EARNINGS PER COMMON SHARE

Basic earnings per share (“EPS”) is calculated by dividing net income attributable to Rayonier by the weighted average number of common shares outstanding during the year. Diluted EPS is calculated by dividing net income attributable to Rayonier by the weighted average number of common shares outstanding adjusted to include the potentially dilutive effect of outstanding stock options, performance shares, restricted shares and convertible debt.

The following table provides details of the calculation of basic and diluted EPS for the three years ended December 31:



	2013		2012		2011
Income from continuing operations	$	331,765	$	271,442	$	276,674
Less: Income from continuing operations attributable to noncontrolling interest	1,902		—		—
Income from continuing operations attributable to Rayonier Inc.	$	329,863	$	271,442	$	276,674

Income from discontinued operations attributable to Rayonier Inc.	$	42,033	$	7,243	$	(669	)

Net income attributable to Rayonier Inc.	$	371,896	$	278,685	$	276,005

Shares used for determining basic earnings per common share	125,717,311		122,711,802		121,662,985
Dilutive effect of:
Stock options	463,949		634,218		702,693
Performance and restricted shares	158,319		757,308		982,951
Assumed conversion of Senior Exchangeable Notes (a)	1,965,177		2,888,650		1,895,762
Assumed conversion of warrants (a)	1,800,345		1,710,445		149,900
Shares used for determining diluted earnings per common share	130,105,101		128,702,423		125,394,291
Basic earnings per common share attributable to Rayonier Inc.:
Continuing operations	$	2.63	$	2.21	$	2.28
Discontinued operations	0.33		0.06		(0.01		)
Net income	$	2.96	$	2.27	$	2.27
Diluted earnings per common share attributable to Rayonier Inc.:
Continuing operations	$	2.54	$	2.11	$	2.21
Discontinued operations	0.32		0.06		(0.01		)
Net income	$	2.86	$	2.17	$	2.20



	2013	2012	2011
Anti-dilutive shares excluded from the computations of diluted earnings per share:
Stock options, performance and restricted shares	337,145	224,918	161,786
Assumed conversion of exchangeable note hedges (a)	1,965,177	2,888,650	1,895,762
Total	2,302,322	3,113,568	2,057,548

(a)

The Senior Exchangeable Notes due 2012 (the “2012 Notes”) matured in October 2012 and $41.5 million of the Senior Exchangeable Notes due 2015 (the “2015 Notes”) were redeemed by the noteholders in September and October 2013; however, no additional shares were issued due to offsetting exchangeable note hedges. Similarly, Rayonier will not issue additional shares upon future exchange or maturity of the remaining 2015 Notes due to offsetting hedges. ASC 260, Earnings Per Share requires the assumed conversion of the Notes to be included in dilutive shares if the average stock price for the period exceeds the strike prices, while the assumed conversion of the hedges is excluded since they are anti-dilutive. As such, the dilutive effect of the assumed conversion of the 2012 Notes was included for the year ended December 31, 2012. The full dilutive effect of the 2015 Notes was included for the year ended December 31, 2012, while only a proportional amount based on the length of time the $41.5 million balance was outstanding before the exchange was included for the year ended December 31, 2013.

The warrants sold in conjunction with the 2012 Notes began maturing on January 15, 2013 and matured ratably through March 27, 2013, resulting in the issuance of 2,135,221 shares. The dilutive impact of these warrants was calculated based on the length of time they were outstanding before settlement. Rayonier will distribute additional shares upon maturity of the warrants associated with the 2015 Notes if the stock price exceeds $39.10 per share. For further information, see Note 13 — Debt.