Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2018shares | |
Document And Entity Information [Abstract] | |
Entity Registrant Name | Norbord Inc. |
Entity Central Index Key | 877,365 |
Current Fiscal Year End Date | --12-31 |
Document Type | 6-K |
Document Period End Date | Jun. 30, 2018 |
Document Fiscal Year Focus | 2,018 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
Amendment Description | |
Entity Common Stock, Shares Outstanding | 86,661,841 |
Entity Current Reporting Status | Yes |
Interim Consolidated Balance Sh
Interim Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 298 | $ 241 |
Accounts receivable | 214 | 174 |
Taxes receivable | 0 | 1 |
Inventory | 244 | 224 |
Prepaids | 10 | 11 |
Current assets | 766 | 651 |
Non-current assets | ||
Property, plant and equipment | 1,453 | 1,421 |
Intangible assets | 23 | 24 |
Deferred income tax assets | 4 | 4 |
Other assets | 4 | 3 |
Non-current assets | 1,484 | 1,452 |
Assets | 2,250 | 2,103 |
Current liabilities | ||
Accounts payable and accrued liabilities | 256 | 282 |
Taxes payable | 29 | 74 |
Current liabilities | 285 | 356 |
Non-current liabilities | ||
Long-term debt | 549 | 548 |
Other liabilities | 27 | 29 |
Deferred income tax liabilities | 183 | 151 |
Non-current liabilities | 759 | 728 |
Shareholders’ equity | 1,206 | 1,019 |
Liabilities and shareholders' equity | $ 2,250 | $ 2,103 |
Interim Consolidated Statements
Interim Consolidated Statements of Earnings - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Profit or loss [abstract] | ||||
Sales | $ 707 | $ 536 | $ 1,283 | $ 1,003 |
Cost of sales | (430) | (370) | (832) | (729) |
General and administrative expenses | (5) | (2) | (10) | (8) |
Depreciation and amortization | (36) | (27) | (66) | (51) |
Loss on disposal of assets | 0 | (2) | 0 | (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 | (53) | (30) | (89) | (43) |
Profit (loss) | $ 174 | $ 97 | $ 269 | $ 146 |
Earnings per common share | ||||
Basic (in dollars per share) | $ 2.01 | $ 1.13 | $ 3.11 | $ 1.70 |
Diluted (in dollars per share) | $ 2 | $ 1.12 | $ 3.09 | $ 1.69 |
Interim Consolidated Statement4
Interim Consolidated Statements of Comprehensive Income Statement - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Statement of comprehensive income [abstract] | ||||
Earnings | $ 174 | $ 97 | $ 269 | $ 146 |
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 |
Interim Consolidated Statement5
Interim Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Millions | Total | Share capital | Merger reserve | Contributed surplus | Retained earnings (deficit) | Accumulated other comprehensive loss | |
Balance, beginning of period at Dec. 31, 2016 | $ 1,341 | $ 9 | $ (402) | $ (202) | |||
Issue of common shares upon exercise of options and Dividend Reinvestment Plan | 4 | ||||||
Stock options exercised | $ 1 | (1) | |||||
Earnings | 146 | 146 | |||||
Common share dividends | (26) | ||||||
Other comprehensive (loss) income | 11 | 11 | |||||
Balance, end of period at Jul. 01, 2017 | 784 | 1,345 | $ (96) | 8 | (282) | [1] | (191) |
Balance, beginning of period at Apr. 01, 2017 | 1,345 | 8 | (359) | (200) | |||
Issue of common shares upon exercise of options and Dividend Reinvestment Plan | 0 | ||||||
Stock options exercised | 0 | ||||||
Earnings | 97 | 97 | |||||
Common share dividends | (20) | ||||||
Other comprehensive (loss) income | 9 | 9 | |||||
Balance, end of period at Jul. 01, 2017 | 784 | 1,345 | (96) | 8 | (282) | [1] | (191) |
Equity [abstract] | |||||||
Deficit arising on cashless exercise of warrants in 2013 | (263) | ||||||
All other retained earnings (deficit) | (19) | ||||||
Balance, beginning of period at Dec. 31, 2017 | 1,019 | 1,350 | 8 | (67) | (176) | ||
Issue of common shares upon exercise of options and Dividend Reinvestment Plan | 6 | ||||||
Stock options exercised | 1 | (1) | |||||
Earnings | 269 | 269 | |||||
Common share dividends | (81) | ||||||
Other comprehensive (loss) income | (6) | (6) | |||||
Balance, end of period at Jun. 30, 2018 | 1,206 | 1,356 | (96) | 7 | 121 | [1] | (182) |
Balance, beginning of period at Mar. 31, 2018 | 1,353 | 8 | (13) | (165) | |||
Issue of common shares upon exercise of options and Dividend Reinvestment Plan | 3 | ||||||
Stock options exercised | (1) | ||||||
Earnings | 174 | 174 | |||||
Common share dividends | (40) | ||||||
Other comprehensive (loss) income | (17) | (17) | |||||
Balance, end of period at Jun. 30, 2018 | $ 1,206 | $ 1,356 | $ (96) | $ 7 | 121 | [1] | $ (182) |
Equity [abstract] | |||||||
Deficit arising on cashless exercise of warrants in 2013 | (263) | ||||||
All other retained earnings (deficit) | $ 384 | ||||||
[1] | (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 $(282) |
Interim Consolidated Statement6
Interim Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Operating activities | ||||
Earnings | $ 174 | $ 97 | $ 269 | $ 146 |
Items not affecting cash: | ||||
Depreciation and amortization | 36 | 27 | 66 | 51 |
Deferred income tax | 28 | 12 | 31 | 25 |
Loss on disposal of assets | 0 | 2 | 0 | 7 |
Other items | (5) | (10) | 2 | (4) |
Cash flows from (used in) operations | 233 | 128 | 368 | 225 |
Net change in non-cash operating working capital balances | 19 | 2 | (74) | (55) |
Net change in taxes receivable, taxes payable and investment tax credit receivable | (2) | 14 | (40) | 13 |
Cash flows from (used in) operating activities | 250 | 144 | 254 | 183 |
Investing activities | ||||
Investment in property, plant and equipment | (61) | (62) | (117) | (118) |
Investment in intangible assets | (1) | (1) | (1) | (3) |
Cash flows from (used in) investing activities | (62) | (63) | (118) | (121) |
Financing activities | ||||
Common share dividends paid | (40) | (19) | (81) | (25) |
Issue of common shares | 2 | 0 | 4 | 3 |
Accounts receivable securitization repayments, net | 0 | 0 | 0 | (200) |
Accounts receivable securitization repayments, net | 0 | (61) | 0 | 0 |
Bank advances, net | 0 | (2) | 0 | 0 |
Cash flows from (used in) financing activities | (38) | (82) | (77) | (222) |
Foreign exchange revaluation on cash and cash equivalents held | (5) | 8 | (2) | 6 |
Increase during period | 145 | 7 | 57 | (154) |
Balance, beginning of period | 153 | 0 | 241 | 161 |
Balance, end of period | $ 298 | $ 7 | $ 298 | $ 7 |
NATURE AND DESCRIPTION OF THE C
NATURE AND DESCRIPTION OF THE COMPANY | 6 Months Ended |
Jun. 30, 2018 | |
Corporate Information And Statement Of IFRS Compliance [Abstract] | |
NATURE AND DESCRIPTION OF THE COMPANY | NATURE AND DESCRIPTION OF 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. At period-end, Brookfield's interest was approximately 40% of the outstanding common shares of the Company. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2018 | |
Significant Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES (a) Statement of Compliance These interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting , on a basis consistent with the accounting policies Norbord disclosed in its audited consolidated financial statements as at, and for the year ended, December 31, 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. These interim financial statements were authorized for issuance by the Board of Directors of the Company on August 1, 2018 . (b) Basis of Presentation These interim financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. (c) Changes in Accounting Policies (i) Financial Instruments In 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. (ii) Revenue from Contracts with Customers 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: Revenue is recognized when control of the goods has transferred to the purchaser. This is generally when goods are shipped, which is also when the performance obligations have been fulfilled under either the terms of the 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. (iii) Share-based Payment 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. (iv) Foreign Currency Transactions and Advance Consideration 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. (d) Future Changes in Accounting Policies (i) Leases 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. (ii) Uncertainty over Income Tax Treatments 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. (iii) Financial Instruments 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. (iv) Employee Benefits 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. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 6 Months Ended |
Jun. 30, 2018 | |
Subclassifications of assets, liabilities and equities [abstract] | |
ACCOUNTS RECEIVABLE | ACCOUNTS RECEIVABLE The Company has the ability to draw up to $125 million under a multi-currency accounts receivable securitization program with a third-party trust sponsored by a highly rated Canadian financial institution. The program is revolving and has an evergreen commitment subject to termination on 12 months’ notice. Under the program, the Company has transferred substantially all of its present and future trade accounts receivable to the trust, on a fully serviced basis, for proceeds consisting of cash and deferred purchase price. However, the asset derecognition criteria under IFRS have not been met and the transferred accounts receivable remain recorded as an asset. At period-end, the Company had transferred but continued to recognize $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). |
INVENTORY
INVENTORY | 6 Months Ended |
Jun. 30, 2018 | |
Inventories [Abstract] | |
INVENTORY | INVENTORY (US $ millions) Jun 30, 2018 Dec 31, 2017 Raw materials $ 74 $ 68 Finished goods 83 74 Operating and maintenance supplies 87 82 $ 244 $ 224 At period-end, the provision to reflect inventories at the lower of cost and net realizable value was $12 million ( December 31, 2017 – $14 million ). |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2018 | |
Financial Instruments [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT (US $ millions) Jun 30, 2018 Dec 31, 2017 Principal value 5.375% senior secured notes due December 2020 $ 240 $ 240 6.25% senior secured notes due April 2023 315 315 555 555 Less: Unamortized debt issue costs (6 ) (7 ) $ 549 $ 548 Revolving Bank Lines 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. The revolving bank lines contain two quarterly financial covenants: minimum tangible net worth of $500 million and maximum net debt to total capitalization, book basis, of 65% . The Company was in compliance with the financial covenants at period-end. |
OTHER LIABILITIES
OTHER LIABILITIES | 6 Months Ended |
Jun. 30, 2018 | |
Subclassifications of assets, liabilities and equities [abstract] | |
OTHER LIABILITIES | OTHER LIABILITIES (US $ millions) Jun 30, 2018 Dec 31, 2017 Defined benefit pension obligation $ 16 $ 20 Accrued employee benefits 6 6 Reforestation obligation 2 2 Unrealized monetary hedge loss 1 — Other 2 1 $ 27 $ 29 |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2018 | |
Share Capital, Reserves, And Other Equity Interest [Abstract] | |
SHAREHOLDERS' EQUITY | SHAREHOLDERS’ EQUITY Share Capital 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 Dividend Reinvestment Plan Year-to-date, less than $1 million of dividends was reinvested in common shares (2017 – less than $1 million ). Merger Reserve On March 31, 2015, the Company and Ainsworth Lumber Co. Ltd. (Ainsworth) completed an arrangement under which the Company acquired all of the outstanding common shares of Ainsworth in an all-share transaction. The Company elected not to account for this transaction as a business combination under IFRS 3, Business Combinations , as the transaction represented a combination of entities under common control of Brookfield. Accordingly, the book values of the two entities were combined and no adjustments were made to reflect fair values or to recognize any new assets or liabilities of either entity. The merger reserve represents the difference between the fair value of the Norbord common shares on the date of issuance and the book value of Ainsworth’s net assets exchanged. Stock Options Year-to-date, 0.2 million stock options were granted (2017 – 0.2 million stock options) and stock option expense of less than $1 million was recorded with a corresponding increase in contributed surplus (2017 – less than $1 million ). 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. Accumulated Other Comprehensive Loss (US $ millions) Jun 30, 2018 Dec 31, 2017 Foreign currency translation loss on foreign operations, net of tax of $(6) $ (148 ) $ (138 ) Net loss on hedge of net investment in foreign operations, net of tax of $3 (8 ) (8 ) Actuarial loss on defined benefit pension obligation, net of tax of $9 (26 ) (30 ) Accumulated other comprehensive loss, net of tax $ (182 ) $ (176 ) |
SHAREHOLDERS' EQUITY | SHAREHOLDERS’ EQUITY Share Capital 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 Dividend Reinvestment Plan Year-to-date, less than $1 million of dividends was reinvested in common shares (2017 – less than $1 million ). Merger Reserve On March 31, 2015, the Company and Ainsworth Lumber Co. Ltd. (Ainsworth) completed an arrangement under which the Company acquired all of the outstanding common shares of Ainsworth in an all-share transaction. The Company elected not to account for this transaction as a business combination under IFRS 3, Business Combinations , as the transaction represented a combination of entities under common control of Brookfield. Accordingly, the book values of the two entities were combined and no adjustments were made to reflect fair values or to recognize any new assets or liabilities of either entity. The merger reserve represents the difference between the fair value of the Norbord common shares on the date of issuance and the book value of Ainsworth’s net assets exchanged. Stock Options Year-to-date, 0.2 million stock options were granted (2017 – 0.2 million stock options) and stock option expense of less than $1 million was recorded with a corresponding increase in contributed surplus (2017 – less than $1 million ). 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. Accumulated Other Comprehensive Loss (US $ millions) Jun 30, 2018 Dec 31, 2017 Foreign currency translation loss on foreign operations, net of tax of $(6) $ (148 ) $ (138 ) Net loss on hedge of net investment in foreign operations, net of tax of $3 (8 ) (8 ) Actuarial loss on defined benefit pension obligation, net of tax of $9 (26 ) (30 ) Accumulated other comprehensive loss, net of tax $ (182 ) $ (176 ) |
INCOME TAX
INCOME TAX | 6 Months Ended |
Jun. 30, 2018 | |
Income Taxes [Abstract] | |
INCOME TAX | INCOME TAX Income tax expense recognized in the statement of earnings comprises the following: (US $ millions) Q2 2018 Q2 2017 6 mos 2018 6 mos 2017 Current income tax expense $ 25 $ 18 $ 58 $ 18 Deferred income tax expense 28 12 31 25 $ 53 $ 30 $ 89 $ 43 |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 6 Months Ended |
Jun. 30, 2018 | |
Earnings per share [abstract] | |
EARNINGS PER COMMON SHARE | EARNINGS PER COMMON SHARE (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. |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 6 Months Ended |
Jun. 30, 2018 | |
Cash Flow Statement [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | SUPPLEMENTAL CASH FLOW INFORMATION Other items comprise: (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 ) The net change in non-cash operating working capital balances comprises: (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 ) Cash interest and income taxes comprise: (US $ millions) Q2 2018 Q2 2017 6 mos 2018 6 mos 2017 Cash interest paid $ 17 $ 17 $ 17 $ 25 Cash interest received — — (1 ) — Cash income taxes paid 28 1 101 3 Cash income taxes received — — (3 ) (1 ) The net change in financial liabilities comprises: (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 ) Cash and non-cash movements in financial liabilities comprise: (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 ) |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2018 | |
Financial Instruments [Abstract] | |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS Non-Derivative Financial Instruments The net book values and fair values of non-derivative financial instruments were as follows: 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 (1) Principal value of long-term debt excluding debt issue costs of $6 million (2017 – $7 million ) (note 5). The carrying values of the Company's non-derivative financial instruments approximate fair value, except where disclosed below. Derivative Financial Instruments Canadian Dollar Monetary Hedge 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 ). Euro Cash Flow Hedge 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. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2018 | |
Other Provisions, Contingent Liabilities And Contingent Assets [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES The Company has provided certain guarantees, commitments and indemnifications, including those related to former businesses. The maximum amounts from many of these items cannot be reasonably estimated at this time. However, in certain circumstances, the Company has recourse against other parties to mitigate the risk of loss. In the normal course of its business 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. The Company has entered into various commitments as follows: Payments Due by Period (US $ millions) Less than 1 Year 1–5 Years Thereafter Total Purchase commitments $ 34 $ 51 $ 51 $ 136 Operating leases 6 9 6 21 Reforestation obligations 1 1 1 3 $ 41 $ 61 $ 58 $ 160 Purchase commitments relate to the purchase of property, plant and equipment and long-term purchase contracts with minimum fixed payment amounts. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2018 | |
Related Party [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS In the normal course of operations, Norbord enters into various transactions with related parties which have been measured at exchange value and recognized in the consolidated financial statements. The following transactions have occurred between Norbord and its related parties during the normal course of business. Brookfield Norbord periodically engages the services of Brookfield 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 ). Other Sales to Asian markets are handled by Interex Forest Products Ltd. (Interex), a cooperative sales company over which Norbord, as a 25% shareholder, has significant influence. During the quarter, 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. |
GEOGRAPHIC SEGMENTS
GEOGRAPHIC SEGMENTS | 6 Months Ended |
Jun. 30, 2018 | |
Operating Segments [Abstract] | |
GEOGRAPHIC SEGMENTS | GEOGRAPHIC SEGMENTS The Company operates principally in North America and Europe. Sales by geographic segment are determined based on the origin of shipment. 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. (2) Balance as at December 31, 2017 . |
SIGNIFICANT ACCOUNTING POLICI21
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Significant Accounting Policies [Abstract] | |
Statement of Compliance | Statement of Compliance These interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting , on a basis consistent with the accounting policies Norbord disclosed in its audited consolidated financial statements as at, and for the year ended, December 31, 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. These interim financial statements were authorized for issuance by the Board of Directors of the Company on August 1, 2018 . |
Basis of Measurement | (b) Basis of Presentation These interim financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. |
Revenue Recognition | Revenue is recognized when control of the goods has transferred to the purchaser. This is generally when goods are shipped, which is also when the performance obligations have been fulfilled under either the terms of the 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. |
Changes in Accounting Policies | Changes in Accounting Policies (i) Financial Instruments 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. (ii) Revenue from Contracts with Customers 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: Revenue is recognized when control of the goods has transferred to the purchaser. This is generally when goods are shipped, which is also when the performance obligations have been fulfilled under either the terms of the 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. (iii) Share-based Payment 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. (iv) Foreign Currency Transactions and Advance Consideration 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. |
Future Changes in Accounting Policies | Future Changes in Accounting Policies (i) Leases 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. (ii) Uncertainty over Income Tax Treatments 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. (iii) Financial Instruments 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. (iv) Employee Benefits 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. |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventories [Abstract] | |
Disclosure of inventory | (US $ millions) Jun 30, 2018 Dec 31, 2017 Raw materials $ 74 $ 68 Finished goods 83 74 Operating and maintenance supplies 87 82 $ 244 $ 224 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Financial Instruments [Abstract] | |
Disclosure of detailed information about borrowings | (US $ millions) Jun 30, 2018 Dec 31, 2017 Principal value 5.375% senior secured notes due December 2020 $ 240 $ 240 6.25% senior secured notes due April 2023 315 315 555 555 Less: Unamortized debt issue costs (6 ) (7 ) $ 549 $ 548 |
OTHER LIABILITIES (Tables)
OTHER LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Subclassifications of assets, liabilities and equities [abstract] | |
Disclosure of other liabilities | (US $ millions) Jun 30, 2018 Dec 31, 2017 Defined benefit pension obligation $ 16 $ 20 Accrued employee benefits 6 6 Reforestation obligation 2 2 Unrealized monetary hedge loss 1 — Other 2 1 $ 27 $ 29 |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Share Capital, Reserves, And Other Equity Interest [Abstract] | |
Disclosure of classes of share capital | 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 |
Disclosure of accumulated other comprehensive income (loss) | (US $ millions) Jun 30, 2018 Dec 31, 2017 Foreign currency translation loss on foreign operations, net of tax of $(6) $ (148 ) $ (138 ) Net loss on hedge of net investment in foreign operations, net of tax of $3 (8 ) (8 ) Actuarial loss on defined benefit pension obligation, net of tax of $9 (26 ) (30 ) Accumulated other comprehensive loss, net of tax $ (182 ) $ (176 ) |
INCOME TAX (Tables)
INCOME TAX (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Income Taxes [Abstract] | |
Disclosure of major components of tax expense (income) | Income tax expense recognized in the statement of earnings comprises the following: (US $ millions) Q2 2018 Q2 2017 6 mos 2018 6 mos 2017 Current income tax expense $ 25 $ 18 $ 58 $ 18 Deferred income tax expense 28 12 31 25 $ 53 $ 30 $ 89 $ 43 |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings per share [abstract] | |
Disclosure of earnings per share | (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. |
SUPPLEMENTAL CASH FLOW INFORM28
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Cash Flow Statement [Abstract] | |
Disclosure of supplemental cash flow statement items | Other items comprise: (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 ) The net change in non-cash operating working capital balances comprises: (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 ) Cash interest and income taxes comprise: (US $ millions) Q2 2018 Q2 2017 6 mos 2018 6 mos 2017 Cash interest paid $ 17 $ 17 $ 17 $ 25 Cash interest received — — (1 ) — Cash income taxes paid 28 1 101 3 Cash income taxes received — — (3 ) (1 ) The net change in financial liabilities comprises: (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 ) Cash and non-cash movements in financial liabilities comprise: (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 ) |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Financial Instruments [Abstract] | |
Disclosure of net book values and fair values of non-derivative financial assets | The net book values and fair values of non-derivative financial instruments were as follows: 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 (1) Principal value of long-term debt excluding debt issue costs of $6 million (2017 – $7 million ) (note 5). |
Disclosure of net book values and fair values of non-derivative financial liabilities | The net book values and fair values of non-derivative financial instruments were as follows: 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 (1) Principal value of long-term debt excluding debt issue costs of $6 million (2017 – $7 million ) (note 5). |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Other Provisions, Contingent Liabilities And Contingent Assets [Abstract] | |
Disclosure of commitments | The Company has entered into various commitments as follows: Payments Due by Period (US $ millions) Less than 1 Year 1–5 Years Thereafter Total Purchase commitments $ 34 $ 51 $ 51 $ 136 Operating leases 6 9 6 21 Reforestation obligations 1 1 1 3 $ 41 $ 61 $ 58 $ 160 |
GEOGRAPHIC SEGMENTS (Tables)
GEOGRAPHIC SEGMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Operating Segments [Abstract] | |
Disclosure of geographical segments | 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. |
NATURE AND DESCRIPTION OF THE32
NATURE AND DESCRIPTION OF THE COMPANY (Details) | 6 Months Ended |
Jun. 30, 2018property | |
Disclosure of subsidiaries [line items] | |
Number of plant locations | 17 |
Brookfield | Norbord | |
Disclosure of subsidiaries [line items] | |
Proportion of ownership interest in subsidiary | 40.00% |
(Details)
(Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Dec. 31, 2017 | |
Disclosure of continuing involvement in derecognised financial assets [line items] | |||
Termination notice of accounts receivable securitization program | 12 months | ||
Securitisations | |||
Disclosure of continuing involvement in derecognised financial assets [line items] | |||
Recognised assets representing continuing involvement in derecognised financial assets, program amount | $ 125,000,000 | ||
Recognised trade accounts receivable transferred | 195,000,000 | $ 153,000,000 | |
Recognised other long-term debt relating to financing program | $ 0 | $ 0 | |
Minimum | |||
Disclosure of continuing involvement in derecognised financial assets [line items] | |||
Utilisation rate on other long-term debt within securitization program | 0.00% | 1.50% | |
Maximum | |||
Disclosure of continuing involvement in derecognised financial assets [line items] | |||
Utilisation rate on other long-term debt within securitization program | 2.60% |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Inventories [Abstract] | ||
Raw materials | $ 74 | $ 68 |
Finished goods | 83 | 74 |
Operating and maintenance supplies | 87 | 82 |
Inventory | 244 | 224 |
Inventory provision | $ 12 | $ 14 |
LONG-TERM DEBT - Values of Debt
LONG-TERM DEBT - Values of Debt (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Disclosure of detailed information about borrowings [line items] | ||
Principal value | $ 555 | $ 555 |
Less: Unamortized debt issue costs | (6) | (7) |
Long-term debt | $ 549 | 548 |
5.375% senior secured notes due December 2020 | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings, interest rate | 5.375% | |
Principal value | $ 240 | 240 |
6.25% senior secured notes due April 2023 | ||
Disclosure of detailed information about borrowings [line items] | ||
Borrowings, interest rate | 6.25% | |
Principal value | $ 315 | $ 315 |
LONG-TERM DEBT - Narrative (Det
LONG-TERM DEBT - Narrative (Details) - Revolving Bank Line - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Disclosure of detailed information about borrowings [line items] | ||
Maximum borrowing capacity | $ 245,000,000 | |
Undrawn borrowing facilities | 0 | |
Letters of credit | 19,000,000 | $ 19,000,000 |
Unutilized borrowing facilities | 226,000,000 | $ 226,000,000 |
Minimum tangible net worth | $ 500,000,000 | |
Maximum net debt to total capitalization | 65.00% |
OTHER LIABILITIES (Details)
OTHER LIABILITIES (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Subclassifications of assets, liabilities and equities [abstract] | ||
Defined benefit pension obligation | $ 16 | $ 20 |
Accrued employee benefits | 6 | 6 |
Reforestation obligation | 2 | 2 |
Unrealized monetary hedge loss | 1 | 0 |
Other | 2 | 1 |
Other liabilities | $ 27 | $ 29 |
SHAREHOLDERS' EQUITY - Share Ca
SHAREHOLDERS' EQUITY - Share Capital (Details) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018USD ($)shares | Jul. 01, 2017USD ($)shares | Jun. 30, 2018USD ($)shares | Jul. 01, 2017USD ($)shares | |
Changes in equity [abstract] | ||||
Balance, beginning of period | $ 1,019 | |||
Balance, end of period | $ 1,206 | $ 784 | $ 1,206 | $ 784 |
Share capital | ||||
Reconciliation of number of shares outstanding [abstract] | ||||
Common shares outstanding, beginning of year (in shares) | shares | 86.4 | 85.8 | ||
Issuance of common shares upon exercise of options and Dividend Reinvestment Plan (in shares) | shares | 0.3 | 0.3 | ||
Common shares outstanding, end of year (in shares) | shares | 86.7 | 86.1 | 86.7 | 86.1 |
Changes in equity [abstract] | ||||
Balance, beginning of period | $ 1,353 | $ 1,345 | $ 1,350 | $ 1,341 |
Issue of common shares upon exercise of options and Dividend Reinvestment Plan | 3 | 0 | 6 | 4 |
Balance, end of period | $ 1,356 | $ 1,345 | $ 1,356 | $ 1,345 |
SHAREHOLDERS' EQUITY SHAREHOLDE
SHAREHOLDERS' EQUITY SHAREHOLDERS' EQUITY - Narrative (Details) number in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018USD ($) | Jul. 01, 2017USD ($) | Jun. 30, 2018USD ($)shares | Jul. 01, 2017USD ($)shares | |
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Accounts receivable securitization repayments, net | $ 0 | $ 0 | $ 0 | $ (200) |
Dividends reinvested in common shares | 1 | $ 1 | ||
Options granted (in shares) | shares | 200,000 | |||
Proceeds from exercise of options | 4 | $ 3 | ||
Stock options exercised | $ 1 | $ 1 | ||
Share capital | ||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Number of share options exercised in share-based payment arrangement | shares | 300,000 | 300,000 | ||
Employee Stock Option | ||||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||||
Options granted (in shares) | 0.2 | |||
Share-based payments | $ 1 | $ 1 |
SHAREHOLDERS' EQUITY - Accumula
SHAREHOLDERS' EQUITY - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | Dec. 31, 2017 | Mar. 31, 2018 | Apr. 01, 2017 | Dec. 31, 2016 | |
Disclosure of analysis of other comprehensive income by item [line items] | ||||||||
Actuarial loss on defined benefit pension obligation, net of tax | $ 4 | $ (3) | $ 4 | $ (6) | ||||
Accumulated other comprehensive loss, net of tax | 1,206 | 784 | 1,206 | 784 | $ 1,019 | |||
Accumulated other comprehensive loss | ||||||||
Disclosure of analysis of other comprehensive income by item [line items] | ||||||||
Foreign currency translation loss on investment in foreign operations, net of tax of $(3) (December 31, 2015 – $(10)) | (148) | (138) | ||||||
Net loss on hedge of net investment in foreign operations, net of tax of $3 (December 31, 2015 – $3) | (8) | (8) | ||||||
Actuarial loss on defined benefit pension obligation, net of tax | (26) | (30) | ||||||
Accumulated other comprehensive loss, net of tax | $ (182) | $ (191) | (182) | $ (191) | (176) | $ (165) | $ (200) | $ (202) |
Tax | (6) | (5) | ||||||
Income tax relating to hedges of net investments in foreign operations | 3 | 3 | ||||||
Income tax relating to actuarial loss on defined benefit pension obligation | $ 9 | $ 9 |
INCOME TAX - Income Tax Compone
INCOME TAX - Income Tax Components (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Income Taxes [Abstract] | ||||
Current income tax expense | $ 25 | $ 18 | $ 58 | $ 18 |
Deferred income tax expense | 28 | 12 | 31 | 25 |
Income tax expense | $ 53 | $ 30 | $ 89 | $ 43 |
EARNINGS PER COMMON SHARE (Deta
EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Earnings per share [abstract] | ||||
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 |
Dilutive stock options (in shares) | 0.6 | 0.6 | 0.5 | 0.6 |
Diluted number of common shares | 87.2 | 86.7 | 87 | 86.6 |
Earnings per common share: | ||||
Basic (in dollars per share) | $ 2.01 | $ 1.13 | $ 3.11 | $ 1.70 |
Diluted (in dollars per share) | $ 2 | $ 1.12 | $ 3.09 | $ 1.69 |
EARNINGS PER COMMON SHARE - Nar
EARNINGS PER COMMON SHARE - Narrative (Details) - shares shares in Millions | Jun. 30, 2018 | Jul. 01, 2017 |
Earnings per share [abstract] | ||
Antidilutive securities (in shares) | 0 | 0.1 |
SUPPLEMENTAL CASH FLOW INFORM44
SUPPLEMENTAL CASH FLOW INFORMATION - Other Items (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Cash Flow Statement [Abstract] | ||||
Stock-based compensation | $ 1 | $ 2 | $ 2 | $ 2 |
Pension funding (greater) less than expense | (1) | (1) | (2) | (2) |
Cash interest paid less than interest expense | (8) | (8) | 0 | (6) |
Amortization of debt issue costs | 0 | 0 | 1 | 1 |
Unrealized loss on outstanding currency forwards | 1 | 0 | 1 | 0 |
Unrealized foreign exchange gain on translation of monetary balances | 0 | (3) | (2) | (1) |
Other | 2 | 0 | 2 | 2 |
Other items | $ (5) | $ (10) | $ 2 | $ (4) |
SUPPLEMENTAL CASH FLOW INFORM45
SUPPLEMENTAL CASH FLOW INFORMATION - Net Change in Non-Cash Working Capital (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 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) |
Increase (decrease) in working capital | 19 | 2 | (74) | (55) |
Cash interest paid | 17 | 17 | 17 | 25 |
Cash interest received | 0 | 0 | (1) | 0 |
Cash income taxes paid | 28 | 1 | 101 | 3 |
Cash income taxes received | $ 0 | $ 0 | $ (3) | $ (1) |
SUPPLEMENTAL CASH FLOW INFORM46
SUPPLEMENTAL CASH FLOW INFORMATION - Net Change in Financial Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Cash Flow Statement [Abstract] | ||||
Long-term debt | $ 0 | $ 0 | $ 1 | $ (199) |
Other long-term debt | 0 | (61) | 0 | 0 |
Bank advances | 0 | (2) | 0 | 0 |
Accrued interest on long-term debt | (8) | (9) | (1) | (7) |
Net decrease in financial liabilities | $ (8) | $ (72) | $ 0 | $ (206) |
SUPPLEMENTAL CASH FLOW INFORM47
SUPPLEMENTAL CASH FLOW INFORMATION - Cash and Non-Cash Movements in Financial Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Cash movements: | ||||
Repayment of debt | $ 0 | $ 0 | $ 0 | $ (200) |
Interest paid | (17) | (17) | (17) | (25) |
Accounts receivable securitization repayments | 0 | (61) | 0 | 0 |
Bank advances | 0 | (2) | 0 | 0 |
Cash movements | (17) | (80) | (17) | (225) |
Non-cash movements: | ||||
Amortization of debt issue costs | 0 | 0 | 1 | 1 |
Interest expense | 9 | 8 | 16 | 18 |
Interest expense | 9 | 8 | 17 | 19 |
Net decrease in financial liabilities | $ (8) | $ (72) | $ 0 | $ (206) |
FINANCIAL INSTRUMENTS - Narrati
FINANCIAL INSTRUMENTS - Narrative (Details) $ in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | |||||||
Jun. 30, 2018USD ($) | Jul. 01, 2017USD ($) | Jun. 30, 2018USD ($) | Jul. 01, 2017USD ($) | Jun. 30, 2018EUR (€) | Jun. 30, 2018CAD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2017EUR (€) | Dec. 31, 2017CAD ($) | |
Disclosure of detailed information about hedging instruments [line items] | |||||||||
Debt issue costs | $ 6 | $ 6 | $ 7 | ||||||
Unrealized gain (loss) on derivatives | (1) | (1) | 0 | ||||||
Foreign Currency Forward Contracts | Cash flow hedges | |||||||||
Disclosure of detailed information about hedging instruments [line items] | |||||||||
Nominal amount of hedging instrument | $ 73 | $ 41 | |||||||
Unrealized gain (loss) on derivatives | 1 | 1 | 1 | ||||||
Gains (losses) on financial assets at fair value through profit or loss | 1 | $ 1 | 1 | $ 2 | |||||
Foreign Currency Options | Cash flow hedges | |||||||||
Disclosure of detailed information about hedging instruments [line items] | |||||||||
Nominal amount of hedging instrument | € | € 30,000,000 | € 60,000,000 | |||||||
Unrealized gain (loss) on derivatives | 1 | 1 | $ 1 | ||||||
Gains (losses) on financial assets at fair value through profit or loss | $ 1 | $ 0 | $ 1 | $ 0 |
FINANCIAL INSTRUMENTS - Book an
FINANCIAL INSTRUMENTS - Book and Fair Values of Financial Instruments (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Disclosure of financial assets [line items] | ||
Net Book Value | $ 515 | $ 417 |
Fair Value | 515 | 417 |
Disclosure of financial liabilities [line items] | ||
Net Book Value | 838 | 866 |
Fair Value | 856 | 908 |
Accounts payable and accrued liabilities | Amortised cost | ||
Disclosure of financial liabilities [line items] | ||
Net Book Value | 256 | 282 |
Fair Value | 256 | 282 |
Long-term debt | Amortised cost | ||
Disclosure of financial liabilities [line items] | ||
Net Book Value | 555 | 555 |
Fair Value | 573 | 597 |
Other liabilities | Amortised cost | ||
Disclosure of financial liabilities [line items] | ||
Net Book Value | 27 | 29 |
Fair Value | 27 | 29 |
Cash and cash equivalents | Fair value through profit or loss | ||
Disclosure of financial assets [line items] | ||
Net Book Value | 298 | 241 |
Fair Value | 298 | 241 |
Accounts receivable | Amortised cost | ||
Disclosure of financial assets [line items] | ||
Net Book Value | 214 | 174 |
Fair Value | 214 | 174 |
Other assets | Amortised cost | ||
Disclosure of financial assets [line items] | ||
Net Book Value | 3 | 2 |
Fair Value | $ 3 | $ 2 |
COMMITMENTS AND CONTINGENCIES50
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | Jun. 30, 2018USD ($) |
Disclosure of contingent liabilities [line items] | |
Purchase commitments | $ 136 |
Operating leases | 21 |
Reforestation obligation | 3 |
Commitments | 160 |
Less than 1 Year | |
Disclosure of contingent liabilities [line items] | |
Purchase commitments | 34 |
Operating leases | 6 |
Reforestation obligation | 1 |
Commitments | 41 |
1–5 Years | |
Disclosure of contingent liabilities [line items] | |
Purchase commitments | 51 |
Operating leases | 9 |
Reforestation obligation | 1 |
Commitments | 61 |
Thereafter | |
Disclosure of contingent liabilities [line items] | |
Purchase commitments | 51 |
Operating leases | 6 |
Reforestation obligation | 1 |
Commitments | $ 58 |
RELATED PARTY TRANSACTIONS - Na
RELATED PARTY TRANSACTIONS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | Dec. 31, 2017 | |
Brookfield | |||||
Disclosure of transactions between related parties [line items] | |||||
Services received from related party transactions | $ 1 | $ 1 | $ 1 | $ 1 | |
Interex Forest Products Ltd. | |||||
Disclosure of transactions between related parties [line items] | |||||
Proportion of ownership interest in associate | 25.00% | ||||
Revenue from sale from related party transactions | 26 | $ 17 | $ 49 | $ 30 | |
Amounts receivable from related party transactions | 3 | 3 | $ 3 | ||
Investments accounted for using equity method, less than | $ 1 | $ 1 | $ 1 |
GEOGRAPHIC SEGMENTS (Details)
GEOGRAPHIC SEGMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | Dec. 31, 2017 | |
Disclosure of operating segments [line items] | |||||
Sales | $ 707 | $ 536 | $ 1,283 | $ 1,003 | |
EBITDA | 272 | 162 | 441 | 259 | |
Depreciation and amortization | 36 | 27 | 66 | 51 | |
Additions to property, plant and equipment | 53 | 57 | 103 | 115 | |
Property, plant and equipment | 1,453 | 1,453 | $ 1,421 | ||
Operating segments | North America | |||||
Disclosure of operating segments [line items] | |||||
Sales | 577 | 431 | 1,025 | 798 | |
EBITDA | 256 | 155 | 412 | 252 | |
Depreciation and amortization | 30 | 23 | 55 | 44 | |
Additions to property, plant and equipment | 48 | 32 | 93 | 59 | |
Property, plant and equipment | 1,199 | 1,199 | 1,168 | ||
Operating segments | Europe | |||||
Disclosure of operating segments [line items] | |||||
Sales | 130 | 105 | 258 | 205 | |
EBITDA | 21 | 9 | 39 | 15 | |
Depreciation and amortization | 6 | 4 | 11 | 7 | |
Additions to property, plant and equipment | 5 | 25 | 10 | 56 | |
Property, plant and equipment | 254 | 254 | 253 | ||
Unallocated | |||||
Disclosure of operating segments [line items] | |||||
Sales | 0 | 0 | 0 | 0 | |
EBITDA | (5) | (2) | (10) | (8) | |
Depreciation and amortization | 0 | 0 | 0 | 0 | |
Additions to property, plant and equipment | 0 | $ 0 | 0 | $ 0 | |
Property, plant and equipment | $ 0 | $ 0 | $ 0 |