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TravelCenters Of America LLC Announces Second Quarter 2012 Results

These financial statements should be read in conjunction with TA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, to be filed with the Securities and Exchange Commission, including the condensed consolidated financial statements and notes thereto that describe certain revisions to the financial information for the six months ended June 30, 2011 that TA determined are not material.

TRAVELCENTERS OF AMERICA LLC
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
   
June 30, December 31,
2012 2011
Assets
Current assets:
Cash and cash equivalents $ 129,386 $ 118,255
Accounts receivable, net 155,018 130,672
Inventories 165,290 168,267
Other current assets   62,579   67,056
Total current assets 512,273 484,250
 
Property and equipment, net 523,713 479,943
Intangible assets, net 20,185 21,957
Other noncurrent assets   29,440   30,381
Total assets $ 1,085,611 $ 1,016,531
 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 178,276 $ 149,051
Current HPT Leases Liabilities 26,027 25,073
Other current liabilities   140,528   113,624
Total current liabilities 344,831 287,748
 
Noncurrent HPT Leases liabilities 358,145 364,369
Other noncurrent liabilities   47,280   45,813
Total liabilities 750,256 697,930
 
Shareholders’ equity   335,355   318,601
Total liabilities and shareholders’ equity $ 1,085,611 $ 1,016,531

These financial statements should be read in conjunction with TA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, to be filed with the Securities and Exchange Commission.

TRAVELCENTERS OF AMERICA LLC
CONSOLIDATED SUPPLEMENTAL DATA
(in thousands)
 
Three Months Ended Six Months Ended
June 30, June 30,
2012 2011 2012 2011
Calculation of EBITDAR: (1)
Net income $ 29,852 $ 21,828 $ 15,667 $ 5,256
Add: income taxes 389 231 633 451
Add: depreciation and amortization 12,388 11,007 24,230 22,629
Deduct: interest income (360 ) (172 ) (582 ) (336 )
Add: interest expense (2) 2,482 2,216 4,994 4,324
Add: real estate rent expense (3)   49,364   47,827   98,879   95,137  
EBITDAR (1) $ 94,115 $ 82,937 $ 143,821 $ 127,461  
 
(1)   TA calculates EBITDAR as earnings before interest, taxes, depreciation, amortization and rent. TA believes EBITDAR is a useful indication of its operating performance and its ability to pay rent or service debt, make capital expenditures and expand its business. TA believes that EBITDAR is a meaningful disclosure that may help interested persons to better understand its financial performance, including comparing its performance between periods and to the performance of other companies. However, EBITDAR as presented may not be comparable to similarly titled amounts calculated by other companies. This information should not be considered as an alternative to net income, income from continuing operations, operating profit, cash flow from operations or any other operating or liquidity performance measure prescribed by U.S. generally accepted accounting principles, or GAAP.
 
(2) Interest expense included the following.
  Three Months Ended   Six Months Ended
June 30, June 30,
2012   2011 2012   2011
 
HPT rent classified as interest expense $ 1,810 $ 1,921 $ 3,620 $ 3,694
Amortization of deferred financing costs 88 71 175 142
Other   584   224   1,199   488
$ 2,482 $ 2,216 $ 4,994 $ 4,324
  (3)   Real estate rent expense recognized under GAAP differs from TA’s obligation to pay cash for rent under its leases. Cash paid under real property lease agreements was $54,166 and $51,414 during the three month periods ended June 30, 2012 and 2011, respectively, while the total rent amounts expensed during the three months ended June 30, 2012 and 2011, were $49,364 and $47,827, respectively. Cash paid under lease agreements was $108,161 and $102,357 during the six month periods ended June 30, 2012 and 2011, respectively, while the total rent amounts expensed during the six months ended June 30, 2012 and 2011, were $98,879 and $95,137, respectively. GAAP requires recognition of minimum lease payments payable during the lease term in equal amounts on a straight line basis over the lease term. In addition, under GAAP, a portion of the rent TA pays to HPT is classified as interest expense and a portion of the rent payments to HPT is applied to amortize a sale/leaseback financing obligation. Also, under GAAP, TA amortizes as a reduction of rent expense the deferred tenant improvement allowance that HPT paid to TA during the four years from 2007 through 2010. A reconciliation of these amounts is as follows.
  Three Months Ended   Six Months Ended
June 30, June 30,
2012 2011 2012 2011
 
Cash payments to HPT for rent (a) $ 51,713 $ 48,966 $ 103,314 $ 97,465
Other cash rental payments   2,453   2,448   4,847   4,892  
Total cash payments under real property leases 54,166 51,414 108,161 102,357
Adjustments for:
Accrued estimated percentage rent not yet paid 208 208
Noncash straight line rent accrual – HPT (1,013 ) 421 (1,551 ) 2,236
Noncash straight line rent accrual – other 54 43 163 95
Interest paid on deferred rent obligation (1,450 )
Amortization of sale/leaseback financing obligation (549 ) (438 ) (1,098 ) (1,023 )
Portion of rent payments classified as interest expense (1,810 ) (1,921 ) (3,620 ) (3,694 )
Amortization of deferred rent obligation   (1,692 )   (1,692 )   (3,384 )   (3,384 )
Total amount expensed as rent $ 49,364 $ 47,827 $ 98,879 $ 95,137  
 

(a) Includes the final payment of interest on TA’s deferred rent obligation made in January 2011.

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