Net Income/(Loss) Per Common Unit

We calculate basic and diluted net income/(loss) per common unit by dividing net income attributable to PAA (after deducting amounts allocated to preferred unitholders and participating securities) by the basic and diluted weighted average number of common units outstanding during the period. Participating securities include LTIP awards that have vested DERs, which entitle the grantee to a cash payment equal to the cash distribution paid on our outstanding common units.

The diluted weighted average number of common units is computed based on the weighted average number of common units plus the effect of potentially dilutive securities outstanding during the period, which include (i) our Series A preferred units and (ii) our equity-indexed compensation plan awards (which include LTIP awards and AAP Management Units). When applying the if-converted method prescribed by FASB guidance, the possible conversion of our Series A preferred units was excluded from the calculation of diluted net income/(loss) per common unit for the nine months ended September 30, 2018 and the three and nine months ended September 30, 2017 as the effect was antidilutive. Our LTIP awards that contemplate the issuance of common units and certain AAP Management Units that contemplate the issuance of common units to AAP when such AAP Management Units become earned are considered dilutive unless (i) they become vested or earned only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied. LTIP awards and AAP Management Units that were deemed to be dilutive during the three and nine months ended September 30, 2018 and the nine months ended September 30, 2017 were reduced by a hypothetical common unit repurchase based on the remaining unamortized fair value, as prescribed by the treasury stock method in guidance issued by the FASB. LTIP Awards and AAP Management Units were excluded from the computation of diluted net loss per common unit from the three months ended September 30, 2017 as the effect was antidilutive. See Note 16 to our Consolidated Financial Statements included in Part IV of our 2017 Annual Report on Form 10-K for a complete discussion of our LTIP awards and the AAP Management Units.

The following table sets forth the computation of basic and diluted net income/(loss) per common unit (in millions, except per unit data):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Basic Net Income/(Loss) per Common Unit
Net income attributable to PAA	$	710		$	33		1,099			665
Distributions to Series A preferred unitholders	(37		)	(36		)	(112		)	(105		)
Distributions to Series B preferred unitholders	(12		)	—			(37		)	—
Distributions to participating securities	(1		)	(1		)	(2		)	(2		)
Other	(2		)	(4		)	(2		)	(11		)
Net income/(loss) allocated to common unitholders ⁽¹⁾	$	658		$	(8	)	$	946		$	547

Basic weighted average common units outstanding	726			725			726			714

Basic net income/(loss) per common unit	$	0.91		$	(0.01	)	$	1.30		$	0.77

Diluted Net Income/(Loss) per Common Unit
Net income attributable to PAA	$	710		$	33		$	1,099		$	665
Distributions to Series A preferred unitholders	—			(36		)	(112		)	(105		)
Distributions to Series B preferred unitholders	(12		)	—			(37		)	—
Distributions to participating securities	(1		)	(1		)	(2		)	(2		)
Other	—			(4		)	(1		)	(11		)
Net income/(loss) allocated to common unitholders ⁽¹⁾	$	697		$	(8	)	$	947		$	547

Basic weighted average common units outstanding	726			725			726			714
Effect of dilutive securities:
Series A preferred units	71			—			—			—
Equity-indexed compensation plan awards	2			—			2			1
Diluted weighted average common units outstanding	799			725			728			715

Diluted net income/(loss) per common unit	$	0.87		$	(0.01	)	$	1.30		$	0.76

⁽¹⁾

We calculate net income/(loss) allocated to common unitholders based on the distributions pertaining to the current period’s net income (whether paid in cash or in-kind). After adjusting for the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to common unitholders and participating securities in accordance with the contractual terms of our partnership agreement in effect for the period and as further prescribed under the two-class method.