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Net Income Per Class A Share
 6 Months Ended
Jun. 30, 2014
Net Income Per Class A Share  
Net Income Per Class A Share

Note 7—Net Income Per Class A Share

 

Basic net income per Class A share is determined by dividing net income attributable to PAGP by the weighted average number of outstanding Class A shares during the period. Class B shares do not share in the earnings of the Partnership. Accordingly, basic and diluted net income per Class B share has not been presented.

 

Diluted net income per Class A share is determined by dividing net income attributable to PAGP by the weighted average number of outstanding diluted Class A shares during the period. For purposes of calculating diluted net income per Class A share, both the net income attributable to PAGP and the weighted average number of outstanding diluted Class A shares consider the impact of possible future exchanges of (i) AAP units and the associated Class B shares into our Class A shares and (ii) certain Class B units of AAP (referred to herein as “AAP Management Units”) into our Class A shares. In addition, the calculation of the weighted average number of outstanding diluted Class A shares considers the effect of potentially dilutive awards under the Plains GP Holdings, L.P. Long-Term Incentive Plan (the “PAGP LTIP”).

 

All AAP Management Units that have satisfied the applicable performance condition are considered potentially dilutive. Exchanges of potentially dilutive AAP units and AAP Management Units are assumed to have occurred at the beginning of the period and the incremental income attributable to PAGP resulting from the assumed exchanges is representative of the incremental income that would have been attributable to PAGP if the assumed exchanges occurred on that date. Our PAGP LTIP awards that contemplate the issuance of Class A Shares are considered dilutive unless (i) vesting occurs only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied. PAGP LTIP awards that are deemed to be dilutive are reduced by a hypothetical share repurchase based on the remaining unamortized fair value, as prescribed by the treasury stock method in guidance issued by the FASB. All outstanding PAGP LTIP awards as of June 30, 2014 are dilutive.

 

For the three and six months ended June 30, 2014, the possible exchange of any AAP units and certain AAP Management Units would have had an antidilutive effect on net income per Class A share. For the same periods, our PAGP LTIP awards are dilutive; however, there are less than 0.1 million dilutive LTIP awards, which amount is not large enough to change the presentation of weighted average shares outstanding or net income per Class A share. The following table illustrates the calculation of basic net income per Class A share and diluted net income per Class A share for the three and six months ended June 30, 2014 (amounts in millions, except per share data):

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30, 2014

 

June 30, 2014

 

Basic and Diluted Net Income per Class A Share

 

 

 

 

 

Net income attributable to PAGP

 

$

15

 

$

29

 

Basic and diluted weighted average number of Class A shares outstanding

 

136

 

135

 

 

 

 

 

 

 

Basic and diluted net income per Class A share

 

$

0.11

 

$

0.21