Norbord Reports First Quarter 2009 Results



    
    Note: Financial references in US dollars unless otherwise indicated

    Q1 2009 HIGHLIGHTS

    -   Completed bank line amendments to widen financial covenants and
        extend term
    -   Reduced manufacturing input costs by $18 million vs. Q4 2008
    -   Generated positive EBITDA at European Operations
    -   North American EBITDA loss reduced by $17 million vs. Q1 2008
    -   Improved safety recordable rate by 40% vs. Q1 2008
    

    TORONTO, April 29, 2009 /CNW/ - Norbord Inc. (TSX:NBD, NBD.WT) today
reported a loss of $22 million or $0.05 per share in Q1 2009. Norbord recorded
a loss of $30 million or $0.19 per share in the prior quarter and a loss of
$31 million or $0.21 per share in the first quarter of 2008. The modest
improvement reflected a significant decline in company-wide manufacturing
input costs and stronger year-over-year North American OSB prices.
    Norbord recorded negative EBITDA of $14 million in Q1 2009 compared to
negative $28 million in Q4 2008 and negative $24 million in the same period
last year. North American operations generated negative EBITDA of $12 million
in Q1 2009, an improvement of $7 million and $17 million compared to the
fourth and first quarters of 2008. Norbord's European mills generated positive
EBITDA of $1 million in the current quarter, primarily due to lower input
costs.
    "We know that the next 12 to 18 months will continue to challenge our
Company," said Barrie Shineton, President and CEO. "However, there are signs
that the economics of our business are starting to stabilize."
    "Manufacturing input costs peaked during the fourth quarter and have
dramatically declined to-date. North American OSB prices held above last
year's levels. In Europe, the falling Pound favoured our UK-based mills by
limiting the panelboard imports that compete with our business. And, there is
some indication that the various initiatives taken by the governments in the
US and the UK are starting to have a positive effect on the availability of
credit. It is too soon to say with certainty that the worst of this downturn
is behind us, but we are encouraged by these small signs of improvement."

    Bank Line Amendments Completed

    Subsequent to quarter end, Norbord completed its previously announced
bank line amendments to, among other things, extend the term and revise the
financial covenants.
    Under the amended terms, Norbord has $205 million aggregate committed
revolving bank lines maturing in May 2011. The bank lines contain two
quarterly financial covenants: minimum tangible net worth of $250 million and
maximum net debt to total capitalization, book basis of 70%. Effective January
1, 2011, the maximum net debt to total capitalization, book basis covenant
reduces to 60%.
    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 2012 and 2017 bonds and with the debt facility
held by Brookfield Asset Management Inc. ("Brookfield").
    Concurrent with these bank line amendments, Norbord revised its debt
facility with Brookfield. The facility, which is currently undrawn, is
available up to $50 million, matures in June 2011, and is subordinated to the
bank lines. Any drawings under the facility are included in tangible net worth
for bank line covenant purposes.

    Market Conditions

    North American North Central benchmark OSB prices averaged $154 versus
$170 in Q4 2008 and $137 in Q1 2008. In the South East region, where
approximately 55% of Norbord's North American capacity is located, prices
averaged $139 in the first quarter, up $2 and $18 from the fourth and first
quarters of 2008, respectively. Sales volume continued to be the primary
challenge as demand from housing activity remained poor. Expert forecasts for
US housing starts in 2009 now average 0.5 million.
    In Europe, panel markets continued to reflect the deteriorating economy
as the recession and limited credit availability affected consumer buying
activity across all markets. Norbord's product prices were down 17% for OSB
and MDF and 9% for particleboard compared to the first quarter of 2008. Many
European panel producers took market downtime in the quarter to manage high
inventory levels.

    Performance

    Norbord's North American OSB mills operated at approximately 60% of
capacity in the first quarter of 2009. Industry-wide, OSB mills in North
America operated at approximately 40% of capacity in the same period.
Norbord's European mills operated at 80% of capacity.
    Norbord's North American per unit OSB production costs decreased 6%
quarter-over-quarter due primarily to lower key input costs, and in spite of
significant curtailments taken and fewer operating days in the quarter.
    Capital investments totaled $5 million in the first quarter. Norbord's
2009 capital investment program will be limited to essential projects and is
not expected to exceed $20 million in 2009.

    Developments

    In the fourth quarter of 2008, future income tax assets of $8 million
were charged to retained earnings due to Brookfield Asset Management Inc.'s
ownership exceeding 50% at the end of the year. Canadian income tax
legislation was passed in the first quarter allowing Norbord to reinstate this
future tax asset and record $8 million of additional income in the first
quarter.

    Annual and Special Meeting of Shareholders

    Norbord's Annual and Special Meeting of Shareholders will be held on
Wednesday, April 29, 2009 at 10:00 a.m. A live webcast of the meeting will be
available and can be accessed via www.norbord.com or www.newswire.ca. A first
quarter conference call for analysts and investors has not been scheduled.

    Additional Information

    Please note that Norbord's first quarter 2009 letter to shareholders,
news release, management's discussion & analysis, unaudited financial
statements and notes to the financial statements have been filed on SEDAR
(www.sedar.com) and are also available in the investor section of the
Company's website at www.norbord.com. Shareholders are encouraged to read this
material.

    Norbord Profile

    Norbord Inc. is an international producer of wood-based panels with
assets of $1.0 billion, employing approximately 2,500 people at 15 plant
locations in the United States, Europe and Canada. Norbord is one of the
world's largest producers of oriented strand board (OSB). In addition to OSB,
Norbord manufactures particleboard, medium density fibreboard (MDF), hardwood
plywood and related value-added products. Norbord is a publicly traded company
listed on the Toronto Stock Exchange under the symbols NBD and NBD.WT.

    This news release contains forward-looking statements, as defined in
applicable legislation. Often, but not always, words such as "believe,"
"will," "expect," "expects," "expected," "forecast," "estimate," "estimates,"
"estimated," "likely," "may," "agreed to," "would," and other expressions
which are predictions of or indicate future events, trends or prospects and
which do not relate to historical matters identify forward-looking statements.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of Norbord to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements.
    Although Norbord believes it has a reasonable basis for making these
forward-looking statements, readers are cautioned not to place undue reliance
on such forward-looking information. By its nature, forward-looking
information involves numerous assumptions, inherent risks and uncertainties,
both general and specific, which contribute to the possibility that the
predictions, forecasts and other forward-looking statements will not occur.
Factors that could cause actual results to differ materially from those
contemplated or implied by forward-looking statements include: general
economic conditions; risks inherent with product concentration; effects of
competition and product pricing pressures; risks inherent with customer
dependence; effects of variations in the price and availability of
manufacturing inputs; risks inherent with a capital intensive industry; and
other risks and factors described from time to time in filings with Canadian
securities regulatory authorities.
    Except as required by applicable laws, Norbord does not undertake to
update any forward-looking statements, whether as a result of new information,
future events or otherwise, or to publicly update or revise the above list of
factors affecting this information. See the "Caution Regarding Forward-Looking
Information" statement in the March 2, 2009 Annual Information Form and the
cautionary statement contained in the "Forward-Looking Statements" section of
the 2008 Management's Discussion and Analysis dated January 29, 2009.



    April 29, 2009

    To Our Shareholders,

    Norbord's results in the first quarter continued to reflect very low OSB
prices. Demand from new home construction remained depressed as the global
recession continued to delay any recovery in both North America and Europe. 
Against this backdrop, Norbord recorded an EBITDA loss of $14 million during
the first quarter.
    The next 12 to 18 months will be challenging for our Company. However,
there are signs that the economics of our business are starting to stabilize.
Manufacturing input costs peaked at the end of the fourth quarter and have
since declined sharply. North American OSB prices are holding above last
year's levels and in Europe the weaker Pound favours our UK-based mills by
limiting panel imports.
    Experts are now forecasting 2009 US housing starts of approximately
500,000 making this the worst housing downturn since World War II. In my view,
these very low levels are unsustainable. The demographic realities of
immigration, new household formations and replacement homes will push demand
back above the 50-year annual average of 1.5 million US housing starts when
the economy recovers.
    The benefit of the extraordinary stimulus effort by the US government is
accumulating and many of these initiatives specifically target housing and
home buyers. Low home prices and attractive mortgage rates have made housing
very affordable and there are early indications that home buyers are
interested in re-entering the market.
    If these trends continue, house prices should bottom by year-end and
stabilize next year.
    Norbord is planning for a business recovery that takes hold in 2011. As
we manage through the remainder of this downturn, we will maintain our focus
on three key areas:

    
    1. Protecting the stability of our balance sheet. We believe our recent
       recapitalization initiatives, including the CAD$240 million Rights
       Offering, provide adequate liquidity to manage through the remainder
       of this downturn.

    2. Building on our effective customer strategy of increasing sales with
       Big Box and industrial customers to provide better market balance and
       reduce our exposure to cyclical new home construction.

    3. Upgrading our mills so that we are well positioned to operate at full
       capacity when housing and OSB demand return.
    

    On behalf of everyone at Norbord, I thank you for your continued support
during this challenging point in our history. I want to reassure you that
Norbord will not only survive this unprecedented market downturn, we will
thrive when markets recover. I look forward to updating you on our progress
throughout the year.

    
     (signed)
     J. Barrie Shineton
    

    This letter includes forward-looking statements, as defined by applicable
securities legislation. Often, but not always, forward-looking statements can
be identified by the use of words such as "would," "expect," "positions,"
"when," "if," "should," "must," "believe," "view," "when," 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 2008
Management's Discussion and Analysis dated January 29, 2009.



    
                                 NORBORD INC.
                     CONSOLIDATED STATEMENTS OF EARNINGS
         FOR THE THREE MONTHS ENDED MARCH 28, 2009 AND MARCH 29, 2008

    (unaudited)

                                                          1st Qtr    1st Qtr
    (US $ millions, except per share information)            2009       2008
    -------------------------------------------------------------------------
                                                                     (note 2)

    Net sales                                            $    156   $    234
    -------------------------------------------------------------------------

    Earnings before interest, income tax, depreciation,
     foreign exchange loss and provision for
     non-core operation                                       (14)       (24)

    Interest expense                                           (8)       (15)
    Interest and other income                                   -          1
    Foreign exchange loss                                      (2)         -
    Provision for non-core operation (note 10)                  -         (4)
    -------------------------------------------------------------------------

    Earnings before income tax and depreciation               (24)       (42)

    Depreciation                                              (15)       (19)
    Income tax recovery                                        17         30
    -------------------------------------------------------------------------

    Earnings                                             $    (22)  $    (31)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per common share (note 9)
      - Basic                                            $  (0.05)  $  (0.21)
      - Diluted                                          $  (0.05)  $  (0.21)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (See accompanying notes)



                                 NORBORD INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
         FOR THE THREE MONTHS ENDED MARCH 28, 2009 AND MARCH 29, 2008

    (unaudited)

                                                          1st Qtr    1st Qtr
    (US $ millions)                                          2009       2008
    -------------------------------------------------------------------------
                                                                     (note 2)
    CASH PROVIDED BY (USED FOR):

    Operating Activities
    Earnings                                             $    (22)  $    (31)
    Items not affecting cash:
      Depreciation                                             15         19
      Future income taxes                                     (17)       (25)
    Other items                                                 -         (1)
    -------------------------------------------------------------------------
                                                              (24)       (38)

    Net change in non-cash working capital balances
     (note 11)                                                (81)       (43)
    -------------------------------------------------------------------------

                                                             (105)       (81)
    -------------------------------------------------------------------------

    Investing Activities
    Investment in property, plant and equipment                (5)        (5)
    Other (note 11)                                             3        (13)
    -------------------------------------------------------------------------

                                                               (2)       (18)
    -------------------------------------------------------------------------

    Financing Activities
    Revolving bank lines drawn (repaid) (note 6)               15        146
    Issue of common shares, net (note 8)                       97          -
    Issue of warrants, net (note 8)                            21          -
    Brookfield debt facility drawn (repaid) (note 6)          (35)        55
    Repurchase of 8 1/8% debentures (note 6)                    -       (197)
    Dividends paid                                              -         (8)
    -------------------------------------------------------------------------

                                                               98         (4)
    -------------------------------------------------------------------------

    Decrease in cash and cash equivalents                $     (9)  $   (103)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Cash and cash equivalents, beginning of period       $     20   $    128
    Cash and cash equivalents, end of period (note 11)         11         25
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (See accompanying notes)



                                 NORBORD INC.
                         CONSOLIDATED BALANCE SHEETS

                                                           Mar 28     Dec 31
    (US $ millions)                                          2009       2008
    -------------------------------------------------------------------------
                                                       (unaudited)   (note 2)
    ASSETS
    Current assets:
      Cash and cash equivalents                          $     11   $     20
      Accounts receivable (note 3)                             43         12
      Tax receivable                                           15         13
      Inventory (note 4)                                       96         81
    -------------------------------------------------------------------------
                                                              165        126

    Property, plant and equipment                             867        885
    Other assets (note 5)                                      32         33
    -------------------------------------------------------------------------

                                                         $  1,064   $  1,044
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and accrued liabilities           $    114   $    146

    Long-term debt (note 6)                                   521        542
    Other liabilities (note 7)                                  9         14
    Future income taxes                                        57         74
    Shareholders' equity (note 8)                             363        268
    -------------------------------------------------------------------------

                                                         $  1,064   $  1,044
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (See accompanying notes)



                                 NORBORD INC.
         CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                           AND COMPREHENSIVE INCOME
         FOR THE THREE MONTHS ENDED MARCH 28, 2009 AND MARCH 29, 2008

    (unaudited)

                                                          1st Qtr    1st Qtr
    (US $ millions)                                          2009       2008
    -------------------------------------------------------------------------
                                                                     (note 2)
    CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

    Share Capital
    Balance at beginning of period                       $    238   $    150
    Dividend reinvestment plan                                  -          6
    Issue of common shares, net (note 8)                       97          -
    -------------------------------------------------------------------------
    Balance at end of period                             $    335   $    156
    -------------------------------------------------------------------------

    Contributed Surplus
    Balance at beginning of period                       $     17   $      1
    Stock-based compensation (note 8)                           -          -
    Issue of warrants, net (note 8)                            21          -
    -------------------------------------------------------------------------
    Balance at end of period                             $     38   $      1
    -------------------------------------------------------------------------

    Retained Earnings
    Balance at beginning of period                       $     24   $    204
    Adoption of new accounting recommendations                  2          1
    -------------------------------------------------------------------------
    Adjusted balance at beginning of period                    26        205
    Earnings                                                  (22)       (31)
    Common share dividends                                      -        (14)
    -------------------------------------------------------------------------
    Balance at end of period                             $      4   $    160
    -------------------------------------------------------------------------

    Accumulated Other Comprehensive Income (Loss)
      Balance at beginning of period                     $    (13)  $      4
    Other comprehensive income (loss)                          (1)         -
    -------------------------------------------------------------------------
    Balance at end of period                             $    (14)  $      4
    -------------------------------------------------------------------------

    Shareholders' equity                                 $    363   $    321
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

     Earnings                                            $    (22)  $    (31)

    Other comprehensive income (loss):
      Net change in unrealized cumulative translation
       loss (net of $1 tax expense (2008 -
       $2 tax recovery))                                       (1)         -
    -------------------------------------------------------------------------

    Comprehensive income (loss)                          $    (23)  $    (31)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (See accompanying notes)



                                 NORBORD INC.
           NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

    (unaudited)

    (In US$, unless otherwise noted)

    Note 1 - Basis of Presentation
    ------------------------------

    The interim financial statements should be read in conjunction with the
    most recently issued Annual Report of Norbord Inc. ("the Company"), which
    includes information necessary or useful to understanding the Company's
    business and financial statement presentation. In particular, the
    Company's significant accounting policies and practices were presented in
    Note 1 to the annual consolidated financial statements, and have been
    consistently applied in the preparation of these interim financial
    statements, except as described within Note 2 below.

    The interim financial statements are unaudited. Financial information in
    the interim consolidated financial statements, reflects information that
    is, in the opinion of management, necessary to a fair statement of
    results for the interim periods in accordance with Canadian generally
    accepted accounting principles ("GAAP"). Certain prior period amounts
    have been reclassified to conform to the current period's presentation.

    The consolidated financial statements include the accounts of the Company
    and all of its subsidiaries including a newly formed joint venture, True
    North Hardwood Plywood Inc., which has been proportionately consolidated
    effective January 30, 2009.

    Note 2 - Changes in Accounting Policies
    ---------------------------------------

    Goodwill and Intangible Assets

    In February 2008, the CICA issued Handbook Section 3064, Goodwill and
    Intangible Assets, replacing Handbook Sections 3062, Goodwill and Other
    Intangible Assets and 3450, Research and Development Costs and EIC
    Abstract 27, Revenues and Expenditures during the Pre-Operating Period.
    Section 3064 establishes standards for the recognition, measurement,
    presentation and disclosure of goodwill subsequent to its initial
    recognition of intangible assets by profit-oriented enterprises. This new
    standard became effective January 1, 2009. The impact of adopting this
    new standard was a $6 million increase to property, plant and equipment,
    a $4 million decrease to other assets, a $1 million increase to opening
    retained earnings, and a $1 million increase to future income tax
    liability as at January 1, 2008. The impact of adopting this new standard
    was a $2 million decrease to depreciation expense and a $1 million
    increase to income tax expense for the year ended December 31, 2008. The
    increase to property, plant and equipment arises from the retraction of
    EIC 27, Revenues and Expenditures during the Pre-Operating Period, as a
    result of the enactment of Section 3064. The Company has retroactively
    reclassified costs incurred in the pre-operating period which were
    previously capitalized as intangible assets to the cost of production
    equipment in accordance with Section 3061, Property, Plant and Equipment.
    The costs include materials, labour and overhead costs directly
    attributable to the construction of the capital asset. The rate of
    depreciation is intended to fully depreciate the cost over 25 years which
    approximates the useful life of the production equipment. Previously the
    amortization period for these capitalized costs was three years.

    Credit Risk and Fair Value of Financial Assets and Financial Liabilities

    In January 2009, the CICA issued EIC Abstract 173, Credit Risk and the
    Fair Value of Financial Assets and Financial Liabilities. The EIC
    requires the Company to take into account the Company's own credit risk
    and the credit risk of the counterparty in determining the fair value of
    financial assets and financial liabilities, including derivative
    instruments. There is no material impact to the Company's financial
    statement in adopting this new standard.

    Future Changes in Accounting Policies

    International Financial Reporting Standards (IFRS)

    In February 2008, the Accounting Standards Board (AcSB) confirmed that
    International Financial Reporting Standards (IFRS) will replace Canadian
    GAAP for publicly accountable enterprises for financial periods beginning
    on and after January 1, 2011.

    Business Combinations

    In January 2009, the CICA issued Handbook Section 1582, Business
    Combinations, which requires that all assets and liabilities of an
    acquired business will be recorded at fair value at acquisition.
    Obligations for contingent considerations and contingencies will also be
    recorded at fair value at the acquisition date. The standard also states
    that acquisition-related costs will be expensed as incurred and that
    restructuring charges will be expensed in periods after the acquisition
    date. The new standard applies prospectively to business combinations for
    which the acquisition date is on or after the beginning of the first
    annual reporting period on or after January 1, 2011. The Company is
    currently assessing the impact of this new standard on its financial
    statements.

    Consolidations and Non-Controlling Interests

    In January 2009, the CICA issued Handbook Section 1601, Consolidations,
    and Section 1602, Non-Controlling Interests. Section 1601 establishes
    standards for the preparation of consolidated financial statements.
    Section 1602 establishes standards for accounting for a non-controlling
    interest in a subsidiary in consolidated financial statements subsequent
    to a business combination. These standards apply to interim and annual
    consolidated financial statements relating to fiscal years beginning on
    or after January 1, 2011. The Company is currently assessing the impact
    of this new standard on its financial statements.

    Note 3 - Accounts Receivable
    ----------------------------

    Norbord has an $85 million accounts receivable securitization program
    with a highly rated financial institution. Under the program, Norbord has
    transferred substantially all of its present and future trade accounts
    receivable to the financial institution, on a fully serviced basis, for
    the proceeds consisting of cash and deferred purchase price. At period
    end, Norbord recorded cash proceeds of $55 million (2008 - $68 million)
    relating to this program.

    The securitization program is subject to the following financial
    covenants that the Company must comply with on a quarterly basis: minimum
    tangible net worth of $300 million; and maximum net debt to total
    capitalization, book basis, of 65%. At period end, the Company's tangible
    net worth was $363 million and net debt to total capitalization, book
    basis, was 58%. In addition, the program contains trade accounts
    receivable portfolio performance covenants and standard reporting
    requirements. The program is not subject to any credit-rating
    requirements.

    Note 4 - Inventory
    ------------------

                                                           Mar 28     Dec 31
    (US$ millions)                                           2009       2008
    -------------------------------------------------------------------------

    Raw materials                                        $     31   $     20
    Finished goods                                             37         32
    Operating and maintenance supplies                         28         29
    -------------------------------------------------------------------------
                                                         $     96   $     81
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    At period end, the provision to reflect inventories at the lower of cost
    and net realizable value was $2 million (2008 - $3 million).

    During the quarter, the amount of inventory recognized as an expense was
    $169 million (2008 - $264 million) which includes $15 million (2008 -
    $19 million) in depreciation expense on property, plant and equipment.

    Note 5 - Other Assets
    ---------------------

                                                           Mar 28     Dec 31
    (US $ millions)                                          2009       2008
    -------------------------------------------------------------------------

    Unrealized net investment hedge gains (note 14)      $     26   $     26
    Unrealized interest rate swap gains (note 14)               6          6
    Other                                                       -          1
    -------------------------------------------------------------------------

                                                         $     32   $     33
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The unrealized net investment hedge gains and unrealized interest rate
    swap gains are offset by unrealized losses on the underlying exposures
    being hedged.

    Note 6 - Long-Term Debt
    -----------------------

                                                           Mar 28     Dec 31
    (US $ millions)                                          2009       2008
    -------------------------------------------------------------------------

    Principal value
    7 1/4% debentures due 2012                           $    240   $    240
    Senior notes due 2017                                     200        200
    Revolving bank lines                                       72         57
    Brookfield debt facility                                    -         35
    -------------------------------------------------------------------------
                                                              512        532
    Debt issue costs                                           (4)        (4)
    Deferred interest rate swap gains                           7          8
    Unrealized interest rate swap gains (notes 5 and 7)         6          6
    -------------------------------------------------------------------------

                                                         $    521   $    542
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Revolving Bank Lines

    At period end, the Company has committed revolving bank lines of
    $205 million that mature in May 2010 and bear interest at money market
    rates plus a margin that varies with the Company's credit rating, and
    contain the following financial covenants with which the Company must
    comply on a quarterly basis: minimum tangible net worth of $300 million;
    and maximum net debt to total capitalization, book basis, of 65%. At
    period end, the Company's tangible net worth was $363 million and net
    debt to total capitalization, book basis, was 58%. At period end, $72
    million of the revolving bank lines was drawn as cash; $9 million was
    utilized for letters of credit; and $124 million was available to support
    short-term liquidity requirements.

    Subsequent to the quarter, the Company completed amendments to its
    committed revolving bank lines. Under the amended terms, the aggregate
    commitment of $205 million has been extended to May 2011 and bears
    interest at money market rates plus a margin that varies with the
    Company's credit rating. The quarterly financial covenants have been
    amended to the following: minimum tangible net worth of $250 million and
    maximum net debt to total capitalization, book basis of 70%. Effective
    January 1, 2011, the maximum net debt to total capitalization, book basis
    covenant reduces to 60%. Net debt to total capitalization under the
    amended terms includes amounts utilized for letters of credit. 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 2012 debentures, 2017 senior notes, and
    Brookfield debt facility.

    Brookfield Debt Facility

    During the quarter, the Company repaid $35 million of the Brookfield debt
    facility using proceeds from the Rights Offering (note 8). Concurrent
    with the bank line amendments, the Company revised its debt facility with
    Brookfield. The facility was decreased from $100 million to $50 million,
    bears interest equal to the greater of 8% and US base rate plus 1/2%,
    matures in June 2011 and is subordinated to the revolving bank lines. Any
    drawings under the facility are treated as tangible net worth for
    financial covenant purposes.

    Interest Rate Swaps

    At period end, the Company had $115 million (2008 - $115 million) in
    interest rate swaps outstanding. The terms of these swaps correspond to
    the terms of the underlying hedged debt.

    8 1/8% Debentures Repaid in 2008

    In the first quarter of 2008, the 8 1/8% debentures with a principal
    value of $197 million were repurchased and a corresponding amount of
    interest rate swaps matured.

    Note 7 - Other Liabilities
    --------------------------

                                                           Mar 28     Dec 31
    (US $ millions)                                          2009       2008
    -------------------------------------------------------------------------

    Unrealized net investment hedge losses (note 14)     $      3   $      8
    Accrued pension and post-retirement benefits                2          2
    Other liabilities                                           4          4
    -------------------------------------------------------------------------
                                                         $      9   $     14
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The unrealized net investment hedge and interest rate swap losses are
    offset by unrealized gains on the underlying exposures being hedged.

    Note 8 - Shareholders' Equity
    -----------------------------

    During the quarter, the number of issued and outstanding common shares
    changed as follows:

                                                          1st Qtr    1st Qtr
    (in millions)                                            2009       2008
    -------------------------------------------------------------------------

    Common shares outstanding, beginning of period          268.7      146.8
    Issued :
      Issue of common shares, net                           163.0          -
      Issue of common shares - stock options                    -        0.1
      Dividend reinvestment plan                                -        1.3
    -------------------------------------------------------------------------
    Common shares outstanding, end of period                431.7      148.2
    -------------------------------------------------------------------------

    Unexercised stock options                                13.0        3.3
    Unexercised warrants                                    136.3          -
    -------------------------------------------------------------------------
    Total diluted common shares, end of period              581.0      151.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Rights Offering

    On January 6, 2009, pursuant to a Standby Purchase Agreement entered into
    in connection with a Rights Offering (the "Offering") filed in November
    2008, Brookfield Asset Management Inc. ("Brookfield") completed the
    standby commitment through which it purchased an additional 163 million
    common shares and 81.5 million warrants for gross proceeds of
    approximately $120 million (CAD $144 million). Share issue costs,
    including the standby fee paid to Brookfield based on 1% of the gross
    proceeds of the Offering, were approximately $2 million. Net proceeds
    received were used to repay drawings under the Brookfield debt facility
    and revolving bank lines.

    Stock Options

    In the quarter, 10 million options were granted under the stock option
    plan. Earnings include less than $1 million related to stock-based
    compensation expense. In the quarter, less than 0.1 million common shares
    were issued as a result of options exercised under the stock option plan
    for proceeds of less than $1 million.

    Share Consolidation

    On March 2, 2009, Norbord proposed a special resolution to shareholders
    to approve the amendment of Norbord's restated articles of incorporation
    to consolidate its issued and outstanding common shares on the basis of
    one post-consolidation common share for each 10 pre-consolidation common
    shares. The Company's shareholders will be asked to authorize the Board
    to effect the share consolidation, if and when it is deemed to be in the
    best interest of the Company. If approved by shareholders, the Board can
    effect the share consolidation no later than October 31, 2009.

    Note 9 - Earnings per Common Share
    ----------------------------------

    Earnings per common share are calculated as follows:

    (US$ millions, except per share information,          1st Qtr    1st Qtr
     unless otherwise noted)                                 2009       2008
    -------------------------------------------------------------------------

    Earnings available to common shareholders            $    (22)  $    (31)
                                                        ---------------------
                                                        ---------------------

    Common shares (millions):
    Weighted average number of common shares outstanding    422.4      146.9
      Stock options                                             -          -
      Warrants                                                  -          -
                                                        ---------------------
      Diluted number of common shares                       422.4      146.9
                                                        ---------------------
                                                        ---------------------

    Earnings per common share:
      Basic                                              $  (0.05)  $  (0.21)
      Diluted                                            $  (0.05)  $  (0.21)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Stock options issued under the Company's stock option plan and warrants
    issued under the Offering (note 8) were excluded from the calculation of
    diluted earnings per common share because the impact would be anti-
    dilutive. If dilutive in the future, they would be included to the extent
    that the exercise prices were less than the average market price of the
    Company's common shares during the year.

    Note 10 - Provision For Non-Core Operation
    ------------------------------------------

    In the first quarter of 2008, the Company recorded a $4 million provision
    relating to severance arising on the permanent closure of a particleboard
    line at the Genk, Belgium site. The provision was substantially paid in
    2008.

    Note 11 - Supplemental Cash Flow Information
    --------------------------------------------

    The net change in non-cash working capital balance comprises:

                                                          1st Qtr    1st Qtr
    (US$ millions)                                           2009       2008
    -------------------------------------------------------------------------

    Cash used for:
      Accounts receivable                                $    (32)  $    (21)
      Inventory                                               (17)       (12)
      Accounts payable and accrued liabilities                (32)       (10)
    -------------------------------------------------------------------------
                                                         $    (81)  $    (43)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Other under investing activities comprises:

                                                          1st Qtr    1st Qtr
    (US$ millions)                                           2009       2008
    -------------------------------------------------------------------------

    Cash provided by (used for):
      Realized net investment hedge gains (losses)
       (note 14)                                         $      2   $    (15)
      Other                                                     1          2
    -------------------------------------------------------------------------
                                                         $      3   $    (13)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash and cash equivalents comprise:

                                                          1st Qtr    1st Qtr
    (US$ millions)                                           2009       2008
    -------------------------------------------------------------------------

    Cash                                                 $      6   $      8
    Cash equivalents                                            5         17
    -------------------------------------------------------------------------
                                                         $     11   $     25
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note 12 - Related Party Transactions
    ------------------------------------

    Rights Offering

    In connection with the Offering (note 8), the Company entered into a
    Standby Purchase Agreement with Brookfield, in which Brookfield agreed to
    exercise all of its rights and to purchase any units not otherwise
    subscribed for by other shareholders of the Company. On December 24,
    2008, Brookfield paid $72 million (CAD $87 million) to purchase
    99.1 million common shares and 49.6 million warrants through their basic
    subscription privilege which increased their ownership interest to
    approximately 60% of the Company's issued and outstanding common shares.
    On January 6, 2009, Brookfield paid $120 million (CAD $144 million) to
    acquire 163.0 million common shares and 81.5 million warrants under the
    Standby Purchase Agreement, increasing their ownership interest to
    approximately 75%. A standby fee of approximately $2 million was paid to
    Brookfield based on 1% of the gross proceeds of the Offering.

    As a result of the acquisition of control of the Company by Brookfield on
    December 24, 2008, future income tax assets of $8 million were charged to
    retained earnings in the fourth quarter of 2008. These tax attributes
    were reinstated and recorded through the statement of earnings in the
    first quarter of 2009 when Canadian income tax legislation was
    substantively enacted.

    Brookfield debt facility

    Subsequent to the quarter, concurrent with the bank line amendments
    (note 6), the Brookfield debt facility decreased from $100 million to
    $50 million, was extended to June 2011, bears an interest rate equal to
    the greater of 8% and US base rate plus 1/2% and is subordinated to the
    revolving bank lines. Interest paid on the Brookfield debt facility in
    the first quarter was less than $1 million (2008 - less than $1 million).

    Other

    During the quarter, the Company provided certain administrative services
    to Brookfield or its affiliates which were charged on a cost recovery
    basis. In addition, the Company periodically engages the services of
    Brookfield or its affiliates for various financial, real estate and other
    business advisory services. The fees for these services were less than
    $1 million in the quarter (2008 - less than $1 million) and were charged
    at market rates.

    Note 13 - Capital Management
    ----------------------------

    Norbord's capital structure at period end consisted of the following:

                                                           Mar 28     Dec 31
    (US$ millions)                                           2009       2008
    -------------------------------------------------------------------------

    Long-term debt, principal value                      $    512   $    532
    Less: Drawings under Brookfield debt facility(1)            -        (35)
    Less:  Cash and cash equivalents                          (11)       (20)
    -------------------------------------------------------------------------
    Net debt                                                  501        477
    -------------------------------------------------------------------------

    Shareholders' equity                                      363        268
    Plus:  Drawings under Brookfield debt facility(1)           -         35
    -------------------------------------------------------------------------
    Tangible net worth                                        363        303
    -------------------------------------------------------------------------

    Total capitalization                                      864        780
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Net debt to capitalization, book basis                    58%        61%
    Net debt to capitalization, market basis                  31%        32%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Drawings under the Brookfield debt facility are treated as tangible
        net worth for financial covenant purposes.

    Note 14 - Financial Instruments
    -------------------------------

    The net book values and fair values of non-derivative financial
    instruments were as follows:

    -------------------------------------------------------------------------
                                           Mar 28                Dec 31
                                            2009                  2008
    -------------------------------------------------------------------------
                                   Net Book       Fair   Net Book       Fair
    (US $ millions)                   Value      Value      Value      Value
    -------------------------------------------------------------------------

    Financial Assets:
    Cash and cash equivalents      $     11   $     11   $     20   $     20
    Accounts receivable                  43         43         12         12
    Tax receivable                       15         15         13         13
    -------------------------------------------------------------------------

                                   $     69   $     69   $     45   $     45
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Financial Liabilities:
    Accounts payable and accrued
     liabilities                   $    114   $    114   $    146   $    146
    Long-term debt                      521        397        542        376
    -------------------------------------------------------------------------

                                   $    635   $    511   $    688   $    522
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Information about derivative financial instruments was as follows:

    -------------------------------------------------------------------------
                                         Mar 28                Dec 31
                                          2009                  2008
    -------------------------------------------------------------------------
                                          Unrealized              Unrealized
                                          gain/(loss)             gain/(loss)
    (In millions and in US $    Notional  at period      Notional  at period
     unless otherwise noted)       Value      end(1)        Value      end(1)
    -------------------------------------------------------------------------
    Currency hedges:
      Net investment
        UK                 (pnds stlg)100     $ 26   (pnds stlg)103     $ 26
        Belgium                  (euro)75       (3)        (euro)79       (8)
      Monetary liabilities        CAD $27        -          CAD $18        -
    Future Committed
     Transaction                        -        -         CAD $144        1

    Interest rate hedges:
      Interest rate swaps            $115        6             $115        6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

     (1) The carrying values of the derivative financial instruments are
        equivalent to the unrealized gain/(loss) at period end.

    During the quarter, the Company realized a $3 million gain
    (2008 - $8 million loss) on its matured UK net investment hedges and a
    $1 million loss (2008 - $7 million loss) on its matured Belgium net
    investment hedges.

    During the quarter, the Company realized a gain of $nil (2008 -
    $3 million gain) on its matured monetary liability hedges.

    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.

    Note 15 - Geographic Segments
    -----------------------------

    The Company has a single reportable segment. The Company operates
    principally in North America and Europe. Net sales by geographic segment
    are determined based on the origin of shipment and therefore include
    export sales.

    (US$ millions)
    -------------------------------------------------------------------------
                                      North
    1st Qtr 2009                    America     Europe  Unallocated    Total
    -------------------------------------------------------------------------
    Net sales                      $     85   $     71   $      -   $    156
    EBITDA(1)                           (12)         1         (3)       (14)
    Depreciation                         10          5          -         15
    Property, plant and equipment       680        184          3        867
    Investment in property, plant
     and equipment                        5          -          -          5

    1st Qtr 2008
    -------------------------------------------------------------------------

    Net sales                      $    115   $    119   $      -   $    234
    EBITDA(1)                           (29)         7         (2)       (24)
    Depreciation                         11          8          -         19
    Property, plant and equipment       698        269          4        971
    Investment in property,
     plant and equipment                  5          -          -          5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) EBITDA is earnings determined in accordance with GAAP before
        interest, provision for non-core operation, income tax, foreign
        exchange, depreciation and amortization. Norbord views EBITDA as a
        measure of gross profit and interprets EBITDA trends as an indicator
        of relative operating performance.

    Note 16 - Subsequent Events
    ---------------------------

    On April 17, 2009, the Company completed amendments to its committed
    revolving bank lines. Under the amended terms, the aggregate commitment
    of $205 million is secured, the term is extended to May 2011 and the
    financial covenants have been amended as follows: minimum tangible net
    worth of $250 million and maximum net debt to total capitalization, book
    basis of 70%. Effective January 1, 2011, the maximum net debt to total
    capitalization, book basis covenant reduces to 60%.
    




For further information:

For further information: Anita Veel, Director, Corporate & Regulatory
Affairs, (416) 643-8838, anita.veel@norbord.com


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