Annual report pursuant to Section 13 and 15(d)

Net Income Per Limited Partner Unit

v3.6.0.2
Net Income Per Limited Partner Unit
12 Months Ended
Dec. 31, 2016
Net Income Per Limited Partner Unit  
Net Income Per Limited Partner Unit

(8)  Net Income Per Limited Partner Unit

 

The Partnership’s net income is attributed to the general partner and limited partners, including subordinated unitholders, in accordance with their respective ownership percentages, and when applicable, giving effect to incentive distributions paid to the general partner. Basic and diluted net income per limited partner unit is calculated by dividing limited partners’ interest in net income, less general partner incentive distributions, by the weighted average number of outstanding limited partner units during the period.

 

We compute earnings per unit using the two-class method for master limited partnerships. Under the two-class method, earnings per unit is calculated as if all of the earnings for the period were distributed under the terms of the partnership agreement, regardless of whether the general partner has discretion over the amount of distributions to be made in any particular period, whether those earnings would actually be distributed during a particular period from an economic or practical perspective, or whether the general partner has other legal or contractual limitations on its ability to pay distributions that would prevent it from distributing all of the earnings for a particular period.

 

We calculate net income available to limited partners 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, if any, are attributed to the general partner and limited partners in accordance with the contractual terms of the partnership agreement under the two-class method.

 

Basic earnings per unit is computed by dividing net earnings attributable to unitholders by the weighted average number of units outstanding during each period. Diluted net income per limited partner unit reflects the potential dilution that could occur if agreements to issue common units, such as awards under long-term incentive plans, were exercised, settled or converted into common units. When it is determined that potential common units resulting from an award should be included in the diluted net income per limited partner unit calculation, the impact is reflected by applying the treasury stock method. Earnings per common unit assuming dilution for the year ended December 31, 2016 was calculated based on the diluted weighted average number of units outstanding of 100,860,164, including 153,846 dilutive units attributable to non-vested restricted unit and phantom unit awards. For the year ended December 31, 2016, there were no non-vested phantom unit and restricted unit awards that were anti-dilutive and therefore excluded from the calculation of diluted earnings per unit.

 

The Partnership’s calculation of net income per common and subordinated unit for the periods indicated is as follows (in thousands, except per unit data):  

 

 

 

 

 

 

 

 

 

 

  

Year Ended December 31,

 

2014

    

2015

    

2016

  

 

 

 

 

 

 

 

 

Net income

$

127,875

  

$

159,105

  

$

236,703

Less:

 

 

 

 

 

 

 

 

Pre-IPO net income attributed to parent

 

(98,219)

 

 

 —

 

 

 —

Pre-Water Acquisition net income attributed to parent

 

(22,234)

 

 

(40,193)

 

 

 —

General partner interest in net income attributable to incentive distribution rights

 

 —

 

 

(1,264)

 

 

(16,944)

Limited partner interest in net income

$

7,422

  

$

117,648

 

$

219,759

 

 

 

 

 

 

 

 

 

Net income allocable to common units - basic and diluted

$

3,711

 

$

62,421

 

$

125,241

Net income allocable to subordinated units - basic and diluted

 

3,711

 

 

55,227

 

 

94,518

Limited partner interest in net income - basic and diluted

$

7,422

 

$

117,648

 

$

219,759

 

 

 

 

 

 

 

 

 

Net income per limited partner unit - basic and diluted

 

 

 

 

 

 

 

 

Common units

$

0.05

 

$

0.76

 

$

1.24

Subordinated units

$

0.05

 

$

0.73

 

$

1.24

 

 

 

 

 

 

 

 

 

Weighted average limited partner units  outstanding - basic

 

 

 

 

 

 

 

 

Common units

 

75,941

 

 

82,538

 

 

100,706

Subordinated units

 

75,941

 

 

75,941

 

 

75,941

 

 

 

 

 

 

 

 

 

Weighted average limited partner units  outstanding - diluted

 

 

 

 

 

 

 

 

Common units

 

75,941

 

 

82,586

 

 

100,860

Subordinated units

 

75,941

 

 

75,941

 

 

75,941