Exhibit



(Unaudited) (US $ millions)	Note	Jun 30, 2018		Dec 31, 2017
Assets
Current assets
Cash and cash equivalents		$	298	$	241
Accounts receivable	3	214		174
Taxes receivable		—		1
Inventory	4	244		224
Prepaids		10		11
		766		651
Non-current assets
Property, plant and equipment	14	1,453		1,421
Intangible assets		23		24
Deferred income tax assets		4		4
Other assets		4		3
		1,484		1,452
		$	2,250	$	2,103
Liabilities and shareholders’ equity
Current liabilities
Accounts payable and accrued liabilities		$	256	$	282
Taxes payable		29		74
		285		356
Non-current liabilities
Long-term debt	5	549		548
Other liabilities	6	27		29
Deferred income tax liabilities		183		151
		759		728
Shareholders’ equity		1,206		1,019
		$	2,250	$	2,103



(Unaudited) Periods ended Jun 30 and Jul 1 (US $ millions, except per share information)	Note	Q2 2018			Q2 2017			6 mos 2018			6 mos 2017
Sales	14	$	707		$	536		$	1,283		$	1,003
Cost of sales		(430		)	(370		)	(832		)	(729		)
General and administrative expenses		(5		)	(2		)	(10		)	(8		)
Depreciation and amortization	14	(36		)	(27		)	(66		)	(51		)
Loss on disposal of assets		—			(2		)	—			(7		)
Operating income		236			135			375			208
Non-operating expense:
Finance costs		(9		)	(8		)	(17		)	(19		)
Earnings before income tax		227			127			358			189
Income tax expense	8	(53		)	(30		)	(89		)	(43		)
Earnings		$	174		$	97		$	269		$	146
Earnings per common share	9
Basic		$	2.01		$	1.13		$	3.11		$	1.70
Diluted		2.00			1.12			3.09			1.69



(Unaudited) Periods ended Jun 30 and Jul 1 (US $ millions)	Q2 2018			Q2 2017			6 mos 2018			6 mos 2017
Earnings	$	174		$	97		$	269		$	146
Other comprehensive income (loss), net of tax
Items that will not be reclassified to earnings:
Actuarial gain (loss) on post-employment obligation	4			(3		)	4			(6		)
Items that may be reclassified subsequently to earnings:
Foreign currency translation (loss) gain on foreign operations	(21		)	12			(10		)	17
Other comprehensive (loss) income, net of tax	(17		)	9			(6		)	11
Comprehensive income	$	157		$	106		$	263		$	157



(Unaudited) Periods ended Jun 30 and Jul 1 (US $ millions)	Note	Q2 2018			Q2 2017			6 mos 2018			6 mos 2017
Share capital
Balance, beginning of period		$	1,353		$	1,345		$	1,350		$	1,341
Issue of common shares upon exercise of options and Dividend Reinvestment Plan	7	3			—			6			4
Balance, end of period	7	$	1,356		$	1,345		$	1,356		$	1,345
Merger reserve	7	$	(96	)	$	(96	)	$	(96	)	$	(96	)
Contributed surplus
Balance, beginning of period		$	8		$	8		$	8		$	9
Stock options exercised	7	(1		)	—			(1		)	(1		)
Balance, end of period		$	7		$	8		$	7		$	8
Retained earnings (deficit)
Balance, beginning of period		$	(13	)	$	(359	)	$	(67	)	$	(402	)
Earnings		174			97			269			146
Common share dividends		(40		)	(20		)	(81		)	(26		)
Balance, end of period⁽ⁱ⁾		$	121		$	(282	)	$	121		$	(282	)
Accumulated other comprehensive loss
Balance, beginning of period		$	(165	)	$	(200	)	$	(176	)	$	(202	)
Other comprehensive (loss) income		(17		)	9			(6		)	11
Balance, end of period	7	$	(182	)	$	(191	)	$	(182	)	$	(191	)
Shareholders’ equity		$	1,206		$	784		$	1,206		$	784



(Unaudited) Periods ended Jun 30 and Jul 1 (US $ millions)	Note	Q2 2018			Q2 2017			6 mos 2018			6 mos 2017
CASH PROVIDED BY (USED FOR):
Operating activities
Earnings		$	174		$	97		$	269		$	146
Items not affecting cash:
Depreciation and amortization	14	36			27			66			51
Deferred income tax	8	28			12			31			25
Loss on disposal of assets		—			2			—			7
Other items	10	(5		)	(10		)	2			(4		)
		233			128			368			225
Net change in non-cash operating working capital balances	10	19			2			(74		)	(55		)
Net change in taxes receivable, taxes payable and investment tax credit receivable		(2		)	14			(40		)	13
		250			144			254			183
Investing activities
Investment in property, plant and equipment		(61		)	(62		)	(117		)	(118		)
Investment in intangible assets		(1		)	(1		)	(1		)	(3		)
		(62		)	(63		)	(118		)	(121		)
Financing activities
Common share dividends paid		(40		)	(19		)	(81		)	(25		)
Issue of common shares	7	2			—			4			3
Repayment of debt		—			—			—			(200		)
Accounts receivable securitization repayments, net		—			(61		)	—			—
Bank advances, net		—			(2		)	—			—
		(38		)	(82		)	(77		)	(222		)
Foreign exchange revaluation on cash and cash equivalents held		(5		)	8			(2		)	6
Cash and cash equivalents
Increase during period		145			7			57			(154		)
Balance, beginning of period		153			—			241			161
Balance, end of period		$	298		$	7		$	298		$	7

In these condensed consolidated interim financial statements (interim financial statements) notes, “Norbord” means Norbord Inc. and all of its consolidated subsidiaries and affiliates, and “Company” means Norbord Inc. as a separate corporation, unless the context implies otherwise. “Brookfield” means Brookfield Asset Management Inc., or any of its consolidated subsidiaries and affiliates, which are related parties by virtue of holding a significant equity interest in the Company.

Norbord is an international producer of wood-based panels with 17 mills in the United States, Europe and Canada. Norbord is a publicly traded company listed on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE). The ticker symbol on both exchanges is “OSB”. The Company is incorporated under the Canada Business Corporations Act and is headquartered in Toronto, Ontario, Canada.

These interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, on a basis consistent with the accounting policies Norbord disclosed in its audited consolidated financial statements as at, and for the year ended, December 31, 2017 unless noted otherwise in note 2(c). These interim financial statements do not contain all of the disclosures that are required in annual financial statements prepared under International Financial Reporting Standards (IFRS) and should be read in conjunction with Norbord’s 2017 audited annual financial statements which include information necessary or useful to understanding Norbord’s business and financial statement presentation. Norbord’s interim results are not necessarily indicative of its results for a full year.

In July 2014, the International Accounting Standards Board (IASB) issued the final publication of IFRS 9, Financial Instruments (IFRS 9), superseding IAS 39, Financial Instruments. IFRS 9 includes amended guidance for the classification and measurement of financial assets by introducing a fair value through other comprehensive income category for certain debt instruments. It also includes a new general hedge accounting standard which will align hedge accounting more closely with risk management and contains a new impairment model which could result in earlier recognition of losses. IFRS 9 became effective for Norbord on January 1, 2018 and did not have a material impact on its interim financial statements or accounting policy.

In May 2014, the IASB issued IFRS 15, Revenue from Contracts with Customers (IFRS 15), which replaces the existing revenue recognition guidance with a new framework to determine the timing of revenue recognition and the measurement of revenue. In April 2016, the IASB issued an amendment clarifying the guidance on identifying performance obligations, licences of intellectual property, and principal versus agent, and to provide additional practical expedients upon transition. IFRS 15 and the related amendments became effective for Norbord on January 1, 2018 and did not have a material impact on its interim financial statements. The revised accounting policy is as follows:

related sales contract or standard industry terms. The majority of product is shipped via third-party transport on a freight-on-board shipping point basis. Revenues are recorded net of discounts and incentives but inclusive of freight. In all cases, product is subject to quality testing by Norbord to ensure it meets applicable standards prior to shipment.

In June 2016, the IASB issued an amendment to IFRS 2, Share-based Payment, clarifying the accounting for certain types of share-based payment transactions. The amendments provide requirements on accounting for the effects of vesting and non-vesting conditions of cash-settled share-based payments, withholding tax obligations for share-based payments with a net settlement feature, and when a modification to the terms of a share-based payment changes the classification of the transaction from cash-settled to equity-settled. The amendment became effective for Norbord on January 1, 2018 and did not have an impact on its interim financial statements or accounting policy.

In December 2016, the IFRS Interpretations Committee of the IASB issued IFRIC 22, Foreign Currency Transactions and Advance Consideration (IFRIC 22). The interpretation addresses how to determine the date of the transaction when applying IAS 21, The Effects of Changes in Foreign Exchange Rates. The date of transaction determines the exchange rate to be used on initial recognition of the related asset, expense or income. IFRIC 22 became effective for Norbord on January 1, 2018 and did not have a material impact on its interim financial statements or accounting policy.

In January 2016, the IASB issued IFRS 16, Leases (IFRS 16), which replaces the existing lease accounting guidance. IFRS 16 requires all leases to be reported on the balance sheet unless certain criteria for exclusion are met. Norbord intends to adopt IFRS 16 in its financial statements for the annual period beginning on January 1, 2019. Norbord is currently assessing the impact of IFRS 16 on its financial statements.

In June 2017, the IFRS Interpretations Committee of the IASB issued IFRIC 23, Uncertainty over Income Tax Treatments (IFRIC 23). The interpretation provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances in which there is uncertainty over income tax treatments. The interpretation is effective for the annual period beginning on January 1, 2019. Norbord is currently assessing the impact of IFRIC 23 on its financial statements.

In October 2017, the IASB issued amendments to IFRS 9 with regards to prepayment features with negative compensation. These amendments are effective for the annual period beginning on January 1, 2019, and clarify that a financial asset containing prepayment features with negative compensation may be measured at amortized cost or fair value through other comprehensive income when eligibility conditions are met. Norbord has assessed its financial instruments and does not expect these amendments to have any impact on its financial statements.

In February 2018, the IASB issued amendments to IAS 19, Employee Benefits. The amendments are effective for the annual period beginning on January 1, 2019 and clarify the actuarial assumptions to be used for defined benefit pension plans upon plan amendment, curtailment or settlement. Norbord does not expect these amendments to have any impact on its accounting policy.

The Company has the ability to draw up to $125 million under a multi-currency accounts receivable securitization program with a third-party trust sponsored by a highly rated Canadian financial institution. The program is revolving and has an evergreen commitment subject to termination on 12 months’ notice. Under the program, the Company has transferred substantially all of its present and future trade accounts receivable to the trust, on a fully serviced basis, for proceeds consisting of cash and deferred purchase price. However, the asset derecognition criteria under IFRS have not been met and the transferred accounts receivable remain recorded as an asset.

At period-end, the Company had transferred but continued to recognize $195 million (December 31, 2017 – $153 million) in trade accounts receivable, and the Company recorded drawings of $nil as other long-term debt (December 31, 2017 – $nil) relating to this financing program. The level of accounts receivable transferred under the program fluctuates with the level of shipment volumes, product prices and foreign exchange rates. The amount the Company chooses to draw under the program at any point in time depends on the level of accounts receivable transferred and timing of cash settlements and fluctuates with the Company’s cash requirements. Any drawings are presented as other long-term debt on the balance sheet and are excluded from the net debt to capitalization calculation for financial covenant purposes (note 5). The utilization charge, which is based on money market rates plus a margin, and other program fees are recorded as finance costs. Year-to-date, there were no utilization charges (2017 – 1.5% to 2.6%).

The securitization program contains no financial covenants; however, the program is subject to minimum credit-rating requirements. The Company must maintain a long-term issuer credit rating of at least single B (mid) or the equivalent. As at August 1, 2018, the Company’s ratings were BB (DBRS), BB (Standard & Poor’s Ratings Services) and Ba1 (Moody’s Investors Service).

The Company has an aggregate commitment of $245 million under committed revolving bank lines which bear interest at money market rates plus a margin that varies with the Company’s credit rating. The maturity date of the total aggregate commitment is May 2021. The bank lines are secured by a first lien on the Company’s North American OSB inventory and property, plant and equipment. This lien is shared pari passu with holders of the 2020 and 2023 senior secured notes.

At period-end, none of the revolving bank lines were drawn as cash, $19 million (December 31, 2017 – $19 million) was utilized for letters of credit and guarantees and $226 million (December 31, 2017 – $226 million) was available to support short-term liquidity requirements.



	6 mos 2018			6 mos 2017
	Shares (millions)	Amount (US $ millions)		Shares (millions)	Amount (US $ millions)
Common shares outstanding, beginning of period	86.4	$	1,350	85.8	$	1,341
Issuance of common shares upon exercise of options and Dividend Reinvestment Plan	0.3	6		0.3	4
Common shares outstanding, end of period	86.7	$	1,356	86.1	$	1,345

On March 31, 2015, the Company and Ainsworth Lumber Co. Ltd. (Ainsworth) completed an arrangement under which the Company acquired all of the outstanding common shares of Ainsworth in an all-share transaction. The Company elected not to account for this transaction as a business combination under IFRS 3, Business Combinations, as the transaction represented a combination of entities under common control of Brookfield. Accordingly, the book values of the two entities were combined and no adjustments were made to reflect fair values or to recognize any new assets or liabilities of either entity.

Year-to-date, 0.3 million common shares (2017 – 0.3 million common shares) were issued as a result of options exercised under the stock option plan for total cash proceeds of $4 million (2017 – $3 million) plus $1 million (2017 – $1 million) representing the vested amount of stock options transferred from contributed surplus.



(US $ millions)	Jun 30, 2018			Dec 31, 2017
Foreign currency translation loss on foreign operations, net of tax of $(6) (December 31, 2017 – $(5))	$	(148	)	$	(138	)
Net loss on hedge of net investment in foreign operations, net of tax of $3 (December 31, 2017 – $3)	(8		)	(8		)
Actuarial loss on defined benefit pension obligation, net of tax of $9 (December 31, 2017 – $9)	(26		)	(30		)
Accumulated other comprehensive loss, net of tax	$	(182	)	$	(176	)



(US $ millions, except share and per share information, unless otherwise noted)	Q2 2018		Q2 2017		6 mos 2018		6 mos 2017
Earnings available to common shareholders	$	174	$	97	$	269	$	146
Common shares (millions):
Weighted average number of common shares outstanding	86.6		86.1		86.5		86.0
Dilutive stock options⁽¹⁾	0.6		0.6		0.5		0.6
Diluted number of common shares	87.2		86.7		87.0		86.6
Earnings per common share:
Basic	$	2.01	$	1.13	$	3.11	$	1.70
Diluted	2.00		1.12		3.09		1.69

⁽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. At period-end, there were nil stock options (July 1, 2017 – 0.1 million) that were not taken into account in the calculation of diluted earnings per share because their effect was anti-dilutive.



(US $ millions)	Q2 2018			Q2 2017			6 mos 2018			6 mos 2017
Stock-based compensation	$	1		$	2		$	2		$	2
Pension funding greater than expense	(1		)	(1		)	(2		)	(2		)
Cash interest paid greater than interest expense	(8		)	(8		)	—			(6		)
Amortization of debt issue costs	—			—			1			1
Unrealized loss on outstanding currency forwards	1			—			1			—
Unrealized foreign exchange gain on translation of monetary balances	—			(3		)	(2		)	(1		)
Other	2			—			2			2
	$	(5	)	$	(10	)	$	2		$	(4	)



(US $ millions)	Q2 2018			Q2 2017			6 mos 2018			6 mos 2017
Cash (used for) provided by:
Accounts receivable	$	(29	)	$	(17	)	$	(43	)	$	(37	)
Prepaids	1			(1		)	2			3
Inventory	12			14			(24		)	(20		)
Accounts payable and accrued liabilities	35			6			(9		)	(1		)
	$	19		$	2		$	(74	)	$	(55	)



(US $ millions)	Q2 2018			Q2 2017			6 mos 2018			6 mos 2017
Long-term debt	$	—		$	—		$	1		$	(199	)
Other long-term debt	—			(61		)	—			—
Bank advances	—			(2		)	—			—
Accrued interest on long-term debt	(8		)	(9		)	(1		)	(7		)
Net decrease in financial liabilities	$	(8	)	$	(72	)	$	—		$	(206	)



(US $ millions)	Q2 2018			Q2 2017			6 mos 2018			6 mos 2017
Cash movements:
Repayment of debt	$	—		$	—		$	—		$	(200	)
Interest paid	(17		)	(17		)	(17		)	(25		)
Accounts receivable securitization repayments	—			(61		)	—			—
Bank advances	—			(2		)	—			—
	(17		)	(80		)	(17		)	(225		)
Non-cash movements:
Amortization of debt issue costs	—			—			1			1
Interest expense	9			8			16			18
	9			8			17			19
Net decrease in financial liabilities	$	(8	)	$	(72	)	$	—		$	(206	)



		Jun 30, 2018				Dec 31, 2017
(US $ millions)	Financial Instrument Category	Net Book Value		Fair Value		Net Book Value		Fair Value
Financial assets:
Cash and cash equivalents	Fair value through profit or loss	$	298	$	298	$	241	$	241
Accounts receivable	Amortised cost	214		214		174		174
Other assets	Amortised cost	3		3		2		2
		$	515	$	515	$	417	$	417
Financial liabilities:
Accounts payable and accrued liabilities	Amortised cost	$	256	$	256	$	282	$	282
Long-term debt⁽¹⁾	Amortised cost	555		573		555		597
Other liabilities	Amortised cost	27		27		29		29
		$	838	$	856	$	866	$	908

At period-end, the Company had foreign currency forward contracts representing a notional amount of C $73 million (December 31, 2017 – C $41 million) in place to sell US dollars and buy Canadian dollars with maturities in July 2018. The fair value of these contracts at period-end is an unrealized loss of $1 million (December 31, 2017 – an unrealized gain of $1 million); the carrying value of the derivative instrument is equivalent to the unrealized loss at period-end. During the quarter, realized losses on the Company's matured hedges were $1 million (2017 – realized gains of less than $1 million). Year-to-date, realized losses on the Company’s matured hedges were $1 million (2017 – realized losses of $2 million).

At period-end, the Company had foreign currency options representing a notional amount of €30 million (December 31, 2017 – €60 million) in place to buy Pounds Sterling and sell Euros with maturities between July 2018 and December 2018. The fair value of these contracts at period-end is an unrealized gain of less than $1 million (December 31, 2017 – unrealized gain of less than $1 million). During the quarter, net realized losses on the Company's matured hedges were less than $1 million (2017 – $nil). Year-to-date, net realized losses on the Company's matured hedges were less than $1 million (2017 – $nil).

Derivative instruments are measured at fair value as determined using valuation techniques under Level 2 of the fair value hierarchy. The fair values of over-the-counter derivative financial instruments are based on broker quotes or observable market rates. Those quotes are tested for reasonableness by discounting expected future cash flows using market interest and exchange rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument for the Company and counterparty when appropriate. Realized and unrealized gains and losses on derivative financial instruments are offset by realized and unrealized losses and gains on the underlying exposures being hedged.

The Company has provided certain guarantees, commitments and indemnifications, including those related to former businesses. The maximum amounts from many of these items cannot be reasonably estimated at this time. However, in certain circumstances, the Company has recourse against other parties to mitigate the risk of loss. In the normal course of its business activities, the Company is subject to claims and legal actions that may be made against its customers, suppliers and others. While the final outcome with respect to actions outstanding or pending as at period-end cannot be predicted with certainty, the Company believes the resolution will not have a material effect on the Company’s financial position, financial performance, or cash flows.

In the normal course of operations, Norbord enters into various transactions with related parties which have been measured at exchange value and recognized in the consolidated financial statements. The following transactions have occurred between Norbord and its related parties during the normal course of business.

Norbord periodically engages the services of Brookfield for various financial, real estate and other business services. During the quarter, the fees for services rendered were less than $1 million (2017 – less than $1 million). Year-to-date, the fees for services rendered were less than $1 million (2017 – less than $1 million).

Sales to Asian markets are handled by Interex Forest Products Ltd. (Interex), a cooperative sales company over which Norbord, as a 25% shareholder, has significant influence. During the quarter, net sales of $26 million (2017 – $17 million) were made to Interex. Year-to-date, net sales of $49 million (2017 – $30 million) were made to Interex. At period-end, $3 million (December 31, 2017 – $3 million) due from Interex was included in accounts receivable. At period-end, the investment in Interex was less than $1 million (December 31, 2017 – less than $1 million) and is included in other assets.



								Q2 2018
(US $ millions)	North America		Europe		Unallocated			Total
Sales	$	577	$	130	$	—		$	707
EBITDA⁽¹⁾	256		21		(5		)	272
Depreciation and amortization	30		6		—			36
Additions to property, plant and equipment	48		5		—			53

								Q2 2017
(US $ millions)	North America		Europe		Unallocated			Total
Sales	$	431	$	105	$	—		$	536
EBITDA⁽¹⁾	155		9		(2		)	162
Depreciation and amortization	23		4		—			27
Additions to property, plant and equipment	32		25		—			57

								6 mos 2018
(US $ millions)	North America		Europe		Unallocated			Total
Sales	$	1,025	$	258	$	—		$	1,283
EBITDA⁽¹⁾	412		39		(10		)	441
Depreciation and amortization	55		11		—			66
Additions to property, plant and equipment	93		10		—			103
Property, plant and equipment	1,199		254		—			1,453

								6 mos 2017
(US $ millions)	North America		Europe		Unallocated			Total
Sales	$	798	$	205	$	—		$	1,003
EBITDA⁽¹⁾	252		15		(8		)	259
Depreciation and amortization	44		7		—			51
Additions to property, plant and equipment	59		56		—			115
Property, plant and equipment⁽²⁾	1,168		253		—			1,421

⁽¹⁾EBITDA is a non-IFRS financial measure, which the Company uses to assess segment performance and operating results. The Company defines EBITDA as earnings before finance costs, income tax, depreciation and amortization. Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies.



⁽ⁱ⁾ Retained earnings (deficit) comprised of:
Deficit arising on cashless exercise of warrants in 2013	$	(263	)	$	(263	)
All other retained earnings (deficit)	384			(19		)
	$	121		$	(282	)



	Payments Due by Period
(US $ millions)	Less than 1 Year		1–5 Years		Thereafter		Total
Purchase commitments	$	34	$	51	$	51	$	136
Operating leases	6		9		6		21
Reforestation obligations	1		1		1		3
	$	41	$	61	$	58	$	160


(iv)	Employee Benefits