(7)Net Income Per Limited Partner Unit

Net Income Per Limited Partner Unit

The Partnership’s net income is allocated to the general partner and limited partners, including subordinated unitholders, in accordance with their respective ownership percentages, and when applicable, giving effect to incentive distributions paid to the general partner. Basic and diluted net income per limited partner unit is calculated by dividing limited partners’ interest in net income, less general partner incentive distributions, by the weighted average number of outstanding limited partner units during the period.

We compute earnings per unit using the two-class method for master limited partnerships. Under the two-class method, earnings per unit is calculated as if all of the earnings for the period were distributed under the terms of the partnership agreement, regardless of whether the general partner has discretion over the amount of distributions to be made in any particular period, whether those earnings would actually be distributed during a particular period from an economic or practical perspective, or whether the general partner has other legal or contractual limitations on its ability to pay distributions that would prevent it from distributing all of the earnings for a particular period.

We calculate net income available to limited partners based on the distributions pertaining to the current period’s net income. After adjusting for the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner and limited partners in accordance with the contractual terms of the partnership agreement under the two-class method.

Basic earnings per unit is computed by dividing net earnings attributable to unitholders by the weighted average number of units outstanding during each period. Diluted net income per limited partner unit reflects the potential dilution that could occur if securities or agreements to issue common units, such as awards under the long-term incentive plan, were exercised, settled or converted into common units. When it is determined that potential common units resulting from an award should be included in the diluted net income per limited partner unit calculation, the impact is reflected by applying the treasury stock method. Earnings per common unit assuming dilution for the three months ended March 31, 2015 was calculated based on the diluted weighted average number of units outstanding of 151,882,627, including 713 dilutive units attributable to non-vested restricted unit awards. For the three months ended March 31, 2015, 2,350,470 non-vested phantom unit awards were anti-dilutive and therefore excluded from the calculation of diluted earnings per unit.

The following table illustrates the Partnership’s calculation of net income per common and subordinated unit for the periods indicated:


	Three months ended March 31, 2015
(in thousands)	General partner		Limited partners' common units		Limited partner's subordinated units		Total
Earnings per unit:
Earnings:
Distribution declared (1)	$	—	$	13,669	$	13,669	$	27,338
Distributions in excess of earnings		—		(5,845)		(5,845)		(11,690)
Total earnings	$	—	$	7,824	$	7,824	$	15,648
Weighted average units outstanding:
Basic:		—		75,941		75,941		151,882
Diluted:		—		75,942		75,941		151,883
Net income per limited partner unit:
Basic:	$	—	$	0.10	$	0.10
Diluted:	$	—	$	0.10	$	0.10

(1)

On April 15, 2015, we announced that the board of directors of our general partner had declared a quarterly cash distribution of $0.18 per unit, totaling approximately $27.3 million. The distribution is payable on May 27, 2015 to unitholders of record on May 13, 2015.