Cash Distributions and Net Income Per Unit | 3. Cash Distributions and Net Income Per Unit Cash Distributions Our partnership agreement generally provides that we will make cash distributions, if any, each quarter in the following manner: • first , 98 percent to the holders of common units and 2 percent to our general partner, until each common unit has received the minimum quarterly distribution of $0.412500 plus any arrearages from prior quarters; • second, 98 percent to the holders of subordinated units and 2 percent to our general partner, until each subordinated unit has received the minimum quarterly distribution of $0.412500 ; and • third, 98 percent to all unitholders, pro rata, and 2 percent to our general partner, until each unit has received a distribution of $0.474375 . If cash distributions to our unitholders exceed $0.474375 per unit in any quarter, our unitholders and our general partner will receive distributions according to the following percentage allocations: Total Quarterly Distribution Per Unit Target Amount Marginal Percentage Interest in Distributions Unitholders General Partner Minimum Quarterly Distribution $0.412500 98% 2% First Target Distribution above $0.412500 up to $0.474375 98% 2% Second Target Distribution above $0.474375 up to $0.515625 85% 15% Third Target Distribution above $0.515625 up to $0.618750 75% 25% Thereafter above $0.618750 50% 50% Our distributions are declared subsequent to quarter end. The table below represents total cash distributions applicable to the period in which the distributions were earned: Earned in Quarter Ended Total Quarterly Distribution Per Unit Total Cash Distribution including general partners IDRs Date of Distribution Unitholders Record Date (Dollars in millions) June 30, 2015 $ 0.5825 $ 29.0 August 31, 2015 August 14, 2015 September 30, 2015 $ 0.5940 $ 29.6 December 1, 2015 November 13, 2015 December 31, 2015 $ 0.5940 $ 29.5 March 1, 2016 February 15, 2016 March 31, 2016 (1) $ 0.5940 $ 29.4 June 1, 2016 May 16, 2016 June 30, 2016 $ 0.5940 $ 29.5 September 1, 2016 August 15, 2016 September 30, 2016 (2) $ 0.5940 $ 29.5 December 1, 2016 November 15, 2016 (1) SunCoke provided the Partnership with deferred payment terms until April 2017 on the $1.4 million IDR cash distribution earned in the first quarter of 2016. The total cash disbursed from the distribution on June 1, 2016 was $28.0 million . (2) On October 18, 2016 , our Board of Directors declared a cash distribution of $0.5940 per unit, which will be paid on December 1, 2016 , to unitholders of record on November 15, 2016 . Allocation of Net Income Our partnership agreement contains provisions for the allocation of net income to the unitholders and the general partner. For purposes of maintaining partner capital accounts, the partnership agreement specifies that items of income and loss shall be allocated among the partners in accordance with their respective percentage interest. Normal allocations according to percentage interests are made after giving effect, if any, to priority income allocations in an amount equal to incentive cash distributions allocated 100 percent to the general partner. Net income from Granite City’s operations prior to the Granite City Dropdown is allocated to the general partner. Upon payment of the cash distribution for the fourth quarter of 2015, the financial requirements for the conversion of all subordinated units were satisfied. As a result, the 15,709,697 subordinated units converted into common units on a one-for-one basis. For purpose of calculating net income per unit, the conversion of the subordinated units is deemed to have occurred on January 1, 2016. The conversion did not impact the amount of the cash distribution paid or the total number of the Partnership's outstanding units representing limited partner interest. The calculation of net income allocated to the general and limited partners was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 (Dollars in millions) Net income attributable to SunCoke Energy L.P./Previous Owner $ 21.3 $ 19.5 $ 73.2 $ 49.7 Less: Expenses allocated to Common - SunCoke (1) — — (7.0 ) — Less: Allocation of net income attributable to the Previous Owner to the general partner — — — 0.6 Net income attributable to all partners 21.3 19.5 80.2 49.1 General partner's incentive distribution rights 1.4 1.6 12.2 3.6 Net income attributable to partners, excluding incentive distribution rights 19.9 17.9 68.0 45.5 General partner's ownership interest: 2.0 % 2.0 % 2.0 % 2.0 % General partner's allocated interest in net income 0.4 0.3 1.4 0.9 General partner's incentive distribution rights 1.4 1.6 12.2 3.6 Net income attributable to the Previous Owner — — — 0.6 Total general partner's interest in net income $ 1.8 $ 1.9 $ 13.6 $ 5.1 Common - public unitholder's interest in net income $ 8.8 $ 7.7 $ 29.9 $ 19.3 Common - SunCoke interest in net income: Common - SunCoke interest in net income 10.7 3.4 36.7 8.0 Expenses allocated to Common - SunCoke (1) — — (7.0 ) — Total common - SunCoke interest in net income 10.7 3.4 29.7 8.0 Subordinated - SunCoke interest in net income — 6.5 — 17.3 Total limited partners' interest in net income $ 19.5 $ 17.6 $ 59.6 $ 44.6 (1) Per the amended Partnership agreement, expenses paid on behalf of the Partnership are to be allocated entirely to the partner who paid them. During the first quarter of 2016 , SunCoke paid $7.0 million of allocated corporate costs on behalf of the Partnership and will not seek reimbursement for those costs. See Note 2 . These expenses are recorded as a direct reduction to SunCoke's interest in net income for the nine months ended September 30, 2016 . Earnings Per Unit Our net income is allocated to the general partner and limited partners in accordance with their respective partnership percentages, after giving effect to priority income allocations for incentive distributions, if any, to our general partner, pursuant to our partnership agreement. Distributions less than or greater than earnings are allocated in accordance with our partnership agreement. 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. In addition to the common and subordinated units, we also have identified the general partner interest and IDRs as participating securities and we use the two-class method when calculating the net income per unit applicable to limited partners, which is based on the weighted-average number of common units outstanding during the period. Basic and diluted net income per unit applicable to limited partners are the same because we do not have any potentially dilutive units outstanding. In 2015, the Partnership early adopted ASU 2015-06, "Earnings Per Share (Topic 260): Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions (a consensus of the Emerging Issues Task Force)." Therefore, the Granite City Dropdown does not impact historical earnings per unit as the earnings of Granite City prior to the Granite City Dropdown were allocated entirely to our general partner. The calculation of earnings per unit is as follows: Three Months Ended September 30, Nine months ended September 30, 2016 2015 2016 2015 (Dollars and units in millions, except per unit amounts) Net income attributable to SunCoke Energy L.P./Previous Owner $ 21.3 $ 19.5 $ 73.2 $ 49.7 Less: Expenses allocated to Common - SunCoke — — (7.0 ) — Less: Allocation of net income attributable to the Previous Owner to the general partner — — — 0.6 Net income attributable to all partners 21.3 19.5 80.2 49.1 General partner's distributions (including, $1.4, $1.6, $12.2 and $3.6 million of incentive distribution rights, respectively) 2.0 2.0 6.0 5.2 Limited partners' distributions on common units 27.5 18.2 82.4 49.6 Limited partners' distributions on subordinated units — 9.4 — 27.6 Distributions less than (greater than) earnings (8.2 ) (10.1 ) (8.2 ) (33.3 ) General partner's earnings: Distributions (including $1.4, $1.6, $12.2 and $3.6 million of cash incentive distribution rights, respectively) 2.0 2.0 6.0 5.2 Allocation of distributions less than (greater than) earnings (0.2 ) (0.1 ) 7.6 (0.7 ) Net income attributable to Previous Owner — — — 0.6 Total general partner's earnings 1.8 1.9 13.6 5.1 Limited partners' earnings on common units: Distributions 27.5 18.2 82.4 49.6 Expenses allocated to Common - SunCoke — — (7.0 ) — Allocation of distributions less than (greater than) earnings (8.0 ) (6.6 ) (15.8 ) (20.9 ) Total limited partners' earnings on common units 19.5 11.6 59.6 28.7 Limited partners' earnings on subordinated units: Distributions — 9.4 — 27.6 Allocation of distributions greater than earnings — (3.4 ) — (11.7 ) Total limited partners' earnings on subordinated units — 6.0 — 15.9 Weighted average limited partner units outstanding: Common - basic and diluted 46.2 27.4 46.2 24.8 Subordinated - basic and diluted — 15.7 — 15.7 Net income per limited partner unit: Common - basic and diluted $ 0.42 $ 0.43 $ 1.29 $ 1.16 Subordinated - basic and diluted $ — $ 0.38 $ — $ 1.00 Unit Activity Unit activity for the nine months ended September 30, 2016 : Common - Public Common - SunCoke Total Common Subordinated - SunCoke At December 31, 2015 20,787,744 9,705,999 30,493,743 15,709,697 Units issued to directors 9,720 — 9,720 — Conversion of subordinate units to common units — 15,709,697 15,709,697 (15,709,697 ) At September 30, 2016 20,797,464 25,415,696 46,213,160 — |