NET EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2011

NET EARNINGS PER SHARE

NET EARNINGS (LOSS) PER SHARE

Our basic earnings (loss) per share attributable to Weyerhaeuser shareholders for the last three years were:

• $0.62 in 2011,

• $4.00 in 2010 and

• $(2.58) in 2009.

Our diluted earnings (loss) per share attributable to Weyerhaeuser shareholders for the last three years were:

• $0.61 in 2011,

• $3.99 in 2010 and

• $(2.58) in 2009.

This note discloses:

• how we calculate basic and diluted net earnings per share and

• our shares with an antidilutive effect.

HOW WE CALCULATE BASIC AND DILUTED NET EARNINGS PER SHARE

“Basic earnings” per share is net earnings divided by the weighted average number of our outstanding common shares.

“Diluted earnings” per share is net earnings divided by the sum of the:

• weighted average number of our outstanding common shares and

• the effect of our outstanding dilutive potential common shares.

Dilutive potential common shares may include:

• outstanding stock options,

• restricted stock units or

• performance share units.

We use the treasury stock method to calculate the effect of our outstanding dilutive potential common shares. Share-based payment awards that are contingently issuable upon the achievement of specified performance or market conditions are included in our diluted earnings per share calculation in the period in which the conditions are satisfied.

To implement our decision to be taxed as a REIT, we distributed to our shareholders our accumulated earnings and profits, determined under federal income tax provisions, as a “Special Dividend.” On September 1, 2010, we paid a dividend of $5.6 billion which included the Special Dividend and the regular quarterly dividend of approximately $11 million. At the election of each shareholder, the Special Dividend was paid in cash or Weyerhaeuser common shares. The number of common shares issued was approximately 324 million.The stock portion of the Special Dividend was treated as the issuance of new shares for accounting purposes and affects our earnings per share only for periods after the distribution. Prior periods are not restated. The required treatment results in earnings per share that is less than would have been the case had the common shares not been issued. Reflected below are pro forma results giving effect to the common stock distribution for diluted earnings per common share as if the common stock distribution had occurred at the beginning of the period.

Pro Forma 2010 and 2009 DIluted Earnings per Share to Reflect Special DIvidend

DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES
	2010		2009
Net earnings (loss) attributable to Weyerhaeuser common shareholders	$	1,281	$	(545	)
Diluted earnings (loss) per share:
As reported	$	3.99	$	(2.58	)
Pro forma	$	2.39	$	(1.02	)
Diluted weighted average shares outstanding (in thousands):
As reported	321,096		211,342
Pro forma	537,013		535,661

SHARES EXCLUDED FROM DILUTIVE EFFECT

The following shares were not included in the computation of diluted earnings (loss) per share because they were antidilutive. However, some or all of these shares may be dilutive potential common shares in future periods.

Potential Shares Not Included in the Computation of Diluted Earnings per Share

Shares in thousands	2011	2010	2009
Stock options	23,363	26,385	11,721
Restricted stock units	—	—	706
Performance share units	396	—	219

The increase in options in 2010 is primarily due to our Long-Term Incentive Compensation Plan requiring outstanding stock options to be adjusted as a result of the Special Dividend. The number of awards increased by a ratio of the closing price of our common stock on the New York Stock Exchange on July 19, 2010 to the opening price on July 20, 2010