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 earnings per unit.

Diluted earnings 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. We do not consider these units in the two-class method when calculating earnings per unit. Basic and diluted earnings 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 earnings 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 nine months ended September 30, 2015, we made incentive distribution right payments of $0.3 million and $0.5 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 nine months ended September 30, 2015 and 2014, respectively, is as follows:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
	(In thousands, except per unit data)
Net income	$	16,493		$	16,250		$	47,731		$	49,634
Net income attributable to General Partner (1)	—			3,985			—			15,461
Net income attributable to limited partners	16,493			12,265			47,731			34,173
General Partner distributions	(326		)	—			(481		)	—
Limited partners' distributions on common units	(8,766		)	(7,014		)	(25,086		)	(19,291		)
Limited partners' distributions on subordinated units	(8,326		)	(7,014		)	(23,838		)	(19,291		)
Distributions less than (greater than) earnings	$	(925	)	$	(1,763	)	$	(1,674	)	$	(4,409	)

General Partners' earnings:
Distributions	$	326		$	—		$	481		$	—
Net income attributable to General Partner (1)	—			3,985			—			15,461
Total General Partners' earnings	$	326		$	3,985		$	481		$	15,461

Limited partners' earnings on common units:
Distributions	$	8,766		$	7,014		$	25,086		$	19,291
Allocation of distributions less than (greater than) earnings	(474		)	(882		)	(858		)	(2,205		)
Total limited partners' earnings on common units	$	8,292		$	6,132		$	24,228		$	17,086

Limited partners' earnings on subordinated units:
Distributions	$	8,326		$	7,014		$	23,838		$	19,291
Allocation of distributions less than (greater than) earnings	(451		)	(881		)	(816		)	(2,204		)
Total limited partners' earnings on subordinated units	$	7,875		$	6,133		$	23,022		$	17,087

Weighted-average limited partner units outstanding:
Common units - basic	24,017			22,811			24,006			22,811
Common units - diluted	24,024			22,883			24,024			22,853
Subordinated units - basic and diluted	22,811			22,811			22,811			22,811

Net income per limited partner unit:
Common - basic	$	0.35		$	0.27		$	1.01		$	0.75
Common - diluted	0.35			0.27			1.01			0.75
Subordinated - basic and diluted	0.35			0.27			1.01			0.75


(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.