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TravelCenters Of America LLC Announces Third Quarter 2012 Results

These financial statements should be read in conjunction with TA’s Quarterly Report on Form 10-Q for the quarter ended September 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 nine months ended September 30, 2011, that TA determined are not material.

       
 
TRAVELCENTERS OF AMERICA LLC
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
 

September 30, 2012

December 31, 2011

Assets
Current assets:
Cash and cash equivalents $ 101,610 $ 118,255
Accounts receivable, net 176,782 130,672
Inventories 187,176 168,267
Other current assets   61,782   67,056
Total current assets 527,350 484,250
 
Property and equipment, net 555,612 479,943
Intangible assets, net 20,139 21,957
Other noncurrent assets   26,787   30,381
Total assets $ 1,129,888 $ 1,016,531
 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 199,533 $ 149,051
Current HPT Leases liabilities 26,006 25,141
Other current liabilities   148,010   113,624
Total current liabilities 373,549 287,816
 
Noncurrent HPT Leases liabilities 353,814 365,085
Other noncurrent liabilities   47,456   45,029
Total liabilities 774,819 697,930
 
Shareholders’ equity   355,069   318,601
Total liabilities and shareholders’ equity $ 1,129,888 $ 1,016,531

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

     
 
TRAVELCENTERS OF AMERICA LLC
CONSOLIDATED SUPPLEMENTAL DATA
(in thousands)
 
Three Months Ended

September 30,

Nine Months Ended

September 30,

2012   2011 2012   2011
Calculation of EBITDAR: (1)
Net income $ 18,990 $ 20,793 $ 34,657 $ 26,049
Add: income taxes 429 259 1,062 710
Add: depreciation and amortization 12,874 11,770 37,138 34,399
Deduct: interest income (512

)

 

(319 ) (1,094

)

 

(655 )
Add: interest expense (2) 2,638 2,364 7,632 6,688
Add: real estate rent expense (3)   49,185   48,202   148,030   143,339  
EBITDAR (1) $ 83,604 $ 83,069 $ 227,425 $ 210,530  
  (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 GAAP.
 
(2) Interest expense included the following:
       
 
Three Months Ended

September 30,

Nine Months Ended

September 30,

2012     2011 2012     2011
 
HPT rent classified as interest expense $ 1,816 $ 1,847 $ 5,436 $ 5,541
Amortization of deferred financing costs 89 72 263 214
Other   733   445   1,933   933
$ 2,638 $ 2,364 $ 7,632 $ 6,688
  (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 $54,321 and $51,778 during the three month periods ended September 30, 2012 and 2011, respectively, while the total rent amounts expensed during the three months ended September 30, 2012 and 2011, were $49,185 and $48,202, respectively. Cash paid under lease agreements was $162,692 and $154,135 during the nine month periods ended September 30, 2012 and 2011, respectively, while the total rent amounts expensed during the nine months ended September 30, 2012 and 2011, were $148,030 and $143,339, 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

September 30,

Nine Months Ended

September 30,

2012   2011 2012   2011
 
Cash payments to HPT for rent (a) $ 51,867 $ 49,313 $ 155,390 $ 146,778
Other cash rental payments   2,454   2,465   7,302   7,357
Total cash payments under real property leases 54,321 51,778 162,692 154,135
Adjustments for:
Accrued estimated percentage rent not yet paid 76 76
Noncash straight line rent accrual – HPT (1,172

)

 

408 (2,723

)

 

2,644
Noncash straight line rent accrual – other 29 67 191 163
Interest paid on deferred rent obligation (1,450 )
Amortization of sale/leaseback financing obligation (543

)

 

(512

)

 

(1,641

)

 

(1,535 )
Portion of rent payments classified as interest expense

(1,816

)

 

(1,847

)

 

(5,436

)

 

(5,541 )
Amortization of deferred tenant improvements allowance (1,692

)

 

(1,692

)

 

(5,077

)

 

(5,077 )
Amortization of deferred gain on sale/leaseback transactions   (18

)

 

    (52

)

 

 
Total amount expensed as rent $ 49,185 $ 48,202 $ 148,030 $ 143,339

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

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