(10) Net Income Per Limited Partner Unit

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

The Partnership computes 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.

The Partnership calculates 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 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 three months ended September 30, 2018 was calculated based on the diluted weighted average number of units outstanding of 187,501,733 including 457,795 dilutive units attributable to non-vested restricted unit and phantom unit awards. Earnings per common unit assuming dilution for the nine months ended September 30, 2018 was calculated based on the diluted weighted average number of units outstanding of 187,342,199, including 343,227 dilutive units attributable to non-vested restricted unit and phantom unit awards. For the three and nine months ended September 30, 2018 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 limited partner unit for the periods indicated is as follows (in thousands, except per unit data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2018		2017		2018
Net income	$	80,893		119,764	$	243,160		337,335
Less:
Net income attributable to incentive distribution rights		(19,067)		(37,816)		(45,948)		(99,414)
Limited partner interest in net income	$	61,826		81,948	$	197,212		237,921

Net income per limited partner unit–basic and diluted	$	0.33		0.44	$	1.06		1.27

Weighted average limited partner units outstanding–basic		186,581		187,044		185,240		186,999

Weighted average limited partner units outstanding–diluted		187,145		187,502		185,728		187,342