(7) Partners’ Capital

Common Units and General Partner Interest

As of March 31, 2018, we had 62,443,593 common units outstanding. USA Compression Holdings held 25,092,196 common units as of March 31, 2018 and controlled our General Partner, which held an approximate 1.2% general partner interest (the “General Partner’s Interest”) and the incentive distribution rights (“IDRs”). See the Unaudited Condensed Consolidated Statement of Changes in Partners’ Capital. See Note 12 for changes to the ownership structure on April 2, 2018.

Cash Distributions

We have declared quarterly distributions per unit to limited partner unitholders of record, including holders of common and phantom units, and distributions paid to the General Partner, including the General Partner’s Interest and IDRs, as follows (in millions, except distribution per unit):


	Distribution per		Amount Paid to		Amount Paid to		Amount Paid to
	Limited Partner		Common		General		Phantom		Total
Payment Date	Unit		Unitholders		Partner		Unitholders		Distribution
February 14, 2017	$	0.525	$	31.9	$	0.7	$	0.8	$	33.4
May 12, 2017	$	0.525	$	32.1	$	0.7	$	0.6	$	33.4
August 11, 2017	$	0.525	$	32.3	$	0.8	$	0.6	$	33.7
November 10, 2017	$	0.525	$	32.6	$	0.8	$	0.5	$	33.9
February 14, 2018	$	0.525	$	32.7	$	0.8	$	0.8	$	34.3

Announced Quarterly Distribution

On April 19, 2018, we announced a cash distribution of $0.525 per unit on our common units. The distribution will be paid on May 11, 2018 to unitholders of record as of the close of business on May 1, 2018.

Distribution Reinvestment Plan

During the three months ended March 31, 2018 and 2017, distributions of $0.2 million and $4.1 million, respectively, were reinvested under the DRIP resulting in the issuance of 9,571 and 221,693 common units, respectively. Such distributions are treated as non-cash transactions in the accompanying Unaudited Condensed Consolidated Statements of Cash Flows.

Earnings Per Unit

The computation of earnings per unit is based on the weighted average number of units outstanding during the applicable period. Basic earnings per unit is determined by dividing net income (loss) allocated to the units after deducting the amount allocated to our General Partner (including distributions to our General Partner on our General Partner’s Interest and its IDRs, if any), by the weighted average number of outstanding units during the period. Net income (loss) is allocated to the units and our General Partner’s Interest (including its IDRs) based on their respective shares of the distributed and undistributed earnings for the period. To the extent cash distributions exceed net income (loss) for the period, the excess distributions are allocated to all participating units outstanding based on their respective ownership percentages. Diluted earnings per unit are computed using the treasury stock method, which considers the potential issuance of limited partner units associated with our long-term incentive plan. Unvested phantom units are not included in basic earnings per unit, as they are not considered to be participating securities, but are included in the calculation of diluted earnings per unit. Incremental unvested phantom units outstanding represent the only difference between our basic and diluted weighted average common units outstanding during the three months ended March 31, 2017. For the three months ended March 31, 2018, approximately 324,000 incremental unvested phantom units were excluded from the calculation of diluted earnings per unit because the impact was anti-dilutive.

Incentive Distribution Rights

Prior to April 2, 2018, our General Partner held all of our IDRs. The IDRs represented the right to receive an increasing percentage of our quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels had been achieved. See Note 12(c) for additional information on the Equity Restructuring Agreement that converted the General Partner’s Interest into a non-economic general partner interest and cancelled the IDRs on April 2, 2018.

The following table illustrates the percentage allocations of Available Cash from Operating Surplus between our unitholders and our General Partner based on the specified target distribution levels that were applicable prior to April 2, 2018. The amounts set forth under “Marginal Percentage Interest in Distributions” are the percentage interests of our General Partner and our unitholders in any Available Cash from Operating Surplus we distribute up to and including the corresponding amount in the column “Total Quarterly Distribution Per Unit.” The percentage interests shown for our unitholders and our General Partner for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests set forth below for our General Partner include its General Partner’s Interest, and assume our General Partner has contributed any additional capital necessary to maintain its General Partner’s Interest and our General Partner has not transferred our IDRs.


		Marginal Percentage Interest
	Total Quarterly	in Distributions
	Distribution Per Unit	Unitholders		General Partner
Minimum Quarterly Distribution	$0.425	98.8	%	1.2	%
First Target Distribution	up to $0.4888	98.8	%	1.2	%
Second Target Distribution	above $0.4888 up to $0.5313	85.8	%	14.2	%
Third Target Distribution	above $0.5313 up to $0.6375	75.8	%	24.2	%
Thereafter	above $0.6375	50.8	%	49.2	%