NET EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2012

NET EARNINGS PER SHARE

NET EARNINGS PER SHARE

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

• $0.71 in 2012,

• $0.62 in 2011 and

• $4.00 in 2010.

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

• $0.71 in 2012,

• $0.61 in 2011 and

• $3.99 in 2010.

This note discloses:

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

• shares excluded from dilutive 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, including stock equivalent units where there is no circumstance under which those shares would not be issued.

“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 Diluted Earnings per Share to Reflect Special Dividend

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

SHARES EXCLUDED FROM DILUTIVE EFFECT

The following shares were not included in the computation of diluted earnings per share because they were either antidilutive or the required performance or market conditions were not met. 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	2012	2011	2010
Stock options	3,519	23,363	26,385
Performance share units	—	396	—