PARTNERS' EQUITY

Please refer to Note 2 for a discussion of the Merger.

Issuance of Common Units

On June 29, 2018, we issued 413,736 common units at a price of $24.17 per unit to William E. Greehey, Chairman of the Board of Directors of NuStar GP, LLC. We used the proceeds of $10.2 million from the sale of these units, including a contribution of $0.2 million from our general partner to maintain the 2% general partner economic interest it owned at that time, for general partnership purposes.

Partners’ Equity Activity

The following table summarizes changes to our partners’ equity, which excludes the carrying value of the Series D Preferred Units (in thousands of dollars):



Balance as of January 1, 2018	$	2,480,089
Net income	189,608
Unit-based compensation	6,559
Other comprehensive income	23,204
Distributions to partners	(284,605		)
Issuance of common units, including contribution from general partner	10,204
Adjustments related to the Merger (refer to Note 2 for discussion)	(67,972		)
Series D Preferred Unit accretion (refer to Note 11 for discussion)	(4,031		)
Other	(6,174		)
Balance as of September 30, 2018	$	2,346,882

Cash Distributions

General Partner and Common Limited Partners. We make quarterly distributions to common unitholders, and, prior to the Merger, made quarterly distributions to the general partner of 100% of our available cash, generally defined as cash receipts less cash disbursements, including distributions to our preferred units, and cash reserves established by the general partner, in its sole discretion. These quarterly distributions are declared and paid within 45 days subsequent to each quarter-end. The common unitholders receive a distribution each quarter as determined by the board of directors, subject to limitation by the distributions in arrears, if any, on our preferred units. Prior to the Merger, our available cash was distributed based on the percentages shown below:



	Percentage of Distribution
Quarterly Distribution Amount per Common Unit	Common Unitholders	General Partner Including Incentive Distributions
Up to $0.60	98%	2%
Above $0.60 up to $0.66	90%	10%
Above $0.66	75%	25%

The general partner was not allocated distributions beginning with the second quarter of 2018 as a result of the Merger, which was effective prior to the record date for the second quarter distribution. Beginning with the second quarter of 2018, the common limited partners’ distribution includes the additional common units issued in exchange for previously outstanding NSH units because the Merger closed prior to the common unit distribution record date for the second quarter of 2018. The following table reflects the allocation of total cash distributions to the general partner and common limited partners applicable to the period in which the distributions were earned:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
	(Thousands of Dollars, Except Per Unit Data)
General partner interest	$	—	$	2,302	$	1,141	$	6,947
General partner incentive distribution	—		10,912		—		34,736
Total general partner distribution	—		13,214		1,141		41,683
Common limited partners’ distribution	64,248		101,870		184,369		305,652
Total cash distributions	$	64,248	$	115,084	$	185,510	$	347,335

Cash distributions per unit applicable to common limited partners	$	0.60	$	1.095	$	1.800	$	3.285

The following table summarizes information about our quarterly cash distributions to our general partner, prior to the Merger, and to our common limited partners:



Quarter Ended	Cash Distributions Per Unit		Total Cash Distributions		Record Date	Payment Date
			(Thousands of Dollars)
September 30, 2018	$	0.600	$	64,248	November 8, 2018	November 14, 2018
June 30, 2018	$	0.600	$	64,205	August 7, 2018	August 13, 2018
March 31, 2018	$	0.600	$	57,057	May 8, 2018	May 14, 2018
December 31, 2017	$	1.095	$	115,267	February 8, 2018	February 13, 2018

Preferred Units. The following table summarizes information about our cash distributions on our 8.50% Series A, 7.625% Series B and 9.00% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units:



Period	Cash Distributions Per Unit		Total Cash Distributions		Record Date	Payment Date
			(Thousands of Dollars)
Series A Preferred Units:
September 15, 2018 - December 14, 2018	$	0.53125	$	4,813	December 3, 2018	December 17, 2018
June 15, 2018 - September 14, 2018	$	0.53125	$	4,813	September 4, 2018	September 17, 2018
March 15, 2018 - June 14, 2018	$	0.53125	$	4,813	June 1, 2018	June 15, 2018
December 15, 2017 - March 14, 2018	$	0.53125	$	4,813	March 1, 2018	March 15, 2018

Series B Preferred Units:
September 15, 2018 - December 14, 2018	$	0.47657	$	7,339	December 3, 2018	December 17, 2018
June 15, 2018 - September 14, 2018	$	0.47657	$	7,339	September 4, 2018	September 17, 2018
March 15, 2018 - June 14, 2018	$	0.47657	$	7,339	June 1, 2018	June 15, 2018
December 15, 2017 - March 14, 2018	$	0.47657	$	7,339	March 1, 2018	March 15, 2018

Series C Preferred Units:
September 15, 2018 to December 14, 2018	$	0.56250	$	3,881	December 3, 2018	December 17, 2018
June 15, 2018 to September 14, 2018	$	0.56250	$	3,881	September 4, 2018	September 17, 2018
March 15, 2018 to June 14, 2018	$	0.56250	$	3,881	June 1, 2018	June 15, 2018
November 30, 2017 - March 14, 2018	$	0.65625	$	4,528	March 1, 2018	March 15, 2018

Allocations of Net Income

Our partnership agreement sets forth the calculation to be used to determine the amount and priority of cash distributions that the unitholders will receive and, prior to the Merger, the general partner received. The partnership agreement also contains provisions for the allocation of net income to the unitholders and, prior to the Merger, to the general partner. Our net income for each quarterly reporting period is first allocated to the preferred limited partner unitholders in an amount equal to the earned distributions for the respective reporting period and, prior to the Merger, then to the general partner in an amount equal to the general partner’s incentive distribution calculated based upon the declared distribution for the respective reporting period. Prior to the Merger, we allocated the remaining net income or loss among the common unitholders (98%) and general partner (2%), as set forth in our partnership agreement.

Accumulated Other Comprehensive Income (Loss)

The balance of and changes in the components included in AOCI were as follows:



	Foreign Currency Translation			Cash Flow Hedges			Pension and Other Postretirement Benefits			Total
	(Thousands of Dollars)
Balance as of January 1, 2018	$	(51,603	)	$	(24,304	)	$	(9,020	)	$	(84,927	)
Other comprehensive (loss) income:
Other comprehensive (loss) income before reclassification adjustments	(6,536		)	26,067			—			19,531
Net gain on pension costs reclassified into other income, net	—			—			(611		)	(611		)
Net loss on cash flow hedges reclassified into interest expense, net	—			4,271			—			4,271
Other	60			—			(47		)	13
Other comprehensive (loss) income	(6,476		)	30,338			(658		)	23,204
Balance as of September 30, 2018	$	(58,079	)	$	6,034		$	(9,678	)	$	(61,723	)