Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares outstanding and potentially dilutive shares. The dilutive effect of employee stock options and awards of restricted stock units are included in the computation of diluted earnings per share. The dilutive effect of stock options is calculated using the treasury stock method and expected proceeds upon exercise of the stock options.

The following table summarizes the shares used in computing basic and diluted net income per common share:

For the fiscal years ended January 31, 2013, 2012 and 2011, employee stock options to purchase 653,634, 616,585, and 642,585 common shares were excluded from the calculations of diluted earnings per share as the calculated proceeds from the options' exercises were greater than the market price of the Company's common shares during these periods.