NET EARNINGS PER SHARE AND SHARE REPURCHASES

NET EARNINGS PER SHARE

Our basic earnings per share attributable to Weyerhaeuser shareholders were:


•	$0.30 during third quarter 2016 and $0.64 during year-to-date 2016; and


•	$0.35 during third quarter 2015 and $0.78 during year-to-date 2015.

Our diluted earnings per share attributable to Weyerhaeuser shareholders were:


•	$0.30 during third quarter 2016 and $0.64 during year-to-date 2016; and


•	$0.35 during third quarter 2015 and $0.77 during year-to-date 2015.

Basic earnings per share is net earnings available to common shareholders 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 available to common shareholders divided by the sum of the weighted average number of our outstanding common shares and the effect of our outstanding dilutive potential common shares:



	QUARTER ENDED		YEAR-TO-DATE ENDED
SHARES IN THOUSANDS	SEPTEMBER 2016	SEPTEMBER 2015	SEPTEMBER 2016	SEPTEMBER 2015
Weighted average number of outstanding common shares – basic	749,587	514,301	708,395	518,121
Dilutive potential common shares:
Stock options	3,185	1,969	2,660	2,459
Restricted stock units	814	348	723	352
Performance share units	458	470	427	523
Total effect of outstanding dilutive potential common shares	4,457	2,787	3,810	3,334
Weighted average number of outstanding common shares – dilutive	754,044	517,088	712,205	521,455

We use the treasury stock method to calculate the effect of our outstanding stock options, restricted stock units and performance share units. 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.

As described below, on July 1, 2016, all outstanding Preference Shares were converted into common shares. For all periods presented the Preference Shares were antidilutive as determined using the if-converted method.

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

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.



	QUARTER ENDED		YEAR-TO-DATE ENDED
SHARES IN THOUSANDS	SEPTEMBER 2016	SEPTEMBER 2015	SEPTEMBER 2016	SEPTEMBER 2015
Stock options	1,835	6,579	1,835	6,579
Performance share units	361	351	361	351
Preference shares	—	24,987	—	24,987

STOCK REPURCHASE PROGRAM

We repurchased 9,775,873 shares of common stock for $306 million (including transaction fees) during third quarter 2016 and 67,816,810 shares of common stock for $2.0 billion (including transaction fees) year-to-date 2016 under the 2016 Share Repurchase Authorization. The 2016 Share Repurchase Authorization was approved in November 2015 by our Board of Directors and authorized management to repurchase up to $2.5 billion of outstanding shares subsequent to the closing of our merger with Plum Creek. This new authorization replaced the August 2015 share repurchase authorization. Transaction fees incurred for repurchases are not counted as use of funds authorized for repurchases under the 2016 Share Repurchase Authorization. All common stock purchases under the stock repurchase program were made in open-market transactions. As of September 30, 2016, we had remaining authorization of $500 million for future stock repurchases.

We record share repurchases upon trade date as opposed to the settlement date when cash is disbursed. We record a liability to account for repurchases that have not been cash settled. There were no unsettled repurchases as of September 30, 2016 or December 31, 2015.

MANDATORY CONVERTIBLE PREFERENCE SHARES

On July 1, 2016, all outstanding 6.375% Mandatory Convertible Preference Shares, Series A (Preference Shares) converted into Weyerhaeuser common shares at a rate of 1.6929 Weyerhaeuser common shares per Preference Share. The company issued a total of 23.2 million Weyerhaeuser common shares in conjunction with the conversion, based on 13.7 million Preference Shares outstanding as of the conversion date.

In accordance with the terms of the Preference Shares, the number of Weyerhaeuser common shares issuable on conversion was determined based on the average volume weighted average price of $29.54 for Weyerhaeuser common shares over the 20-trading-day period beginning June 1, 2016, and ending on June 28, 2016.