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Earnings Per Share
 9 Months Ended
Sep. 30, 2012
Earnings Per Share
6.
Earnings Per Share

The Company reports earnings per share in accordance with Accounting Standards Codification (“ASC”) 260, Earnings Per Share, which establishes standards for computing and presenting earnings per share. Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding and the number of dilutive potential common share equivalents during the period. Under the treasury stock method, unexercised “in-the-money” stock options are assumed to be exercised at the beginning of the period or at issuance, if later. The assumed proceeds are then used to purchase common shares at the average market price during the period.
 
Basic and diluted earnings per share for the three and nine months ended September 30, 2012 and 2011 are as follows: 
 
   
Three months ended September 30,
    
Nine months ended September 30,
  
   
2012
    
2011
    
2012
    
2011
  
Shares used in the calculation of Basic earnings per share
     13,287,463       12,817,910       13,237,629       12,744,471  
Effect of dilutive securities:
                                
Stock options, SARs, RSAs, and shares held in escrow
     1,171,691       947,623       1,120,162       985,364  
Diluted shares used in the calculation of earnings per share
     14,459,154       13,765,533       14,357,791       13,729,835  
 
In connection with the acquisition of Anika Therapeutics S.r.l. (“Anika S.r.l.”) on December 30, 2009, the Company issued 1,981,192 shares of its common stock of which 500,000 of these shares remain in escrow at September 30, 2012. These 500,000 shares are included in the diluted potential common shares but are excluded from the basic earnings per share calculation. See Note 10 for additional information relative to this item.

Equity awards of 133,064 and 104,187 shares were outstanding for the three and nine months ended September 30, 2012, respectively, but were not included in the computation of diluted earnings per share because the awards’ impact on earnings per share was anti-dilutive. Equity awards of 1,674,331 and 1,057,096 shares were outstanding for the three and nine months ended September 30, 2011, respectively, but were not included in the computation of diluted earnings per share because the awards’ impact on earnings per share was anti-dilutive.