Net Income/(Loss) Per Common Unit

3 Months Ended

Mar. 31, 2021

We calculate basic and diluted net income/(loss) per common unit by dividing net income/(loss) 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 equity-indexed compensation plan awards that have vested distribution equivalent rights, 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. When applying the if-converted method prescribed by FASB guidance, the possible conversion of approximately 71 million Series A preferred units, on a weighted-average basis, were excluded from the calculation of diluted net income/(loss) per common unit for the three months ended March 31, 2021 and 2020 as the effect was antidilutive for each period. Our equity-indexed compensation plan awards that contemplate the issuance of common units are considered potentially dilutive unless (i) they become vested only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied. Equity-indexed compensation plan awards that are deemed to be dilutive during the period are 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. As a result of the hypothetical common unit repurchase, there were no potentially dilutive equity-indexed compensation plan awards for the three months ended March 31, 2021. Potentially dilutive equity-indexed compensation plan awards of approximately 1 million units, on a weighted-average basis, were excluded from the computation of diluted net loss per common unit for the three months ended March 31, 2020 as the effect was antidilutive. See Note 18 to our Consolidated Financial Statements included in Part IV of our 2020 Annual Report on Form 10-K for a discussion of our equity-indexed compensation plan awards.

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 March 31,
		2021		2020
Basic and Diluted Net Income/(Loss) per Common Unit
Net income/(loss) attributable to PAA		$	422	$	(2,847)
Distributions to Series A preferred unitholders		(37)		(37)
Distributions to Series B preferred unitholders		(12)		(12)
Distributions to participating securities		(1)		(1)
Other		(1)		—
Net income/(loss) allocated to common unitholders (1)		$	371	$	(2,897)

Basic and diluted weighted average common units outstanding		722		728

Basic and diluted net income/(loss) per common unit		$	0.51	$	(3.98)

(1)We calculate net income/(loss) allocated to common unitholders 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 (i.e., undistributed loss), if any, are allocated to the 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.