 asset purchase agreement between the Company and Brookeld,
for which Norbord provided an indemnity, are estimated at less than $1 million and are included in other liabilities in the
consolidated balance sheets.
Other
The Company provided certain administrative services to Brookeld which were charged on a cost recovery basis. In addition,
the Company periodically purchases goods from or engages the services of Brookeld for various nancial, real estate and other
business advisory services. In 2012, the fees for services rendered and the cost of goods purchased were $4 million (2011
$5 million) and were charged at market rates.
Compensation of Key Management Personnel
The remuneration of Directors and other key management personnel was as follows:
Salaries, incentives and short-term benets $ 4 $ 2
Share-based awards 2 2
$ 6 $ 4
NOTE 18. GEOGRAPHIC SEGMENTS
The Company has a single reportable segment. The Company operates principally in North America and Europe. Sales by
geographic segment are determined based on the origin of shipment and therefore include export sales.
2012
(US $ millions) North America Europe Unallocated Total
Sales $ 701 $ 448 $ $ 1,149
EBITDA
(1)
165 39 (16) 188
Investment in property, plant and equipment 20 6 26
2011
(US $ millions) North America Europe Unallocated Total
Sales $ 507 $ 458 $ $ 965
EBITDA
(1)
14 44 (13) 45
Depreciation 31 19 1 51
Investment in property, plant and equipment 14 11 25
(1)
EBITDA is earnings before interest, income tax and depreciation.
NOTE 19. PRIOR PERIOD COMPARATIVES
Certain 2011 gures have been reclassied to conform with the current periods presentation.
SELECTED QUARTERLY INFORMATION
(unaudited) 2012
(US $ millions, except per share information) Q1 Q2 Q3 Q4 Total
Sales
(1)

North America $ 135 $ 163 $ 195 $ 208 $ 701
Europe 118 109 107 114 448
Total 253 272 302 322 1,149
Earnings before interest, income tax
and depreciation
North America 14 26 58 67 165
Europe 11 9 10 9 39
Unallocated (4) (4) (2) (6) (16)
Total 21 31 66 70 188
Earnings before income tax and depreciation 13 22 56 61 152
Depreciation (13) (13) (13) (14) (53)
Income tax (expense) recovery (3) (15) (9) (27)
Earnings $ $ 6 $ 28 $ 38 $ 72
Earnings per common share
Basic $ $ 0.14 $ 0.64 $ 0.86 $ 1.65
Diluted 0.14 0.61 0.76 1.59
Cash (used for) provided by operating
activities per share (0.62) 0.57 1.19 1.98 3.12
Return on capital employed 10% 15% 32% 33% 23%
Net debt for nancial covenant purposes $ 383 $ 357 $ 314 $ 315
Tangible net worth for nancial covenant purposes 344 350 380 422
Net debt to capitalization, market basis 46% 45% 39% 32%
Net debt to capitalization, book basis 53% 50% 45% 43%
(1)
SELECTED QUARTERLY I NFORMATI ON 71
(unaudited) 2011
(US $ millions, except per share information) Q1 Q2 Q3 Q4 Total
Sales
(1)
North America $ 133 $ 124 $ 131 $ 119 $ 507
Europe 120 117 111 110 458
Total 253 241 242 229 965
Earnings before interest, income tax
and depreciation
North America 7 5 2 14
Europe 11 13 10 10 44
Unallocated (4) (3) (3) (3) (13)
Total 14 10 12 9 45
Earnings before income tax and depreciation 6 2 4 12
Depreciation (14) (13) (13) (11) (51)
Income tax recovery (expense) 6 12 8 2 28
Earnings $ (2) $ 1 $ (1) $ (9) $ (11)
Earnings per common share
Basic $ (0.05) $ 0.03 $ (0.02) $ (0.21) $ (0.25)
Diluted (0.05) 0.03 (0.02) (0.21) (0.25)
Cash (used for) provided by operating
activities per share (0.76) 0.05 (0.32) 0.73 (0.30)
Return on capital employed 6% 5% 6% 4% 5%
Net debt for nancial covenant purposes $ 367 $ 373 $ 393 $ 360
Tangible net worth for nancial covenant purposes 351 352 352 343
Net debt to capitalization, market basis 37% 39% 43% 42%
Net debt to capitalization, book basis 51% 51% 53% 51%
(1)
EIGHT-YEAR HISTORICAL REVIEW
2012
(US $ millions, except per share information) IFRS
Earnings
Sales
(1)
$ 1,149
Earnings before interest, income tax, depreciation, litigation settlement,
provision for non-core operations and foreign exchange loss 188
Foreign exchange loss
Litigation settlement
Provision for non-core operations
Interest expense, net (36)
Earnings before income tax and depreciation 152
Depreciation (53)
Income tax (expense) recovery (27)
Earnings $ 72
Basic $ 1.65
Diluted 1.59
Balance Sheet
Current assets $ 351
Property, plant and equipment 764
Other assets
Total assets $ 1,115
Current liabilities $ 173
Long-term debt 433
Other liabilities 40
Deferred income taxes 83
Shareholders equity 386
Total liabilities and shareholders equity $ 1,115
Cash Flow
Cash provided by (used for) operating activities $ 136
Investment in property, plant and equipment (22)
Other investing activities 3
Debt (repaid) incurred (71)
Debt issue costs (5)
Issue (repurchase) of shares 4
Issue of warrants
Dividends
Increase (decrease) in cash and cash equivalents $ 45
Per Common Share
Dividends $
Market price range (CAD $)
High 30.65
Low 8.28
Close 30.19
(1)

EI GHT- YEAR HI STORI CAL REVI EW 73
2011 2010 2009 2008 2007 2006 2005
IFRS IFRS CGAAP CGAAP CGAAP CGAAP CGAAP
$ 965 $ 962 $ 718 $ 943 $ 1,104 $ 1,252 $ 1,462
45 107 (60) 42 247 495
(3)
(32)
(8) (4) (4) (13)
(33) (34) (36) (46) (44) (26) (25)
12 65 (43) (142) (2) 208 470
(51) (51) (48) (68) (88) (94) (89)
28 (1) 33 95 45 (17) (133)
$ (11) $ 13 $ (58) $ (115) $ (45) $ 97 $ 248
$ (0.25) $ 0.30 $ (1.35) $ (7.62) $ (3.10) $ 6.76 $ 16.22
(0.25) 0.29 (1.35) (7.62) (3.10) 6.74 16.12

$ 278 $ 291 $ 176 $ 126 $ 431 $ 284 $ 403
787 814 860 879 968 1,008 921
5 13 7 36 5 7 4
$ 1,070 $ 1,118 $ 1,043 $ 1,041 $ 1,404 $ 1,299 $ 1,328
$ 404 $ 164 $ 140 $ 146 $ 390 $ 228 $ 225
265 503 471 542 480 480 440
40 35 9 14 18 44 31
61 85 89 73 156 113 110
300 331 334 266 360 434 522
$ 1,070 $ 1,118 $ 1,043 $ 1,041 $ 1,404 $ 1,299 $ 1,328

$ (13) $ 127 $ (35) $ (13) $ 15 $ 191 $ 314
(23) (14) (14) (27) (36) (160) (115)
(1) 6 1 29 (32) (11) 13
10 (28) (64) (143) 196 40 (11)
(1) (2) (5) (3)
2 97 65 (28) (100)
21 14
(33) (32) (167) (161)
$ (28) $ 91 $ 1 $ (108) $ 108 $ (135) $ (60)
$ $ $ $ 3.80 $ 3.80 $ 12.50 $ 11.30
16.44 21.45 19.10 78.90 98.80 127.90 139.00
7.13 10.70 5.90 5.00 70.50 77.70 99.40
8.10 14.64 14.66 7.00 79.60 89.10 122.50
PRINCIPAL OPERATING INTERESTS
Information regarding Norbords estimated annual production capacity is set forth in the following table. The estimated annual
production capacity is based on normal operating rates and normal production mixes under current market conditions, taking into
account known constraints, such as permit restrictions. Factors such as market conditions, uctuations in raw material availability,
mechanical interruptions and the nature of current orders may cause actual production rates and mixes to vary signicantly from
the estimated production rates and mixes used to derive the estimated annual capacities shown.
Estimated Annual
(MMsf
3
8") Capacity at Year-End
(unaudited) 2012
OSB
Bemidji, Minnesota 470
Cordele, Georgia 990
Genk, Belgium 350
Guntown, Mississippi 450
Huguley, Alabama
(1)
500
Inverness, Scotland 350
Jefferson, Texas
(2)
415
Joanna, South Carolina 500
La Sarre, Quebec 375
Nacogdoches, Texas 380
Val-dOr, Quebec
(1)
340
5,120
Particleboard
Cowie, Scotland 380
South Molton, England 225
605
MDF
Cowie, Scotland 380
380
Total panels 6,105
(1)
In January 2009, Norbord indenitely curtailed production at its Huguley OSB mill to contain costs and manage operating working capital across the Company. In July
2012, Norbord indenitely curtailed production at its Val-dOr OSB mill to improve the Companys operating conguration in Canada. Combined, these mills represent
840 MMsf
38" of annual production capacity.
(2)
In January 2009, Norbord indenitely curtailed production at its Jefferson OSB mill. In January 2013, Norbord announced its intention to restart the Jefferson mill by
mid-2013.
75
GLOSSARY
m
3
: Cubic metre. A measure of volume equal to approximately 1,130 square feet (
3
8-inch basis).
MDF: Medium density breboard. A panelboard produced by chemically bonding highly rened wood bres of uniform size under
heat and pressure.
Msf (MMsf): Measurement for panel products equal to a thousand (million) square feet. This measurement is calculated on either
a
3
8-inch or
7
16-inch thick basis.
OSB: Oriented strand board. An engineered structural wood panel produced by chemically bonding wood strands in a uniform
direction under heat and pressure.
Panelboard: Oriented strand board, particleboard, medium density breboard and plywood.
Particleboard: A panelboard produced by chemically bonding clean sawdust, small wood particles and recycled wood bre
under heat and pressure.
Plywood: A panelboard produced by chemically bonding thin layers of solid wood veneers.
BOARD OF DIRECTORS
Jack L. Cockwell
Director since 1987
Group Chair, Brookeld Asset
Management Inc.
Dian N. Cohen
Director since 1987
Corporate Director and
Economics consultant
Pierre Dupuis
Director since 1995
Corporate Director
Dominic Gammiero
Director since 1998
Managing Partner, Brookeld
Special Situations Partners Ltd.
Jon S. Haick
Director since 2012
Managing Partner, Brookeld
Asset Management Inc. and
Chief Executive Ofcer,
Brookeld Europe
Robert J. Harding
Chair
Director since 1998
Corporate Director
Neville W. Kirchmann
Director since 2007
President, Kirchmann Holdings Ltd.
J. Barrie Shineton
Director since 2004
President and Chief Executive Ofcer,
Norbord Inc.
Denis A. Turcotte
Director since 2012
President and Chief Executive Ofcer,
North Channel Management
and North Channel Capital Partners
James D. Wallace
Director since 2012
President, Pioneer Construction Inc.
Details on Norbords Directors are provided in the Management Proxy Circular and on Norbords website.
SENIOR MANAGEMENT
Robert J. Harding
Chair
J. Barrie Shineton
President and
Chief Executive Ofcer
Robin E. Lampard
Senior Vice President and
Chief Financial Ofcer
Peter C. Wijnbergen
Senior Vice President and
Chief Operating Ofcer
Karl R. Morris
Senior Vice President,
European Operations
Nigel A. Banks
Senior Vice President,
Corporate Services
Michael J. Dawson
Vice President,
Sales, Marketing and Logistics
James L. Black
Vice President,
Operations West
Kevin J. Burke
Vice President,
Operations East
CORPORATE INFORMATION
Norbord Inc.
1 Toronto Street, Suite 600
Toronto, Ontario
M5C 2W4
416-365-0705 or
1-888-667-2673
www.norbord.com
info@norbord.com
TSX stock symbols: NBD
NBD.WT
Sales
Toronto, Ontario
416-365-0705
1-800-387-1740
Inverness, Scotland
011-44-1463-792424
South Molton, England
011-44-1769-572991
Genk, Belgium
011-32-8950-0300
Media and Investor Relations
Heather Colpitts
Manager, Corporate Affairs
416-365-0705
info@norbord.com
Investor Information
2013 Financial Calendar
Norbord Year-End December 31
(dates on or about)
Q1 Earnings Release April 30
Q2 Earnings Release July 25
Q3 Earnings Release November 1
Q4 and 2013 Year-End January 30, 2014
Annual Meeting of Shareholders
Tuesday, April 30, 2013
at 10:00 a.m.
The National Club, 303 Bay Street
Toronto, Ontario M5H 2R1
Shareholder Information
Transfer Agent & Registrar
CIBC Mellon Trust Company
(1)
320 Bay Street
Toronto, Ontario
M5H 4A6
416-682-3860 or
1-800-387-0825
inquiries@canstockta.com
To receive additional copies of
this report, please contact us at
1-888-667-2673, 416-365-0705
or info@norbord.com.
(1)
Canadian Stock Transfer Company acts as the
administrative agent for CIBC Mellon Trust
Company.

This report has been printed on paper stock that is FSC
(Forest Stewardship Council)

certied. FSC bre used in the manufacture of the paper stock comes from well-managed forests
independently certied by SmartWood according to Forest Stewardship Council rules.
C000000
From responsible
sources
MlX
www.norbord.com
An international producer of wood-based panels
One of the worlds largest oriented strand board (OSB) producers
13 plant locations in North America and Europe
US $1 billion in annual sales
5 billion square feet of annual OSB production capacity
NORTH AMERICAN PRODUCTS
EUROPEAN PRODUCTS

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