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


•	$1.40 in 2016,


•	$0.89 in 2015 and


•	$3.20 in 2014.

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


•	$1.39 in 2016,


•	$0.89 in 2015 and


•	$3.18 in 2014.

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 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.

Dilutive potential common shares may include:


•	outstanding stock options,


•	restricted stock units,


•	performance share units and


•	preference shares.

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:



SHARES IN THOUSANDS
	2016	2015	2014
Weighted average number of outstanding shares - basic	718,560	516,371	556,705
Dilutive potential common shares:
Stock options	2,672	2,342	3,190
Restricted stock units	756	381	510
Performance share units	413	524	494
Total effect of outstanding dilutive potential common shares	3,841	3,247	4,194
Weighted average number of outstanding common shares - dilutive	722,401	519,618	560,899

We use the treasury stock method to calculate the dilutive 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.

We issued 13.8 million 6.375 percent Mandatory Convertible Preference Shares, Series A on June 24, 2013. For all periods presented, the Preference Shares were antidilutive as determined using the if-converted method. In applying the if-converted method, conversion was not assumed for purposes of computing diluted earnings per share if the effect was antidilutive. Preference shares were antidilutive whenever the amount of the dividend declared in or accumulated for the current period per common share obtainable on conversion exceeded diluted earnings per share exclusive of the preference shares.

Preference shares were evaluated for participation on a quarterly basis to determine whether two-class presentation was required. Preference shares were considered to be participating as of the financial reporting period end to the extent they would participate in dividends paid to common shareholders. Preference shares were not considered participating for the years ended December 31, 2015 and December 31, 2014. Under the provisions of the two-class method, basic and diluted earnings per share would be presented for both preference and common shareholders.

All remaining outstanding preference shares were converted to common shares on July 1, 2016. See further information at Note 15: Shareholders' Interest.

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
	2016	2015	2014
Stock options	1,462	5,016	—
Performance share units	384	155	—
Preference Shares	—	25,307	24,988