5. Earnings Per Unit

Earnings in excess of distributions are allocated to the limited partners based on their respective ownership interests. Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of net income per unit.

Diluted net income per unit includes the effects of potentially dilutive units of our common units that consist of unvested phantom units. These units are non-participating securities due to the forfeitable nature of their associated distribution equivalent rights, prior to vesting, and we do not consider the units in the two-class method when calculating the net income per unit. Basic and diluted net income per unit applicable to subordinated limited partners are the same because there are no potentially dilutive subordinated units outstanding.

In addition to the common and subordinated units, we have identified the general partner interest and incentive distribution rights as participating securities and use the two-class method when calculating the net income per unit applicable to limited partners that is based on the weighted-average number of common units outstanding during the period. We make incentive distribution payments to our general partner when our per unit distribution amount exceeds the target distribution. During the three and six months ended June 30, 2015, we made incentive distribution right payments of $0.14 million and $0.16 million, respectively, to our general partner. We made no incentive distribution right payments to our general partner prior to the first quarter of 2015. Refer to Note 12, Equity, for further information regarding incentive distribution rights.

The calculation of net income per unit for the three and six months ended June 30, 2015 and 2014, respectively, is as follows:



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
	(In thousands, except per unit data)
Net income	$	15,915		$	17,060		$	31,238		$	33,384
Net income attributable to general partner (1)	—			6,085			—			11,476
Net income attributable to limited partners	15,915			10,975			31,238			21,908
General partner distributions	(139		)	—			(155		)	—
Limited partners' distributions on common units	(8,346		)	(6,786		)	(16,320		)	(12,277		)
Limited partners' distributions on subordinated units	(7,927		)	(6,786		)	(15,512		)	(12,277		)
Distributions less than (greater than) earnings	$	(497	)	$	(2,597	)	$	(749	)	$	(2,646	)

General partners' earnings:
Distributions	$	139		$	—		$	155		$	—
Allocation of distributions less than (greater than) earnings	—			6,085			—			11,476
Total general partners' earnings	$	139		$	6,085		$	155		$	11,476

Limited partners' earnings on common units:
Distributions	$	8,346		$	6,786		$	16,320		$	12,277
Allocation of distributions less than (greater than) earnings	(255		)	(1,298		)	(384		)	(1,323		)
Total limited partners' earnings on common units	$	8,091		$	5,488		$	15,936		$	10,954

Limited partners' earnings on subordinated units:
Distributions	$	7,927		$	6,786		$	15,512		$	12,277
Allocation of distributions less than (greater than) earnings	(242		)	(1,299		)	(365		)	(1,323		)
Total limited partners' earnings on subordinated units	$	7,685		$	5,487		$	15,147		$	10,954

Weighted average limited partner units outstanding:
Common units - basic	24,017			22,811			24,001			22,811
Common units - diluted	24,051			22,861			24,023			22,838
Subordinated units - basic and diluted	22,811			22,811			22,811			22,811

Net income per limited partner unit:
Common - basic	$	0.34		$	0.24		$	0.66		$	0.48
Common - diluted	0.34			0.24			0.66			0.48
Subordinated - basic and diluted	0.34			0.24			0.66			0.48


(1)	For historical periods prior to the Wholesale Acquisition, we have applied the two-class method to calculate earnings per unit. The net income of WRW prior to the Wholesale Acquisition was allocated entirely to the general partner.