Net income per unit applicable to the limited partners is computed using the two-class method, because we have more than one class of participating securities. The classes of participating securities as of June 30, 2016, included common units, general partner units and incentive distribution rights (IDRs). To the extent net income attributable to the partnership exceeds or is less than cash distributions, this difference is allocated based on the unitholders’ respective ownership percentages, after consideration of any priority allocations of earnings.

When our financial statements are retrospectively adjusted after a dropdown transaction, the earnings of the acquired business or asset, prior to the closing of the transaction, are allocated entirely to our general partner and presented as net income (loss) attributable to predecessors as shown below. The earnings per unit of our limited partners prior to the close of the transaction do not change as a result of the dropdown. After the closing of a dropdown transaction, the earnings of the acquired business are allocated in accordance with our partnership agreement as previously described.

For purposes of applying the two-class method including the allocation of cash distributions in excess of earnings, net income per limited partner unit is computed as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(In thousands)
Net income attributable to Holly Energy Partners	$	39,120		$	30,174		$	81,878		$	61,774
Net loss attributable to predecessors	—			227			239			430
Net Income attributable to partnership	39,120			30,401			82,117			62,204
Less: General partner’s distribution declared (including IDRs)	(13,115		)	(10,661		)	(25,536		)	(20,883		)
Limited partner’s distribution declared on common units	(34,575		)	(31,968		)	(68,302		)	(63,496		)
Distributions in excess of net income attributable to partnership	(8,570		)	(12,228		)	(11,721		)	(22,175		)



	General Partner (including IDRs)			Limited Partners’ Common Units			Total
	(In thousands, except per unit data)
Three Months Ended June 30, 2016
Net income attributable to partnership:
Distributions declared	$	13,115		$	34,575		$	47,690
Distributions in excess of net income attributable to partnership	(171		)	(8,399		)	(8,570		)
Net income attributable to partnership	$	12,944		$	26,176		$	39,120
Weighted average limited partners' units outstanding				58,865
Limited partners' per unit interest in earnings - basic and diluted				$	0.45

Three Months Ended June 30, 2015
Net income attributable to partnership:
Distributions declared	$	10,661		$	31,968		$	42,629
Distributions in excess of net income attributable to partnership	(245		)	(11,983		)	(12,228		)
Net income attributable to partnership	$	10,416		$	19,985		$	30,401
Weighted average limited partners' units outstanding				58,657
Limited partners' per unit interest in earnings - basic and diluted				$	0.34



Six Months Ended June 30, 2016
Net income attributable to partnership:
Distributions declared	$	25,536		$	68,302		$	93,838
Distributions in excess of net income attributable to partnership	(234		)	(11,487		)	(11,721		)
Net income attributable to partnership	$	25,302		$	56,815		$	82,117
Weighted average limited partners' units outstanding				58,761
Limited partners' per unit interest in earnings - basic and diluted				$	0.96

Six Months Ended June 30, 2015
Net income attributable to partnership:
Distributions declared	$	20,883		$	63,496		$	84,379
Distributions in excess of net income attributable to partnership	(444		)	(21,731		)	(22,175		)
Net income attributable to partnership	$	20,439		$	41,765		$	62,204
Weighted average limited partners' units outstanding				58,657
Limited partners' per unit interest in earnings - basic and diluted				$	0.71