EARNINGS PER COMMON SHARE

The following table provides details of the calculations of basic and diluted earnings per common share:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Income from continuing operations	$	58,367	$	79,278	$	249,516	$	197,968
Less: Income from continuing operations attributable to noncontrolling interest	1,022		—		1,749		—
Income from continuing operations attributable to Rayonier Inc.	$	57,345	$	79,278	$	247,767	$	197,968

Income from discontinued operations attributable to Rayonier Inc.	$	—	$	1,282	$	44,477	$	5,108

Net income attributable to Rayonier Inc.	$	57,345	$	80,560	$	292,244	$	203,076

Shares used for determining basic earnings per common share	126,122,151		122,848,705		125,549,133		122,552,910
Dilutive effect of:
Stock options	468,286		603,761		501,324		667,960
Performance and restricted shares	546,247		755,884		518,138		735,653
Assumed conversion of Senior Exchangeable Notes (a)	2,168,254		3,683,936		2,176,414		3,148,423
Assumed conversion of warrants (a) (b)	1,608,466		2,067,380		2,043,965		1,443,606
Shares used for determining diluted earnings per common share	130,913,404		129,959,666		130,788,974		128,548,552
Basic earnings per common share attributable to Rayonier Inc.:
Continuing operations	$	0.45	$	0.65	$	1.97	$	1.62
Discontinued operations	—		0.01		0.36		0.04
Net income	$	0.45	$	0.66	$	2.33	$	1.66
Diluted earnings per common share attributable to Rayonier Inc.:
Continuing operations	$	0.44	$	0.61	$	1.89	$	1.54
Discontinued operations	—		0.01		0.34		0.04
Net income	$	0.44	$	0.62	$	2.23	$	1.58



	Three Months Ended September 30,		Nine Months Ended September 30,
	2013	2012	2013	2012
Anti-dilutive shares excluded from the computations of diluted earnings per share:
Stock options, performance and restricted shares	101,884	123,217	167,487	261,759
Assumed conversion of exchangeable note hedges (a)	2,168,254	3,683,936	2,176,414	3,148,423
Total	2,270,138	3,807,153	2,343,901	3,410,182

(a) The Senior Exchangeable Notes due 2012 (the “2012 Notes”) matured in October 2012 and $31.5 million of the Senior Exchangeable Notes due 2015 (the “2015 Notes”) were redeemed by the noteholders in September 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 2015 Notes due to offsetting hedges. Accounting Standards Codification 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 three and nine months ended September 30, 2012. The full dilutive effect of the 2015 Notes was included for the three and nine months ended September 30, 2012, while only a proportional amount based on the length of time the $31.5 million balance was outstanding before the exchange was included for the three and nine months ended September 30, 2013.

The warrants sold in conjunction with the 2012 Notes began maturing on January 15, 2013 and matured ratably through March 27, 2013. As a result, 2,037,303 shares were issued through the end of the first quarter and 97,918 shares were issued in the first week of April. 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 $39.24 per share. For further information, see Note 11 — Debt in the 2012 Annual Report on Form 10-K and Note 16 — Debt of this Form 10-Q.

(b) The higher shares used for the assumed conversion of the warrants associated with the 2012 Notes in the first nine months of 2013 were primarily due to an increase in the average stock price from $45.65 in the nine months ended September 30, 2012 to $56.42, partially offset by a decrease in dilutive shares due to the maturity of the warrants. The shares used for the assumed conversion of the warrants decreased in the third quarter of 2013 as there was no dilutive impact from the warrants on the 2012 Notes.