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PART IV

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015
Commission file number 001-33274
TRAVELCENTERS OF AMERICA LLC
(Mark One)Exact Name of Registrant as Specified in Its Charter)
  

ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-33274

TRAVELCENTERS OF AMERICA LLC
(Exact Name of Registrant as Specified in Its Charter)

Delaware 20-5701514
(State or other jurisdiction
of incorporation or organization)		 (I.R.S. Employer
Identification No.)

24601 Center Ridge Road, Suite 200, Westlake, OH  44145-5639
(Address of Principal Executive Offices)

(440) 808-9100
(Registrant'sRegistrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(b) of the Act:
Title of each className of each exchange on which registered
Common Shares NYSE
8.25% Senior Notes due 2028 NYSE
8.00% Senior Notes due 2029NYSE
8.00% Senior Notes due 2030NYSE

         Securities registered pursuant to Section 12(g) of the Act:None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o    No 
ý

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filero
 
Accelerated filerý
 
Non-accelerated filero
Smaller reporting company (Doo
 (Do not check if a smaller
reporting company)		 Smaller reporting companyo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

The aggregate market value of the voting common shares of beneficial ownership, no par value, or common shares, of the registrant held by non-affiliates was $264.3$476.9 million based on the $10.94$14.85 closing price per common share on the New York Stock Exchange on June 28, 2013.30, 2015. For purposes of this calculation, an aggregate of 2,812,3243,276,196 common shares held directly by, or by affiliates of, the directors and the officers of the registrant, plus 2,540,0003,420,000 common shares held by Hospitality Properties Trust, or HPT, have been included in the number of common shares held by affiliates.

Number of the registrant's common shares outstanding as of June 4, 2014: 37,625,366.

February 29, 2016: 38,798,664.

DOCUMENTS INCORPORATED BY REFERENCE
Certain information required in Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K is incorporated by reference to our definitive Proxy Statement for our 2016 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A, or our definitive Proxy Statement.

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References in this Annual Report on Form 10-K, to "TA", "TravelCenters", the "Company", "we", "us" and "our" include TravelCenters of America LLC and our consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.

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WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2015, OR THIS ANNUAL REPORT, CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS "BELIEVE", "EXPECT", "ANTICIPATE", "INTEND", "PLAN", "ESTIMATE" OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. AMONG OTHERS, THE FORWARD LOOKING STATEMENTS WHICH APPEAR IN THIS ANNUAL REPORT THAT MAY NOT OCCUR INCLUDE:

OUR OPERATING RESULTS FOR THE YEAR ENDED DECEMBER 31, 2015, REFLECT INCREASES IN NONFUEL SALES AND GROSS MARGIN OVER THE SAME PERIOD LAST YEAR, INCLUDING ON A SAME SITE BASIS. THIS ANNUAL REPORT STATESMAY IMPLY THAT OUR NONFUEL SALES AND MARGIN WILL CONTINUE TO IMPROVE. HOWEVER, CUSTOMER DEMAND AND COMPETITIVE CONDITIONS AMONG OTHER FACTORS MAY SIGNIFICANTLY IMPACT OUR NONFUEL SALES AND THE OPERATIONS AT MANYCOSTS OF OUR SITES ACQUIREDNONFUEL PRODUCTS MAY INCREASE IN 2011, 2012THE FUTURE BECAUSE OF INFLATION OR OTHER REASONS. IF WE ARE NOT ABLE TO PASS INCREASED NONFUEL COSTS TO OUR CUSTOMERS, IF OUR NONFUEL SALES VOLUMES DECLINE OR IF OUR NONFUEL SALES MIX CHANGES IN A MANNER THAT NEGATIVELY IMPACTS OUR NONFUEL MARGIN, OUR NONFUEL SALES AND/OR MARGIN MAY DECLINE;
WE HAVE INVESTED AND 2013 HAVE NOT YET REACHED THEEXPECT TO CONTINUE TO INVEST TO ACQUIRE AND IMPROVE OUR TRAVEL CENTERS AND CONVENIENCE STORES AND THAT WE EXPECT OUR PROPERTIES WILL PRODUCE IMPROVED STABILIZED FINANCIAL RESULTS AND PROFITS SOMETIME AFTER WE CURRENTLY EXPECT AND THAT WE ESTIMATE THAT ACQUIRED SITES GENERALLY WILL REACH STABILIZATION IN APPROXIMATELY THE THIRD YEAR AFTER ACQUISITION. THE IMPLICATIONS OFMAKE THESE STATEMENTS ARE THAT OPERATIONS AT THESE ACQUIRED SITES WILL IMPROVE TO A LEVEL THAT WILL RESULT IN INCREASES IN OPERATING INCOME AND NET INCOME IN THE FUTURE.INVESTMENTS. HOWEVER, MANY OF THE LOCATIONS WE HAVE ACQUIRED PRODUCED OPERATING RESULTS WHICHTHAT CAUSED THE PRIOR OWNERS TO EXIT THESE BUSINESSES AND OUR ABILITY TO OPERATE THESE LOCATIONS PROFITABLY DEPENDS UPON MANY FACTORS, INCLUDING OUR ABILITY TO INTEGRATE NEW OPERATIONS INTO OUR EXISTING OPERATIONS. IN FACT, THERE ARE MANY FACTORS WHICH WILL IMPACT OUR FUTURE OPERATIONS THAT MAY CAUSE US TO OPERATE LESS PROFITABLY OR UNPROFITABLY IN ANNUAL AND/OR QUARTERLY PERIODS IN ADDITION TO THESE STATED ITEMS, INCLUDING SOME FACTORSOF WHICH ARE BEYOND OUR CONTROL, SUCH AS SEASONALITY, THE CONDITIONLEVEL OF THE U.S. ECONOMY GENERALLY, THE FUTURE DEMAND FOR OUR GOODS AND SERVICES ARISING FROM THE U.S. ECONOMY. ALSO, OUR FUTURE OPERATING INCOME AND COMPETITIONNET INCOME WILL DEPEND UPON MANY FACTORS IN ADDITION TO THE RESULTS REALIZED FROM OUR BUSINESS;

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THIS ANNUAL REPORT REFERENCESACQUIRED SITES; ACCORDINGLY, OUR FUTURE OPERATING INCOME AND NET INCOME MAY NOT INCREASE BUT INSTEAD MAY DECLINE OR WE MAY EXPERIENCE LOSSES;
WE HAVE MADE ACQUISITIONS, HAVE AGREED TO MAKE ADDITIONAL ACQUISITIONS, INTEND TO BUILD NEW TRAVEL CENTERS ON LAND THAT HAVE BEEN AGREED BUT THAT HAVE NOT BEEN COMPLETED ASWE OWN, AND TO SELL CERTAIN OF THE DATE OF THIS ANNUAL REPORT ANDTHOSE TRAVEL CENTER GROUND UP DEVELOPMENTS UNDER CONSIDERATION FOR LAND PARCELSCENTERS WE OWN. IMPLICATIONS OFOWN TO HOSPITALITY PROPERTIES TRUST, OR HPT. THESE STATEMENTS MAY BEIMPLY THAT THESE ACQUISITIONS AND DEVELOPMENT PROJECTS AND RELATED SALES WILL BE COMPLETED AND THAT THEY MAYWILL IMPROVE OUR FUTURE PROFITS. HOWEVER, THESEOUR ACQUISITIONS ARE SUBJECT TO CLOSING CONDITIONS WHICH MAY NOT BE MET AND THE TRANSACTIONS MAY NOT BE COMPLETED OR MAY BE DELAYED OR THEIR TERMS MAY CHANGE. THERE ARE MANY FACTORS THAT MAY RESULT IN ADDITION,OUR NOT BEING ABLE TO ACQUIRE, RENOVATE AND DEVELOP ADDITIONAL LOCATIONS THAT YIELD PROFITS, INCLUDING COMPETITION FOR SUCH ACQUISITIONS FROM OTHER BUYERS, OUR INABILITY TO NEGOTIATE ACCEPTABLE PURCHASE TERMS AND THE POSSIBILITY THAT WE MAY NEED TO USE OUR AVAILABLE FUNDS FOR OTHER PURPOSES. WE MAY DETERMINE TO DELAY OR NOT TO PROCEED WITH PENDING ACQUISITIONS OR DEVELOPMENT PROJECTS. THOUGH WE HAVE AGREEMENTS TO SELL TO, AND LONG TERM LEASE BACK FROM, HPT THE DEVELOPMENT PROPERTIES UPON THEIR COMPLETION, HPT'S PURCHASES ARE SUBJECT TO CONDITIONS AND THOSE CONDITIONS MAY NOT BE SATISFIED. ALSO, OUR DEVELOPMENT PROJECTS.COSTS COULD EXCEED THE MAXIMUM AMOUNT HPT HAS AGREED TO FUND. MOREOVER, MANAGING AND INTEGRATING ACQUIRED TRAVEL CENTER AND CONVENIENCE STORE OPERATIONS AND DEVELOPMENT PROJECTSDEVELOPED LOCATIONS CAN BE DIFFICULT, TIME CONSUMING AND/OR MORE EXPENSIVE THAN ANTICIPATED AND INVOLVE RISKS OF FINANCIAL LOSSES. WE MAY NOT OPERATE THESEOUR ACQUIRED OR NEWLY DEVELOPED LOCATIONS AS PROFITABLY AS WE NOW EXPECT;


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THIS ANNUAL REPORT REFERENCES OUR ACQUISITION IN DECEMBER 2013 OF A COMPANY THAT OPERATES 31 CONVENIENCE STORES AND STATES THAT THE

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OUR GROWTH STRATEGY IS TO SELECTIVELY ACQUIRE ADDITIONAL LOCATIONS THAT THESE CONVENIENCE STORES APPEARAND BUSINESSES, INCLUDING THE QUAKER STEAK & LUBE® RESTAURANT BUSINESS, AND TO NEED ONLY LIMITED NEAR TERM CAPITAL INVESTMENT, THAT THESE CONVENIENCE STORES WILL NOT REQUIRE A LENGTHY PERIOD TO ACHIEVE STABILIZED FINANCIAL RESULTS ANDOTHERWISE GROW OUR BUSINESSES. THIS STATEMENT MAY IMPLY THAT WE EXPECT THAT WE MAYWILL BE ABLE TO REALIZE SYNERGIES IN PURCHASINGIDENTIFY AND MERCHANDISING AT THESE CONVENIENCE STORES. THE IMPLICATION OF THESE STATEMENTS ISCOMPLETE ADDITIONAL ACQUISITIONS, THAT THESE STORESWE WILL BE ABLE TO OTHERWISE GROW OUR BUSINESSES AND THAT ANY ACQUISITIONS OR GROWTH INITIATIVES WE MAY HAVE A POSITIVE IMPACT ON OUR EARNINGS ANDPURSUE WILL IMPROVE OUR FUTURE PROFITS. HOWEVER, ACQUISITIONS AND MANAGING AND INTEGRATING ACQUIRED OPERATIONS CAN BE DIFFICULT, TIME CONSUMING AND/OR MORE EXPENSIVE THAN ANTICIPATED AND INVOLVE RISKS OF FINANCIAL LOSSES. CHANGES OF OWNERSHIP FREQUENTLY RESULT IN PERSONNEL CHANGES AND IN REQUIREMENTS FOR NEW SUPPLY AND SALES ARRANGEMENTS. THESE OR OTHER FACTORS MAY RESULT IN LOWER FINANCIAL PERFORMANCE THAN EXPECTED OR FINANCIAL LOSSES. ALSO, MARKET CONDITIONS AFFECTING THE CONVENIENCE STORES WE ACQUIRED MAY CHANGE IN A WAY WHICH MATERIALLY AND ADVERSELY IMPACTS THE BUSINESS OF THESE CONVENIENCE STORES. WE MAY NOT OPERATE THESE ACQUIRED SITES AS PROFITABLY AS WE NOW EXPECT;

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THIS ANNUAL REPORT STATES THAT WE AND HOSPITALITY PROPERTIES TRUST, OR HPT, INTEND TO CHALLENGE THE VIRGINIA DEPARTMENT OF TRANSPORTATION, OR VDOT, VALUATION OF THE PROPERTY WE LEASED FROM HPT AND OPERATE IN ROANOKE, VA THAT WAS TAKEN BY EMINENT DOMAIN PROCEEDINGS BY THE VDOT. THE IMPLICATIONS OF THIS STATEMENT MAY BE THAT WE AND HPT WILL RECOVER ADDITIONAL AMOUNTS FROM VDOT THAT WOULD FURTHER REDUCE OUR RENT PAYABLE TO HPT AND/OR PROVIDE US A CASH PAYMENT. HOWEVER, WE MAY NOT BE SUCCESSFULSUCCEED IN OUR CHALLENGE;

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WE STATE IN THIS ANNUAL REPORT OUR CURRENT OBSERVATIONS OF ECONOMICIDENTIFYING OR ACQUIRING OTHER PROPERTIES AND INDUSTRY CONDITIONS. RECENT ECONOMIC DATA HAS BEEN MIXED AND IMPROVEMENTS, IF ANY, IN THE U.S. ECONOMY, IN GENERAL,BUSINESSES OR IN THE TRUCKING OR TRAVEL CENTER INDUSTRIES SPECIFICALLY, MAY NOT CONTINUE, AND OUR FUEL AND NONFUEL SALES VOLUMES MAY DECLINE;

•
OUR ENVIRONMENTAL LIABILITY MAY BE GREATER THAN WE CURRENTLY ANTICIPATE. LEGISLATION AND REGULATION REGARDING CLIMATE CHANGE, INCLUDING GREENHOUSE GAS EMISSIONS, AND OTHER ENVIRONMENTAL MATTERS MAY BE ADOPTED, ADMINISTERED OR ENFORCED DIFFERENTLY IN THE FUTURE AND ANY SUCH CHANGES, THE MARKET REACTION THERETO, OR ANY GLOBAL CLIMATE CHANGES COULD ADVERSELY IMPACT OUR OPERATIONS, CAUSE US TO EXPEND SIGNIFICANT AMOUNTS AND CAUSEOTHERWISE GROWING OUR BUSINESS, AND FINANCIAL CONDITION TO DECLINE MATERIALLY;

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THIS ANNUAL REPORT STATES THAT ACQUISITIONS WE MAY MAKE AND OTHER GROWTH INITIATIVES WE MAY PURSUE MAY NOT IMPROVE OUR PROFITS;
WE CURRENTLY INTENDPLAN TO CONTINUE OUR EFFORTSINVEST TO SELECTIVELYRENOVATE RECENTLY ACQUIRED PROPERTIES AND WE HAVE ENTERED AGREEMENTS TO ACQUIRE ADDITIONAL PROPERTIES. THE IMPLICATIONSCONVENIENCE STORES. AN IMPLICATION OF THESE STATEMENTS MAY BE THAT WE WILL BE ABLEHAVE SUFFICIENT CAPITAL TO CONTINUE TO IDENTIFY AND COMPLETE ADDITIONAL ACQUISITIONS. HOWEVER, WE MAY NOT SUCCEED IN IDENTIFYING AND/OR ACQUIRING OTHER PROPERTIES;

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THIS ANNUAL REPORT STATES THAT DURINGMAKE THE SECOND AND THIRD QUARTERS OF 2013, OUR PRIMARY COMPETITORS ENGAGED IN AGGRESSIVE

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WE HAVE A CREDIT FACILITY WITH A CURRENT MAXIMUM AVAILABILITY OF $200 MILLION.MILLION, WHICH WE REFER TO AS OUR CREDIT FACILITY. HOWEVER, OUR BORROWING AND LETTER OF CREDIT AVAILABILITY IS SUBJECT TO OUR HAVING QUALIFIED COLLATERAL, INCLUDING ELIGIBLE CASH, ACCOUNTS RECEIVABLE AND INVENTORIESINVENTORY THAT VARY IN AMOUNT FROM TIME TO TIME. ACCORDINGLY, OUR BORROWING AND LETTER OF CREDIT AVAILABILITY AT ANY TIME MAY BE LESS THAN $200 MILLION. FOR EXAMPLE, WE HAD $130.8 MILLION OFAT DECEMBER 31, 2015, OUR BORROWING AND LETTER OF CREDIT AVAILABILITY UNDER OUR CREDIT FACILITY AS OF DECEMBER 31, 2013,WAS $84.7 MILLION, OF WHICH $44.9WE HAD USED $34.5 MILLION WAS UTILIZED FOR OUTSTANDING LETTERS OF CREDIT. ALSO, THIS ANNUAL REPORT STATES THAT THE MAXIMUM AMOUNT AVAILABLE UNDER THE CREDIT

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UNDER OUR CREDIT FACILITY HAVE WAIVED, UNTIL JULY 31, 2014, THE REQUIREMENTJUNE 2015 AGREEMENTS WITH HPT, WE AGREED TO SELL TO HPT UPON COMPLETION OF THEIR DEVELOPMENT, FIVE FULL SERVICE TRAVEL CENTERS FOR DEVELOPMENT AND LAND COSTS, ESTIMATED TO BE UP TO $118 MILLION. OUR AND HPT'S OBLIGATIONS UNDER OUR CREDIT FACILITYTHESE AGREEMENTS ARE SEPARATE CONTRACTUAL OBLIGATIONS THAT ARE SUBJECT TO FURNISH FINANCIAL STATEMENTSVARIOUS TERMS AND CONDITIONS TYPICAL OF LARGE, COMPLEX REAL ESTATE TRANSACTIONS. SOME OF THESE TERMS AND CONDITIONS MAY NOT BE SATISFIED AND, AS A RESULT, SOME OF AND FOR THE FISCAL QUARTER ENDED MARCH 31, 2014. THISTHESE TRANSACTIONS MAY IMPLY THAT WE WILL FILE OUR QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2014,BE DELAYED, MAY NOT OCCUR OR THE TERMS MAY CHANGE;
THE TERMS OF OUR JUNE 2015 AGREEMENTS WITH HPT WERE NEGOTIATED AND APPROVED BY SPECIAL COMMITTEES OF OUR INDEPENDENT DIRECTORS AND OF HPT’S INDEPENDENT TRUSTEES, NONE OF WHOM ARE DIRECTORS OR TRUSTEES OF THE OTHER COMPANY, AND EACH SPECIAL COMMITTEE WAS REPRESENTED BY SEPARATE LEGAL COUNSEL. AN IMPLICATION OF THESE STATEMENTS MAY BE THAT THESE AGREEMENTS MAY HAVE ALL THE TERMS CUSTOMARILY INCLUDED IN “ARM’S LENGTH” AGREEMENTS BETWEEN UNRELATED PARTIES. WE AND HPT ARE RELATED PARTIES FOR A NUMBER OF REASONS, INCLUDING BECAUSE HPT IS OUR LARGEST SHAREHOLDER, BECAUSE WE AND HPT HAVE A COMMON BOARD MEMBER, AND BECAUSE BOTH WE AND HPT ENGAGE THE SAME MANAGEMENT COMPANY. ALSO, AN AGREEMENT ENTERED BETWEEN HPT AND US AT THE TIME WE WERE SPUN OUT TO HPT SHAREHOLDERS AND WE BECAME A SEPARATE PUBLIC COMPANY GRANTS

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HPT CERTAIN RIGHTS OF FIRST QUARTER 10-Q, WITH THE SECURITIES AND EXCHANGE COMMISSION, OR THE SEC, BY JULY 31, 2014 OR THAT EXTENDED OR ADDITIONAL WAIVERS WILL BE OBTAINED FROMREFUSAL REGARDING OUR LENDERS IF NECESSARY. HOWEVER, THEREREAL ESTATE TRANSACTIONS. ACCORDINGLY, WE CAN BEPROVIDE NO ASSURANCE THAT WE WILL BE ABLE TO FILE THE FIRST QUARTER 10-Q OR OTHERWISE COMPLETEAGREEMENTS BETWEEN US AND DELIVER OUR FINANCIAL STATEMENTS FOR SUCH QUARTER BY JULY 31, 2014 OR THAT EXTENDED OR ADDITIONAL WAIVERS WILL BE OBTAINED, AND IF THEY ARE NOT OBTAINED HPT CONTAIN ALL THE TERMS CUSTOMARILY INCLUDED IN “ARM’S LENGTH” AGREEMENTS;
WE MAY BE IN DEFAULT OF OUR CREDIT FACILITY. THESE OUTCOMES COULD OCCUR FOR REASONS WHICH MAY BE UNKNOWN TO US AT THIS TIME AND MAY BE BEYOND OUR CONTROL. OUR FAILURE TO FILE THE FIRST QUARTER 10-QFINANCE OR TO COMPLETE AND DELIVER FINANCIAL STATEMENTS FOR SUCH QUARTER WITHIN SPECIFIED PERIODS COULD GIVE RISE TO DEFAULTS UNDER OUR CREDIT FACILITY, THE INDENTURE GOVERNING OUR 8.25% SENIOR NOTES OR OTHER OBLIGATIONS;

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THIS ANNUAL REPORT STATESSELL UNENCUMBERED REAL ESTATE THAT DURING 2013 WE RECOGNIZED A BENEFIT OF $3.9 MILLION IN OUR FUEL COST OF SALES AS A RESULT OF REFUNDS PAID OR PAYABLE TO US AS A RESULT OF THE RETROACTIVE REINSTATEMENT ON JANUARY 2, 2013, OF THE "BLENDER'S CREDIT FOR BIODIESEL AND RENEWABLE DIESEL," OR THE TAX CREDIT, THAT THIS TAX CREDIT AGAIN EXPIRED ON DECEMBER 31, 2013, AND THATOWN. HOWEVER, WE DO NOT EXPECTKNOW THE EXTENT TO WHICH WE COULD MONETIZE OUR EXISTING UNENCUMBERED REAL ESTATE;
WE AND HPT ARE CHALLENGING THE VIRGINIA DEPARTMENT OF TRANSPORTATION, OR VDOT, VALUATION OF THE PROPERTY WE LEASED FROM HPT AND OPERATED IN ROANOKE, VA, THAT WAS TAKEN BY EMINENT DOMAIN PROCEEDINGS BY VDOT. THE EXPIRATIONIMPLICATION OF THIS TAX CREDIT WILL HAVE A SIGNIFICANT EFFECT ON OUR 2014 FUEL GROSS MARGIN BECAUSE OF THE FUEL MARKET PRICING DYNAMICS. IN FACT, THE MARKET PRICES FOR FUEL COULD REACT DIFFERENTLY THAN WE EXPECT AND OUR 2014 FUEL GROSS MARGIN COULDSTATEMENT MAY BE NEGATIVELY AFFECTED TO A GREATER EXTENT THAN WE CURRENTLY EXPECT;

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THIS ANNUAL REPORT STATES THAT WE ARE IN THE PROCESS OF DESIGNING AND IMPLEMENTING IMPROVED INTERNAL CONTROLS OVER FINANCIAL REPORTINGHPT WILL RECOVER ADDITIONAL AMOUNTS FROM VDOT THAT WOULD FURTHER REDUCE OUR RENT PAYABLE TO REMEDIATE THE MATERIAL WEAKNESSES THAT EXISTED AS OF DECEMBER 31, 2013.HPT AND/OR PROVIDE US A CASH PAYMENT. HOWEVER, WE MAY NOT BE SUCCESSFUL IN OUR REMEDIATION EFFORTSCHALLENGE AND WE MAY DISCOVER OTHER MATERIAL WEAKNESSES IN INTERNAL CONTROL OVER FINANCIAL REPORTING;

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EXPECT THAT THE ULTIMATE RESOLUTION OF THIS MATTER WILL TAKE A CONSIDERABLE PERIOD OF TIME; AND
WE MAY NOT REALIZEBELIEVE OUR EXPECTATION THAT WE WILL BENEFIT FINANCIALLY BY PARTICIPATING INRELATIONSHIPS WITH OUR RELATED PARTIES, INCLUDING HPT, THE RMR GROUP LLC (FORMERLY KNOWN AS REIT MANAGEMENT & RESEARCH LLC), OR RMR, AFFILIATES INSURANCE COMPANY, OR AIC;

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THIS ANNUAL REPORT STATES OUR BELIEF THAT OUR CONTINUING RELATIONSHIPS WITH HPT, REIT MANAGEMENT & RESEARCH LLC, OR RMR, AIC, AND THEIROTHERS AFFILIATED AND RELATED PERSONS AND ENTITIESWITH THEM MAY BENEFIT US AND PROVIDE US WITH ADVANTAGES IN OPERATING AND GROWING OUR

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MATERIALIZE.

THESE AND OTHER UNEXPECTED RESULTS MAY BE CAUSED BY VARIOUS FACTORS, SOME OF WHICH ARE BEYOND OUR CONTROL, INCLUDING:

THE TREND TOWARDS IMPROVED FUEL EFFICIENCY OF MOTOR VEHICLE ENGINES AND OTHER FUEL CONSERVATION PRACTICES EMPLOYED BY OUR CUSTOMERS MAY CONTINUE TO REDUCE THE DEMAND FOR DIESEL FUEL AND MAY ADVERSELY AFFECT OUR BUSINESS;

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THE IMPACT OF CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON US, OUR CUSTOMERS AND OUR FRANCHISEES;

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COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS, ACCOUNTING RULES, TAX RATES, ENVIRONMENTAL REGULATIONS AND SIMILAR MATTERS;

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COMPETITION WITHIN THE TRAVEL CENTER AND CONVENIENCE STORE INDUSTRIES;

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FUTURE FUEL PRICE INCREASES, FUEL PRICE VOLATILITY OR OTHER FACTORSINDUSTRIES MAY CAUSE US TO NEED MORE WORKING CAPITAL TO MAINTAINADVERSELY IMPACT OUR INVENTORIES AND CARRY OUR ACCOUNTS RECEIVABLE THAN WE NOW EXPECT;

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ACQUISITIONS OR PROPERTY DEVELOPMENT MAY SUBJECT US TO ADDITIONAL OR GREATER RISKS THAN OUR CONTINUING OPERATIONS, INCLUDING THE ASSUMPTION OF UNKNOWN LIABILITIES;

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FINANCIAL RESULTS;
FUTURE INCREASES IN FUEL PRICES MAY REDUCE THE DEMAND FOR THE PRODUCTS AND SERVICES THAT WE SELL BECAUSE HIGH FUEL PRICES MAY ENCOURAGE FUEL CONSERVATION, DIRECT FREIGHT BUSINESS AWAY FROM TRUCKING OR OTHERWISE ADVERSELY AFFECT THE BUSINESS OF OUR CUSTOMERS. SOMECUSTOMERS;
FUTURE COMMODITY FUEL PRICE INCREASES, FUEL PRICE VOLATILITY OR OTHER FACTORS MAY CAUSE US TO NEED MORE WORKING CAPITAL TO MAINTAIN OUR INVENTORY AND CARRY OUR ACCOUNTS RECEIVABLE THAN WE NOW EXPECT AND THE GENERAL AVAILABILITY OF, THESE TRENDSDEMAND FOR AND PRICING CHARACTERISTICS OF MOTOR FUELS MAY CONTINUE,CHANGE IN WAYS WHICH MAY ADVERSELY AFFECTLOWER THE PROFITABILITY ASSOCIATED WITH SELLING MOTOR FUELS TO OUR BUSINESS, EVEN IF FUEL PRICES DO NOT INCREASE;

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CUSTOMERS;
OUR SUPPLIERS MAY BE UNWILLING OR UNABLE TO MAINTAIN THE CURRENT CREDIT TERMS FOR OUR PURCHASES. IF WE ARE UNABLE TO PURCHASE GOODS ON REASONABLE CREDIT TERMS, OUR REQUIRED WORKING CAPITAL MAY INCREASE AND WE MAY INCUR MATERIAL LOSSES. ALSO, IN TIMES OF RISING FUEL AND NONFUEL PRICES OUR SUPPLIERS MAY BE UNWILLING OR UNABLE TO INCREASE THE CREDIT AMOUNTS THEY EXTEND TO US, WHICH MAY REQUIREINCREASE OUR WORKING CAPITAL NEEDS TO INCREASE.REQUIREMENTS. THE AVAILABILITY

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ACQUISITIONS OR PROPERTY DEVELOPMENT MAY SUBJECT US TO GREATER RISKS THAN OUR CONTINUING OPERATIONS, INCLUDING THE ASSUMPTION OF UNKNOWN LIABILITIES;
MOST OF OUR TRUCKING COMPANY CUSTOMERS TRANSACT BUSINESS WITH US BY USE OF FUEL CARDS, MOST OF WHICH ARE ISSUED BY THIRD PARTY FUEL CARD COMPANIES. THE FUEL CARD INDUSTRY HAS ONLY A FEW SIGNIFICANT PARTICIPANTS. FUEL CARD COMPANIES FACILITATE PAYMENTS TO US AND CHARGE US FEES FOR THESE SERVICES. COMPETITION, OR LACK THEREOF, AMONG FUEL CARD COMPANIES MAY RESULT IN FUTURE INCREASES IN OUR TRANSACTION FEE EXPENSES OR WORKING CAPITAL REQUIREMENTS, OR BOTH;

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FUEL SUPPLY DISRUPTIONS MAY OCCUR, WHICH MAY LIMIT OUR ABILITY TO OBTAIN FUEL;
COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS, ACCOUNTING AND FINANCIAL REPORTING STANDARDS AND REGULATIONS, TAX RATES, ENVIRONMENTAL REGULATIONS, PAYMENT CARD INDUSTRY REQUIREMENTS AND SIMILAR MATTERS MAY INCREASE OUR OPERATING COSTS AND REDUCE OR ELIMINATE OUR PROFITS;
WE ARE ROUTINELY INVOLVED IN LITIGATION AND OTHER LEGAL MATTERS INCIDENTAL TO THE ORDINARY COURSE OF OUR BUSINESS.LITIGATION. DISCOVERY AND COURT DECISIONS DURING LITIGATION OFTEN HAVE UNANTICIPATED RESULTS. LITIGATION IS USUALLY EXPENSIVE AND CAN BE DISTRACTING TO MANAGEMENT. WE CAN PROVIDE NO ASSURANCE AS TO THE OUTCOME OF ANY OF THE LITIGATION MATTERS IN WHICH WE ARE OR MAY BECOME INVOLVED;

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ACTS OF TERRORISM, GEOPOLITICAL RISKS, WARS, OUTBREAKS OF SO CALLED PANDEMICS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND OUR CONTROL MAY ADVERSELY AFFECT OUR FINANCIAL RESULTS;

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AND
ALTHOUGH WE BELIEVE THAT WE BENEFIT FROM OUR CONTINUING RELATIONSHIPS WITH OUR RELATED PARTIES, INCLUDING HPT, RMR, AIC AND THEIROTHERS AFFILIATED AND RELATED PERSONS AND ENTITIES,WITH THEM, ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH HPT, RMR, AIC AND THEIR AFFILIATED AND RELATED PERSONS AND ENTITIESPARTIES MAY PRESENT A CONTRARY PERCEPTION OR RESULT IN LITIGATION;

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AS A RESULT OF CERTAIN TRADING IN OUR SHARES DURING 2007, WE EXPERIENCED AN OWNERSHIP CHANGE AS DEFINED BY SECTION 382 OF THE INTERNAL REVENUE CODE, OR THE CODE; CONSEQUENTLY, WE MAY BE UNABLE TO USE OUR NET OPERATING LOSS GENERATED IN 2007 TO OFFSET FUTURE TAXABLE INCOME WE MAY GENERATE. IF WE EXPERIENCE ADDITIONAL OWNERSHIP CHANGES, AS DEFINED IN THE CODE, OUR ABILITY TO USE OUR NET OPERATING LOSSES GENERATED AFTER 2007 COULD BE LIMITED OR ELIMINATED; AND

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OUR LIMITED LIABILITY COMPANY AGREEMENT AND BYLAWS AND CERTAIN OF OUR OTHER AGREEMENTS AND BUSINESS LICENSES, INCLUDING OUR LICENSES TO OPERATE GAMING ACTIVITIES, INCLUDE VARIOUS PROVISIONS WHICH MAY DETER A CHANGE OF CONTROL OF US AND, AS A RESULT, OUR SHAREHOLDERS MAY BE UNABLE TO REALIZE A TAKEOVER PREMIUM FOR THEIR SHARES.

LITIGATION.

RESULTS THAT DIFFER FROM THOSE STATED OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS MAY ALSO BE CAUSED BY VARIOUS CHANGES IN OUR BUSINESS OR MARKET CONDITIONS AS DESCRIBED MORE FULLY UNDER ITEM 1A. "RISK FACTORS" AND ELSEWHERE IN THIS ANNUAL REPORT.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS. EXCEPT AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD LOOKING STATEMENT AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.



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TRAVELCENTERS
TABLE OF AMERICA LLC
2013 FORM 10-K ANNUAL REPORT

Table of Contents

CONTENTS



Page

PART I


Item 1.


PART I


Business




10


Item 1A.

1.

Business


Risk Factors




277
Item 1A.


Risk Factors
18
Item 1B.



Unresolved Staff Comments


 


4629


Item 2.


Properties


Properties




4630


Item 3.



Legal Proceedings


 


4831


Item 4.



Mine Safety Disclosures


 


4831


PART II


Item 5.



Market for Our Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities


 


4831


Item 6.



Selected Financial Data


 


4933


Item 7.



Management's Discussion and Analysis of Financial Condition and Results of Operations


 


5034


Item 7A.



Quantitative and Qualitative Disclosures About Market Risk


 


7352


Item 8.



Financial Statements and Supplementary Data


 


7453


Item 9.



Changes in and Disagreements Withwith Accountants on Accounting and Financial Disclosure


 


7453


Item 9A.



Controls and Procedures


 


7453


Item 9B.



Other Information


 


7554


PART III


Item 10.



Directors, Executive Officers and Corporate Governance


 


7654


Item 11.



Executive Compensation


 


8154


Item 12.



Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


 


9354


Item 13.



Certain Relationships and Related Transactions, and Director Independence


 


9654


Item 14.



Principal Accounting Fees and Services


 


9754


PART IV


Item 15.



Exhibits and Financial Statement Schedules


 


9955



SIGNATURES


SIGNATURES



 


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PART I

Item 1. Business

General

Business Overview
We are a Delaware limited liability company formed under Delaware law on October 10, 2006, as a wholly owned subsidiary of Hospitality Properties Trust, or HPT. From that time through January 31, 2007, we conducted no business activities. On January 31, 2007, HPT acquired TravelCenters of America, Inc., our predecessor, restructured this acquired business and distributed all of our then outstanding common shares to the shareholders of HPT. In this Annual Report on Form 10-K for the year ended December 31, 2013, or this Annual Report, we sometimes refer to these transactions as the HPT Transaction, refer to the distribution of our shares in connection with the HPT Transaction as our spin off and refer to HPT and the subsidiaries of HPT from which we lease certain properties collectively as HPT.

Business Overview

company. We operate and franchise 281456 travel center and convenience store locations. Our customers include trucking fleets and their drivers, independent truck drivers and highway and local motorists. We offer a broad range of products and services, including diesel fuel and gasoline, as well as nonfuel products and services such as truck repair and maintenance services, full service restaurants, more than 39 different brands of quick service restaurants, or QSRs, travel/convenience stores and various driver amenities. Additionally, we collect rents, royalties and other fees from our tenants, franchisees and dealers.

We manage our business on the basis of two reportable segments: travel centers and convenience stores. See Note 15 to the Notes to Consolidated Financial Statements included in Item 15 of this Annual Report for more information about our segments. We have a single travel center located in a foreign country, Canada, that we do not consider material to our operations.
As of December 31, 2013,2015, our travel center business included 247252 travel centers located in 4243 states in the United States, or U.S., primarily along the U.S. interstate highway system, and the province of Ontario, Canada. Our travel centers included 172176 operated under the "TravelCenters of America,"America" and "TA" or related brand names, or the TA brand, including 156161 that we operated and 1615 that franchisees operated, including five we lease to franchisees, and 75 that were76 operated under the "Petro Stopping Centers" and "Petro" brand names, or the Petro brand, including 6162 that we operated and 14 that franchisees operated. Of our 247252 travel centers at December 31, 2013,2015, we owned 33,32, we leased or managed 189,194, including 184192 that we leased from Hospitality Properties Trust, or HPT, we operated two for a joint venture and our franchisees owned or leased from others 25.24. Substantially all of our travel centers include a convenience store, at least one restaurant, a truck service/repair facility and fueling lanes for trucks and passenger vehicles. We sublease to franchisees fivereport this portion of our business as our travel center segment.
The U.S. travel center and truck stop industry consists of travel centers, truck stops, diesel fuel outlets and similar properties. We believe that although the travel center and truck stop industry is highly fragmented, with approximately 6,400 travel centers we leaseand truck stops in the U.S., the largest trucking fleets tend to purchase the majority of their fuel from HPT.

us and our two largest competitors. Many of our travel centers were originally developed years ago when prime real estate locations along the interstate highway system were more readily available than they are today, which we believe would make it difficult to replicate our business. We believe that our nationwide travel centers provide an advantage to large trucking fleets, particularly long haul trucking fleets, by enabling them to (i) take advantage of efficiencies afforded by the wide array of services our travel centers provide for their equipment and their drivers and (ii) reduce the number of their suppliers by routing their trucks through our travel centers from coast to coast.

        We offer a broad range of productscoast and services, including diesel fuel and gasoline, truck repair and maintenance services, full service restaurants, more than 43 different brands of quick serve restaurants, or QSRs, travel stores and various driver amenities. Some of our locations include gaming operations.

        The U.S. travel center and truck stop industry in which we operate consists of travel centers, truck stops, diesel fuel outlets and similar properties. We believe that although the travel center and truck stop industry is highly fragmented generally, with in excess of 6,400 travel centers and truck stops in the U.S., the largest trucking fleets tendborder to purchase the majority of their over the road fuel from us and our largest competitors.

border.

As of December 31, 2013,2015, our business also included 34204 convenience stores not located on a travel center property in four11, primarily Midwestern, states with retail gas stations,of the U.S. We operate our convenience stores primarily Kentucky, that we operate and whose primary customers are motorists. We acquired 31 of these stores in 2013 and continue to operate them under the "Minit Mart" brand name, "Minit Mart." The convenience stores we operate include, on average, ten fueling positions and approximately 5,000 square feet of interior space offering merchandise and QSRs.or the Minit Mart brand. Of our 34these 204 convenience stores at December 31, 2013,2015, we owned 27,173 and we leased five,or managed 29, including one that we leased from HPT, and we operated two for a joint venture in which we own a minoritynoncontrolling interest.

Additionally, we collect rent from one dealer who operates a convenience store we own. We report this portion of our business as our convenience store segment.
The U.S. convenience store industry consists of convenience stores, gasoline stations and similar properties. As of December 31, 2015, the convenience store industry consisted of roughly 154,000 convenience stores in the U.S. The convenience store industry is highly competitive with ease of entry and constant changes in the number and types of retailers offering the products and services similar to those we offer. Fuel, food, including prepared foods, and nonfood items similar or identical to those sold by us are generally available from various competitors in the communities we serve, including other convenience store chains, independent convenience store operators, supermarkets, drug stores, mass merchants, and other retail stores.
As of December 31, 2015, we employed approximately 13,500 people on a full time basis and 9,900 people on a part time basis at our travel centers and convenience stores and we employed an additional 850 people in field management, corporate and other roles to support these locations. Thirty-eight of our employees at two travel centers are represented by unions.


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History


Our Predecessor.Growth Strategy
Since 2011, our growth strategy has been to acquire additional travel center locations and, since 2013, convenience store locations. Further, in 2015, we announced our intention to acquire the Quaker Steak & Lube® casual dining restaurant brand and related assets. We currently intend to continue our efforts to selectively acquire additional properties and businesses and to otherwise grow our businesses. Our predecessor was formed in December 1992. Atacquisitions since the timebeginning of the HPT Transaction, our predecessor's business included 163 travel centers, of which 140 were operated by our predecessor, 10 were operated by franchisees on sites leased from our predecessor2011 and 13 were operated by franchisees on sites they owned or leased from others.

        The HPT Transaction.    We commenced business on January 31, 2007. In order to govern relations before and after our spin off, we entered into a transaction agreement with HPT and Reit Management & Research LLC, or RMR. As a result of the HPT Transaction, our spin off and the related transaction agreement, HPT acquired 146 travel centers and certain other assets previously held by our predecessor and we entered a lease of these assets with HPT, which we refer to as the TA Lease. We owned the remaining assets of our predecessor and remained obligated for our predecessor's liabilities. On January 31, 2007, HPT distributed all of our then outstanding shares to its shareholders. Other material effects of the HPT Transaction that have continuing effects on usplanned acquisitions are summarized as follows:

        The Petro Acquisition.    On May 30, 2007, we acquired Petro Stopping Centers, L.P., or Petro, which operated or franchised 69 travel centers along the U.S. interstate highway system. We refer to this transaction as the Petro Acquisition. Simultaneously with the Petro Acquisition, HPT acquired the real estate of 40 Petro travel centers and we leased these 40 travel centers from HPT, which we refer to as the Petro Lease and which together with the TA Lease we refer to as the HPT Leases. In additionbelow. See also Note 3 to the leasehold for these 40 travel centers, the Petro assets we acquired included the contract rights as franchisor of 24 Petro travel centers and certain other assets.

        Rent Deferral Agreement and Amendment Agreement.    In August 2008, we entered a rent deferral agreement with HPT. Under the terms of the deferral agreement we deferred a total of $150 million of rent payments through December 31, 2010. In January 2011, we and HPT entered an Amendment Agreement, or the Amendment Agreement, that amended the HPT Leases and our rent deferral agreement with HPT. The Amendment Agreement, among other things, reduced the minimum annual rent payable to HPT, extended the due date for the $150 million of rent that we previously deferred and ceased interest charges on that deferred rent, as further described under the heading "Our Leases With HPT" below.


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        Other Significant Activities.    During the fiscal year ended December 31, 2013, we completed the following other significant activities:

Recent Developments

        On March 17, 2014, we filed a Form 12b-25 with the SEC indicating that we were unable to file this Annual Report withinfor more information about our acquisitions.

During 2016, to the time period prescribed by the Securities Exchange Actdate of 1934, as amended, or the Exchange Act, due to unanticipated delays encountered in connection with our accounting for income taxes as well as general delays encountered in connection with the completion of our accounting processes and procedures. On May 13, 2014, we filed a second Form 12b-25 indicating that as a result of the delay in completing this Annual Report, we were also unableentered agreements to fileacquire 16 convenience stores for a total of $23.3 million. We expect to complete these acquisitions in the First Quarter 10-Q within the time period prescribed by the Exchange Act.

Our Growth Strategy

        Acquisitions and Development.    Pressure from difficult economic and industryfirst half of 2016, but these acquisitions are subject to conditions of the past several years has caused some, and may cause further, financial challengesnot occur, may be delayed or the terms may change.

As of December 31, 2015, we had entered agreements to acquire 24 convenience stores for some travel center operatorsan aggregate purchase price of $32.8 million and 53 restaurant locations (including owned, leased and franchised locations) for a total of $25.0 million. Through the date of this Annual Report, we completed the purchase of seven of these convenience stores for an aggregate purchase price of $13.9 million. We expect to complete the remaining acquisitions in 2016, but these purchases are subject to conditions and may innot occur, may be delayed or the future result in opportunities to acquire locations at attractive prices. We believe these conditions led to our acquisitions during 2011 of sixterms may change.
During 2015, we acquired three travel centers and two properties ancillary to existing170 convenience stores for an aggregate purchase price of $320.3 million.
During 2014, we acquired four travel centers for an aggregate amount of $38.0$28.7 million.
During 2012,2013, we acquired nine travel centers and the business of a franchisee at a travel center such franchisee had previously subleased from us and 31 convenience stores for an aggregate amount of $52.3 million,$111.5 million.
During 2012, we acquired 10 travel centers and the businesses of our franchisees at four travel centers that such franchisees previously had subleased from us. During 2013, we acquired,us for an aggregate amount of $46.2 million, nine$52.1 million.
During 2011, we acquired six travel centers and the businesstwo properties ancillary to existing travel centers for an aggregate amount of a franchisee at a travel center such franchisee had previously subleased from us. Additionally, in December 2013, we acquired for $67.9 million a business that operates 31 convenience stores with retail gasoline stations in Kentucky and Tennessee. Further, as$37.8 million.
As of December 31, 2013,2015, we had entered an agreement to acquire an additional travel center for a totalbegun construction of $3 million, which acquisition was completed in January 2014. During 2014 to the date of this Annual Report, we entered agreements to acquire two additional travel centers for a total of $21.5 million. We expect to complete these acquisitions in the second or third quarters of 2014, but these purchases are subject to conditions and may not occur, may be delayed or


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the terms may change. We currently intend to continue our efforts to selectively acquire additional properties.

        We own sevenon three parcels of previously undeveloped land suitable for developingwe own and planned to begin construction on one additional parcel we own during 2016. In January of 2016, we completed development of one of these travel centers. We also have begun to plan to developconstruction of a new travel centerscenter on two of these parcels starting during 2014 or 2015an owned property that previously included only a convenience store and truck repair facility. We may decide to build additional travel centers or other facilities on the other five parcels in the future.future on six other parcels of largely undeveloped land we own. We occasionally consider purchasing properties for future development and we expect to continue to do so in the future.

        Existing Properties.We believe that in addition to growing our business through our acquisitions and development plans, we have opportunities to increase revenues and profits through continued investment in our existing properties, including thosecontinuing the renovations and stabilization of operations at locations we have acquired during 2011 throughrecently or may acquire in the date of this annual report. These opportunities includefuture. Recent investments in our existing properties have included projects such as parking lot expansions, construction of additional truck repair bays, restaurant remodeling, the installation of additional QSR offerings, installation of diesel exhaust fluid, or DEF, and liquid natural gas, or LNG, dispensers for sale of those products, and possible expansion of offerings to include items not previously offered by us, such as natural gas refueling as noted above.our Reserve-It!

        Franchising.™ In 2011,parking, RoadSquad®, RoadSquad Connect™ and RoadSquad OnSite® offerings.

Typical improvements we added four franchise travel centers. Two of thesemake at acquired travel centers are located in Virginiainclude adding truck repair facilities and onenationally branded QSRs, paving parking lots, rebranding gasoline offerings, replacing outdated fuel dispensers, installing DEF dispensing systems, changing signage, installing point of sale and other information technology, or IT, systems and general building and cosmetic upgrades. The improvements to travel center is located in eachproperties we acquire are often substantial and require a long period of Alabamatime to plan, design, permit and Tennessee. Although we added no franchise sites in 2012 or 2013, we may selectively expand our business through franchising in the future. During 2011, 2012complete, and 2013, we acquired the operationsafter being completed require a period of one, eight and four, respectively,time to become part of our former franchisees who elected to exit those businesses.

Our Locations

        At December 31, 2013, our 281 locations consisted of:

Improvements that we typically make at acquired convenience stores we owninclude rebranding to the Minit Mart brand, adding QSRs, rebranding gasoline offerings and operate;

•
Three travel centers and fourcompleting any required deferred maintenance. We estimate that the convenience stores that we operate on sites owned by parties other than HPT or us;acquire will generally reach financial stabilization within one year after acquisition, but the actual results can vary widely from the estimate due to many factors, some of which are outside our control.

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•
Two travel centers
Our Travel Center and two convenience stores we operate for a joint venture in which we own a minority interest; and

•
25 travel centers that are operated by our franchisees on sites they own or lease from parties other than us.

        Our travel centers include 172 operated under the TA and related brands and 75 operated under the Petro brand. Convenience Store Locations

Our typical travel center includes:

over 25 acres of land with parking for 189approximately 186 tractor trailers and 100 cars;

•
a full service restaurant and one or more QSRs that we operate as a franchisee under various brands;

•
a truck repair facility and parts store;

•
multiple diesel and gasoline fueling points, including diesel exhaust fluidDEF at the diesel lanes; and

•
a traveltravel/convenience store, game room, lounge and other amenities for professional truck drivers and motorists.

Substantially all of our travel centers are full service sites located on or near an interstate highway exit and offer fuel and nonfuel products and services 24 hours per day, 365 days per year.


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        Our convenience stores include 31 that we operate under the Minit Mart brand and three we operate under other brands. Our typical convenience store includes tenincludes:

approximately 10 fueling positions and positions;
approximately 5,0003,100 square feet of interior space offeringon an acre of land; and
multiple merchandise and prepared foods on approximately 2 acres of land.

        Properties.    The physical layouts of our locations vary from site to site. QSR offerings.

The majority of the developed acreage at our travel centers consists of truck and car fuel islands, separate truck and car parking lots, a main building that contains a full service restaurant and one or more QSRs, a travel store, a truck maintenance and repair shop and other amenities. Most of our TA travel center locations have one building with separate service areas and most of our Petro travel center locations have several separate buildings. Our convenience store properties include a single building and parking lot.

        Product and Service Offering.stores are open 24 hours per day, 365 days per year.

Our locations offer a broad range of products and services designed to appeal to our customers, including:

Fuel. We sell diesel fuel at separate truck fueling lanes at our travel centers. centers. We also sell branded and unbranded gasoline and diesel fuel at motorist fuel islands.islands at our travel centers and convenience store locations. As of December 31, 2013,2015, we offered branded gasoline at 258427 of our 281456 locations and unbranded gasoline at 815 of our locations (7(six of which are operated by franchisees of ours). We did not offer gasoline at 15ours and the remainder of our locations.which are expected to be converted to a nationally recognized brand during the first six months of 2016).

•
Diesel Exhaust Fluid. Diesel exhaust fluid, or DEF is an additive that is required by most truck engines manufactured after 2010. As of December 31, 2013,2015, we offered DEF is offered from dispensers on the diesel fueling island at all of the travel centers we operate and nearly all of our franchised travel centers.

•
Full Service Restaurants and QSRs. Most of our travel centers have both full service restaurants and QSRs that offer customers a wide variety of nationally recognized branded food choices. The substantial majority of our full service restaurants are operated under our Iron Skillet® and Country Pride® brands and offer menu table service and buffets. We also operate 4339 different brands of QSRs, including Arby's®, Burger King®, Dunkin' Donuts®, Pizza Hut®, Popeye's Chicken & Biscuits®, Starbuck's Coffee®, Subway® and Taco Bell®. As of December 31, 2013,2015, 217 of our travel centers included a full service restaurant, 190240 of our travel centers and convenience stores offered at least one QSR, and there were a total of 359450 QSRs in our 281456 locations.

•
Truck Service. Most of our travel centers have truck repair and maintenance facilities and we have plans to add truck repair and maintenance facilities to four travel centers that were purchased in 20132014 and 2014.2015. Our 235247 truck repair and maintenance facilities typically have between three and six service bays and are staffed by mechanics and service technicians employed by us or our franchisees. These shops generally operate 24 hours per day, 365 days per year, and offer extensive maintenance and emergency repair and road services, ranging from basic services such as oil changes, wheel alignments and tire repair to specialty services such as diagnostics and repair of air conditioning, brakes and electrical systems. Our repair and maintenance services are generally covered by our warranty. Most of our truck repair and maintenance facilities provide some warranty work on Daimler Trucks North America, or Daimler, brand trucks through our participation in the Freightliner ServicePoint® and Western Star ServicePoint® programs, as described under the heading "Operations—Daimler Agreement" below.


•
Roadside Repair. RoadSquad® is a roadside truck service program that operates 24 hours per day, seven days per week and includes a fleet of approximately 430 service trucks we own and trucks owned by470 heavy duty emergency vehicles at our franchisees.company operated sites. Our service trucks are positioned at our travel centers and centrally dispatched to assist customers with repairs when they are unable to bring their truck to our travel center due to a break down. RoadSquad ConnectTM™ is our centralized call center that operates 24 hours per day, seven days per week to dispatch both our RoadSquad® vehicles and third

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Travel Stores. At each of ourOur travel centers we offerstores located at a travel store that offers merchandise to truck drivers, motorists, recreational vehicle operators and bus drivers and passengers. Our travel storescenter have a selection of over 4,0004,700 items, including packaged food and snack items, beverages, non-prescription drug and beauty supplies, batteries, automobile accessories, and music and video products. Each travel store also has a "to go" bar offering fresh brewed coffee, hot dogs, prepared sandwiches and other prepared foods. Our travel stores in our travel centers also sell items specifically designed for the truck driver's "on the road" lifestyle, including laundry supplies, clothing, truck accessories and a variety of electronics. We have recently begun a program to use Minit Mart branding at the travel stores in our travel centers; as of the date of this Annual Report, 25 of these include Minit Mart signage and branding elements.
Convenience Stores.

Our standalone convenience stores have a selection of over 3,600 items, including packaged food and snack items, beverages, tobacco products, non-prescription drug and beauty supplies, batteries, and automobile accessories. Each convenience store also has a "to go" bar offering fresh brewed coffee, hot dogs, prepared sandwiches and other prepared foods. A majority of our convenience stores also offer car washes.
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Additional Driver Services. We believe that trucking fleets can improve the retention and recruitment of truck drivers by directing them to visit large, high quality, full service travel centers.centers with plentiful overnight parking. We offer commercial truck and other customer loyalty programs, the principal program being the UltraOne® Club, that are similar to the frequent shopper programs offered by other retailers. Drivers receive points for diesel fuel purchases and for spending on selected nonfuel products and services. These points can be redeemed for discounts on nonfuel products and services at our travel centers. In addition, we publish a magazine called RoadKing® which includes articles and advertising of interest to professional truck drivers. Some of our travel centers offer casino gaming. We are an authorized Verizon Wireless dealer and currently offer Verizon Wireless products and services at 21 of our travel centers. We strive to provide a consistently high level of service and amenities to professional truck drivers at all of our travel centers, making our travel centers an attractive choice for trucking fleets. Most of our travel centers provide truck drivers the amenities listed below:

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specialized business services, including an information center where drivers can send and receive faxes, overnight mail and other communications;
Reserve-It!

™
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Reserve-ItTM parking program, which allows drivers to reserve for a fee a parking space in advance of arriving at a travel center;

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a banking desk where drivers can cash checks and receive funds transfers from fleet operators,

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operators;
wi-fi internet access;

•
a video game room;

•
a laundry area with washers and dryers;

•
private showers;

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free exercise facilities; and

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areas designated for truck drivers only, including a theater or big screen television room with a video player and comfortable seating.

Operations
Operating SegmentFuel.

We manage our business on the basis of one operating segment. Please refer to the consolidated financial statements included in Item 15 of this Annual Report for revenue, operating profit and asset data. We have only a single travel center located in a foreign country, Canada, and the revenues and


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assets relatedsell fuel to our operations in Canadacustomers at prices that we establish daily or are not material. The following table sets forth the composition of our total revenues by type for each of the three years ended December 31, 2013.

 
 Year Ended December 31, 
 
 2013 2012 2011 

Revenues:

          

Fuel

  81.5% 83.0% 83.7%

Nonfuel

  18.3% 16.8% 16.1%

Rent and royalties from franchisees

  0.2% 0.2% 0.2%
        
​​​​​​​​​​​

Total revenues

  100.0% 100.0% 100.0%
        
​​​​​​​​​​​
​​​​​​​​​​​
        

Operations

        Fuel.indexed to market prices and reset daily. We have numerous sources for our diesel fuel and gasoline supply, including nearly all of the major and large oil companies operating in the U.S. We purchase diesel fuel from various suppliers at rates that fluctuate with market prices and generally are reset daily, and we sell fuel to our customers at prices that we establish daily or are indexed to market prices and reset daily. By establishing diesel fuel supply relationships with several alternate suppliers for most locations, we believe we are able to effectively create competition for our purchases among various diesel fuel suppliers. We also believe that purchasing arrangements with multiple diesel fuel suppliers may help us avoid product outages during times of diesel fuel supply disruptions. At some locations, however, there are very few suppliers for diesel fuel in that market and we may have only one viable supplier. WeGenerally we have single sources of supply for gasoline at each of our locations that offer branded gasoline; we generally purchase gasoline from multiple sources for our locations that offer unbranded gasoline.locations. We offer biodiesel at a number of our travel centers and have a limited number of suppliers for this product at those sites at whichsites. During 2014, we sell biodiesel. We expect to beginbegan selling liquefied natural gas, or LNG at certainsome of our travel centers. As of December 31, 2015, we sold LNG at six locations and we expect to add LNG offerings at two additional travel centers during the second quarter of 2014.2016. Equilon Enterprises LLC doing business as Shell Oil Products U.S., or Shell, is expected to be our sole supplier of LNG at these locations.

Generally our fuel purchases are delivered directly from suppliers' terminals to our locations. We do not contract to purchase substantial quantities of fuel to hold as inventory. We generally have less than three days of diesel fuel and gasoline inventory at our locations. We are exposed to price increases and interruptions in supply. We believe our exposure to market price increases for diesel fuel and gasoline is partially mitigated by the significant amount of our diesel fuel and gasoline sales that are sold under arrangements that include pricing formulae that reset daily and are indexed to market prices and by our generally not purchasing fuel for delivery other than on the date of purchase. We historically have not engaged in any fixed or hedged price fuel contracts with customers.

contracts.


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Nonfuel products.We have many sources for the large variety of nonfuel products that we sell. We have developed supply relationships with several suppliers of key nonfuel products, including Daimler for truck parts, Bridgestone Americas Tire Operations, LLC, Michelin North America, Inc. and The Goodyear Tire & Rubber Company for truck tires, McLane Company, Inc. for convenience store and tobacco products and ExxonMobil Oil Corporation and Shell for lubricants. We believe that our relationships with these and our other suppliers are satisfactory. We maintain two distribution centers to distribute certain nonfuel and nonperishable products to our locations using a combination of contract carriers and our fleet of trucks and trailers. We believe these distribution centers allow us to purchase, maintain and transport inventory and supplies at lower total acquisition costs. These warehouses are leased and include a total of approximately 181,400 square feet of space.

Daimler Agreement.We are party to an agreement with Daimler that extends to July 2019. Daimler is a leading manufacturer of heavy trucks in North America under the Freightliner and Western Star brand names. Except for locations in Texas, our TA and Petro truck repair and


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maintenance facilities are, or are expected to be, authorized providers of repair work and specified warranty repairs to Daimler's customers. This is accomplished through the Freightliner ServicePoint® program at TA locations and through the Freightliner and/or Western Star ServicePoint® program at our Petro locations. Our TA and Petro truck maintenance and repair facilities are also part of Freightliner's 24 hour customer assistance database for emergency and roadside repair referrals and we have access generally to Daimler's parts distribution, service and technical information systems.

Fuel cards.Most of our trucking customers transact business with us by use of fuel cards, most of which are issued by third party fuel card companies. The fuel card industry has only a few significant participants, including Comdata Network, Inc., or Comdata, the largest issuer of fuel cards, WEX Inc. and Electronic Funds Source, LLC, or EFS,EFS.
Competition
Travel Centers
Fuel and nonfuel products and services can be obtained by trucking companies and truck drivers from a company affiliated withvariety of sources, including national and regional full service travel centers and pumper only truck stops, some of which are owned or franchised by large chains and some of which are independently owned and operated, and some large service stations. In addition, some trucking companies operate their own terminals to provide fuel and services to their own trucking fleets and drivers. Also, some of our competitors may have more resources than we do and vertically integrated fuel and other businesses which may provide them competitive advantages. For all of these reasons and others, we can provide no assurance that we will be able to compete successfully.
Although there are in excess of 6,400 travel centers and truck stops in the U.S., we believe that large trucking fleets and long haul trucking fleets tend to purchase the large majority of their fuel at the approximately 1,900 travel centers and truck stops that are located at or near interstate highway exits. Based on the number of locations, TA, Pilot Travel Centers LLC, or Pilot, Flying J. and Love's Travel Stops and Country Stores, Inc., or Love's, are the three largest companies focused principally on the travel center industry.
We acceptcompete with other travel center and truck stop chains based primarily on diesel fuel cardsprices. We also experience competition, to a lesser extent, from travel center chains and independent full service travel centers that are based on the quality, variety and pricing of the wide array of nonfuel products, service and amenities offerings. Our truck repair and maintenance facilities compete with other providers of truck repair and maintenance facilities, including some at Pilot and Love's locations. These two competitors have increased their respective numbers of truck repair and maintenance facilities over the past few years; however, they do not currently offer as paymentlarge a chain of repair and maintenance facilities as we do and generally do not offer the breadth of services that we offer. For truck maintenance and repair services, we also compete with regional full service travel center and truck stop chains, full service independently owned and operated travel centers and truck stops, fleet maintenance terminals, independent garages, truck dealerships, truck quick lube facilities and other parts and service centers. We also compete with other full service restaurants, QSRs, mass merchandisers, electronics stores, drugstores and convenience stores. Some truck fleets own their own fuel, repair and maintenance facilities; however, we believe the long term trend has been toward a reduction in these facilities in favor of obtaining fuel, repair and maintenance services from third parties like us. We believe that we are able to compete successfully because we offer consistent, high quality products and services in our nationwide chain of large full service travel centers that feature a large menu of truck maintenance and repair offerings, numerous diverse dining choices, large parking lots and various driver amenities.

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An additional source of competition in the future could result from commercialization of state owned interstate highway rest areas. Some state governments have historically requested that the federal government allow these rest areas to offer fuel and nonfuel products and services similar to that offered at a travel center and certain congressional leaders have historically supported such legislation. If commercialized, these rest areas may increase the number of locations competing with us and these rest areas may have significant competitive advantages over existing travel centers, including ours, because they are generally located on restricted (i.e., toll) roads and have dedicated ingress and egress.
Some states have privatized their toll roads that are part of the interstate highway system. We believe it is likely that tolls will increase on privatized highways. In addition, some states may increase tolls for their own account. If tolls are introduced or increased on highways in the proximity of our travel centers, our business at those travel centers may decline because truckers may seek alternative routes.
Convenience Stores
The convenience store industry is highly competitive with ease of entry and constant changes in the number and types of retailers offering the products and services similar to those we receive paymentoffer. Fuel, food, including prepared foods, and nonfood items similar or identical to those sold by us are generally available from various competitors in the communities we serve, including other convenience store chains, independent convenience store operators, supermarkets, drug stores, discount clubs, motor fuel service stations, mass merchants, fast food operations, gasoline stations and other retail stores. We believe our stores compete principally with their local grocery stores, convenience stores, restaurants, and larger gasoline stations offering a more limited selection of grocery and food items for sale. As of December 31, 2015, the convenience store industry consisted of roughly 154,000 convenience stores in the U.S. Based on the number of our accounts receivable from these fuel cardlocations, and including the convenience store operations within our travel centers, we believe we are one of the 25 largest companies on a daily basis.

in the convenience store industry.

Our Leases Withwith HPT

        We

In June 2015, we and HPT agreed to expand and subdivide the lease pursuant to which we then leased 144 properties from HPT, or the Prior TA Lease, into four amended and restated leases, or the New TA Leases. As a result, we now have twofive leases with HPT, the four New TA LeaseLeases for 145153 properties, and the pre-existing Petro Lease for 40 properties. We refer to the Petro properties. TwoLease and the four New TA Leases (or, with respect to periods prior to June 2015, the Petro Lease and the Prior TA Lease) collectively as the HPT Leases. One of our subsidiaries are the tenantsis a tenant under the leases, and we, and in the case of our four New TA LeaseLeases certain of our subsidiaries, guarantee the tenants' obligations under the leases. See Note 12 to the Notes to Consolidated Financial Statements in Item 15 of this Annual Report for more information about the terms of the HPT Leases and related amounts. The following are summaries of the material terms of these leases, as amended.

Term.    The TA Lease expires on December 31, 2022. The Petro Lease expires on June 30, 2024,2024. The four New TA Leases expire one each on December 31, 2026, 2028, 2029, and 2030. Each lease may be extended by us for up to two additional periods of 15 years each.

        Operating Costs.    The HPT Leases are "triple net" leases, which require us to pay all costs incurred in the operation of the leased properties, including personnel, utilities, acquiring inventories, providing services to customers, insurance, paying real estate and personal property taxes, environmental related expenses, underground storage tank removal costs and ground lease payments at those properties at which HPT leases the property from the owner and subleases it to us.

Rent. As of December 31, 2013,2015, the TA Lease requiresHPT Leases require us to pay minimum rent to HPT in an amount of $159.3$255.6 million per year through December 31, 2022 and the Petro Lease requires us to pay minimum rent to HPT of $60.2 million through June 30, 2024.

year. We may request that HPT purchase approved renovations, improvements and equipment additions we make at the leased properties, in return for an increase in our minimum annual rent equal to the amount paid by HPT times the greater of (i) 8.5% or (ii) a benchmark U.S. Treasury interest rate plus 3.5%. HPT is not required to purchase any improvements and we are not required to sell any improvements to HPT.

        Starting

Percentage Rent. Under the Petro Lease, we began to incur percentage rent payable to HPT in 2012, the TA Lease requires us to pay additional2013. The percentage rent that generally is calculated as follows: an amount equal toequals 3% of increases in nonfuel gross revenues and, until June 2015, 0.3% of increases in gross fuel revenues at the 145leased properties covered byover base amounts. Percentage rent for 2014, which totaled $2.9 million, was incorporated into the TA Lease over the respective gross revenue amounts for the year 2011. Additional rent attributable to fuel revenues is subject to a maximum each year calculated by reference to changes in the consumer price index. Additionalminimum annual rent under the New TA Lease was $2.1 millionLeases, and $1.5 million2015 became the percentage rent base year for the years ended December 31, 2013 and 2012, respectively. The Petro Lease requires us to pay additionalNew TA Leases. Beginning in 2016, percentage rent calculated using the same formula as in the TA Lease, except that such payments started in 2013 and are calculated using the revenueswill be 3.0% of the 40 leased Petro properties in excess of gross nonfuel revenues for any particular year over the percentage rent base year 2012 and the additional rent under the Petro Lease is subjectamount. HPT has agreed to the waiver ofwaive payment of the first $2.5 million of such additional rent. The amountpercentage rent that may become due under our Petro Lease; through December 31, 2015, HPT has waived, in aggregate, $2.1 million of the $2.5 million of percentage rent that would have been payable under the Petro Lease for the year ended December 31, 2013, was $0.4 million; because thisto be waived.
Deferred Rent. We owe deferred rent to HPT in an aggregate amount was waived, we did not recognize it as an expense in 2013. In connection with the agreement we entered into with Shell, on April 15, 2013, we and HPT amended the HPT Leases to revise the calculation of percentage rent payable by us under the HPT Leases, with the intended effect that the amount of percentage rent would be unaffected by the type of fuel sold, whether diesel fuel or natural gas.


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        On August 11, 2008, we entered a rent deferral agreement with HPT. Under the terms of the deferral agreement, through December 31, 2010, we had deferred $150$150.0 million, of rent payable to HPT, the maximum amount we were able to defer and which was contractually due to HPT by July 1, 2011. As part of the Amendment Agreement, we and HPT amended the rent deferral agreement, so that $107.1 million of our deferred rent obligation will be due and payable on December 31, 2022, the remaining $42.9 million, of our deferred rent obligation$29.3 million, $29.1 million, $27.4 million and $21.2 million will be due and payable on June 30, 2024, and effective January 1, 2011, interestDecember 31, 2026, 2028, 2029 and 2030, respectively. Interest does not accrue on our deferred rent obligation; provided, however, that thethis deferred rent obligation, shallsubject to exceptions. This deferred rent obligation may be accelerated by HPT and become due on an earlier date and interest shall begin to accrue thereon ifupon the occurrence of certain events, provided in the Amendment Agreement occur, including a change of control of us.

        On August 13, 2013, the travel center located in Roanoke, VA, that we leased from HPT under the TA Lease was taken by eminent domain proceedings brought by the Virginia Department


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Table of Transportation, or VDOT, in connection with planned highway construction. The TA Lease provides that the annual rent payable by us is reduced by 8.5% of the amount of the proceeds HPT receives from the taking or, at HPT's option, the fair market value rent of the property on the commencement date of the TA Lease. In January 2014, HPT received proceeds from VDOT of $6.2 million, which is a portion of VDOT's estimate of the value of the property, and as a result our annual rent under the TA Lease was reduced by $0.5 million effective January 6, 2014. We and HPT intend to challenge VDOT's estimate of the property's value. HPT has entered a lease agreement with VDOT to lease this property through August 2014 for $40,000 per month, and under the terms of the TA Lease we will be responsible to pay this ground lease rent. We sublease this property from HPT and plan to continue operating it as a travel center through August 2014.

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Maintenance and Alterations.We must maintain, at our expense, the leased properties, including maintenance of structural and non-structural components. At the end of each lease we must surrender the leased properties in substantially the same condition as existed at the commencement of the lease subject to any permitted alterations and reasonable wear and tear.

Assignment and Subletting. HPT's consent is required for any direct or indirect assignment or sublease of any of the leased properties. We remain liable under the leases for subleased properties.

        Environmental Matters.Indemnification and Insurance.     We also are required generally toWith limited exceptions, we indemnify HPT for certain environmental matters and for liabilities which arise during the terms of the leases from ownership or operation of the leased properties.

        Indemnification and Insurance.    With limited exceptions, we indemnify HPT from liabilities whichthat arise during the terms of the leases from ownership or operation of the leased properties. We generally must maintain commercially reasonable insurance. Our insurance coverage requirements include:

property insurance in an amount equal to the full replacement cost of at risk improvements at our leased properties;

•
business interruption insurance;

•
general liability insurance, including bodily injury and property damage, in amounts asthat are generally maintained by companies operating travel centers;

•
flood insurance for any property located in whole or in part in a flood plain;

•
workers' compensation insurance if required by law; and

•
such additional insurance as may be generally maintained by companies operating travel centers, including certain environmental insurance.

The leasesHPT Leases generally require that HPT be named as an additional insured under our insurance policies.


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Damage, Destruction or Condemnation. If any leased property is damaged by fire or other casualty or taken by eminent domain, we are generally obligated to rebuild. If the leased property cannot be restored, HPT will generally receive all insurance or taking proceeds, we are liable to HPT for any deductible or deficiency between the replacement cost and the amount of such proceeds, and the annual minimum rent will be reduced by (i) in the case of the New TA Lease,Leases, at HPT's option, either 8.5% of the net proceeds paid to HPT or the fair market rental of the damaged, destroyed or condemned property, or portion thereof, as of the commencement date of the New TA Lease;Leases; (ii) in the case of a casualty loss under the Petro Lease, 8.5% of the net proceeds paid to HPT plus 8.5% of the fair market value of the land; and (iii) in the case of a taking under the Petro Lease, 8.5% of the amount of the net proceeds paid to HPT.

Events of Default. Events of default under each lease include the following:

our failure to pay rent or any other amounts when due;

•
our failure to maintain the insurance required under the lease;

•
the occurrence of certain events with respect to our insolvency;

•
the institution of a proceeding for our bankruptcy or dissolution;

•
our failure to continuously operate any leased properties without HPT's consent;

•
the acquisition by any person or group of beneficial ownership of 9.8% or more of our voting shares or the power to direct the management and policies of us or any of our subsidiary tenants or guarantors; the sale of a material part of the assets of us or any such tenant or guarantor; or the cessation of certain continuing directors constituting a majority of the board of directors of us or any such tenant or guarantor; in each case without the consent of HPT;

•
our default under any indebtedness of $10$10.0 million or more for the New TA Lease,Leases, or $20$20.0 million or more for the Petro Lease, that gives the holder the right to accelerate the maturity of the indebtedness; and

•
our failure to perform certain other covenants or agreements of the lease and the continuance thereof for a specified period of time after written notice.

Remedies.Following the occurrence of any event of default, each lease provides that, among other things, HPT may, to the extent legally permitted:

accelerate the rent;

•
terminate the lease; and/or

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•
make any payment or perform any act required to be performed by us under the lease and receive from us, on demand, an amount equal to the amount so expended by HPT plus interest.

We are also obligated to reimburse HPT for all costs and expenses incurred in connection with any exercise of the foregoing remedies.

Lease Subordination. Each lease may be subordinated to any mortgages of the leased properties by HPT, but HPT is required to obtain nondisturbance agreements for our benefit.

Financing Limitations; Security.Without HPT's prior written consent, our tenant subsidiaries may not incur debt secured by any of their assets used in the operation of the leased properties; provided, however, our tenant subsidiaries may incur purchase money debt to acquire assets used in these operations and we may encumber such assets to obtain a line of credit secured by our tenant subsidiaries' receivables, inventory or certain other assets used in these operations.


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Lease Termination.When a lease terminates, any equipment, furniture, fixtures, inventory and supplies at the leased properties that we own may be purchased by HPT at its then fair market value. Also at termination of the New TA Lease,Leases, HPT has the right to license any of our software used in the operation of the leased properties thereunder at its then fair market value and to offer employment to employees at the leased properties thereunder;properties; and under both leasesthe HPT Leases we have agreed to cooperate in the transfer of permits, agreements and the like necessary for the operation of the leased properties thereunder.properties.

Territorial Restrictions.Under the terms of each lease, without the consent of HPT, we generally cannot own, franchise, finance, operate, lease or manage any travel center or similar property within 75 miles in either direction along the primary interstate on which a travel center owned by HPT is located.

Non-Economic Properties.If during a lease term the continued operation of any leased property becomes non-economic in our reasonable determination and we and HPT cannot agree on an alternative use for the property, we may offer that property for sale, including the sale of HPT's interest in the property, free and clear of our leasehold interests. No sale of a property leased from HPT, however, may be completed without HPT's consent. In the event we obtain a bona-fide offer to purchase the property and HPT consents to the sale, the net sale proceeds received will be paid to HPT, exclusive of amounts associated with our personal property, which we can elect to sell to the buyers or keep, and the annual minimum rent payable shall be reduced. In the case of the New TA Lease,Leases, this rent reduction will be, at HPT's option, either the amount of such proceeds times 8.5% or the fair market rental for such property as of the commencement date of the lease; in the case of the Petro Lease, this reduction will be the amount of such proceeds times 8.5%. If we obtain a bona-fide offer to purchase the property but HPT does not consent to the sale of the property, that property will no longer be part of the lease and the minimum rent will be reduced as if the sale had been completed at the amount offered. No more than a total of 15 properties subject to the New TA LeaseLeases and no more than five properties subject to the Petro Lease may be offered for sale as non-economic properties during the applicable lease term.

Arbitration.Our leases with HPT also include arbitration provisions for the resolution of disputes, claims and controversies.

        For further information about the HPT Leases and related amounts, see

See Note 1712 to the Notes to Consolidated Financial Statements in Item 15 of this Annual Report which is incorporated herein by reference. In addition, for more information about these transactionsthe terms of the HPT Leases and relationships and about the risks which may arise as a resultrelated amounts.

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Table of these transactions and relationships, see elsewhere in this Annual Report, including "Warning Concerning Forward Looking Statements" and Item 1A, "Risk Factors".

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Relationships with Franchisees

We have lease and franchise agreements with lessees and owners of travel centers. We collect rent and franchise, royalty and other fees under these agreements. As of December 31, 2013, 302015, 29 of our travel centers were operated by our franchisees. Five of these travel centers are leasedowned by us from HPT and subleased by usleased to a franchisee. Twenty fivefranchisees. Twenty-four of these travel centers are owned, or leased from others, by our franchisees. As of December 31, 2013,2015, one franchisee operated four travel centers, two operated two travel centers, and 2221 operated one travel center each. The table below summarizes by state information as of December 31, 2013,2015, regarding branding and ownership of the travel centers our


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franchisees operate and excludes travel centers we operate. Similar information for the locations we operate is included in Item 2 of this Annual Report.

 
 Brand Affiliation
of Sites(1)		 Ownership of
Sites By:(1)		 
 
 TA Petro Total HPT Franchisee
or Others		 

Alabama

  1  1  2  1  1 

Georgia

  1  —  1  1  — 

Illinois

  —  1  1  —  1 

Iowa

  1  —  1  —  1 

Kansas

  1  1  2  —  2 

Minnesota

  —  2  2  —  2 

Missouri

  2  2  4  —  4 

North Carolina

  —  1  1  —  1 

North Dakota

  —  1  1  —  1 

Ohio

  2  1  3  —  3 

Oregon

  1  —  1  —  1 

Pennsylvania

  1  —  1  —  1 

Tennessee

  2  —  2  1  1 

Texas

  2  —  2  2  — 

Virginia

  1  2  3  —  3 

Wisconsin

  1  2  3  —  3 
            
​​​​​​​​​​​​​​​​​

Total

  16  14  30  5  25 
            
​​​​​​​​​​​​​​​​​
​​​​​​​​​​​​​​​​​
            
(1)
Includes only travel centers operated by our franchisees and excludes sites we operate.

 Brand Affiliation:  Ownership of Sites By:
 
TA(1)
 Petro Total  TA 
Franchisee
or Others(1)
Alabama1
 1
 2
  1
 1
Georgia1
 —
 1
  1
 —
Illinois—
 1
 1
  —
 1
Iowa1
 —
 1
  —
 1
Kansas1
 1
 2
  —
 2
Minnesota—
 2
 2
  —
 2
Missouri2
 2
 4
  —
 4
North Carolina—
 1
 1
  —
 1
North Dakota—
 1
 1
  —
 1
Ohio1
 1
 2
  —
 2
Oregon1
 —
 1
  —
 1
Pennsylvania1
 —
 1
  —
 1
Tennessee2
 —
 2
  1
 1
Texas2
 —
 2
  2
 —
Virginia1
 2
 3
  —
 3
Wisconsin1
 2
 3
  —
 3
Total15
 14
 29
  5
 24
(1)
SinceDecember 31, 2015, through the date of this Annual Report we entered into a franchise agreement for one additional travel center in Texas.
Franchise Agreements

Material provisions of our franchise agreements typically include the following:

Initial Franchise Fee. The initial franchise fee for a new franchise is $1,000,000.$1.0 million.

Term of Agreement. The initial term of a franchise agreement is generally ten10 to fifteen15 years. Our TA franchise agreements generally provide for two five year renewals on the terms then being offered to prospective franchisees at the time of the franchise renewal and our Petro franchise agreements generally provide for two five year renewals on the same terms and conditions as the expiring agreements. As of December 31, 2013,2015, our franchise agreements had an average remaining term excluding renewal options of five years and an average remaining term including renewal options of 1311 years.

Protected Territory.Under the terms of our franchise agreements for TA travel centers, generally we have agreed not to operate, or allow another person to operate, a travel center or travel center business that uses the TA brand in a specified territory for that TA branded franchise travel center. Under the terms of our franchise agreements for Petro travel centers, generally we have agreed not to operate, or allow another person to operate, a travel center or travel center business that uses the Petro brand in a specified territory for that Petro branded franchise travel center.


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Restrictive Covenants. Generally our franchisees may not operate any travel center or truck stop related business under a franchise agreement, licensing agreement or marketing plan or system of another person or entity. If the franchisee owns the franchised premises, generally for a two year


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period after expiration or earlier termination of our franchise agreement the franchisee may not operate the premises withunder a competitive brand.

Nonfuel Product Offerings.Franchisees are required to operate their travel centers in conformity with guidelines that we establish and offer any products and services that we deem to be a standard product or service in our travel centers.

Fuel Purchases, Sales and Royalties.Our franchise agreements require the franchisee to pay us a royalty fee per gallon of fuel sold based on sales of certain fuels at the franchised travel center, unless they purchase their fuel inventory from us. We also purchase receivables generated by some of our franchisees in connection with sales to common trucking fleet customers through our proprietary billing system on a non-recourse basis in return for a fee.

Royalty Payments on Nonfuel Revenues. Franchisees are required to pay us a royalty fee generally equal to between 2%2.0% and 4%4.0% of nonfuel revenues, in some cases up to a threshold amount, with a lower percentage fee payable on amounts in excess of the threshold amount and on revenues from branded QSRs.

Advertising, Promotion and Image Enhancement. Our franchisees are required to make additional payments to us as contributions to the applicable brand wide advertising, marketing and promotional expenses we incur.

Termination/Nonrenewal. Generally, we may terminate or refuse to renew a franchise agreement for default by the franchisee. Generally, we may also refuse to renew if we determine that renewal would not be in our economic interest or, in the case of TA franchisees and Petro franchisees under our current form of franchise agreement, if the franchisee will not agree to the terms in our then current form of franchise agreement.

Rights of First Refusal. During the term of each franchise agreement, we generally have a right of first refusal to purchase that facility at the price offered to a franchisee by a third party. In addition, some of our agreements give us a right to purchase the franchised center for fair market value, as determined by the parties or an independent appraiser, upon expiration or earlier termination of the franchise agreement.

Franchisee SubleaseLease Agreements

In addition to franchise fees, we also collect rent from franchisees who subleaselease their respective travel centers from us. At December 31, 2013,2015, there were five such subleasedleased franchisee travel centers. During 2012 and 2013, we acquired the operations at four and one travel centers, respectively, that previously had been subleased from us by franchisees. The current terms of the five remaining subleaselease agreements end between June and September 2017. Four of the five remaining subleasesleases have one renewal option for an additional five year period; the fifth subleaselease has no further renewal options.option. The subleasesleases require that the franchisees notify us of their intent to renew the subleaselease at least 90 days but not more than 180 days prior to the expiration of the current term. Among other things, renewal is contingent upon the franchisee not being in default under the expiring subleaselease and executing our then current form of sublease,lease, the terms of which may differ from the expiring sublease,lease, including without limitation, increased rent. The material provisions
Regulatory Environment
Environmental Regulation
Extensive environmental laws regulate our operations and properties. These laws may require us to investigate and clean up hazardous substances, including petroleum or natural gas products, released at our owned and leased properties. Governmental entities or third parties may hold us liable for property damage and personal injuries, and for investigation, remediation and monitoring costs incurred in connection with any contamination and regulatory compliance at our locations. We use both underground storage tanks and above ground storage tanks to store petroleum products, natural gas and other hazardous substances at our locations. We must comply with environmental laws regarding tank construction, integrity testing, leak detection and monitoring, overfill and spill control, release reporting and financial assurance for corrective action in the event of our sublease agreements typically include the following:

        Operating Costs.a release. At some locations we must also comply with environmental laws relative to vapor recovery or discharges to water. Under the terms of our existing leases, the sublessee is responsibleHPT Leases, we generally have agreed to indemnify HPT for the payment ofany environmental liabilities related to properties that we lease from HPT and we are required to pay all costs andenvironmental related expenses incurred in connection with the operation of the leasedproperties. Under an agreement with Shell, we have agreed to indemnify Shell and its affiliates from certain environmental liabilities incurred with respect to our travel centers typically excluding certain environmental costs, certain maintenance costs and real estate taxes.

where Shell has installed natural gas fueling lanes.


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        Rent.    Under


For further information about these and other environmental and climate change matters, see the terms of our existing leases,disclosure under the sublessee must pay annual fixed rent equalheading "Environmental Contingencies" in Note 13 to the sum of:

        Use of the Leased Travel Center.    The leased travel center must be operatedarise as a travel centerresult, see elsewhere in compliance with all laws,this Annual Report, including all environmental laws.

        Termination/Nonrenewal.    The subleases contain terms"Warning Concerning Forward Looking Statements," Item 1A, "Risk Factors," and provisions regarding terminationItem 7, "Management's Discussion and nonrenewal, which are substantially the same as the termsAnalysis—Environmental and provisions of the related franchise agreements. The subleases are cross defaulted with the related franchise agreements. In certain circumstances we may reimburse the franchisee for a portion of the franchisee's cost of certain capital improvements upon termination of the sublease.

Climate Change Matters."

Franchise Regulation

Some states require state registration and delivery of specified disclosure documentation to potential franchisees and impose special regulations on petroleum franchises. Some state laws also impose restrictions on our ability to terminate or not renew franchises and impose other limitations on the terms of our franchise relationships or the conduct of our franchise business. A number of states include, within the scope of their petroleum franchising statutes, prohibitions against price discrimination and other allegedly anticompetitive conduct. These provisions supplement applicable federal and state antitrust laws. Federal Trade Commission regulations require that we make extensive disclosure to prospective franchisees. We believe that we are in compliance with all franchise laws applicable to our business.

Gaming Regulation

As a result of our involvement in gaming operations at some of our travel centers operated through certain of our subsidiaries, we and such subsidiaries, which we refer to as our licensed subsidiaries, are currently subject to gaming regulations in Illinois, Louisiana, Montana and Nevada. Requirements under gaming regulations vary by jurisdiction but include, among other things:

findings of suitability by the relevant gaming authorities with respect to, or licensure of, certain of our and our licensed subsidiaries' officers, directors and key employees and certain individuals having a material relationship with us or our licensed subsidiaries;

•
findings of suitability by the relevant gaming authorities with respect to certain of our securityholderssecurity holders and restrictions on ownership of certain of our securities;

•
prior approval in certain circumstances by the relevant gaming authorities of public offerings of our securities;

•
prior approval by the relevant gaming authorities of changes in control of us; and

•
specified reporting requirements.

Holders of beneficial interests in our voting securities are subject to licensing or suitability investigations by the relevant gaming authorities under various circumstances including, generally, the attainment of certain levels of ownership of a class of voting securities, or involvement in the gaming


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operations of or influence over us or our licensed subsidiaries. Persons or entities seeking to acquire control over us or over operation of the license are subject to prior investigation by and approval from the relevant gaming authorities. Any beneficial owner of our voting securities, regardless of the number of shares owned, may be required by a relevant gaming authority to file an application and have his or itstheir suitability reviewed in certain circumstances, including if the gaming authority has reason to believe that such ownership of our voting securities would otherwise be inconsistent with its state's gaming laws. In some jurisdictions, the applicant must pay all costs of investigations incurred in connection with such investigations. Additionally, in the event of a finding by a relevant gaming authority that a person or entity is unsuitable to be an owner of our securities, such person would be prohibited from, among other things, receiving any dividend or interest upon such securities, exercising any voting right conferred through such securities or continuing to hold our securities beyond such period of time as may be prescribed by such gaming authority, managing the licensed business and, in some cases, the shareholder may be required to divest himself or itself of our voting securities.

Certain of our and our subsidiaries' officers and directors must also file applications, be investigated and be licensed or found suitable by the relevant gaming authorities in order to hold such positions. In the event of a finding by a relevant gaming authority that a director, officer, key employee or individual with whom we or our licensed subsidiary have a material relationship is unsuitable, we or our licensed subsidiary, as applicable, may be required to sever our relationships with such individual.

Any violations by us or any of our licensed subsidiaries of the gaming regulations to which we are subject could result in fines, penalties (including the limiting, conditioning, suspension or revocation of any licenses held) and criminal actions. Additionally, certain jurisdictions, such as Nevada, empower their regulators to investigate participation by licensees in gaming outside their jurisdiction and require access to periodic reports regarding those gaming activities. Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions.

Competition

Travel Centers

        Fuel and nonfuel products and services can be obtained by trucking companies and truck drivers from a variety of sources, including national and regional full service travel centers and pumper only truck stops, some of which are owned or franchised by large chains and some of which are independently owned and operated, and some large service stations. In addition, some trucking companies operate their own terminals to provide fuel and services to their own trucking fleets and drivers.

        Although there are in excess of 6,400 travel centers and truck stops in the U.S., we believe that large trucking fleets and long haul trucking fleets tend to purchase the large majority of their fuel at the approximately 1,900 travel centers and truck stops that are located at or near interstate highway exits and from us or our largest competitors. Based on the number of locations, Pilot Flying J, and Love's Travel Stops and Country Stores, Inc., or Love's, and we are the largest companies in our industry.

        We compete with other travel center and truck stop chains based primarily on diesel fuel prices. We also experience competition, to a lesser extent, from travel center chains and independent full service travel centers that is based on the quality, variety and pricing of the wide array of nonfuel product, service and amenities offerings. Our truck repair and maintenance facilities compete with the truck repair and maintenance facilities at Pilot Flying J and Love's locations. These two competitors have increased their respective numbers of truck repair and maintenance facilities over the past few years but do not have as large a chain of repair and maintenance facilities as we do. For truck maintenance and repair services, we also compete with regional full service travel center and truck stop chains, full service independently owned and operated travel centers and truck stops, fleet maintenance



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terminals, independent garages, truck dealerships, truck quick lube facilities and other parts and service centers. We also compete with other full service restaurants, QSRs, mass merchandisers, electronics stores, drugstores and travel stores. Some truck fleets own their own fuel, repair and maintenance facilities; however, we believe the long term trend has been toward a reduction in these facilities in favor of obtaining fuel, repair and maintenance services from third parties like us.

        An additional source of competition


Seasonality
Our sales volumes are lower in the future could result from commercializationfirst and fourth quarters than the second and third quarters of state owned interstate highway rest areas. Some state governments have historically requested thateach year. In the federal government allow these rest areas to offer fuel and nonfuel products and services similar to that offered at a travel center and certain congressional leaders have historically supported such legislation. If commercialized, these rest areas may increasefirst quarter, the numbermovement of locations competing with us and these rest areas may have significant competitive advantages over existing travel centers, including ours, because they are generally located on restricted (i.e., toll) roads and have dedicated ingress and egress.

        Some states have privatized their toll roads that are part of the interstate highway system. We believe it is likely that tolls will increase on privatized highways. In addition, some states may increase tolls for their own account. If tolls are introduced or increased on highways in the proximity of our travel centers, our business at those travel centers may decline because truckers may seek alternative routes.

        We believe we may be able to compete successfully for the following reasons:

        HPT is not obligated to provide us with opportunities to lease additional properties, and we may not be able to find other sources of capital sufficient to maintain or grow our travel center business. Also, some of our competitors may have more resources than we do; and some of our competitors have vertically integrated fuel, fuel card and other businesses which may provide them competitive advantages. For all of these reasons and others, we can provide no assurance that we will be able to compete successfully.

Convenience Stores

        The convenience store industry is highly competitive with ease of entry and constant change in the number and types of retailers offering the products and services similar to those we offer. Fuel, food, including prepared foods, and nonfood items similar or identical to those sold by us are generally available from various competitors in the communities we serve, including other convenience store chains, independent convenience store operators, supermarkets, drug stores, mass merchants, gasoline stations and other retail stores. We believe our stores compete principally with their local grocery stores, convenience stores, restaurants, and larger gasoline stations offering a more limited selection of grocery and food items for sale. We believe that we may have a competitive advantage in this market because at an average of approximately 5,000 square feet, our convenience stores are larger than the average convenience store, which average is approximately 2,900 square feet according to the National


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Association of Convenience Stores, enabling us to have a larger variety of product and service offerings.

Environmental and Climate Change Matters

        Extensive environmental laws regulate our operations and properties. These laws may require us to investigate and clean up hazardous substances, including petroleum or natural gas products, released at our owned and leased properties. Governmental entities or third parties may hold us liable for property damage and personal injuries, and for investigation, remediation and monitoring costs incurred in connection with any contamination and regulatory compliance. We use both underground storage tanks and above ground storage tanks to store petroleum products, natural gas and waste at our locations. We must comply with environmental laws regarding tank construction, integrity testing, leak detection and monitoring, overfill and spill control, release reporting and financial assurance for corrective action in the event of a release. At some locations we must also comply with environmental laws relative to vapor recovery or discharges to water. In addition, legislation and regulation regarding climate change, including greenhouse gas emissions, and other environmental matters may be adopted or administered and enforced differently in the future, which could adversely impact our business. For instance, federal and state governmental requirements addressing emissions from trucks and other motor vehicles, such as the U.S. Environmental Protection Agency's gasoline and diesel sulfur control requirements that limit the concentration of sulfur in motor gasoline and diesel fuel, as well as President Obama's recent order that his administration developmotorist travel are usually at their lowest levels of each calendar year. In the fourth quarter, freight movement is lower due to vacation time taken by professional truck drivers associated with the holiday season. While our revenues are modestly seasonal, the quarterly variations in our operating results may reflect greater seasonal differences as our rent and implement new fuel efficiency standards for medium and heavy duty commercial trucks by March 2016, could negatively impact our business. While thecertain other costs of our environmental compliance in the past havedo not had a material adverse impact on us, it is impossible to predict the ultimate effect changing circumstances and changing environmental laws may have on us in the future. Under the terms of our leases, we generally have agreed to indemnify HPT for any environmental liabilities related to properties that we lease from HPT and we are required to pay all environmental related expenses incurred in the operation of these properties. Under our agreement with Shell, we have agreed to indemnify Shell and its affiliates from certain environmental liabilities incurred with respect to our travel centers where natural gas fueling lanes are installed by Shell. Also, legislation and regulations that limit carbon emissions may cause our energy costs at our locations to increase.

        For further information about these and other environmental and climate change matters, see the disclosure under the heading "Environmental Matters" in Note 18 to the Notes to Consolidated Financial Statements included in Item 15 of this Annual Report, which disclosure is incorporated herein by reference. In addition, for more information about these environmental and climate change matters and about the risks which may arise as a result, see elsewhere in this Annual Report, including "Warning Concerning Forward Looking Statements," Item 1A, "Risk Factors," and Item 7, "Management's Discussion and Analysis—Environmental and Climate Change Matters."

vary seasonally.

Intellectual Property

        We own no patents. We own the "Petro Stopping Centers" and "Minit Mart" names and related trademarks and various trade names used in our business such as RoadSquad®, RoadSquad ConnectTM™, UltraOne®, Iron Skillet®, Reserve-ItTMReserve-It!™ and others. We have the right to use the "TA", "TravelCenters of America", Country Pride® and certain other trademarks, historically used by our predecessor, which are owned by HPT, during the termterms of each of the four New TA Lease.Leases. We also license certain trademarks used in the operation of certain of our QSRs and convenience stores and may in the future license trademarks to be used in the operation of one or more of our full service restaurants. We believe that these trademarks are important to our business, but that they could be replaced with alternative trademarks without significant disruption in our business except for changes in cost, which may be significant.


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Seasonality

        Assuming little variation in fuel prices, our revenues are usually lowest in the first quarter of a year when movement of freight by professional truck drivers and motorist travel are typically at their lowest levels of the year, and our revenues in the fourth quarter of a year are often somewhat lower than those of the second and third quarters because, although the beginning of the fourth quarter is often positively impacted by increased movement of freight in preparation for various national holidays, that positive impact is often more than offset by a reduction in freight movement caused by vacation time associated with those holidays taken by professional truck drivers toward the end of the year. While our revenues are modestly seasonal, the quarterly variations in our operating results may reflect greater seasonal differences because our rent and certain other costs do not vary seasonally.

Employees

        As of December 31, 2013, we employed approximately 20,670 people on a full or part time basis. Of this total, approximately 20,000 were employees at our company operated sites, 600 performed managerial, operational or support services at our headquarters or elsewhere and 70 employees staffed our distribution centers. Thirty of our employees at two travel centers are represented by unions. We believe that our relationship with our employees is satisfactory.

Internet Website

Websites

Our internet website address is www.tatravelcenters.com.addresses are www.ta-petro.com and www.minitmart.com. Copies of our governance guidelines, code of business conduct and ethics, our insider trading policy and our policy outlining procedures for handling concerns or complaints about accounting, internal accounting controls or auditing matters and the charters of our audit, compensation and nominating and governance committees are posted on our website at www.ta-petro.com and also may be obtained free of charge by writing to our Secretary, TravelCenters of America LLC, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458 or at our website.02458. We make available, free of charge, on our website at www.ta-petro.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, as soon as reasonably practicable after these forms are filed with, or furnished to, the Securities and Exchange Commission, or the SEC. Any shareholder or other interested party who desires to communicate with our Independent Directors, individually or as a group, may do so by filling out a report on our website.website at www.ta-petro.com. Our boardBoard of directorsDirectors also provides a process for security holders to send communications to the entire board. Information about the process for sending communications to our boardBoard of Directors can be found on our website. Our website address is included several times in this Annual Report as a textual reference only and the information in the website is not incorporated by reference into this Annual Report.

at www.ta-petro.com.


Item 1A. Risk Factors

Our business faces many risks. If any of the events or circumstances described in the following risks occurs, our business, financial condition or results of operations could suffer and the trading pricemarket prices of our equity or debt securities could decline. Investors and prospective investors should carefully consider the following risks, the risks referred to elsewhere in this Annual Report and the information contained under the heading "Warning Concerning Forward Looking Statements" before deciding whether to invest in our securities.

Risks relatedRelated to our business

Our operations have produced lossesBusiness

.

        From when we began operations on January 31, 2007, through 2010 our business produced losses. Although some of our historical results were impacted by separation obligations with our former


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management, business reorganizations and other costs that did not recur and we have been profitable in 2011, 2012 and 2013, we believe our losses in prior periods were also the result of the general decline of the U.S. and world economies over which we have no control. We cannot provide any assurance that we will be able to operate profitably in future periods.

Our operating margins are narrow.narrow

.

Our total revenues foroperating margins are low. Fuel sales comprise the year ended December 31, 2013, were $7.9 billion, while the summajority of our cost of goods sold (excluding depreciation)revenues and site level operating expenses for the same period totaled $7.5 billion. Fuel sales in particular generate low gross margin percentages. Our fuel sales for the year ended December 31, 2013, were $6.5 billion and our gross margin on fuel sales was $0.3 billion, or approximately 5.3% of fuel sales. A small percentage decline in our future revenues or increase in our future costs, and expenses, especially revenues and costs and expenses related to fuel, may cause our profits to decline or us to incur losses.

Historically, our fuel margins per gallon decline during periods of rising fuel prices. Further, fuel prices and sourcing have historically been volatile, which may increase the risk of declines in revenues or increases in costs. In recent prior years, during the U.S. economic recession and periods of historically high and volatile fuel prices, we realized large operating losses. Further shifts in customer demand for our products and services, or heightened competition could result in our operating margins narrowing and incurring operating losses.


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Our financial results are affected by U.S. trucking industry economic conditions.

The trucking industry is the primary customer for our goods and services. Demand for trucking services in the U.S. generally reflects the amount of commercial activity in the U.S. economy. When the U.S. economy declines, demand for goods moved by trucks declines, and in turn demand for our products and services typically declines. For example, in the recent past declines in housing construction led to less lumber and construction materials being shipped, and these reduced shipments resulted in fewer customers and lower sales volumes at our travel centers. While the U.S. economy recently has been slowly growing over the past several quarters and trucking activity measures reflect growth in that industry, the strength and sustainability of any economic recovery is uncertain. If the U.S. economy continues to operate as it has over the past few years, or if it worsens, our financial results may not improve and may decline.

We have a substantial amount of indebtedness and rent obligations, which could adversely affect our financial condition.

        As of December 31, 2013, we had total consolidated

Our indebtedness of $154.9 million, consisting of letters of credit outstanding under our credit facility and $110 millionrent obligations are substantial. The terms of our 8.25% Senior Notesleases with HPT require us to pay all of our operating costs and generally fixed amounts of rent. During periods of business decline, our revenues and gross margins may decrease but our minimum rents due 2028. Asto HPT and the interest payable on our indebtedness do not decline. A decline in our revenues or an increase in our expenses may make it difficult or impossible for us to make payments of December 31, 2013, we also had deferredinterest and principal on our debt or meet all of our rent obligations of $150 million, $107.1 of which is due on December 31, 2022, and $42.9 million of which is due on June 30, 2024, and substantial ongoing obligations under our leases. Together, these obligations are substantial and could limit our ability to obtain financing for working capital, capital expenditures, acquisitions, refinancing, lease obligations or other purposes. TheyOur substantial indebtedness and rent obligations may also increase our vulnerability to adverse economic, market and industry conditions, limit our flexibility in planning for, or reacting to, changes in our business operations or to our industry overall, and place us at a disadvantage in relation to competitors that have lower relative debt levels. If we default under our HPT leases, we may be unable to continue our business. Any or all of the above events and factors could have an adverse effect on our results of operations and financial condition.

We are obligated to pay material amounts of rent to HPT.

        The terms of our leases with HPT require us to pay all of our operating costs and generally fixed amounts of rent. During periods of business decline, like the one we experienced during the recent recession, our revenues and gross margins may decrease but our minimum rents due to HPT do not decline. A decline in our revenues or an increase in our expenses may make it difficult or impossible for us to meet all of our obligations and, if we default under our HPT leases, we may be unable to continue our business.


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Fuel price increases and fuel price volatility negatively affect our business.

        High

Increasing fuel prices and the inability to project future pricesfuel price volatility have several adverse impacts upon our business. First, high fuel prices result in higher truck shipping costs. This causes shippers to consider alternative means for transporting freight, which reduces trucking business and, in turn, reduces our business. Second, high fuel prices cause our trucking customers to seek cost savings throughout their businesses. This has resulted in the implementation by many customerof our customers of measures to conserve fuel, such as lower maximum driving speeds and reduced truck engine idling, reducingwhich measures reduce total fuel consumption and in turn reduce our fuel sales. Third, higher fuel prices may result in less disposable income for our customers to purchase our nonfuel goods and services. Fourth, higher and more volatile fuel commodity prices increase the working capital needed to maintain our fuel inventoriesinventory and receivables, and this increases our costs of doing business. Further, increases in fuel prices may place us at a cost disadvantage to our competitors that may have larger and longer maintained fuel inventory that may have been purchasedor forward contracts executed during periods of lower fuel prices. If fuel commodity prices or fuel price volatility increase, our financial results may not improve and may worsen.

Increasing truck fuel efficiency may adversely impact our business.

Government regulation and the high cost of motor fuels in recent years are causing truck manufacturers and our trucking customers to focus on fuel efficiency. The largest part of our business consists of selling motor fuel. If our trucking customers purchase less motor fuel because their trucks are operated more efficiently, our financial results will decline unless we are able to sufficiently offset those declines by selling substitute or other products or services, gaining market share, or increasing our gross margins per gallon of fuel sold on lower volumes of fuel sales.or reducing our operating costs. It is unclear whether we will be able to operate our travel centers profitably if the amount of motor fuels used by the U.S. trucking industry declines because of fuel use efficiencies. If and as truck fuel use efficiency continues to increase and if we are unable to sufficiently increaseoffset any resulting declines in our fuel sales of other products and services to gain market share or to increase our profit margins on lower fuel volumes,volume, our profits may decline or we may incur losses.


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Climate change and other environmental legislation and regulation and market reaction thereto may decrease demand for our major product, diesel fuel, and require us to make significant capital or other expenditures, which may adversely affect our business.

Climate change legislation and regulation, including those addressing greenhouse gas emissions, and market reaction to any such legislation or regulation or to climate change concerns, may decrease the demand for our major product, diesel fuel, and may require us to make significant capital or other expenditures. Legislative and regulatory initiatives requiring increased truck fuel efficiency have accelerated in the United States,U.S. and these mandates have and may continue to result in decreased demand for diesel fuel, which could have a material adverse effect on our business, financial condition and results of operations. Increased costs incurred by our suppliers as a result of climate change or other environmental legislation or regulation may be passed on to us in the prices we pay for our fuel supplies, but we may not be able to pass on those increased costs to our customers. Increased fuel costs resulting from these reasons would likely have similar effects on our business, operations and liquidity as discussed elsewhere regarding high fuel costs, including decreased demand for our fuel at our locations, increased working capital needs and decreased fuel gross margins. Further, legislation and regulations that limit carbon emissions may cause our energy costs at our locations to increase. Moreover, technological changes developed or changes in customer transportation or fueling preferences, including as a result of or in response to any such legislation, regulation or market reaction, may require us to make significant capital or other expenditures to adopt those technologies or to address those changed preferences and may decrease the demand for products and services sold at our locations. For example, federal and state governmental requirements addressing emissions from trucks and other motor vehicles, such as the U.S. Environmental Protection Agency's, or the EPA's, gasoline and


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diesel sulfur control requirements that limit the concentration of sulfur in motor gasolinefuel, as well as President Obama's February 2014 order that his administration develop and dieselimplement new fuel efficiency standards for medium and heavy duty commercial trucks by March 2016, could negatively impact our business by making the fuel more expensive and causing our customers to buy less. For more information regarding climate change matters and their possible adverse impact on us, please see Item 7, "Management's Discussion and Analysis—Environmental and Climate Change Matters."

Our travel centers require regular and substantial maintenance and capital investments.

        Our travel centers are open for business 24 hours per day, 365 days per year. Also, many of our travel centers were originally constructed more than 25 years ago. Because of the age of many of our travel centers and because of the nature and intensity of the uses of our travel centers, our travel centers require regular and substantial expenditures for maintenance and capital investments to remain functional and attractive to customers. If we cannot access capital necessary to maintain our properties, our business may decline and our profits may decline or we may incur losses. Also, deferring certain capital expenditures in the near term may require us to make even larger amounts of capital expenditures in the future.

        Although we may request that HPT purchase future renovations, improvements and equipment at the travel centers that we lease from HPT, HPT is not obligated to purchase any amounts and any amounts it purchases will result in an increase in our rent payable to HPT.

Our failure to prepare and timely file our periodic reports with the SEC may adversely affect our accessbusiness. Pursuant to the public markets to raise debt or equity capital as necessary to make required investmentsPresident's executive order, in our properties or to implement our business strategies.

        We are not current in our reporting requirements withJune 2015 the SEC, and, as a result, are not able to use our shelf registration statement on Form S-3 to access the public markets to raise debt or equity capital. This limitation could adversely affect our ability to make the capital investments necessary to maintain our properties or prevent us from pursuing transactions or implementing business strategies that we might otherwise believe are beneficial to our business. Until we have regained and maintained timely compliance with our reporting obligations under the Exchange Act for a period of no less than twelve full consecutive calendar months, we will be ineligible to use shorter and less costly filings, such as a registration statement on Form S-3, to register our securities for sale. We may use a registration statement on Form S-1 to register a sale of our securities to raise capital or complete acquisitions, but doing so would likely increase transaction costsEPA and the time required to raise capital and adversely impact our ability to raise capital or complete acquisitionsNational Highway Traffic Safety Administration proposed a new regulation that would phase in a timely manner.

We may not complete our pending acquisitions within the time frame we anticipate, or at all, which could have a negative effect on us.

        Our pending acquisitions are subject to satisfaction of closing conditions, which could delay or prevent completion, cause us to incur additional costs, or both. If we do not consummate one or more pending acquisitions within the expected time frame, or at all, it could have a negative effect on our ability to execute on our growth strategy or financial performance. Additionally, if we incur substantial expenses in connection with the negotiation and completion of a particular transaction and it is not completed, we would have incurred these expenses without realizing the expected benefits of the transaction.

Acquisitions may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of a particular transaction may not be fully realized.

        Travel centers that we acquire often require substantial improvements in order to be brought up to our standards, which improvements require an extended period of time to plan, design, permit and


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complete, often followed by a period of time to mature and become part of our customers' networks. We estimate that our travel center acquisitions generally will reach stabilization in approximately the third year after acquisition, but actual results can vary widely from this estimate. If improvements are more difficult, costly or time consuming than expected or if reaching maturity takes longer than expected or does not occur at all, our business, financial condition or results of operations could be negatively affected.

        Additionally, the success of any acquisition, including the realization of anticipated benefits and cost savings, will depend, in part, on our ability to successfully combine the acquiree's business and ours. The integration may be more difficult, costly or time consuming than expected, may result in the loss of key employees or business disruption to us, or may adversely affect our ability to maintain relationships with customers, suppliers and employees or to fully achieve the anticipated benefits and cost savings of the acquisition. If we experience difficulties with the integration process for a particular acquisition, the anticipated benefits of the transaction may not be realized fully or at all, or may take longer to realize than expected. Integration efforts may also divert management attention and resources. These matters could have an adverse effect on us for an undetermined period after completion of a transaction.

The obligations and liabilities with respect to an acquisition, some of which may be unanticipated or unknown, may be greater than we have anticipated which may diminish the value of the acquisition to us.

        We may acquire obligations and liabilities in a particular transaction, some of which may not have been disclosed to us, may not be reflected or reserved for in the acquiree's historical financial statements, or may be greater than we have anticipated. These obligations and liabilities could have a material adverse effect on our business, financial condition or results of operations.

We may not complete our planned travel center development projects within the time frame or for the investment we anticipate, or at all.

        Our planned travel center development projects could be delayed or not completed or could require a greater investment of capital or management time, or both, than we expect. Additionally, if we design, plan, permit or construct a project but do not complete it, we may incur substantial costs without realizing any expected benefits.

We rely upon trade creditors for a significant amount of our working capital and the availability of alternative sources of financing may be limited.

        Our fuel purchases are our largest operating cost. Historically, we have paid for our fuel purchases after delivery. In the past, as our fuel costs increased with the increase in commodity market prices, some of our fuel suppliers were unwilling to adjust the amounts of our available trade credit to accommodate the increased costs of the fuel volumes that we purchase; for example, a $10 million amount of trade credit will allow us to purchase 5 million gallons of fuel at $2.00 per gallon, but only 3.33 million gallons at $3.00 per gallon. Also, our historical financial results and general U.S. economic conditions have caused some fuel suppliers to request letters of credit or other forms of security for our purchases. We cannot predict how high or low fuel prices may be in the future,stringent greenhouse gas emission and fuel commodity prices significantly impact our working capital requirements.

        In light of economic, industryefficiency standards for medium and global credit market conditionsheavy duty vehicles beginning in model year 2021 (model year 2018 for certain trailers) through model year 2027. The proposed regulation would reduce fuel usage between 8% and our historical operating losses, the availability24% (depending on vehicle category) by model year 2027. Further, legislation and terms of any credit we may be able to obtain are uncertain. Although we maintain a credit facility permitting borrowings of up to $200 million, we typically utilize a large portion ofregulations that facility for issuances of letters of credit to our fuel suppliers to secure our fuel purchases and to taxing authorities (or surety bond providers) for fuel taxes. In addition, our qualified collateral historically has been below the amount required to permit the entire $200 million under the


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credit facility to be available to us for borrowings. At December 31, 2013, a total of $130.8 million was available to us for loans and letters of credit under the credit facility, of which we had used $44.9 million for outstanding letters of credit issued under that facility to secure certain purchases, insurance, fuel tax and other trade obligations. Any increased investment in working capital decreases our financial flexibility to use our capital for other business purposes or to fund our operations andlimit carbon emissions may cause usour energy costs at our locations to suffer losses. We received a waiver, until July 31, 2014, of the requirement under our credit facility to furnish unaudited consolidated financial statements as of and for the fiscal quarter ended March 31, 2014 within 45 days of such quarter end. If we are unable to furnish these financial statements within this time period or obtain an extension of the waiver, we may be unable to borrow under our credit facility, which could affect our ability to meet our business obligations or grow our business.

        Our credit facility is secured by substantially all of our cash, accounts receivable, inventory, equipment and intangible assets and imposes restrictions on our ability to incur additional indebtedness or to grant security interests in our assets. Further, under the HPT Leases, subject to certain exceptions, our tenant subsidiaries may not incur debt secured by any of their assets used in the operation of the leased travel centers without HPT's consent. Because security interests in a significant amount of our assets have already been granted and we are contractually limited in our ability to incur additional debt or grant security interests, our ability to obtain additional financing may be limited.

        Further, our failure to timely file this Annual Report with the SEC, consequent inability to use our shelf registration statement on Form S-3 until we have regained and maintained timely compliance with our reporting obligations under the Exchange Act for a period of not less than twelve full consecutive calendar months and the material weaknesses in our internal control over financial reporting may negatively impact our ability to issue new debt and equity securities or the timing and terms of such an issuance.

Our credit facility imposes restrictive covenants on us, and a default under the agreements relating to our credit facility or under our indenture governing our Senior Notes could have a material adverse effect on our business and financial condition.

        Our credit facility requires us and our subsidiaries, among other obligations, to maintain a specified financial ratio under certain circumstances and to satisfy certain financial tests. These tests include maintenance of certain financial ratios any time that excess availability under the credit facility falls below 15% of the maximum credit limit of $200 million, until such time that the excess availability has been greater than 15% of the maximum credit limit for thirty consecutive days. In addition, our credit facility restricts, among other things, our ability to incur debt and liens, make certain investments and pay dividends and other distributions including, under certain circumstances, payments on the Senior Notes. Under certain circumstances, we are required to seek permission from the lenders under our credit facility to engage in specified corporate actions.

        Our credit facility also requires that we furnish certain of our financial statements to our lenders within specified time periods. Additionally, the indenture governing our Senior Notes requires that we file our Exchange Act reports within prescribed time periods. If we are unable to furnish these financial statements or reports within the prescribed time periods, or, in the case of our credit facility, obtain a waiver, we may be in default under our credit facility or under the indenture governing the Senior Notes, which could give rise to adverse consequences, including giving lenders or holders of our Senior Notes the right to exercise certain remedies, such as demanding immediate repayment of amounts owed, and restrictions on our ability to borrow. If we are unable to borrow under our credit facility, we may be unable to meet our business obligations or grow our business. Effective May 31, 2014, we received a waiver from our lenders extending until July 31, 2014, our requirement to furnish our quarterly financial statements as of and for the fiscal quarter ended March 31, 2014.

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        Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants. Failure to comply with these covenants (or similar covenants contained in future financing agreements) could result in a default under our credit facility, indenture and other agreements containing cross-default provisions, which, if not cured or waived, could have a material adverse effect on our business, financial condition and results of operations. A default could permit lenders or holders to accelerate the maturity of the debt under these agreements and to foreclose upon any collateral securing the debt and to terminate any commitments to lend. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations, including our obligations under the Senior Notes. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing. If our indebtedness were to be accelerated, our assets may not be sufficient to repay such indebtedness in full. In such circumstances, we could be forced into bankruptcy or liquidation and, as a result, investors could lose their investment in our securities.

An interruption in our fuel supplies would materially adversely affect our business.

To mitigate the risks arising from fuel price volatility, we generally maintain limited fuel inventories.inventory. Accordingly, an interruption in our fuel supplies would materially adversely affect our business. Interruptions in fuel supplies may be caused by local conditions, such as a malfunction in a particular pipeline or terminal, by weather related events, such as hurricanes in the areas where petroleum or natural gas is extracted or refined, or by national or international conditions, such as government rationing, acts of terrorism, wars and the like. Further, our fuel suppliers may fail to provide us with fuel due to these or other reasons. Any limitation in available fuel supplies or on the fuel we can offer for sale may cause our profits to decline or us to experience losses.

Our storage and dispensing of petroleum products and natural gas create the potential for environmental damages, and compliance with environmental laws is often expensive.

Our business is subject to laws relating to the protection of the environment. The travel centers and convenience stores we operate include fueling areas, truck repair and maintenance facilities and tanks for the storage and dispensing of petroleum products, natural gas, waste and other hazardous substances, all of which create the potential for environmental damage. As a result, we regularly incur environmental clean up costs. Our balance sheet as of December 31, 2013, included an accrued liability of $7.5 million for environmental remediation and related costs. Because of the uncertainties associated with environmental expenditures, it is possible that future expenditures could be substantially higher than this amount. Environmental laws expose us to the possibility that we may become liable to reimburse governments or others for damages and costs they incur in connection with environmental hazards or liable for fines and penalties for failure to comply with environmental laws. We cannot predict what environmental legislation or regulations may be enacted or how existing laws or regulations will be administered or interpreted with respect to our products or activities in the future; more stringent laws, more vigorous enforcement policies or stricter interpretation of existing laws in the future could cause us to expend significant amounts or experience losses.

        In our experience, the risk of being subject to regulatory review and proceedings for environmental related matters is greater in certain jurisdictions, such as the State of California. We have significant operations in the State of California and are currently and have in the past been subject to regulatory review and proceedings for environmental related matters and may in the future be subject to similar reviews and proceedings in that state or elsewhere. Although to date our environmental regulatory matters in the State of California have not resulted in settlements or judgments against us, or otherwise resulted in our paying or agreeing to pay amounts, which have had, or which we expect would reasonably be likely to have, a material adverse effect on our business, there can be no assurance that



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they will not have such an effect or that environmental regulatory reviews or proceedings elsewhere would not have such an effect on us.


Under the leases between us and HPT, we generally have agreed to indemnify HPT from environmental liabilities it may incur arising at any of the properties we lease from HPT. Under our agreement with Shell, we have agreed to indemnify Shell and its affiliates from certain environmental liabilities they may incur with respect to our travel centers where natural gas fueling lanes have been installed. Although we maintain insurance policies which cover our environmental liabilities, that coverage may not adequately cover liabilities we may incur. To the extent we incur material amounts for environmental matters for which we do not receive insurance or other third party reimbursement or for which we have not recognized a liability in prior years, our operating results may be materially adversely affected. In addition, to the extent we fail to comply with environmental laws and regulations, or we become subject to costs and requirements not similarly experienced by our competitors, our competitive position may be harmed. Also, to the extent we are or become obligated to fund any such liabilities, such funding obligation could materially adversely affect our liquidity and financial position.

Consolidation

Our growth strategies and our travel centers and convenience stores require regular and substantial capital investment. We may be unable to access the capital necessary to invest in our locations or fund acquisitions.
Our growth strategies and business depend upon our ability to raise additional capital at reasonable costs to invest in our travel centers and convenience stores and to fund acquisitions and investments that we believe are important to maintain our competitiveness. All of our competitorstravel centers and many of our convenience stores are open for business 24 hours per day, 365 days per year. Due to the nature and intensity of the uses of our locations, they require regular and substantial expenditures for maintenance and capital investments to remain functional and attractive to customers. Although we may request that HPT purchase future renovations, improvements and equipment at the properties that we lease from HPT, HPT is not obligated to purchase any amounts and such purchases only relate to improvements to facilities leased from HPT by us and not to facilities that we have acquired and own or to general business improvements, such as improvements to our information technology networks and systems, or IT systems.
Due to the volatility in the availability of capital to businesses on a global basis and the increased volatility in most debt and equity markets generally, our ability to raise reasonably priced capital is not guaranteed; we may be unable to raise reasonably priced capital because of reasons related to our business, market perceptions of our prospects, the terms or amount of our outstanding indebtedness, the terms or amount of our rent obligations or for reasons beyond our control, such as market conditions. If we are unable to raise reasonably priced capital, our business and profits may decline and our growth strategies may fail.
The travel center industry is highly competitive and principally consists of a small number of large competitors.
We believe that large trucking fleets and long haul trucking fleets tend to purchase the large majority of their fuel at travel centers and truck stops that are located at or near interstate highway exits from us or our largest competitors. Based on the number of locations, we, Pilot and Love's are the largest companies in our industry. Increased competition between the major competitors in the travel center and truck stop business could result in a reduction of our gross margins or an increase in our expenses or capital improvement costs, which could negatively affect our profitability and our liquidity.
There is limited competition among third party fuel card companies may negatively affect our business.

        In 2010, the largest companies in our industry based on diesel fuel volume combined to form Pilot Flying J. As a result of this combination, increased competitive pressure could negatively impact our sales volumes and profitability and increase our site level operating expenses and selling, general and administrative expenses. In addition, mostsuppliers for truck tires.

Most of our trucking customers transact business with us by use of fuel cards, which are issued by third party fuel card companies. The fuel card industry has only a few significant participants, including Comdata, Network, Inc., or Comdata, the largest issuer of fuel cards, and Electronic Funds Source, LLC, or EFS, a company affiliated with Pilot Flying J. EFS is the product of the combination during 2011 and 2012 of theEFS. If these large fuel card businessescompanies increase their transaction fees to us, we may not be able to recover the increased expense through higher prices to customers and we may be required to increase our investment in working capital, which could negatively affect our business. In addition, the manufacture of Transportation Clearing House LLC, EFS Transportation Services, Inc., and T-Check Systems, each previously onetruck tires that we sell at our travel centers is dominated by a limited number of the larger competitors to Comdata in the fuel card industry, making, we believe, EFS the second largest competitor in the fuel card industry.large manufacturers. We aremay be unable to determinepass increased costs to our customers that we may be charged for truck tires and any increased costs we may seek to recover may reduce the full extent and effect the combined Pilot Flying J may have on our financial position, results of operations, or competitive position, although we believe the combination enables Pilot Flying J to substantially alter the competitive conditions in the travel center industry. Further, we are unable to determine the extent of the effect that competition, or lack thereof, between Comdata and EFS in particular, may result in future increases in our transaction fee expenses or working capital requirements, or both.

Our convenience stores are subject to a number of risks particular to thetruck tires we sell.

The convenience store industry that, if materialized, could have a material adverse effect on our business, results of operations or financial condition.

is subject to intense competition.

The convenience store industry in the U.S. and in the geographic areas in which we operate is highly competitive and fragmented with ease of entry and constant change in the number and types of retailers offering the products and services similar to those we provide. We compete with other convenience store chains, independent convenience stores, supermarkets, drugstores, discount clubs, motor fuel service stations, mass merchants, fast food operations and other similar retail outlets. In recent years, several non-traditional retailers, such as supermarkets, club stores and mass merchants, have begun to compete directly with convenience stores, particularly in the sale of motor fuel and their market share is expected to grow. Increased competition or new entrants to the industry could result in reduction of our gross margins. Additionally, a largeBased on the number of our convenience storeslocations, we are locatednot one of the largest companies in Kentucky, making ourthe convenience store business particularly vulnerable to changes in economic conditions in Kentucky.

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We rely upon trade creditors for a significant amount of our labor costs are fixedworking capital and cannot be reduced without adversely affecting our business.

        To maintain and manage our operations requires certain minimum staffing levels to operate our travel centers 24 hours per day, 365 days per year, and we attempt to manage our staffing so to avoid excess, unused capacity. As a result, itthe availability of alternative sources of financing may be difficultlimited.

Our fuel purchases are our largest operating cost. Historically, we have paid for us to effect future reductionsour fuel purchases after delivery. In the past, as our fuel costs increased with the increase in our staff without adversely affecting our business prospects. Also, certain opportunities for sales may be lost when labor is reduced.

Our customers may become unable to pay us when we extend credit.

        We sellcommodity market prices, some of our products on credit. Customers purchasing fuel suppliers were unwilling to adjust the amounts of our available trade credit to accommodate the increased costs of the fuel volumes that we purchase; for example, a $10.0 million amount of trade credit will allow us to purchase five million gallons of fuel at $2.00 per gallon, but only 3.33 million gallons at $3.00 per gallon. Also, our historical financial results and general U.S. economic conditions have caused some fuel suppliers to request letters of credit or other goodsforms of security for our purchases. We cannot predict how high or services on credit from uslow fuel prices may default on their obligations to pay, or they may extend the payment periods, for products sold to them on credit. In light of the challenging economic conditions that have existedbe in the U.S. generally duringfuture, and since the recent recession and in the trucking industry specifically, and the slow and uneven recovery and expansion of the U.S. economy since the recession, the risk that some of our customers may not pay us may be greater at present than it had been prior to the recession. Also, to the extent that we are unable to collect receivables owed to us in a timely fashion, we may be required to increase amounts invested infuel commodity prices significantly impact our working capital which could have a material adverse effect on our business, results of operations or financial condition.

We are involved in litigation which is expensive and may have adverse impacts upon our business.

        We are currently involved in litigation which is expensive and which may have adverse consequences to us. If these litigation matters or new litigation matters continue for extended periods or if they result in judgments adverse to us, our profits may decline or we may experience losses. We are named as a defendant in one lawsuit brought under U.S. federal antitrust laws that we have recently agreed to settle. This settlement is subject to court approval and other conditions, and if it is not completed and we were to be found liable for the claims made in the lawsuit, actual damages would be trebled and we would be subject to joint and several liability among the defendants, which could significantly magnify the effect of any adverse judgment. In our experience, the risk of litigation is greater in certain jurisdictions, such as the State of California. We have significant operations in the State of California and have in the past been, and may in the future be, party to employee and other litigation in that state or elsewhere. Although to date our litigation matters in the State of California have not resulted in settlements or judgments against us which have had a material adverse effect on our business, there can be no assurance that pending or future litigation in that jurisdiction or elsewhere would not have such an effect on us. We have defended, and will continue to defend, vigorously against litigation challenges. However, we or our subsidiaries may enter into settlement discussions in particular cases if we believe it is in our best interests to do so. Settlement of, or failure to successfully defend, litigation could result in liability that could have a material adverse effect on our results of operations, financial condition and cash flows. For additional information about material pending legal proceedings see Item 3, "Legal Proceedings", elsewhere in this Annual Report.

Our labor costs may significantly increase as a result of healthcare regulatory initiatives.

        The adoption of the Patient Protection and Affordable Care Act and the related reconciliation measure, the Health Care and Education Reconciliation Act of 2010, and the regulations resulting from such legislation may significantly increase the costs of providing health care to our employees. Due to the complexity of the legislation and the uncertain timing and content of the related regulations, we are unable to predict the amount and timing of any such increased costs, but the cost may be material. In addition, it is likely that we will incur additional administrative costs to comply with certain provisions of this legislation. Because many of the rules and regulations continue to be defined, we are unable to predict the amount of these costs to comply with various provisions of this legislation. However,

requirements.

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changes to our employee healthcare costs could have a significant, adverse impact on our business and results of operations.

Our franchisees may become unable to pay our rents, franchise royalties and other amounts due to us and we have limited control of our franchisees.

        Five travel centers that we lease from HPT are subleased to franchisees. A failure by our franchisees to pay rents to us would not affect our minimum rent payable to HPT. As of December 31, 2013, an additional 25 travel centers not owned by us or HPT are operated by franchisees. For the year ended December 31, 2013, the rent, franchise royalty and other revenue generated from all of our franchisee relationships was $12.7 million. We believe the difficult business conditions that have affected the travel centers that we operate during and since the recent U.S. recession, including the effects of U.S. economic conditions and high and volatile fuel commodity prices, have also adversely affected our franchisees and may make it difficult for our franchisees to pay the rent, franchise royalties and other amounts due to us. In addition, our sublease and franchise agreements with our franchisees are subject to periodic renewal by us or the franchisee. Also, various laws and our existing franchise agreements limit the control we may exercise over our franchisees' business activities. A failure by our franchisees to pay rent, franchise royalties and other amounts due to us, or the termination or non-renewal of a significant number of our franchise agreements, may cause our profits to decline.

We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of information technology could harm our business.

We rely on information technology networks andIT systems, including the Internet, or IT systems,internet, to process, transmit and store electronic information, including financial records and personal identifyingpersonally identifiable information such as employee and payroll data and workforce scheduling information, and to manage or support a variety of business processes, including our supply chain, retail sales, credit card payments and authorizations, financial transactions, banking and numerous other processes and transactions. We purchase some of the IT systems we use from vendors on whom our IT systems materially depend. We rely on commercially available and proprietary IT systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential customer information, such as payment card and credit information. In addition, the IT systems we use for transmission and approval of payment card transactions, and the technology utilized in payment cards themselves, may put payment card data at risk; and some of these IT systems are determined and controlled by the payment card suppliers and not by us. Although we have taken stepstake various actions to protect and maintain the security of the IT systems we use and the data maintained in them, it is possible that our security measures will not prevent the improper functioning of or damage to the IT systems we use, or the improper access to such IT systems or disclosure of personally identifiable or confidential information, such as in the event of a cyber attack. Security breaches, including physical or electronic break ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information. Any compromise or breach of our IT systems could cause material interruptions in our operations, damage our reputation, require significant expenditures to determine the severity and scope of the breach, subject us to material liability claims, material claims of banks and credit card companies or regulatory penalties, reduce our customers' willingness to conduct business with us and could have a material adverse effect on our business, financial condition and results of operations. Moreover, if we have not adopted technologies to support chip and PIN credit and charge cards by the deadlines set by the credit card companies, those companies will not pay us for fraudulent transactions occurring at our locations with those companies' cards. Further, the failure of the IT systems we use to operate effectively, or problems we may experience with maintaining the IT systems we currently use or transitioning to upgraded or replacement systems, could significantly harm our business and operations and cause us to incur significant costs to remediate such problems.

Many of our labor costs cannot be easily reduced without adversely affecting our business.
To maintain and manage our operations requires certain minimum staffing levels to operate our travel centers and certain convenience stores 24 hours per day, 365 days per year, and we attempt to manage our staffing so to avoid excess, unused capacity. As a result, it may be difficult for us to affect future reductions in our staff without adversely affecting our business prospects. Certain aspects of our business require higher skilled personnel, such as truck service technicians. Hiring, training and maintaining higher skilled personnel can be costly, particularly if turnover is high. Further, as we grow our business, particularly the aspects of our business that require higher skilled personnel, we may experience increased difficulty with staffing those positions with qualified personnel and may incur greater costs to do so. Also, certain opportunities for sales may be lost if staffing levels are reduced too much or if we are unable to maintain a sufficient number of higher skilled employees. In addition, costs for health care and other benefits, due to regulation, market factors or otherwise, may further increase our labor costs.

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Our sales could be harmed if we or our suppliers, franchisors, licensors or franchisees become associated with negative publicity.

We operate our travel centers nationwide and operate our convenience stores under a small number of brand names. We sell branded gasoline at most of our locations and many of our locations have QSRs operating under brands we do not own. In addition, we resell numerous other products we obtain from third parties. If the companies or brands associated with our products and offerings become associated with negative publicity, our customers may avoid purchasing these products and offerings, including at our locations, and may avoid visiting our locations because of our association with the particular company or brand. As noted elsewhere in this Annual Report, the control we may exercise over our franchisees is limited. Negative publicity or reputational damage relating to any of our franchisees may be imputed to our entire company and business. If we were to experience these or other instances of negative publicity or reputational damage, our sales and results of operations may be harmed.

Privatization of toll roads or of rest areas may negatively affect our business.

        Some states have privatized their toll roads that are part of the interstate highway system. We believe it is likely that tolls will increase on privatized highways. In addition, some states may increase tolls for their own account. If tolls are introduced or increased on highways in the proximity of our locations, our business at those travel centers may decline because truckers and motorists may seek alternative routes. Similarly, some states have privatized or are considering privatizing their publicly owned highway rest areas. If publicly owned rest areas along highways are privatized and converted to travel centers in the proximity of some of our locations, our business at those locations may decline and we may experience losses.

We may be unable to utilize our net operating loss carryforwards.

        Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, imposes limitations on the ability of a company taxable as a corporation that undergoes an "ownership change", as defined by the Code, to use its net operating loss carryforwards and certain other tax benefits and deductions to reduce its tax liability. As a result of certain trading in our shares during 2007, we experienced an ownership change. Consequently, we may be unable to use our net operating loss generated in 2007 to offset any future taxable income we may generate. If we experience additional ownership changes, our net operating losses and tax credit carryforwards generated after 2007 could be subject to limitations on usage and the existence of a net unrecognized built-in loss at the time of an ownership change could limit our future tax deductions for a five year period after the ownership change. In 2009, our bylaws were amended to impose certain restrictions on the transfer of our shares in order to help us preserve the tax treatment of our net operating losses and other tax benefits (see below for a discussion of the risks related to our ownership limitations under the heading "Risks arising from certain relationships of ours and our organization and structure").

If we fail to maintain effective internal control over financial reporting our financial reporting could be inaccurate.

        Internal control systems are intended to provide reasonable assurance regarding the preparation and fair presentation of published financial statements. We concluded that our internal controls over financial reporting were not effective as of December 31, 2013. As described in Item 9A of this Annual Report, during 2013 we identified certain deficiencies in our internal control over financial reporting with respect to income taxes, a lack of sufficient accounting department personnel and our financial statement close process. We cannot assure you that our actions will be completely effective or that we will not discover other material weaknesses in our controls. If we fail to maintain effective internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected, our business and financial condition could be harmed, investors may lose confidence in our


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reported financial information and the market price of our common shares or other securities may decline.

Risks arising from certain relationships of ours and our organization and structure

Our business is subject to possible conflicts of interest with HPT and RMR.

        Our business is subject to possible conflicts of interest, as follows:

        In connection with the agreement we entered as part of the HPT Transaction, we granted HPT a right of first refusal to purchase, lease, mortgage or otherwise finance any interest we own in a travel center before we sell, lease, mortgage or otherwise finance that travel center with another party, and we granted HPT and other entities to which RMR provides management services a right of first refusal to acquire or finance any real estate of the types in which they invest before we do, which could limit our ability to purchase or finance our properties or properties we may wish to invest in or acquire in the future. Also, under this agreement we agreed not to take any action that might reasonably be expected to have a material adverse impact on HPT's ability to qualify as a real estate investment trust, or REIT.

        We believe that our historical and ongoing business dealings with HPT and RMR have benefited us and that, despite the foregoing possible conflicts of interest, the transactions we have entered with HPT and RMR since the HPT Transaction have been commercially reasonable and not less favorable than otherwise available to us. Nonetheless, in the past, in particular following periods of volatility in the overall market or declines in the market price of a company's securities, shareholder litigation, dissident shareholder director nominations and dissident shareholder proposals have often been instituted against companies alleging conflicts of interest in business dealings with affiliated and related persons and entities. Our relationships with HPT, RMR, Affiliates Insurance Company, or AIC, an


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Indiana insurance company, the other businesses and entities to which RMR provides management services, Barry Portnoy and other related parties of RMR may precipitate such activities. These activities, if instituted against us, could result in substantial costs and a diversion of our management's attention even if the action is unfounded.

We have significant commercial arrangements with RMR and HPT and we are dependent on those arrangements in operating our business.

        We are party to a business management and shared services agreement with RMR, whereby RMR assists us with various aspects of our business, and a property management agreement with RMR, whereby RMR manages our headquarters office building. One of our Directors is the majority owner and Chairman of RMR. One of our other Directors, President and Chief Executive Officer, our Executive Vice President, Chief Financial Officer and Treasurer and our Executive Vice President and General Counsel are also officers of RMR. Most of the travel centers that we operate are leased by us, principally from HPT. As a result of these factors, we are dependent on our arrangements with RMR and HPT in operating our business and any adverse developments in those arrangements could have a material adverse effect on our business and our ability to conduct our operations.

Territorial restrictions placed on us by our leases with HPT and our franchise agreements with our franchisees could impair our ability to grow our business.

Under our leases with HPT, without the consent of HPT, we generally cannot own, franchise, finance, operate, lease or manage any travel center or similar property within 75 miles in either direction along the primary interstate on which a travel center owned by HPT is located. Under the terms of our franchise agreements for TA travel centers, generally we have agreed not to operate, or allow another person to operate, a travel center or travel center business that uses the TA brand in a specified territory for that TA branded franchise location. Under the terms of our franchise agreements for Petro travel centers, generally we have agreed not to operate, or allow another person to operate, a travel center or travel center business that uses the Petro brand in a specified territory for that Petro branded franchise location. As a result of these restrictions, we may be unable to develop, acquire or franchise a travel center in an area in which an additional travel center may be profitable, thereby losing an opportunity for future growth of our business.

Privatization of toll roads or of rest areas may negatively affect our business.
Some states have privatized their toll roads that are part of the interstate highway system. We believe it is likely that tolls will increase on privatized highways. In addition, some states may increase tolls for their own account. If tolls are introduced or increased on highways in the proximity of our locations, our business at those travel centers may decline because truckers and motorists may seek alternative routes. Similarly, some states have privatized or are considering privatizing their publicly owned highway rest areas. If publicly owned rest areas along highways are privatized and converted to travel centers in the proximity of some of our locations, our business at those locations may decline and we may experience losses.
Labor disputes or other events may arise that restrict, reduce or otherwise negatively impact the movement of goods in the United States, which may adversely impact parts of the trucking industry that are our customers and may adversely impact our financial results at travel centers we operate.
A meaningful aspect of the U.S. trucking industry involves the movement of goods across the U.S. Events that restrict, reduce or otherwise negatively impact the movement of those goods may adversely impact the trucking industry. In 2015, there were extended labor disputes at U.S. west coast ports which slowed the loading and unloading of goods at those ports. A large percentage of the goods which are loaded and unloaded at those ports are transported to and from those ports by trucking companies, including some who are our customers. Future labor disputes could disrupt the transportation of goods across the U.S. and remain unresolved for a prolonged period. Such a disruption may materially and adversely affect our business and our ability to operate profitable travel centers and meet our rent obligations may be adversely affected.
We may be unable to utilize our net operating loss carryforwards.
Section 382 of the U.S. Code, or the Code, imposes limitations on the ability of a company taxable as a corporation that undergoes an "ownership change," as defined by the Code, to use its net operating loss carryforwards and certain other tax benefits and deductions to reduce its tax liability. If we experience an ownership change, our net operating loss and tax credit carryforwards, which currently are expected to be utilized to offset future taxable income, may be subject to limitations on usage or elimination. In 2009, our bylaws were amended to impose certain restrictions on the transfer of our shares in order to help us preserve the tax treatment of our net operating losses and other tax benefits (see below for a discussion of the risks related to our ownership limitations under the heading "Risks Arising from Certain Relationships of Ours and Our Organization and Structure").

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Changes in lease accounting standards may materially and adversely affect us.
The Financial Account Standards Board, or FASB, recently adopted new accounting rules, to be effective for our fiscal year ending December 31, 2019, that will require companies to capitalize all leases on their balance sheets by recognizing a lessee's rights and obligations. When the rules are effective, we will be required to account for the HPT Leases in the assets and liabilities on our balance sheet, where previously we accounting for such leases on an "off balance sheet" basis. As a result, a significant amount of lease related assets and liabilities will be recorded on our balance sheet and we may be required to make other changes to the recording and classification of our lease related expenses. Though these changes will not have any direct impact on our overall financial condition, these changes could cause investors or others to believe that we are highly leveraged and could change the calculations of financial metrics and covenants, as well as third party financial models regarding our financial condition.
Our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or our internal control over financial reporting.
The design and effectiveness of our disclosure controls and procedures and our internal control over financial reporting may not prevent all errors, misstatements or misrepresentations. In prior years, we have determined that we had material weaknesses in our internal control over financial reporting. These material weaknesses were previously remediated; however, while management will continue to review the effectiveness of our disclosure controls and procedures and our internal control over financial reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Deficiencies, including any material weaknesses, in our internal control over financial reporting could result in misstatements of our results of operations or our financial statements or could otherwise materially and adversely affect our business, reputation, results of operations, financial condition or liquidity.
Risks Related to Our Acquisition and Development Plans
Acquisitions may be more difficult, costly or time consuming than expected and the anticipated benefits of a particular transaction may not be fully realized.
Travel centers and convenience stores that we acquire often require substantial improvements in order to be brought up to our standards. For our travel center acquisitions, these improvements often require an extended period of time to plan, design, permit and complete, often followed by a period of time to mature and become part of our customers' supply networks. We estimate that the travel centers we acquire or develop generally will achieve stabilized financial results in approximately the third year after acquisition and that the convenience stores that we acquire will generally reach financial stabilization within one year after acquisition, but the actual results can vary widely from these estimates due to many factors, some of which are outside our control. If improvements are more difficult, costly or time consuming than expected or if reaching maturity takes longer than expected or does not occur at all, our business, financial condition or results of operations could be negatively affected.
Additionally, the success of any acquisition, including the realization of anticipated benefits and cost savings, will depend, in part, on our ability to successfully combine the acquiree's business and ours. The renovation and integration may be more difficult, costly or time consuming than expected, may result in the loss of key employees or business disruption to us, or may adversely affect our ability to maintain relationships with customers, suppliers and employees or to fully achieve the anticipated benefits and cost savings of the acquisition. If we experience difficulties with the renovation and integration process for a particular acquisition, the anticipated benefits of the transaction may not be realized fully or at all, or may take longer to realize than expected. Renovation and integration efforts may also divert management attention and resources. These matters could have an adverse effect on us for an undetermined period after completion of a transaction.
Further, if we are successful in our effort to acquire the Quaker Steak & Lube® business it will be a new entry for us into the casual dining business outside of our travel center format. While we have experience operating casual dining restaurants in travel centers, that experience may not transfer to the Quaker Steak & Lube® business to the extent we expect.
We may not complete our planned travel center development projects within the time frame or for the investment we anticipate, or at all, and the anticipated benefits of the new travel centers may not be fully realized.
Developing a new location is more risky than buying an existing operating location. Our planned travel center development projects could be delayed or not completed or could require a greater investment of capital or management time, or both, than we expect. Additionally, if we design, plan, permit or construct a project but do not complete it, we may incur substantial costs without realizing any expected benefits. Also, the travel centers we construct may not generate the financial returns we anticipate.

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Risks Arising from Certain Relationships of Ours and Our Organization and Structure
Our business is subject to possible conflicts of interest with HPT and RMR.
Our business is subject to possible conflicts of interest, as follows:
We have six Directors: one of whom, Barry M. Portnoy, is also a managing trustee of HPT, the Chairman of RMR, which provides management services to us and to HPT, a director and an executive officer of The RMR Group Inc., which is the managing member of RMR, and an owner and trustee of ABP Trust (formerly known as Reit Management & Research Trust), which is the controlling shareholder of The RMR Group Inc.; one of whom, Arthur G. Koumantzelis, is a former trustee of HPT from prior to when we became a separate public company; one of whom, Lisa Harris Jones, is a member of a law firm that previously had provided professional services to RMR; and one of whom, Thomas M. O’Brien, is a former executive officer of HPT from before we became a separate public company. Further, Mr. Portnoy and a majority of our Independent Directors are members of the boards of trustees or boards of directors of other public companies to which RMR or its affiliates provides management services.
Mr. O'Brien, our President and Chief Executive Officer, Andrew J. Rebholz, our Executive Vice President, Chief Financial Officer and Treasurer, and Mark R. Young, our Executive Vice President and General Counsel, are also officers of RMR.
We lease a large majority of our travel centers from HPT.
RMR provides us business management services pursuant to a business management agreement and property management services at our headquarters building pursuant to a property management agreement, and RMR provides business and property management services to HPT.
In the event of conflicts between us and RMR, any affiliate of RMR or any publicly owned entity with which RMR has a relationship, including HPT, our business management agreement allows RMR to act on its own behalf and on behalf of HPT or such other entity rather than on our behalf.
RMR's simultaneous contractual obligations to us and HPT create potential conflicts of interest, or the appearance of such conflicts.
In an agreement with HPT entered in 2007 in connection with our spin off from HPT, we granted HPT a right of first refusal to purchase, lease, mortgage or otherwise finance any interest we own in a travel center before we sell, lease, mortgage or otherwise finance that travel center with another party. Under that agreement, we also granted HPT and other entities to which RMR provides management services a right of first refusal to acquire or finance any real estate of the types in which they invest before we do. These rights of first refusal could limit our ability to purchase or finance our properties or properties we may wish to invest in or acquire in the future. Also, under this agreement we agreed not to take any action that might reasonably be expected to have a material adverse impact on HPT’s ability to qualify as a real estate investment trust, or REIT. We entered into and completed certain sale, purchase and lease agreements with HPT during 2015 regarding travel center properties and related assets. For more information regarding those transactions, as well as our relationship and leases with HPT, see Note 12 to the Notes to Consolidated Financial Statements included in Item 15 of this Annual Report.
We believe that our historical and ongoing business dealings with HPT and RMR have benefited us and that, despite the foregoing possible conflicts of interest, the transactions we have entered with HPT and RMR since our creation as a separate public company have been commercially reasonable and not less favorable than otherwise available to us. Nonetheless, in the past, in particular following periods of volatility in the overall market or declines in the market price of a company’s securities, shareholder litigation, dissident shareholder director nominations and dissident shareholder proposals have often been instituted against companies alleging conflicts of interest in business dealings with affiliated and related persons and entities. Our relationships with HPT, RMR, AIC, the other businesses and entities to which RMR provides management services, Barry M. Portnoy and other related parties of RMR may precipitate such activities. These activities, if instituted against us, could result in substantial costs and a diversion of our management’s attention even if the action is unfounded.

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We have significant commercial arrangements with RMR and HPT and we are dependent on those arrangements in operating our business.
We are party to a business management agreement with RMR whereby RMR assists us with various aspects of our business. Most of the travel centers that we operate are leased by us, principally from HPT. As a result of these factors, we are dependent on our arrangements with RMR and HPT in operating our business and any adverse developments at these companies or in those arrangements could have a material adverse effect on our business and our ability to conduct our operations.
Ownership limitations and certain other provisions in our limited liability company agreement, bylaws and certain material agreements may deter, delay or prevent a change in our control or unsolicited acquisition proposals.

Our limited liability company agreement, or our LLC agreement, and bylaws contain separate provisions which prohibit any shareholder from owning more than 9.8% and 5% of the number or value of any class or series of our outstanding shares. The 9.8% ownership limitation in our LLC agreement is consistent with our contractual obligations with HPT to not take actions that may conflict with HPT'sHPT’s status as a REIT under the Internal Revenue Code. The 5% ownership limitation in our bylaws is intended to help us preserve the tax treatment of our tax credit carryforwards, net operating losses and other tax benefits. We also believe these provisions promote good orderly governance. These provisions inhibit acquisitions of a significant stake in us and may deter, delay or prevent a change in our control or unsolicited acquisition proposals that a shareholder may consider favorable. Additionally, provisions contained in our LLC agreement and bylaws may have a similar impact, including, for example, provisions relating to:

the division of our Directors into three classes, with the term of one class expiring each year, which could delay a change of control;year;

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In addition, the HPT Leases, our shareholders agreement with respect to AIC, our business management and shared services agreement with RMR and our credit agreement for our $200 million secured revolving credit facility, or our Credit Facility, each provide that our rights and benefits under those agreements may be terminated in the event that anyone acquires more than 9.8% of our shares or we experience some other change in control, as defined in those agreements, without the consent of HPT, RMR or the lenders under the credit facility,Credit Facility, respectively, and that pursuant to our shareholders agreement with respect to AIC, AIC and the other shareholders of AIC may have rights to acquire our interests in AIC if such an acquisition occurs or if we experience some other change of control. In addition, our obligation to repay deferred rent then outstanding under our amended leases with HPT may be accelerated if, among other things, a Director not nominated or appointed by the then members of our Board of Directors is elected to our Board of Directors or if our shareholders adopt a proposal (other than a precatory proposal) not recommended for adoption by the then members of our Board of Directors. For these reasons, among others, our shareholders may be unable to realize a change of control premium for securities they own or otherwise effect a change of our policies or a change of our control.


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Our rights and the rights of our shareholders to take action against our Directors, officers, HPT and RMR are limited.

Our LLC agreement eliminates the personal liability of each of our Directors to us and our shareholders for monetary damages for breach of fiduciary duty as our Director, except for a breach of the Director'sDirector’s duty of loyalty to us or our shareholders as modified by our LLC agreement, for acts or omissions not in good faith or which involved intentional misconduct or a knowing violation of law, or for any transaction from which the Director derived an improper personal benefit. Our LLC agreement also provides that our Directors and officers, HPT, RMR, and the respective directors and officers of HPT and RMR shall not be liable for monetary damages to us or our shareholders for losses sustained or liabilities incurred as a result of any act or omission by any of them unless there has been a final, nonappealable judgment entered by a court determining that such person or entity acted in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that his, her or its conduct was unlawful.

Our LLC agreement also generally requires us to indemnify, to the fullest extent permitted by law, our present and former Directors and officers, HPT, RMR, and the respective directors and officers of HPT and RMR for losses they may incur arising from claims or actions in which any of them may be involved in connection with any act or omission by such person or entity in good faith on behalf of or with respect to us. We also have similar obligations to our Directors and officers under individual indemnification agreements with such persons. In addition, we may be obligated to pay or reimburse the expenses incurred by our present and former Directors and officers, HPT, RMR, and the respective directors and officers of HPT and RMR without requiring a preliminary determination of their ultimate entitlement to indemnification. As a result, we and our shareholders may have more limited rights against our present and former Directors and officers, HPT, RMR, and the respective directors, trustees and officers of HPT and RMR than might otherwise exist absent the provisions in our LLC agreement and our indemnification agreements or that might exist with other companies, which could limit our shareholders'shareholders’ recourse in the event of actions not in our shareholders'shareholders’ best interest.

Disputes with HPT and RMR and shareholder litigation against us or our Directors and officers may be referred to binding arbitration proceedings.

Our contracts with HPT and RMR provide that any dispute arising under those contracts may be referred to binding arbitration proceedings. Similarly, our LLC agreement and bylaws provide that actions by our shareholders against us or against our Directors and officers, including derivative and class actions, may be referred to binding arbitration proceedings. As a result, we and our shareholders would not be able to pursue litigation for these disputes in courts against HPT, RMR or our Directors and officers if the disputes were referred to arbitration. In addition, the ability to collect attorney'sattorney’s fees or other damages may be limited in the arbitration proceedings, which may discourage attorneys from agreeing to represent parties wishing to commence such a proceeding.


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We may experience losses from our business dealings with AIC.

As of May 9, 2014, we have invested approximately $6.1 million in AIC,December 31, 2015, we have purchased substantially all of our property insurance in a program designed and reinsured in part by AIC and we periodically consider the possibilities for expanding our relationship with AIC to other types of insurance. As of May 9, 2014,December 31, 2015, we, RMRABP Trust, HPT and fivefour other companies to which RMR provides management services each own 14.3% of AIC, and we and those other AIC shareholders participate in a combined property insurance program designed and reinsured in part by AIC. Our principal reason for investing in AIC and for purchasing insurance in these programs is to seek to improve our financial results by obtainingobtain improved insurance coverages at lower costs than may be otherwise available to us or by participating in any profits which we may realize as an owner of AIC. While we believe we have in the past benefitted from these arrangements, these beneficial financial results may not occur in the


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future, and we may need to invest additional capital in order to continue to pursue these results. AIC'sAIC’s business involves the risks typical of an insurance business, including the risk that it may be insufficiently capitalized. Accordingly, financial benefits from our business dealings with AIC may not be achieved in the future, and we may experience losses from these dealings.

The licenses, permits and related approvals for our operations may restrict our ownership of us, or prevent or delay any change of control of us.

We have travel center locations in Illinois, Louisiana, Montana and Nevada which include gaming operations. As a result, we and our subsidiaries involved in these operations are subject to gaming regulations in those states. Under state gaming regulations, which can vary by jurisdiction:

shareholders whose ownership of our securities exceeds certain thresholds may be required to report their holdings to and to be licensed, found suitable or approved by the relevant state gaming authorities,

•
authorities;
persons seeking to acquire control over us or over the operation of our gaming license are subject to prior investigation by and approval from the relevant gaming authorities,

•
authorities;
persons who wish to serve as one of our Directors or officers may be required to be approved, found suitable and in some cases licensed, by the relevant state gaming authorities,authorities; and

•
the relevant state gaming authorities may limit our involvement with or ownership of securities by persons they determine to be unsuitable.

As an owner of AIC, we are licensed and approved as an insurance holding company; and any shareholder who owns or controls 10% or more of our securities or anyone who wishes to solicit proxies for election of, or to serve as, one of our Directors or for another proposal of business not approved by our Board of Directors may be required to receive pre-clearance from the relevant insurance regulators.

The gaming and insurance regulations to which we are subject may discourage or prevent investors from nominating persons to serve as our Directors, from purchasing our securities, from attempting to acquire control of us or otherwise implementing changes that they consider beneficial.

Risks relatedRelated to our securities

Our Securities

Our shares have experienced significant price and trading volume volatility and may continue to do so.

Since we became a publicly traded company in January 2007, our shares have experienced significant share price and trading volatility, which may continue. The market price of our common shares has fluctuated and could fluctuate significantly in the future in response to various factors and events, including, but not limited to, the risks set out in this Annual Report, as well as:

the liquidity of the market for our common shares;

•
our historic policy to not pay cash dividends;
changes in our operating results;

•
issuances of additional common shares and sales of our common shares by holders of large blocks of our common shares, such as HPT or our officers or directors.
a lack of analyst coverage, changes in analysts' expectations;expectations and

•
unfavorable research reports; and
general economic and industry trends and conditions.


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In addition, in the past, following periods of volatility in the overall market and the market price of a company's securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management's attention and resources.


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Our securities are subject to delistingInvestors may not benefit financially from the New York Stock Exchange, or NYSE, as a result of our inability to timely file our Quarterly Report on Form 10-Q for the period ended March 31, 2014 with the SEC.

        On May 13, 2014, we filed a Form 12b-25 indicating that as a result of the delay in completing this Annual Report, we were also unable to file our First Quarter 10-Q within the time period prescribed by the Exchange Act. While we are working to file the First Quarter 10-Q as soon as possible, there can be no assurance that we will do so in time to regain compliance with the relevant NYSE listing standards. Failure to regain compliance with the relevant NYSE listing standards could resultinvesting in our securities being delisted.

        If the NYSE determines to delist our securities, the delisting could decrease trading in our securities substantially, affect adversely the market liquidity of our securities, decrease the trading price of our securities, increase the volatility of our common stock price, decrease analyst coverage of our securities, decrease investor demand and information available concerning trading prices and volume of our securities and make it more difficult for investors to buy or sell our securities. Delisting could also harm our ability to obtain additional financing on acceptable terms.

Because we do not pay dividends, shareholders will benefit from an investment in our common shares only if our common shares appreciate in value.

        We have never declared or paid any cash dividends on our common shares. For the foreseeable future, it is expected that any earnings generated from our operations will be used to finance the growth of our business, and that no dividends will be paid to holders of our common shares. In addition, our credit facility and rent deferral agreement with HPT generally restrict our ability to declare or pay dividends. Our lease agreements and our credit facility also generally restrict or prohibit us from repurchasing our shares. As a result, the success of an investment in our common shares will depend upon a future increase in the trading value of our common shares. There is no guarantee that our common shares will appreciate in value.

If securities or industry analysts do not publish research, or if they publish unfavorable research, about us, our share price and trading volume would likely decline.

        The trading market for our common shares may be influenced by research and reports, or lack thereof, that industry or securities analysts publish about us, our business or our market. Currently, the number of analyst reports about us is limited. If no additional analysts publish research about us, the trading price and volume of our common shares could decline. If analysts publish research about us that is unfavorable or if analysts who publish research about us now or in the future cease to publish such research regularly our share price and trading volume may decline.

Additional future sales of a significant amount of our shares could cause our share price to decline.

        Future sales of substantial amounts of our common shares by our shareholders in the public market, or the perception that these sales could occur, may cause the market price of our common shares to decline. As of December 31, 2013, HPT, our former parent company, owned 3,420,000 of our outstanding common shares, representing approximately 9.1% of our outstanding common shares at such date. Additionally, we grant restricted share awards which vest over a period of years to our employees, officers, Directors and others under our share award plan. As those shares vest, the recipients of those restricted share awards may seek to sell those shares in the public market. Increased sales of our common shares by HPT, our employees, officers, Directors or others could cause our share price to decline or make it more difficult for us to sell equity or equity related securities in the future.

        Additionally, from time to time without seeking shareholder approval, we may issue additional common shares, preferred shares and other securities. We may file future shelf registration statements

Senior Notes.

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with the SEC that we may use to sell common shares, preferred shares and other securities from time to time in connection with acquisitions or otherwise. Such securities could entitle their holders to greater voting rights or preferences to our common shares, including, without limitation, as to dividends and liquidation rights. To the extent that we are able to grow through acquisitions and are able to pay for such acquisitions with our common shares or other securities convertible into our common shares, the number of outstanding common shares that will be eligible for sale in the future is likely to increase substantially. Persons receiving our shares in connection with these acquisitions may be more likely to sell large quantities of their shares, which may influence the price of our common shares. In addition, the issuance or potential issuance of additional common shares could reduce demand for our common shares or adversely affect the market price for our common shares. To the extent we issue substantial additional common shares or other equity securities, the ownership of our existing shareholders would be diluted and our earnings per share could be reduced.

The indenture under which the 8.25% Senior Notes were issued does not contain financial covenantsdue 2028, the 8.00% Senior Notes due 2029, and does not limit the amount of indebtedness that8.00% Senior Notes due 2030, which we may incur.

        The indenture under whichrefer to collectively as the Senior Notes, were issued contains no financial covenants or other provisions that would afford the holders of the Senior Notes any substantial protection in the event we participate in a material transaction. In addition, the indenture does not limit the amount of indebtedness we may incur or our ability to pay dividends, make distributions or repurchase our common shares. AsAdditionally, investors in our Senior Notes may be adversely affected as a result noteholders are not protected underof the indenture in following:

the event of a highly leveraged transaction, reorganization, change of control, restructuring, sale of significant amount of assets, merger or similar transaction that may adversely affect them.

The Senior Notes are unsecured and effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness.

        Upon any distribution to our creditors in a bankruptcy, liquidation, reorganization or similar proceeding relating to us or our property, the holders of our secured debt, including the lenders under our credit facility, will be entitled to exercise the remedies available to a secured lender under applicable law and pursuant to the instruments governing such debt and to be paid in full from the assets securing that secured debt before any payment may be made with respect to the Senior Notes. In that event, because the Senior Notes are not secured by any of our assets, it is possible that there will be no assets from which claims of holders of the Senior Notes can be satisfied or, if any assets remain, that the remaining assets will be insufficient to satisfy those claims in full. If the value of such remaining assets is less than the aggregate outstanding principal amount of the Senior Notes and accrued interest and all future debt ranking pari passu with the Senior Notes, we will be unable to fully satisfy our obligations under the Senior Notes. In addition, if we fail to meet our payment or other obligations under our secured debt, the holders of that secured debt would be entitled to foreclose on our assets securing that secured debt and liquidate those assets. Accordingly, we may not have sufficient funds to pay amounts due on the Senior Notes. As a result, noteholders may lose a portion of or the entire value of their investment in the Senior Notes.

        Our credit facility is secured by substantially all of the personal property of the borrowers and the guarantors, including a first-priority security interest in 100% of the equity interests of the borrowers and each of their domestic majority owned subsidiaries, 65% of the equity interests of each of the borrowers' foreign majority owned subsidiaries, and all intercompany debt. The amount available to us under our credit facility is determined by reference to a borrowing base calculated based on eligible collateral. At December 31, 2013, this borrowing base calculation provided a total of $130.8 million available for loans and letters of credit under the credit facility. At December 31, 2013, there were no loans outstanding under the credit facility but we had outstanding $44.9 million of letters of credit issued under that facility securing certain purchases, insurance, fuel taxes and other trade obligations.

indebtedness;

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Further, the terms of the Senior Notes permit us to incur additional secured indebtedness. The Senior Notes will be effectively subordinated to any such additional secured indebtedness.

Anan active trading market for the Senior Notes may not be maintained or be liquid.

        We can give no assurances concerning the liquidity of the market for the Senior Notes, the ability of any investor to sell the Senior Notes, or the price at which investors would be able to sell them. The market for the Senior Notes may not continue or it may not be sufficiently liquid to allow holders to resell any of the Senior Notes. Consequently, investors may not be able to liquidate their investment readily, and lenders may not readily accept the Senior Notes as collateral for loans.

        The Senior Notes may trade at a discount from their initial issue price or principal amount, depending upon many factors, including prevailing interest rates, the market for similar securities and other factors, including general economic conditions and our financial condition, performance and prospects. Any decline in trading prices, regardless of cause, may adversely affect the liquidity and trading markets for the Senior Notes.

Weliquid;

we depend upon our subsidiaries for cash flow to service our debt, and the Senior Notes are structurally subordinated to the payment of the indebtedness, lease and other liabilities and any preferred equity of our subsidiaries.

        We are the sole obligor on the Senior Notes. We derive all of our revenue and cash flow from our subsidiaries and our ability to service our debt, including the Senior Notes, is substantially dependent upon the earnings of our subsidiaries and their ability to make cash available to us. In addition, most of our contractual and other obligations are obligations of our subsidiaries and thus structurally senior to our obligations on the Senior Notes. None of our subsidiaries guarantee the Senior Notes. Our subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due on the Senior Notes, or to make any funds available therefore, whether by dividend, distribution, loan or other payments, and the rights of holders of Senior Notes to benefits from any of the assets of our subsidiaries are structurally subordinated to the claims of our subsidiaries' creditors and any preferred equity holders. As a result, subsidiaries;

the Senior Notes are structurally subordinated to the prior payment and satisfaction of all of the existing and future debts, liabilities and obligations, including payment obligations under the HPT lease agreements, trade payables and any preferred equity, of our subsidiaries. Any future subsidiary debt or obligation, whether or not secured, or any preferred equity of our subsidiaries will have priority over the Senior Notes. As of December 31, 2013, our subsidiaries had total indebtedness of $44.9 million, consisting solely of letters of credit outstanding under our credit facility under which our subsidiaries are either co-borrowers or guarantors. As of December 31, 2013, our subsidiaries also had deferred rent obligations of $150 million, which are structurally senior to the Senior Notes, and substantial ongoing obligations under our leases. Our deferred rent is due in two installments, $107.1 million will be due and payable on December 31, 2022, and $42.9 million will be due and payable on June 30, 2024.

The Senior Notes are not rated.

        The Senior Notes are not rated by any rating agency. Unrated securities usually trade at a discount to similar rated securities. As a result, the Senior Notes may trade at a price that is lower than they might otherwise trade if rated by a rating agency. It is possible, however, that one or more rating agencies might independently determine to assign a rating to the Senior Notes. In addition, we may elect to issue other securities for which we may seek to obtain a rating. If any ratings are assigned to the Senior Notes in the future or if we issue other securities with a rating, such ratings, if they are lower than market expectations or are subsequently lowered or withdrawn, could adversely affect the market for or the market value of the Senior Notes.

rated;

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Redemptionredemption may adversely affect noteholders' return on the Senior Notes.

        We haveNotes; and

an increase in market interest rates and other factors could result in a decrease in the right to redeem some or allvalue of the Senior Notes priorNotes.
Our Credit Facility imposes restrictive covenants on us, and a default under the agreements relating to maturity. We may redeem theour Credit Facility or under our indenture governing our Senior Notes at times when prevailing interest rates may be relatively low comparedcould have a material adverse effect on our business and financial condition.
Our Credit Facility requires us and our subsidiaries, among other obligations, to prevailing rates at the time of issuance ofmaintain a specified financial ratio under certain circumstances and to satisfy certain financial tests. In addition, our Credit Facility restricts, among other things, our ability to incur debt and liens, make certain investments and pay dividends and other distributions including, under certain circumstances, payments on the Senior Notes. Accordingly, noteholdersUnder certain circumstances, we are required to seek permission from the lenders under our Credit Facility to engage in specified corporate actions.
Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants. Failure to comply with these covenants (or similar covenants contained in future financing agreements) could result in a default under our Credit Facility, indenture and other agreements containing cross default provisions, which, if not cured or waived, could have a material adverse effect on our business, financial condition and results of operations. A default could permit lenders or holders to accelerate the maturity of the debt under these agreements and to foreclose upon any collateral securing the debt and to terminate any commitments to lend. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations, including our obligations under the Senior Notes. In addition, a default under our Credit Facility or indenture would also constitute a default under the HPT Leases due to cross default provisions in the HPT Leases. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing. If our indebtedness were to be accelerated, our assets may not be ablesufficient to reinvest the redemption proceedsrepay such indebtedness in full. In such circumstances, we could be forced into bankruptcy or liquidation and, as a comparable security at an effective interest rate as high as that of the Senior Notes.

result, investors could lose their investment in our securities.


Item 1B. Unresolved Staff Comments

None.

Item 2.    Properties

        Our principal executive offices are located at 24601 Center Ridge Road, Suite 200, Westlake, Ohio 44145-5639. We operate two distribution centers in leased warehouse facilities located at 329 Mason Road, LaVergne, Tennessee 37086 and 3402 West Buckeye Road, Suite 115, Phoenix, Arizona 85043, and an electronics equipment depot in leased space located at 120 North Martinwood Road, Knoxville, Tennessee 37923. We also conduct some corporate office business from RMR's premises at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458.

        As of December 31, 2013, our travel center business consisted of 247 travel centers, 184 of which were leased from HPT, 33 of which we owned, three of which were owned by parties other than HPT and leased to or managed by us, 25 of which were owned, or leased from others, by our franchisees and two of which we operated for a joint venture in which we own a minority interest. We operated 217 of these travel centers and our franchisees operated 30 of these travel centers. We own seven parcels of undeveloped land suitable for developing travel centers, and two parcels of land that previously included travel centers, and many of our operating travel centers are located on land parcels which are not fully developed; we may decide to build additional travel centers or other facilities on these parcels in the future.

        As of December 31, 2013, our convenience store business consisted of 34 convenience stores, 27 of which we owned, one of which was leased from HPT, four of which were leased from others and two of which we operated for a joint venture in which we own a minority interest.



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Item 2.

Properties

The table below summarizes by state information as of December 31, 2013,2015, regarding branding and ownership of the properties we operate.operate and excludes properties operated by franchisees. Similar information for the locations our franchisees operate is included under the heading "Relationships with Franchisees" in Item 1 of this Annual Report. To be updated for number and ownership of convenience stores.

 
 Brand Affiliation(1) Ownership of Sites by:(1) 
 
 TA(3) Petro Minit
Mart		 Other
Brands		 Total TA(3) HPT Joint
Venture		 Others(2) 

Alabama

  2  3  —  —  5  2  3  —  — 

Arizona

  5  2  —  —  7  1  6  —  — 

Arkansas

  2  2  —  —  4  —  4  —  — 

California

  9  6  —  —  15  2  9  4  — 

Colorado

  3  —  —  —  3  —  3  —  — 

Connecticut

  3  —  —  —  3  —  3  —  — 

Florida

  6  1  —  —  7  —  7  —  — 

Georgia

  6  3  —  —  9  1  8  —  — 

Idaho

  1  —  —  —  1  —  1  —  — 

Illinois

  7  2  —  —  9  2  7  —  — 

Indiana

  7  6  —  1  14  7  7  —  — 

Iowa

  2  —  —  —  2  1  1  —  — 

Kansas

  1  1  —  —  2  2  —  —  — 

Kentucky

  2  2  28  —  32  25  3  —  4 

Louisiana

  4  3  —  —  7  1  6  —  — 

Maryland

  3  —  —  —  3  —  3  —  — 

Michigan

  6  —  —  —  6  2  4  —  — 

Minnesota

  1  —  —  —  1  —  1  —  — 

Mississippi

  1  1  —  —  2  —  1  —  1 

Missouri

  4  1  —  —  5  —  5  —  — 

Nebraska

  2  1  —  —  3  —  3  —  — 

Nevada

  3  3  —  —  6  1  5  —  — 

New Hampshire

  1  —  —  —  1  —  1  —  — 

New Jersey

  3  1  —  —  4  —  4  —  — 

New Mexico

  5  2  —  —  7  —  6  —  1 

New York

  5  1  —  —  6  —  6  —  — 

North Carolina

  3  1  —  —  4  1  3  —  — 

Ohio

  9  4  —  1  14  —  14  —  — 

Oklahoma

  3  1  —  —  4  —  4  —  — 

Oregon

  2  1  —  —  3  —  3  —  — 

Pennsylvania

  8  2  —  —  10  1  9  —  — 

Rhode Island

  1  —  —  —  1  1  —  —  — 

South Carolina

  3  1  —  —  4  1  2  —  1 

Tennessee

  6  2  3  —  11  4  7  —  — 

Texas

  11  8  —  —  19  4  15  —  — 

Utah

  2  —  —  —  2  —  2  —  — 

Virginia

  4  —  —  —  4  —  4  —  — 

Washington

  1  1  —  —  2  —  2  —  — 

West Virginia

  2  —  —  —  2  —  2  —  — 

Wisconsin

  2  —  —  —  2  —  2  —  — 

Wyoming

  3  1  —  —  4  —  4  —  — 

Ontario, Canada

  1  —  —  —  1  1  —  —  — 
                    
​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

Total

  155  63  31  2  251  60  180  4  7 
                    
​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
                    
(1)
Includes only properties we operate and excludes properties operated by franchisees.

(2)
We lease these properties from, or manage these properties for, parties other than HPT.

(3)
During January 2014 we acquired one property in Montana.
 Brand Affiliation:  Ownership of Sites by:
 TA Petro 
Minit
Mart(1)(2)
 Total  TA HPT 
Joint
Venture
 
Others(3)
Alabama3
 3
 —
 6
  2
 4
 —
 —
Arizona5
 2
 —
 7
  —
 7
 —
 —
Arkansas2
 2
 —
 4
  —
 4
 —
 —
California9
 4
 2
 15
  —
 11
 4
 —
Colorado4
 1
 2
 7
  4
 3
 —
 —
Connecticut3
 —
 —
 3
  —
 3
 —
 —
Florida6
 1
 —
 7
  —
 7
 —
 —
Georgia6
 3
 —
 9
  1
 8
 —
 —
Idaho1
 —
 —
 1
  —
 1
 —
 —
Illinois7
 2
 33
 42
  28
 9
 —
 5
Indiana8
 6
 1
 15
  6
 9
 —
 —
Iowa2
 —
 —
 2
  1
 1
 —
 —
Kansas1
 1
 20
 22
  21
 1
 —
 —
Kentucky2
 2
 68
 72
  48
 3
 —
 21
Louisiana4
 3
 —
 7
  —
 7
 —
 —
Maryland3
 —
 —
 3
  —
 3
 —
 —
Michigan6
 —
 —
 6
  1
 5
 —
 —
Minnesota1
 —
 18
 19
  17
 1
 —
 1
Mississippi1
 1
 —
 2
  —
 1
 —
 1
Missouri4
 1
 37
 42
  37
 5
 —
 —
Montana2
 —
 —
 2
  2
 —
 —
 —
Nebraska2
 1
 —
 3
  —
 3
 —
 —
Nevada3
 3
 —
 6
  1
 5
 —
 —
New Hampshire1
 —
 —
 1
  —
 1
 —
 —
New Jersey3
 1
 —
 4
  —
 4
 —
 —
New Mexico5
 2
 —
 7
  —
 6
 —
 1
New York5
 1
 —
 6
  —
 6
 —
 —
North Carolina3
 1
 —
 4
  1
 3
 —
 —
North Dakota1
 —
 —
 1
  1
 —
 —
 —
Ohio9
 4
 11
 24
  9
 14
 —
 1
Oklahoma3
 1
 —
 4
  —
 4
 —
 —
Oregon2
 1
 —
 3
  —
 3
 —
 —
Pennsylvania8
 2
 —
 10
  1
 9
 —
 —
Rhode Island1
 —
 —
 1
  1
 —
 —
 —
South Carolina4
 1
 —
 5
  2
 3
 —
 —
Tennessee6
 2
 3
 11
  4
 7
 —
 —
Texas11
 8
 —
 19
  2
 17
 —
 —
Utah2
 —
 —
 2
  —
 2
 —
 —
Virginia3
 —
 —
 3
  —
 3
 —
 —
Washington1
 1
 —
 2
  —
 2
 —
 —
West Virginia2
 —
 —
 2
  —
 2
 —
 —
Wisconsin2
 —
 9
 11
  9
 2
 —
 —
Wyoming3
 1
 —
 4
  —
 4
 —
 —
Ontario, Canada1
 —
 —
 1
  1
 —
 —
 —
Total161
 62
 204
 427
  200
 193
 4
 30



30

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(1)
SinceDecember 31, 2015, through the date of this Annual Report we acquired two and five properties in Missouri and Illinois, respectively.
(2)
Includes recently acquired convenience stores not yet rebranded Minit Mart and one Minit Mart branded convenience store we own and lease to a dealer. Excludes Minit Mart branded stores located within our travel centers.
(3)
We lease these properties from, or manage these properties for, parties other than HPT.

Item 3. Legal Proceedings

The disclosure under the heading "Legal Proceedings" in Note 1813 to the Notes to Consolidated Financial Statements in Item 15 of this Annual Report is incorporated herein by reference.


Item 4. Mine Safety Disclosures

Not applicable.



PART II

Item 5. Market for Our Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

Market information.    Since April 1, 2013, ourOur common shares have beenare traded on the New York Stock Exchange, or NYSE, under the symbol "TA". Prior to that, our common shares traded on what is now known as the NYSE MKT since 2007. Set forth below, for the periods indicated, are the high and low sales prices for our common shares as reported on the NYSE and the NYSE MKT, as applicable:NYSE:

2015 High Low
First Quarter $17.67
 $12.15
Second Quarter 18.10
 14.35
Third Quarter 16.95
 10.18
Fourth Quarter 12.67
 9.02
2014 High Low
First Quarter $9.80
 $8.00
Second Quarter 9.11
 7.18
Third Quarter 11.85
 8.38
Fourth Quarter 12.85
 8.37
2013
 High Low 

First Quarter

 $9.82 $4.75 

Second Quarter

 $12.50 $9.35 

Third Quarter

 $12.25 $7.35 

Fourth Quarter

 $11.17 $7.01 


2012
 High Low 

First Quarter

 $6.84 $4.29 

Second Quarter

 $6.74 $4.21 

Third Quarter

 $5.84 $4.67 

Fourth Quarter

 $5.47 $4.18 

The closing price of our common shares on the NYSE on June 4, 2014,February 29, 2016, was $8.07$8.63 per share.

Holders.As of May 15, 2014,February 29, 2016, there were 794770 shareholders of record of our common shares.

Dividends.We have never paid or declared any cash dividends on our common shares. At present, we intend to retain our future earnings, if any, to fund the operations and growth of our business. Furthermore, our credit facilityCredit Facility restricts our payment of cash dividends on our common shares, unless certain requirements under the credit facilityCredit Facility are met, including that excess availability is not less than 20% after any such payment, and our rent deferral agreement with HPT prohibits us from paying any dividends while any deferred rent remains unpaid. Our future decisions concerning the payment of dividends on our common shares will depend upon our results of operations, financial condition and capital expenditure plans, as well as other factors as our Board of Directors, in its discretion, may consider relevant, and the extent to which the declaration or payment of dividends may be limited by agreements we have entered or cause us to lose the benefits of certain of our agreements.


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Table of Contents

Stock issuable under equity compensation plans.The equity compensation plan information set forth in Item 12 of this Annual Report is incorporated by reference herein.

Recent sales of unregistered securities.There were no sales of our unregistered securities by us during the fourth quarter of 2013.2015.

Issuer purchases of equity securities. The following table provides information about our purchases of our equity securities during the quarter ended December 31, 2015:
Calendar Month 
Number of Shares
Purchased(1)
 
Average Price
Paid per Share
 
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
 Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
December 2015 196,591
 $9.37
 —
 $—
Total 196,591
 $9.37
 —
 $—
(1)
During 2015, all common share purchases were made to satisfy share awards recipients' tax withholding and payment obligations in connection with the vesting of awards of restricted common shares, which were repurchased by us based on their fair market value on the repurchase date. On December 14, 2015, we retired all 196,591 of our then treasury shares, no par value, with a carrying value of $1,842,058.


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Item 6. Selected Financial Data

The following table presents selected historical financial information for each of the last five fiscal years. The information set forth below with respect to fiscal years 2015, 2014 and 2013 was derived from, and should be read in conjunction with, the audited consolidated financial statements included in Item 15 of this Annual Report. The information set forth below with respect to fiscal years 2012 and 2011 was derived from, and should be read in conjunction with, the audited consolidated financial statements included elsewhere in this Annual Report. The information set forth below with respect to fiscal years 2010 and 2009 was derived from, and should be read in conjunction with, the audited consolidated financial statements included in our 2010 Annual Report on Form 10-K. However, certain statement of income and comprehensive income data and balance sheet data presented in the following table for the years ended December 31, 2010 and 2009, were revised from originally reported financial data, as described in our 20112012 Annual Report on Form 10-K. The following information should also be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Annual Report.


 Years Ended December 31, 
(dollars and gallons in thousands, except per share data)
 2013 2012 2011 2010 2009 

Statement of Operations and Comprehensive Income (Loss) Data:

           
(in thousands, except per share and site counts unless indicated otherwise)Year Ended December 31,
2015 2014 2013 2012 2011
Statement of Income and Comprehensive
Income Data:
 
  
  
  
  

Revenues:

            
  
  
  
  

Fuel

 $6,481,252 $6,636,297 $6,603,329 $4,790,659 $3,588,682 $4,055,448
 $6,149,449
 $6,481,252
 $6,636,297
 $6,603,329

Nonfuel

 1,450,792 1,344,755 1,271,085 1,158,343 1,097,279 1,782,761
 1,616,802
 1,450,792
 1,344,755
 1,271,085

Rent and royalties from franchisees

 12,687 14,672 14,443 13,479 13,859 12,424
 12,382
 12,687
 14,672
 14,443
           
​​​​​​​​​​​

Total revenues

 7,944,731 7,995,724 7,888,857 5,962,481 4,699,820 5,850,633
 7,778,633
 7,944,731
 7,995,724
 7,888,857

Income (loss) from operations

 21,190 41,470 32,400 (42,034) (80,994)

Net income (loss)

 31,623 32,198 23,574 (66,690) (95,085)

Income (loss) per common share:

           
Income from operations78,297
 113,640
 21,190
 41,470
 32,400
Net income27,719
 60,969
 31,623
 32,198
 23,574
Net income per common share: 
  
  
  
  

Basic and diluted

 $1.06 $1.12 $0.98 $(3.84)$(5.70)$0.72
 $1.62
 $1.06
 $1.12
 $0.98

Balance Sheet Data (end of period):

            
  
  
  
  

Total assets

 $1,257,282 $1,029,719 $1,016,531 $891,092 $877,610 $1,635,094
 $1,402,817
 $1,238,772
 $1,012,880
 $1,011,893

Sale-leaseback financing obligation, noncurrent portion(1)

 83,762 82,195 97,765 99,960 102,006 
Sale leaseback financing obligation,
noncurrent portion(1)
20,719
 82,591
 83,762
 82,195
 97,765

Deferred rent obligation(2)

 150,000 150,000 150,000 150,000 90,000 150,000
 150,000
 150,000
 150,000
 150,000

Senior Notes due 2028

 110,000 — — — — 
Senior Notes330,000
 230,000
 110,000
 —
 —

Other Operating Data:

            
  
  
  
  

Total fuel sold (gallons)(3)

 2,034,929 2,039,960 2,087,416 2,036,756 1,933,358 2,130,103
 2,024,790
 2,034,929
 2,039,960
 2,087,416

Number of sites (end of period):

            
  
  
  
  

Company operated travel centers(4)

 217 206 192 186 186 
Company operated travel centers223
 220
 217
 206
 192

Company operated convenience stores

 34 4 4 4 4 203
 34
 34
 4
 4

Franchisee operated travel centers

 5 6 10 10 10 5
 5
 5
 6
 10

Franchisee owned and operated travel centers

 25 29 33 30 35 24
 25
 25
 29
 33
           
​​​​​​​​​​​
Dealer operated convenience store1
 —
 —
 —
 —

Total locations

 281 245 239 230 235 456
 284
 281
 245
 239
           
​​​​​​​​​​​
​​​​​​​​​​​
           

(1)
See Note 12 to the Notes to Consolidated Financial Statements included in Item 15 of this Annual Report for more information about our sale leaseback financing obligation.
(2)
The deferred rent obligation is due and payable $42,915, $29,324, $29,107, $27,421 and $21,233 on June 30, 2024, and December 31, 2026, 2028, 2029 and 2030, respectively, and the obligation does not bear interest unless certain events provided under the applicable agreement occur.
(3)
Includes all fuel we sold, both at our retail locations and also on a wholesale basis, including to a joint venture in which we own a noncontrolling interest but excludes the retail fuel sales at travel centers operated by our franchisees.



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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the Consolidated Financial Statements and related notes included in Item 15 of this Annual Report. Amounts are in thousands of dollars and gallons unless indicated otherwise.

Company Overview
TravelCenters of America LLC, which we refer to Selected Financial Data

(1)
Accounting foras the HPT Transaction under GAAP requiredCompany or we, us to recognize inand our, consolidated balance sheets the leased assets at thirteenis a Delaware limited liability company that operates and franchises 456 travel center and convenience store locations. Our customers include trucking fleets and their drivers, independent truck drivers and highway and local motorists. We offer a broad range of the properties previously owned by our predecessor that we now lease from HPT becauseproducts and services, including diesel fuel and gasoline, as well as nonfuel products and services such as truck repair and maintenance services, full service restaurants, more than a minor portion39 different brands of those properties was subleased to third parties,quick service restaurants, or QSRs, travel/convenience stores and one property did not qualify for operating lease treatment forvarious driver amenities. We also collect rents, royalties and other reasons. A portionfees from our tenants, franchisees and dealers.
We manage our business on the basis of the total rent payments to HPT is recognized as a reduction of the sale-leaseback financing obligationtwo reportable segments: travel centers and a portion is recognized as interest expense in our consolidated statement of income and comprehensive income.convenience stores. See Note 17 in15 to the Notes to Consolidated Financial Statements included in Item 15 of this Annual Report for discussionmore information about our segments. We have a single travel center located in a foreign country, Canada, that we do not consider material to our operations.
As of December 31, 2015, our business included 252 travel centers in 43 states in the United States, or U.S., primarily along the U.S. interstate highway system, and the province of Ontario, Canada. Our travel centers included 176 operated under the "TravelCenters of America" and "TA" brand names, or the TA brand, including 161 that we operated and 15 that franchisees operated, including five we lease to franchisees, and 76 operated under the "Petro Stopping Centers" and "Petro" brand names, or the Petro brand, including 62 that we operated and 14 that franchisees operated. Of our 252 travel centers at December 31, 2015, we owned 32, we leased 194, including 192 that we leased from Hospitality Properties Trust, or HPT, we operated two for a joint venture and our franchisees owned or leased from others 24. Substantially all of our sale-leaseback financing obligation.

(2)
The deferred rent obligation will be duetravel centers include a convenience store, at least one restaurant, a truck service/repair facility and payable $107,085 infueling lanes for trucks and passenger vehicles. We report this portion of our business as our travel center segment.
As of December 2022 and $42,915 in June 2024, and the obligation does31, 2015, our business also included 204 convenience stores not bear interest unless certain events provided in the Amendment Agreement occur.

(3)
Includes all fuel we sold, both at our retail locations and alsolocated on a wholesale basistravel center property in 11, primarily Midwestern, states of the U.S. We operate our convenience stores primarily under the "Minit Mart" brand name, or the Minit Mart brand. Of these 204 convenience stores at December 31, 2015, we owned 173 and we leased or managed 29, including to certain of our franchiseesone that we leased from HPT, and we operated two for a joint venture in which we own a minority interest but excludes the retail fuel sales at travel centers operated bynoncontrolling interest. Additionally, we collect rent from one dealer who operates a convenience store we own. We report this portion of our franchisees.

(4)
In 2013, the number of company operated travel centers was revised for 2009 through 2012 because we counted separatelybusiness as our convenience stores that had previously been considered ancillary operations to nearby travel centers.
store segment.

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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

(dollars in thousands)

Overview

        The following discussion should be read in conjunction with the financial statements included elsewhere in this Annual Report.

Executive Summary
Our revenues and income are subject to potentially material changes as a result of the market prices and the availability of fuel.diesel fuel and gasoline. These factors are subject to the worldwide petroleum products supply chain, which historically has incurredexperienced price and supply volatility and in some cases, shocks as a result of, among other things, severe weather, terrorism, political crises, wars and other military actions and variations in demand whichthat are often the result of changes in the macroeconomic environment. Over the past few years there has been significant volatility in the cost of fuel. Fuel prices increased duringDuring the first quarter of 2011years ended December 31, 2015 and were volatile2014, the price we pay for fuel generally trended downward, ending at a lower price than at the remaining portionstart of the year as a result of, among other reasons, concerns the U.S. and global economies were sliding into another recession. During the first half of 2012, prices generally decreased due to continued global economic concerns, including economic conditions in Europe. However, during the third quarter of 2012 fuel prices generally rose due to tensions in the Middle East and economic stimulus programs in Europe and elsewhere. During the fourth quarter of 2012, fuel prices declined and atyear. At the end of 20122015, diesel oil futures contract prices were nearapproximately 43% below the prices we experienced at the end of 2011. During the first quarter of 2013,2014. Some current economic forecasts reflect continued depressed prices generally declinedfor fuel; however, as noted above, various factors and were at a lower level than the prices experienced during the first quarter of 2012. During the second quarter of 2013,events can cause fuel prices again roseto change, sometimes suddenly and at the end of the second quarter of 2013 approximated the prices we experienced at the end of the second quarter of 2012. Then, during the third quarter of 2013, fuel prices again rose, but were generally at a lower level than the prices experienced during the third quarter of 2012. During the fourth quarter of 2013, fuel prices again rose and at the end of 2013, fuel prices approximated those experienced at the end of 2012. Recent gains in fuel supplies and sources within the United States and Canada have helped to maintain relative market price stability, but as export markets and capabilities increase for fuel that price stabilization factor may be less effective. We expect that changes in our costs for fuel products can largely be passed on to our customers, but often there are delays in passing on price changes that can affect our fuel gross margins. Although other factors have an effect, during periods of rising fuel commodity prices fuel gross margins per gallon tend to be lower than they otherwise may have been and during periods of falling fuel commodity prices fuel gross margins per gallon tend to increase. Also, fuel price increases and volatility can have negative effects on our sales and profitability and increase our working capital requirements. We expect that the fuel markets will continue to be volatile for the foreseeable future. For more information about fuel market risks that may affect us and our actions to mitigate those risks, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" elsewhere in this Annual Report.

        We believe that recent U.S. economic data has been mixed, though generally positive, and the strength and sustainability of any economic expansion is uncertain. The condition of the U.S. economy generally, and the financial condition and activity of the trucking industry in the U.S. specifically, impacted our financial results during 2011 through 2013, and we expect that they will continue to impact our financial results in future periods. The trucking industry is the primary customer for our goods and services. Freight and trucking demand in the U.S. historically generally reflects the level of commercial activity in the U.S. economy. During the period from 2011 through 2013, the U.S. economy slowly improved and the financial condition and activity level in the trucking industry similarly slowly improved; however, these improvements appear to be uneven and may not affect all market participants equally. Further, recent improvements in U.S. export activity have been driven in large part by increased sales of natural resources, such as oil and gas, and by other products that typically are not transported by trucks; and, accordingly, such increased export activity has not resulted in proportional increases in trucking activity within the U.S. We believe that during 2013, demand for fuel by trucking


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companies was negatively affected as compared to the prior year by the new regulatory hours of service rules for truck drivers, which went into effect in July 2013, and the driver shortage plaguing the trucking industry as these factors increase trucking company costs and lead trucking companies to focus on fuel efficiency and shippers to divert some business away from trucking. Technological innovations and other regulatory changes permitting and requiring improved fuel efficiency of motor vehicle engines and other fuel conservation practices employed by trucking companies have accelerated and continue to reduce demand for diesel fuel, including by reducing the amount of diesel fuel required to drive a given amount of trucking miles.

        In part as a result of the aforesaid factors, our nonfuel revenues in 2013 increased on a same site basis over the prior year, but fuel sales volumes on a same site basis for 2013 declined compared to the prior year. Also, during the second and third quarters of 2013, TA's primary competitors engaged in aggressive sales efforts presumably to maintain and grow market share, which negatively impacted our fuel sales volume and fuel gross margin per gallon during this time period. These aggressive sales efforts by our competitors abated somewhat in the third and fourth quarters as compared to the second quarter. Despite the year over year declines in fuel sales volumes, our fuel gross margins per gallon for 2013 increased slightly on a same site basis over the prior year. We believe this trend primarily is attributable to our continued focus on managing our fuel pricing to balance sales volume and profitability considerations.

        Our net income for the year ended December 31, 2013, was favorably impacted by a $26,618 benefit for income taxes that primarily resulted from the reversal during the 2013 fourth quarter of the valuation allowance we historically had maintained with respect to certain deferred tax assets; increased site level profitability from the travel centers we have had in our business since before 2011; and increased profitability earned at the properties we have acquired since the beginning of 2011. These favorable factors were partially offset by the $10,000 charge to expense in December 2013 in connection with a litigation settlement; the increases in depreciation and amortization expense attributable to the property acquisitions and other capital investments we made during 2012 and 2013; and the acquisition and financing costs related to our property acquisitions.

        Since the beginning of 2011, we have invested or expect to invest $325,647 to acquire and improve 30 travel centers and 31 gasoline/convenience stores. While the costs of ownership are reflected in our results for the periods since each acquisition, we believe the returns from these acquired properties are not yet fully reflected in our results of operations. We believe that the improvements we have made and plan to make at the travel centers may continue to improve the financial results at these locations. Typical improvements we make at acquired travel centers include adding truck repair facilities and QSRs, paving parking lots, replacing outdated fuel dispensers, installing diesel exhaust fluid dispensing systems, changing signage, installing point of sale and other IT systems and general building upgrades. The improvements to travel center properties we acquire are often substantial and require a long period of time to plan, design, permit and complete, and after completed then require a period of time to produce stabilized financial results and become part of our customers' networks. We estimate that the travel centers we acquire generally will reach financial stabilization in approximately the third year after acquisition, but the actual result can vary widely from this estimate due to many factors.

        We acquired 31 gasoline/convenience store properties for $67,922 on December 16, 2013. These convenience stores are high volume fuel locations with larger interior space for merchandise and food offerings than typical convenience stores and appear to have limited need for near term capital investment. In addition, we do not expect these convenience stores to require a lengthy period to achieve stabilized financial results. Nearly all of our existing travel centers currently offer gasoline for motorists, and most of these convenience stores' customer offerings are similar to certain of the products and food services available at our travel centers. Accordingly, we currently expect we may be able to realize synergies in purchasing and merchandising customer offerings at these convenience


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stores which may make the financial results, relative to the acquisition cost, similar to that expected for travel center acquisitions.

        The table below shows the number of properties we acquired by year, the amounts we have invested or currently expect to invest through and as of December 31, 2013, in these properties.

 
 Site Count Cash Acquisition
Cost(1)		 Renovation Cost
Incurred Through
December 31, 2013		 Estimated
Renovation Cost
to be Spent		 

Properties acquired in 2011

  6 $36,333 $47,731 $— 

Properties acquired in 2012

  14  46,910  32,513  — 

Properties acquired in 2013(2)

  41  111,602  17,203  33,355 
          
​​​​​​​​​​​​​​

Total

  61 $194,845 $97,447 $33,355 
          
​​​​​​​​​​​​​​
​​​​​​​​​​​​​​
          
(1)
Includes only cash amounts paid that were recorded as property and equipment or intangible assets. Excludes working capital assets and asset retirement obligation assets.

(2)
Includes 31 convenience stores acquired in December 2013.

        The operations at many of the 61 properties acquired during the three years ended December 31, 2013, have not yet reached the stabilized levels we currently expect. As of December 31, 2013, the travel centers we have acquired since the beginning of 2011 have been owned by us for an average of 17 months, with the planned renovations completed at only 23 of these properties for an average of 14 months. The 31 convenience stores we acquired on December 16, 2013, do not require significant renovations. The table below shows the gross revenues in excess of cost of goods sold and site level operating expenses for the properties we began to operate for our own account since the beginning of 2011, whether by way of acquisition from franchisees or others or takeover of operations upon termination of a franchisee sublease, from the beginning of the period shown (or the date we began to operate such property for our own account, if later). Because sites were acquired at various dates during the periods presented, these amounts are intended to indicate directional trends only.

 
 Revenues in Excess of Cost of Goods Sold
and Site Level Operating Expenses		 
 
 Three Months Ended
December 31,		 Year Ended
December 31,		 
 
 2013 2012 2013 2012 

Properties acquired in 2011 (6 sites)

 $3,171 $1,130 $9,437 $5,260 

Properties acquired in 2012 (14 sites)

  3,833  555  14,100  643 

Properties acquired in 2013 (41 sites)(1)

  1,254  —  2,941  — 
          
​​​​​​​​​​​​​​

Total

 $8,258 $1,685 $26,478 $5,903 
          
​​​​​​​​​​​​​​
​​​​​​​​​​​​​​
          
(1)
Includes 31 convenience stores acquired in December 2013.

        The amounts presented in the above table are the gross amounts recognized during the periods presented. Certain of the travel centers we have acquired were franchises of ours from whom we generated revenues and incurred costs prior to our acquiring the site. The rent, royalties and fuel revenues in excess of the related cost of goods sold and site level operating expenses we recognized during the twelve month period prior to each of our acquisitions of travel centers previously operated by our franchisees for the properties acquired in 2011, 2012 and 2013, were $194, $3,705 and $1,417, respectively.

        On January 2, 2013, the American Taxpayer Relief Act of 2012 became law. The law included the reinstatement, retroactive to January 1, 2012, of the "Blender's Credit for Biodiesel and Renewable


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Diesel". This tax credit had previously expired on December 31, 2011, and, accordingly, we did not recognize any benefit directly related to these tax credits in our 2012 operating results, although, in the absence of the tax credits, market dynamics tend to adjust prices to compensate somewhat for the value of the lost tax credits. The reinstatement of this credit entitled us to receive in 2013 approximately $3,887 of refunds related to certain fuel purchases made during 2012. We recognized this amount, net of our estimate of uncollectible amounts, in our operating results for 2013. Under the new law, the credit expired on December 31, 2013, and we reflected any benefit from it in our operating results as we purchased qualifying fuel during 2013. Congress did not extend this tax credit before the end of 2013 or since; consequently, to date during 2014 we have not received rebates as a result of this tax credit for any fuel purchases we have made during 2014. We do not expect that this situation will have a significant effect on our 2014 fuel gross margin because of the expected market pricing dynamics that take the lack of the tax credit into account, but our fuel gross margin may be negatively affected to some extent.

        There can be no assurance that industry conditions will not deteriorate or that any one or more of the risks identified under the sections "Risk Factors," "Warning Concerning Forward Looking Statements" or elsewhere in our Annual Report; or some other unidentified risk will not manifest itself in a manner which is material and adverse to our results of operations, cash flow or financial position.

Summary of Site Counts

        The changes in the number of our sites and in their method of operation (company operated, franchisee leased and operated or franchisee owned and operated) can be significant factors influencing the changes in our results of operations. The following table summarizes the changes in the composition of our business during the past three years:

 
 Company
Operated
Travel
Centers(1)		 Franchisee
Operated
Travel
Centers		 Franchisee
Owned and
Operated
Travel
Centers		 Total
Travel
Centers(1)		 Company
Operated
Convenience
Stores(2)		 Total
Sites		 

Number of sites at December 31, 2010(3)

  186  10  30  226  4  230 

2011 Activity:

                   

Acquired sites

  6  —  (1) 5  —  5 

New franchised travel centers

  —  —  4  4  —  4 
              
​​​​​​​​​​​​​​​​​​​​

Number of sites at December 31, 2011(3)

  192  10  33  235  4  239 

2012 Activity:

                   

Acquired sites

  6  —  —  6  —  6 

Acquisition of franchised travel centers

  8  (4) (4) —  —  — 
              
​​​​​​​​​​​​​​​​​​​​

Number of sites at December 31, 2012(3)

  206  6  29  241  4  245 

2013 Activity:

                   

Acquired sites

  6  —  —  6  31  37 

Acquisition of franchised travel centers

  4  (1) (3) —  —  — 

Conversion of convenience store to travel center

  1  —  —  1  (1) — 

Terminated franchised travel centers

  —  —  (1) (1) —  (1)
              
​​​​​​​​​​​​​​​​​​​​

Number of sites at December 31, 2013

  217  5  25  247  34  281 
              
​​​​​​​​​​​​​​​​​​​​
​​​​​​​​​​​​​​​​​​​​
              
(1)
Includes at each period presented two travel centers we operate that are owned by a joint venture in which we own a minority interest.

(2)
Includes at each period presented two convenience stores we operate that are owned by a joint venture in which we own a minority interest.

Table of Contents

(3)
The number of sites presented as of December 31, 2010, 2011 and 2012, was revised in order to reflect as separate locations two convenience stores we operated as of each of these dates; we previously considered these convenience stores to be ancillary operations to our nearby travel centers and did not count separately.

        In January 2014, we acquired an additional travel center that we now operate. We currently intend to continue to selectively acquire additional travel centers and convenience stores and to otherwise expand our business.

Relevance of Fuel Revenues and Fuel Volumes

sharply. Due to the price volatility of fuel products we buy and our pricing to fuel customers, we believe that fuel revenue is not a reliable metric for analyzing our results of operations from period to period. As a result solely of changes in fuel prices, our fuel revenue may materially increase or decrease, in both absolute amounts and on a percentage basis, without a comparable change in fuel sales volumes or in fuel gross margin per gallon.margin. We therefore consider fuel volumesvolume and fuel gross margin to be better measures of comparative performanceperformance. We generally are able to pass changes in our cost for fuel products to customers, but typically with a delay, such that during periods of rising fuel commodity prices fuel gross margins per gallon tend to be lower than they otherwise may have been and during periods of falling fuel revenues. However,commodity prices fuel pricinggross margins per gallon tend to be higher than they otherwise may have been. Increases and revenuesvolatility in the prices we pay for fuel can impacthave negative effects on our sales and profitability and increase our working capital requirements;requirements. For more information about fuel market risks that may affect us and our actions to mitigate those risks, see "LiquidityItem 7A, "Quantitative and Capital Resources" below.

ResultsQualitative Disclosures About Market Risk" elsewhere in this Annual Report.


34
Table of Operations (dollarsContents

We believe that demand for fuel by trucking companies will tend to be reduced over time for any given level of economic activity by technological innovations that permit, and gallonsregulatory changes that encourage, require or give rise to, improved fuel efficiency of motor vehicle engines and other fuel conservation practices. We believe these factors were significant contributors to the modest increases in thousands)

Yearthe level of fuel sales volumes we realized on a same site basis for 2015, as compared to 2014, despite generally improving economic conditions during 2015. Fuel volumes primarily increased in 2015 as a result of locations acquired during 2014 and 2015.

Our fuel gross margins in 2015 were lower than those in 2014, principally because the decline in fuel prices during 2014 was more rapid and acute than the decline in fuel prices in 2015. Generally, declining fuel costs are not immediately reflected in fuel retail prices, and such a condition often increases our fuel gross margins. In addition, supply conditions in 2014 were generally more favorable than those in 2015, which also contributed to the higher gross margin in 2014.
The decrease in our net income for 2015, as compared to 2014, was primarily due to decreases in fuel gross margin, as noted above, increases in expenses resulting from our acquisitions and the 2015 loss on extinguishment of debt, as further described below under "Transaction Agreement with HPT". These decreases were partially offset by an increase in nonfuel gross margin.

Factors Affecting Comparability
Transaction Agreement with HPT
In June 2015 we entered into a transaction agreement, or the Transaction Agreement, with our principal landlord, HPT, pursuant to which among other things, (i) we and HPT amended and restated the TA lease pursuant to which we then leased 144 properties from HPT into four leases, with initial lease terms ending in 2026, 2028, 2029 and 2030 and each subject to two 15 year renewal periods at our option (these four leases are collectively referred to herein as the "New TA Leases"), (ii) we sold to HPT 14 travel centers owned by us and certain assets we owned at 11 properties that we leased from HPT and leased back these properties and assets from HPT, (iii) we purchased from HPT five travel centers that we then leased from HPT and (iv) we agreed to sell to HPT five travel centers upon the completion of their development, which is expected to be completed before June 30, 2017, at a purchase price equal to their development costs, including the cost of the land, which costs are estimated to be not more than $118,000 in the aggregate, and we agreed to lease back these development properties.
During the year ended December 31, 2013 compared2015, we received proceeds of $279,383 from the aforementioned sale to HPT of 14 owned travel centers and certain assets at 11 properties currently leased from HPT and purchased the five above referenced travel centers from HPT for $45,042. The sale of these travel centers and assets generated an aggregate gain of $133,668, which was deferred and will be amortized as a reduction of our rent expense over the terms of the New TA Leases. The purchase of the five travel centers resulted in a loss on extinguishment of debt of $10,502. The loss on extinguishment of debt arose because the lease of these properties had been accounted for as a financing and the purchase prices paid for the properties exceeded the unamortized balance of the sale leaseback financing obligation. As of December 31, 2012

2015, we leased from HPT a total of 153 properties under the New TA Leases for total minimum annual rent of $190,745.

See Note 12 to the Notes to Consolidated Financial Statements included in Item 15 of this Annual Report for more information about this transaction with HPT.
Recently Acquired Sites
Since our acquisition program began in 2011 and through December 31, 2015, we have acquired 37 travel centers and 201 convenience stores. We invested $320,909 to acquire, renovate and upgrade these travel center properties and $388,308 to acquire, renovate and upgrade these convenience store properties. We expect to invest an additional $24,582 to complete the renovation and upgrade of certain of these travel centers and $18,978 to complete the rebranding, expansion and improvements of certain of these convenience stores. While the results of these properties are reflected in our consolidated results of operations from the date of each acquisition, the stabilized returns we expect from these properties may not yet be fully realized.

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We believe the improvements we have made and plan to make at our recently acquired travel centers will continue to improve the financial results at these locations. Typical improvements we make at acquired travel centers include adding truck repair facilities and nationally branded QSRs, paving parking lots, rebranding gasoline offerings, replacing outdated fuel dispensers, installing diesel exhaust fluid dispensing systems, changing signage, installing point of sale and other information technology networks and systems and general building and cosmetic upgrades. The improvements to travel center properties we acquire are often substantial and require a long period of time to plan, design, permit and complete, and after completed then require a period of time to become part of our customers' supply networks and produce stabilized financial results. We estimate that the travel centers we acquire generally will reach financial stabilization in approximately the third year after acquisition, but the actual result can vary widely from this estimate due to many factors, some of which are outside our control. As of December 31, 2015, the travel centers acquired since the beginning of 2011 have been owned by us for an average of 36 months, and the planned renovations have been completed at 30 of these acquired travel centers for an average of 31 months.
Improvements that we typically make at acquired convenience stores include rebranding the site to the Minit Mart brand, adding QSRs, rebranding gasoline offerings and completing any required deferred maintenance. We estimate that the convenience stores that we acquire will generally reach financial stabilization within one year after acquisition, but the actual results can vary widely from the estimate due to many factors, some of which are outside our control. As of December 31, 2015, the convenience stores acquired since 2013 have been owned by us for an average of eight months, and the planned renovations have been completed at 57 of these acquired convenience stores for an average of five months.
The 37 travel centers and 201 convenience stores we acquired since the beginning of 2011 through December 31, 2015, have produced, from the beginning of each period or, if later, the dates we began to operate them, the following amounts of revenues in excess of cost of goods sold and site level operating expenses:
Revenues in excess of cost of goods sold 
   and site level operating expenses
 Year Ended December 31,
 2015 2014 2013
Travel Centers $54,883
 $52,737
 $26,073
Convenience Stores 15,808
 7,589
 405


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Results of Operations
Consolidated Financial Results
The following table presents changes in our operating results for the year ended December 31, 2013,2015, as compared with the year ended December 31, 2012.

2014 and for the year ended December 31, 2014, as compared with the year ended December 31, 2013.

 
 Years Ended
December 31,		  
  
 
 
  
 %
Change		 
(dollars in thousands)
 2013 2012 Change 

Revenues:

             

Fuel

 $6,481,252 $6,636,297 $(155,045) (2.3)%

Nonfuel

  1,450,792  1,344,755  106,037  7.9%

Rent and royalties from franchisees

  12,687  14,672  (1,985) (13.5)%
          
​​​​​​​​​​​​​​

Total revenues

  7,944,731  7,995,724  (50,993) (0.6)%

Cost of goods sold (excluding depreciation)

             

Fuel

  6,139,080  6,310,250  (171,170) (2.7)%

Nonfuel

  652,824  599,474  53,350  8.9%
          
​​​​​​​​​​​​​​

Total cost of goods sold (excluding depreciation)

  6,791,904  6,909,724  (117,820) (1.7)%

Operating expenses:

             

Site level operating expenses

  755,942  698,522  57,420  8.2%

Selling, general & administrative expense

  107,447  95,547  11,900  12.5%

Real estate rent

  209,320  198,927  10,393  5.2%

Depreciation and amortization expense

  58,928  51,534  7,394  14.3%
          
​​​​​​​​​​​​​​

Total operating expenses

  1,131,637  1,044,530  87,107  8.3%
          
​​​​​​​​​​​​​​

Income from operations

  21,190  41,470  (20,280) (48.9)%

Acquisition costs

  (2,523) (785) (1,738) 221.4%

Interest income

  1,314  1,485  (171) (11.5)%

Interest expense

  (17,650) (10,358) (7,292) 70.4%
          
​​​​​​​​​​​​​​

Income before income taxes and income from equity investees

  2,331  31,812  (29,481) (92.7)%

Benefit (provision) for income taxes

  26,618  (1,491) 28,109  (1,885.2)%

Income from equity investees

  2,674  1,877  797  42.5%
          
​​​​​​​​​​​​​​

Net income

 $31,623 $32,198 $(575) (1.8)%
          
​​​​​​​​​​​​​​
​​​​​​​​​​​​​​
          
 2015 Change
from 2014		 2014 Change
from 2013		 2013
Revenues:         
Fuel$4,055,448
 (34.1)% $6,149,449
 (5.1)% $6,481,252
Nonfuel1,782,761
 10.3 % 1,616,802
 11.4 % 1,450,792
Rent and royalties from franchisees12,424
 0.3 % 12,382
 (2.4)% 12,687
Total revenues5,850,633
 (24.8)% 7,778,633
 (2.1)% 7,944,731
          
Cost of goods sold
   (excluding depreciation):
         
Fuel3,640,954
 (36.4)% 5,720,949
 (6.8)% 6,139,080
Nonfuel819,995
 11.0 % 738,871
 13.2 % 652,824
Total cost of goods sold4,460,949
 (30.9)% 6,459,820
 (4.9)% 6,791,904
          
Operating expenses:         
Site level operating885,646
 8.6 % 815,611
 7.9 % 755,942
Selling, general and administrative121,767
 14.0 % 106,823
 (0.6)% 107,447
Real estate rent231,591
 6.6 % 217,155
 3.7 % 209,320
Depreciation and amortization72,383
 10.4 % 65,584
 11.3 % 58,928
Total operating expenses1,311,387
 8.8 % 1,205,173
 6.5 % 1,131,637
          
Income from operations78,297
 (31.1)% 113,640
 436.3 % 21,190
          
Acquisition costs5,048
 335.2 % 1,160
 (54.0)% 2,523
Interest expense, net22,545
 34.9 % 16,712
 2.3 % 16,336
Income from equity investees4,056
 25.8 % 3,224
 20.6 % 2,674
Loss on extinguishment of debt10,502
 NM
 —
 NM
 —
Income before income taxes44,258
 (55.3)% 98,992
 NM
 5,005
(Provision) benefit for income taxes(16,539) (56.5)% (38,023) NM
 26,618
Net income$27,719
 (54.5)% $60,969
 92.8 % $31,623
Revenues. Revenues for 2015 were $5,850,633, a decrease of $1,928,000, or 24.8%, from 2014 that resulted from a decrease in fuel revenue that was partially offset by an increase in nonfuel revenue. Revenues for 2014 were $7,778,633, a decrease of $166,098, or 2.1%, from 2013 that resulted from a decrease in fuel revenue that was partially offset by an increase in nonfuel revenue.

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Fuel revenues for 2015 were $4,055,448, a decrease of $2,094,001, or 34.1%, from 2014. Fuel revenues for 2014 were $6,149,449, a decrease of $331,803, or 5.1%, from 2013. The tables below show the change in sales volumes and fuel revenues for each of our reportable segments.
 Fuel Gallons Sold
 2015 Change
from 2014		 2014 Change
from 2013		 2013
Travel centers1,974,744
 0.8% 1,958,512
 (2.1)% 2,001,246
Convenience stores121,604
 203.6% 40,048
 473.2 % 6,987
Corporate and other(1)
33,755
 28.7% 26,230
 (1.7)% 26,696
Consolidated totals2,130,103
 5.2% 2,024,790
 (0.5)% 2,034,929
 Fuel Revenues
 2015 Change
from 2014		 2014 Change
from 2013		 2013
Travel centers$3,763,415
 (36.9)% $5,961,764
 (6.5)% $6,378,801
Convenience stores224,894
 98.6 % 113,221
 443.6 % 20,828
Corporate and other(1)
67,139
 (9.8)% 74,464
 (8.8)% 81,623
Consolidated totals$4,055,448
 (34.1)% $6,149,449
 (5.1)% $6,481,252
(1)
Included within corporate and other are unallocated corporate expenses, our distribution center operations and all other businesses which do not meet the definition of a travel center or convenience store and which individually are not material to our operations.
Fuel revenues for the 2015 period reflected the significant decreases in market prices for fuel partially offset by increases in sales volume in both the travel center and convenience store segments, as compared to the 2014 period, primarily due to acquisitions. Wholesale fuel sales increased primarily as a result of our acquisitions in the second half of 2015. Fuel revenues for the 2014 period reflected decreases in both market prices for fuel and sales volume, as compared to 2013. Wholesale fuel sales decreased in 2014 primarily as a result of acquiring during the fourth quarter of 2013 the operations of a franchised site that formerly purchased fuel from us.
Nonfuel revenues for 2015 were $1,782,761, an increase of $165,959, or 10.3%, from 2014, as a result of growth in nonfuel revenues in both our travel center and convenience store segments. Nonfuel revenues for 2014 were $1,616,802, an increase of $166,010, or 11.4%, from 2013, primarily as a result of increases in nonfuel revenue at our travel center segment.
Cost of goods sold (excluding depreciation)

Same Site. Cost of goods sold for 2015 was $4,460,949, a decrease of $1,998,871, or 30.9%, from 2014. Cost of goods sold for 2014 was $6,459,820, a decrease of $332,084, or 4.9%, from 2013.

Fuel cost of goods sold for 2015 was $3,640,954, a decrease of $2,079,995, or 36.4%, from 2014. Fuel gross margin for 2015 was $414,494, as compared to $428,500 for 2014. Fuel cost of goods sold for 2014 was $5,720,949, a decrease of $418,131, or 6.8%, as compared to 2013. Fuel gross margin for 2014 was $428,500, as compared to $342,172 for 2013. The decreases in fuel cost of goods sold for 2015 and 2014 compared to the respective prior year periods primarily resulted from the same factors as described above for fuel revenue. Our fuel cost of goods sold was also impacted by certain federal biodiesel and renewable energy tax credits which entitled us to receive $11,897 and $6,898 of refunds related to certain fuel purchases made during 2015 and 2014, respectively. This program was approved and retroactively applied in December of each of 2015 and 2014. During 2013, we recognized $3,887 for similar tax credits retroactively reinstated for the year 2012. We recognized these amounts, net of our estimate of uncollectible amounts, as a reduction of our fuel cost of goods sold. The 2015 approval also included a prospective approval of this credit to December 31, 2016, and as such we expect to recognize similar benefits in 2016 ratably throughout the year rather than all in the fourth quarter as has occurred in 2015 and 2014.

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Nonfuel cost of goods sold for 2015 was $819,995, an increase of $81,124, or 11.0%, as compared to 2014. Nonfuel cost of goods sold increased primarily due to the same factors as described above for nonfuel revenues. Nonfuel gross margin for 2015 was $962,766, as compared to $877,931 for 2014. Nonfuel gross margin was 54.0% and 54.3% of nonfuel revenues for 2015 and 2014, respectively. The nonfuel gross margin percentage decreased primarily due to the mix of products and services sold as our convenience store segment comprised a larger percentage of our total nonfuel sales in 2015 than in 2014. Our truck repair and food service products and services typically generate a higher gross margin percentage than our store products. Nonfuel cost of goods sold for 2014 was $738,871, an increase of $86,047, or 13.2%, as compared to 2013. Nonfuel cost of goods sold increased primarily due to the same factors as described above for nonfuel revenues. Nonfuel gross margin for 2014 was $877,931, as compared to $797,968 for 2013. Nonfuel gross margin was 54.3% and 55.0% of nonfuel revenues during 2014 and 2013, respectively. The nonfuel gross margin percentage decreased primarily due to the mix of products and services sold as our convenience store segment comprised a larger percentage of our total nonfuel sales in 2014 than in 2013.
Real estate rent expense. Rent expense for 2015 was $231,591, an increase of $14,436, or 6.6%, from 2014. Rent expense increased as a result of the sale and lease back in June 2015 and September 2015 of 14 owned travel centers and certain assets at 11 properties currently leased from HPT, as described above, and improvements at leased sites we sold to HPT during 2015 and 2014. Rent expense for 2014 was $217,155, an increase of $7,835, or 3.7%, from 2013. Rent expense increased for 2014 compared to 2013 as a result of improvements at leased sites we sold to HPT during 2014 and an increase in percentage rent recognized under the HPT Leases based on increases in 2014 fuel and nonfuel revenues over base amounts at the properties leased from HPT.
Selling, general and administrative expenses. Selling, general and administrative expenses for 2015 were $121,767, an increase of $14,944, or 14.0%, from 2014. The increase was primarily attributable to increased personnel costs, which were due to annual compensation increases and increased headcount to support the growth of our business, especially the significant growth in our convenience store segment. These increases were partially offset by lower audit and contractor fees.
Selling, general and administrative expenses for 2014 were $106,823, a decrease of $624, or 0.6%, from 2013. The decrease was primarily attributable to a $10,000 legal settlement charge in 2013 that did not recur in 2014 and the settlement of this and other litigation early in 2014 resulted in an additional $3,848 reduction in legal expense in 2014. This decrease was largely offset by higher audit fees, personnel costs and contractor fees for 2014. Audit expense increased in connection with additional audit work from the delayed filing of our Annual Report on Form 10-K for the year ended December 31, 2013. Personnel costs increased due to annual compensation increases, an increase in share based compensation expense as result of an increase in the market price of our shares, and increased headcount in support of the growth in our business. Contractor fees increased largely due to fees paid in connection with the completion of our 2013 annual and 2014 quarterly financial reporting, and fees paid in connection with improving the design, operation and documentation of our internal control over financial reporting.
Depreciation and amortization. Depreciation and amortization for 2015 was $72,383, an increase of $6,799, or 10.4%, from 2014 that primarily resulted from the acquisitions and other capital investments we completed (and did not subsequently sell to HPT) during 2014 and 2015. The increase was partially offset by the reduction in our depreciable assets as a result of the sale and lease back in June 2015 and September 2015 of 14 owned travel centers and certain assets we owned at 11 properties leased from HPT, as described above. Depreciation and amortization for 2014 was $65,584, an increase of $6,656, or 11.3%, from 2013, that primarily resulted from the acquisitions and other capital investments we completed (and did not subsequently sell to HPT) during 2013 and 2014.
Interest expense, net. Interest expense, net for 2015 was $22,545, an increase of $5,833, or 34.9%, from 2014, primarily as a result of our issuance of Senior Notes in October 2015 for $100,000 and in December 2014 for $120,000. This increase was partially offset by a decrease in interest expense associated with the June 2015 transaction agreement with HPT as described above, which resulted in the qualification as operating leases of certain leased properties that previously were accounted for as financing leases. Interest expense, net for 2014 was $16,712, an increase of $376, or 2.3%, from 2013, primarily as a result of our issuance of Senior Notes in December 2014, for $120,000.
Income tax provision. Our provision for income taxes was $16,539 and $38,023 for the years ended December 31, 2015 and 2014, respectively. The income tax provision for 2015 and 2014 reflects an effective tax rate of 37.0% and 38.2%, respectively. The decrease in the effective tax rate for 2015 is primarily due to an increase in the utilization of various tax credits and incentives. Our provision for income taxes was $38,023 and a benefit of $26,618 for the years ended December 31, 2014 and 2013, respectively. The income tax provision for 2014 and 2013 reflects an effective tax rate of 38.2% and (531.8)%, respectively. The increase in the effective tax rate for 2014 from 2013 is primarily due to the reversal of our valuation allowance on most of our deferred tax assets in the fourth quarter of 2013 that did not recur in 2014. See Note 10 to the Notes to Consolidated Financial Statements included in Item 15 of this Annual Report for more information about our income taxes.

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Table of Contents

Segment Results Comparisons

of Operations

The following is a discussion of fuel and nonfuel revenue and site level gross margin in excess of site level operating expenses by reportable segment.
As part of thethis discussion and analysis of our segment operating results we sometimes refer to increases and decreases in results on a same site basis. For purposes of these comparisons, weWe include a location in the following same site comparisons only if we (or a franchiseecontinuously operated it for the entire duration since the beginning of oursthe earliest comparative period presented, or, for purposes only of the rent and royalty revenues, results)if during that period the location was continuously operated it from January 1, 2012, through December 31, 2013.by one of our franchisees. We do not exclude locations from the same site comparisons as a result of expansions in their size, capital improvements to the site or changes in the services offered. We excluded from

Travel Centers
The following table presents changes in the operating results of our travel center segment for the year ended December 31, 2015, as compared with the year ended December 31, 2014 and for the year ended December 31, 2014, as compared with the year ended December 31, 2013.
 2015 Change
from 2014		 2014 Change
from 2013		 2013
Fuel:         
Fuel revenues$3,763,415
 (36.9)% $5,961,764
 (6.5)% $6,378,801
Fuel gross margin387,947
 (7.8)% 420,956
 23.6 % 340,623
          
Nonfuel:         
Nonfuel revenues1,626,646
 5.6 % 1,539,996
 6.7 % 1,442,715
Nonfuel gross margin915,794
 7.3 % 853,788
 7.5 % 794,065
          
Rent and royalties from franchisees12,424
 0.3 % 12,382
 (2.4)% 12,687
Total revenues$5,402,485
 (28.1)% $7,514,142
 (4.1)% $7,834,203
          
Total gross margin$1,316,165
 2.3 % $1,287,126
 12.2 % $1,147,375
Site level operating expenses833,156
 4.9 % 794,508
 5.4 % 753,870
          
Site level gross margin in excess
   of site level operating expenses
$483,009
 (2.0)% $492,618
 25.2 % $393,505

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Table of Contents

The following table presents our same site comparisonsoperating results for our travel center segment for the two travel centersyear ended December 31, 2015, as compared to the year ended December 31, 2014, and two convenience stores we operate for a joint venture in which we own a 40% interest because we accountthe year ended December 31, 2014, as compared to the year ended December 31, 2013. The table includes amounts for this investment using the equity method of accounting and, therefore, the related revenues and expenses are not included in the respective line items in our consolidated results of operations.

 
 Years Ended December 31,  
 %
Change
Favorable/
(Unfavorable)		 
(gallons and dollars in thousands)
 2013 2012 Change 

Number of company operated locations

  191  191  —    

Fuel:(1)

  
 		  
 		  
 		  
 		 

Fuel sales volume (gallons)

  1,865,018  1,924,646  (59,628) (3.1)%

Fuel revenues

 $5,945,639 $6,270,663 $(325,024) (5.2)%

Fuel gross margin

 $321,075 $319,840 $1,235  0.4%

Fuel gross margin per gallon

 $0.172 $0.166 $0.006  3.6%

Nonfuel:(1)

  
 		  
 		  
 		  
 		 

Nonfuel revenues

 $1,353,534 $1,318,581 $34,953  2.7%

Nonfuel gross margin

 $744,940 $730,919 $14,021  1.9%

Nonfuel gross margin percentage

  55.0% 55.4%    (40)b.p.

Total gross margin(1)

 
$
1,066,015		 
$
1,050,759		 
$
15,256		  
1.5
%

Site level operating expenses(1)

 
$
701,204		 
$
679,237		 
$
21,967		  
(3.2
)%

Site level operating expenses as a percentage of nonfuel revenues(1)

  
51.8
%		 
51.5
%		    
(30
)b.p.

Site level gross margin in excess of site level operating expenses(1)

 $364,811 $371,522 $(6,711) (1.8)%

Number of franchisee operated locations

  
30		  
30		  
—		    

Rent and royalty revenues

 
$
11,666		 
$
10,483		 
$
1,183		  
11.3
%
(1)
Includes fuel volume, gross margin, revenues and expenses of locations that were company operated during the entirety of each of the respective comparative periods presented.

 2015 2014 Change 2014 2013 Change
Number of company operated
   travel center locations
214
 214
 —
 204
 204
 —
            
Fuel:           
Fuel sales volume (gallons)1,946,561
 1,933,904
 0.7 % 1,867,064
 1,951,563
 (4.3)%
Fuel revenues$3,707,703
 $5,886,328
 (37.0)% $5,680,403
 $6,222,085
 (8.7)%
Fuel gross margin380,969
 414,792
 (8.2)% 397,854
 334,881
 18.8 %
Fuel gross margin per gallon0.196
 0.214
 (8.4)% 0.213
 0.172
 23.8 %
            
Nonfuel:           
Nonfuel revenues$1,599,612
 $1,518,114
 5.4 % $1,476,650
 $1,418,675
 4.1 %
Nonfuel gross margin902,034
 843,008
 7.0 % 820,321
 780,588
 5.1 %
Nonfuel gross margin percentage56.4% 55.5% 90pts
 55.6% 55.0% 60pts
            
Total gross margin$1,283,003
 $1,257,800
 2.0 % $1,218,175
 $1,115,469
 9.2 %
            
Site level operating expenses817,565
 783,533
 4.3 % 759,468
 737,792
 2.9 %
            
Site level operating expenses as a
   percentage of nonfuel revenues
51.1% 51.6% (50)pts
 51.4% 52.0% (60)pts
Site level gross margin in excess
   of site level operating expenses
$465,438
 $474,267
 (1.9)% $458,707
 $377,677
 21.5 %
Revenues.Revenues for 2013,2015 were $7,944,731, which represented$5,402,485, a decrease of $2,111,657, or 28.1%, from 2012,2014. Revenues for 2014 were $7,514,142, a decrease of $50,993,$320,061, or 0.6%4.1%, from 2013. The decreases in both 2015 and 2014 compared to the respective prior year period primarily resultingresulted from a decrease in fuel revenuerevenues that was partially offset by an increase in nonfuel revenue.revenues.


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        Fuel revenues for 2013, were $6,481,252, a decrease of $155,045, or 2.3%, compared to 2012. The table below shows the changes in fuel revenues between periods that resulted fromof our travel center segment based on price and volume changes:

changes between periods.

(gallons and dollars in thousands)
 Gallons
Sold		 Fuel
Revenues		 

Results for 2012

  2,039,960 $6,636,297 

Decrease due to same site petroleum products price changes

  
—		  
(133,511
)

Decrease due to same site volume changes

  (59,628) (191,513)

Increase due to locations opened

  104,433  328,941 

Decrease in wholesale sales to nonfranchisees

  (1,965) (9,144)

Decrease in sales to franchisees on a wholesale basis

  (47,871) (149,818)
      
​​​​​​​​

Net change from prior year period

  (5,031) (155,045)
      
​​​​​​​​

Results for 2013

  2,034,929 $6,481,252 
      
​​​​​​​​
​​​​​​​​
      
 Gallons Sold Fuel Revenues
Results for 20132,001,246
 $6,378,801
    
Decrease due to petroleum products price changes—
 (281,773)
Decrease due to same site volume changes(84,499) (259,803)
Increase due to locations opened48,199
 144,423
Decrease in wholesale fuel sales(6,434) (19,884)
Net change from prior year period(42,734) (417,037)
    
Results for 20141,958,512
 5,961,764
    
Decrease due to petroleum products price changes—
 (2,202,534)
Increase due to same site volume changes12,657
 23,908
Increase due to locations opened12,921
 7,800
Decrease due to locations closed(9,346) (27,833)
Increase in wholesale fuel sales—
 310
Net change from prior year period16,232
 (2,198,349)
    
Results for 20151,974,744
 $3,763,415

        The

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Fuel revenues for 2015 were $3,763,415, a decrease of $2,198,349, or 36.9%, from 2014. Fuel revenues in fuel revenue resulted largely from declinesour travel center segment for the 2015 period reflected decreases in same site sales volume and fuel volume sold on a wholesale basis to franchisees and from lower market prices for fuel, partially offset by increases in sales volume growth atfrom same sites weand from sites acquired during 20122014 and 2013.2015. On a same site basis, fuel sales volume for our company operated locations decreasedincreased by 59,62812,657 gallons, or 3.1%0.7%, during 2013,2015, as compared to 2012.2014. We believe that the increase in fuel sales volume on a same site basis was primarily due to our continued focus on managing fuel sales pricing to balance sales volume and profitability and certain marketing initiatives implemented to try to offset the effect of the new regulatory truck driver hours of servicesservice rules on miles driven and truck utilization, the trend for improved fuel efficiency of heavy truck engines and other fuel conservation efforts by trucking customers.
Fuel revenues for 2014 were $5,961,764, a decrease of $417,037, or 6.5%, from 2013. Fuel revenues for the 2014 period reflected decreases in market prices for fuel and same site sales volume, as compared to 2013, which decreases were partially offset by increases in sales volume resulting from the locations we acquired during 2013 and 2014. On a same site basis, fuel sales volume decreased by 84,499 gallons, or 4.3%, during 2014, as compared to 2013. We believe that the effect of the truck driver hours of service rules on miles driven and truck utilization, the trend for improved fuel efficiency of heavy truck engines and other fuel conservation efforts by trucking customers and our decision to avoid certain lower margin fuel sales all contributed to the decreased same site fuel sales volume despite the slight and slow improvement in the U.S. economy. In addition, as noted above under "Overview," competitive pressures from other industry participants also negatively affected our fuel sales volume during 2013. The decreased level of sales volume to franchisees resulted from the sublease renewals we entered into with our franchisees in the second half of 2012 that eliminated the requirement that these subtenants purchase their diesel fuel from us and our acquisitions during 2012 and 2013 of the operations of five of the 10 such subtenants we had at the start of 2012.

volume.

Nonfuel revenues for 2013,2015 were $1,450,792,$1,626,646, an increase of $106,037,$86,650, or 7.9%5.6%, from 2014, primarily due to favorable results of our marketing initiatives and from the locations we acquired during 2014 and 2015. On a same site basis, nonfuel revenues increased by $81,498, or 5.4%, for 2015, as compared to 2012. The majority2014. We believe this same site increase is primarily due to favorable effects of the change between periods resulted fromcertain of our marketing initiatives. Nonfuel revenues for 2014 were $1,539,996, an increase inof $97,281, or 6.7%, as compared to 2013, as a result of certain price increases, the favorable effects of certain of our marketing initiatives and from locations we acquired during 2013 and 2014. On a same site basis, nonfuel revenues increased by 4.1% for 2014, as compared to 2013. We believe this same site increase is primarily due to the improved results at those sites we acquired during 2011 and 2012, and 2013, but also reflected a same site nonfuel revenue increase. On a same site basis for our company operated sites, nonfuel revenues increased by $34,953, or 2.7%, during 2013, compared to 2012. We believe the same site nonfuel revenue increase reflects increased customer spending due to increased customer traffic,as well as certain price increases we have instituted as a result of increased prices we paid for nonfuel inventory purchases and the favorable effects of certain of our marketing initiatives.

        Rent and royalty revenues

Site level gross margin in excess of site level operating expenses. Site level gross margin in excess of site level operating expenses for 2013, were $12,687,2015 was $483,009, a decrease of $1,985,$9,609, or 13.5%2.0%, compared to 2012. Rent and royalties decreased largely as a result of our acquisitions during 2012 and 2013 of 12 franchise travel centers that we now operate, including five that we had subleased to one franchisee. Thisfrom 2014. The decrease was primarily due to decreases in fuel gross margin and increases in site level operating expenses, partially offset by increased rents at six sites we subleased to franchisees that became effective during the second half of 2012. In October 2013, the subleaseincreases in nonfuel gross margin. Fuel gross margin decreased $33,009, or 7.8%, for one of these six sites was terminated and we began to operate that travel center.

        Cost of goods sold (excluding depreciation).    Cost of goods sold for 2013, was $6,791,904, a decrease of $117,820, or 1.7%,2015, as compared to 2012.

        Fuel cost2014. The fuel gross margin per gallon of goods sold$0.196 on a same site basis for 2013, of $6,139,080 decreased by $171,170, or 2.7%, compared to 2012. This decrease in2015, was $0.018 per gallon lower than 2014. Lower fuel cost of goods soldmargin per gallon for 2015 primarily resulted from a favorable purchasing experience in 2014 that did not recur in 2015. Site level operating expenses increased $38,648, or 4.9%, during 2015, as compared to 2014, primarily due to the decrease in same site fuel sales


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volumes, the lower level of market prices for fuel in 2013locations we acquired during 2014 and the decrease in fuel sold to franchisees on a wholesale basis2015. These decreases were partially offset by sales volume growthan increase in nonfuel gross margin of $62,006, or 7.3%, for 2015, as compared to 2014. The nonfuel gross margin was 56.3% and 55.4% of nonfuel revenues in 2015 and 2014, respectively. The nonfuel gross margin percentage increased due to sites we acquired during 2012a favorable change in the mix of products and services sold. On a same site basis, the nonfuel gross margin percentage improved to 56.4% from 55.5%.

Site level gross margin in excess of site level operating expenses for 2014 was $492,618, an increase of $99,113, or 25.2%, from 2013. The increase was primarily due to the increases in fuel and nonfuel gross margin, partially offset by increases in site level operating expenses. Fuel gross margin increased $80,333, or 23.6%, for 2014, as compared to 2013. The fuel gross margin per gallon of $0.172$0.213 on a same site basis for 2013,2014, was $0.006$0.041 per gallon higher than for 2012,2013. Higher fuel margin per gallon in 2014 primarily asresulted from a result of variationsfavorable purchasing experience in market prices for fuel and our decision to forgo certain low margin sales. In addition, during 2013, we recognized $3,887 as a reduction of our fuel cost of goods sold as a result of refunds paid or due to us in relation to certain fuel purchases during 2012 as a result of the retroactive reinstatement of biodiesel tax credits. We also recognized, during the fourth quarter, a $1,097 charge to fuel cost of goods sold in connection with a claim related to invalid biodiesel renewable identification numbers we acquired and sold in 2010 and 2011; we may be able to recover all or a portion of this amount from our suppliers, but we have not recognized a benefit for such recovery in our 2013 results.

        Nonfuel cost of goods sold for 2013, was $652,824, an increase of $53,350, or 8.9%, compared to 2012. Nonfuel cost of goods sold increased primarily due to the nonfuel sales increases noted above, combined with increases in product unit costs.2014. Nonfuel gross margin increased $59,723, or 7.5%, for 2013, was $797,968,2014, as compared to $745,281 during 2012. Nonfuel2013. The nonfuel gross margin was 55.0%55.4% and 55.4%55.0% of nonfuel revenues duringin 2014 and 2013, and 2012, respectively. The nonfuel gross margin percentage decreased largely asincreased due to a result of afavorable change in the mix of products and services sold, as well assold. On a same site basis, the nonfuel gross margin percentage improved to 55.6% from 55.0%. These increases in our cost of tires that we were not able to pass on completely to our customers.

        Site level operating expenses.    Site level operating expenses for 2013, were $755,942, an increase of $57,420, or 8.2%, compared to 2012. The increase inpartially offset by higher site level operating expenses wasof $40,638, or 5.4%, for 2014, as compared to 2013, primarily due to the locations we acquired during 2011, 20122013 and 2013, including $1,416 of start up expenses at these sites.

        On a same site basis for our company operated sites, site level operating expenses increased by $21,967, or 3.2%, for 2013, compared to 2012, primarily due to labor costs that increased as the level of nonfuel sales grew and increased utilities expenses and insurance costs, including property and general liability premiums and claims. Site level operating expenses as a percentage of nonfuel revenues on a same site basis for 2013, were 51.8%, compared to 51.5% in 2012. The increase in operating expenses as a percentage of nonfuel revenues on a same site basis was a result of increases in our utility costs, costs related to self insurance reserves for general liability claims and certain taxes other than income taxes.

        Selling, general and administrative expenses.    Selling, general and administrative expenses for 2013, were $107,447, compared to $95,547 during 2012, an increase of $11,900, or 12.5% that primarily resulted from the $10,000 loss we accrued in connection with the settlement of litigation. Our selling, general and administrative expenses also reflected an increase in personnel costs, including a $1,713 increase in share based compensation expense that resulted from our increased share price since 2012, and an increase in audit fees, partially offset by a decrease in legal expenses.

        Real estate rent expense.    Rent expense for 2013, was $209,320, an increase of $10,393, or 5.2%, compared to 2012 that is attributable to rent increases related to improvements acquired by HPT since January 1, 2012, and percentage rent recognized under the TA Lease based on increases in 2013 fuel and nonfuel revenues over the base amount.

        Depreciation and amortization expense.    Depreciation and amortization expense for 2013, was $58,928, an increase of $7,394, or 14.3%, compared to 2012, that primarily resulted from the acquisitions and other capital investments we completed (and did not subsequently sell to HPT) during 2012 and 2013. The increase over 2012 also reflects charges during the 2013 fourth quarter of $1,690 related to asset impairments and write offs.

        Acquisition costs.    Acquisition costs represent costs incurred for the legal, due diligence and related activities associated with our consideration and completion of possible and actual acquisitions,

2014.


42

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including for closed, pending and abandoned acquisitions. Total acquisition costs


Convenience Stores
The following table presents changes in the operating results of our convenience store segment for the year ended December 31, 2013, were $2,523, an increase of $1,738, or 221.4%, compared to 2012 that primarily resulted from the increased level of due diligence activity in 2013 in connection with the acquisition of a company operating 31 convenience stores and the evaluation of a chain of travel centers and convenience stores that we ultimately determined not to pursue.

        Interest expense.    Interest expense for 2013, was $17,650, an increase of $7,292 compared to 2012. The increase was primarily due to the issuance of our Senior Notes in January 2013 and consisted of the following:

 
 Year Ended
December 31,		  
 
(dollars in thousands)
 2013 2012 Change 

Interest related to our Senior Notes and Credit Facility

 $10,537 $2,096 $8,441 

HPT rent classified as interest

  7,400  7,330  70 

Amortization of deferred financing costs

  667  352  315 

Capitalized interest

  (1,033) —  (1,033)

Other

  79  580  (501)
        
​​​​​​​​​​​

Total interest expense

 $17,650 $10,358 $7,292 
        
​​​​​​​​​​​
​​​​​​​​​​​
        

        We capitalize the portion of our interest expense that is attributable under GAAP to our more significant construction projects over the duration of the respective construction periods. Capitalized interest is amortized to depreciation and amortization expense over the estimated useful life of the corresponding asset.

        Income tax provision (benefit).    Our benefit for income taxes for the year ended December 31, 2013, was $26,618, primarily as a result of the $29,853 beneficial effect from the reversal of the valuation allowance we historically had maintained with respect to certain of our deferred tax assets.


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Year ended December 31, 2012 compared to December 31, 2011

        The following table presents changes in our operating results for the year ended December 31, 2012,2015, as compared with the year ended December 31, 2011.

 
 Years Ended
December 31,		  
  
 
 
  
 %
Change		 
(dollars in thousands)
 2012 2011 Change 

Revenues:

             

Fuel

 $6,636,297 $6,603,329 $32,968  0.5%

Nonfuel

  1,344,755  1,271,085  73,670  5.8%

Rent and royalties from franchisees

  14,672  14,443  229  1.6%
          
​​​​​​​​​​​​​​

Total revenues

  7,995,724  7,888,857  106,867  1.4%

Cost of goods sold (excluding depreciation)

             

Fuel

  6,310,250  6,301,947  8,303  0.1%

Nonfuel

  599,474  548,092  51,382  9.4%
          
​​​​​​​​​​​​​​

Total cost of goods sold (excluding depreciation)

  6,909,724  6,850,039  59,685  0.9%

Operating expenses:

             

Site level operating expenses

  698,522  677,958  20,564  3.0%

Selling, general & administrative expense

  95,547  89,196  6,351  7.1%

Real estate rent

  198,927  191,798  7,129  3.7%

Depreciation and amortization expense

  51,534  47,466  4,068  8.6%
          
​​​​​​​​​​​​​​

Total operating expenses

  1,044,530  1,006,418  38,112  3.8%
          
​​​​​​​​​​​​​​

Income from operations

  41,470  32,400  9,070  28.0%

Acquisition costs

  (785) (446) (339) 76.0%

Interest income

  1,485  835  650  77.8%

Interest expense

  (10,358) (9,005) (1,353) 15.0%
          
​​​​​​​​​​​​​​

Income before income taxes and income from equity investees

  31,812  23,784  8,028  33.8%

(Provision) for income taxes

  (1,491) (1,379) (112) 8.1%

Income from equity investees

  1,877  1,169  708  60.6%
          
​​​​​​​​​​​​​​

Net income

 $32,198 $23,574 $8,624  36.6%
          
​​​​​​​​​​​​​​
​​​​​​​​​​​​​​
          

Same Site Results Comparisons

        As part2014. On December 16, 2013, we acquired 31 convenience store locations and as of the discussion and analysis of our operating resultsDecember 31, 2013, we sometimes refer to increases and decreases in resultsoperated 34 convenience stores not located on a same site basis. For purposestravel center property. The results of operations for these comparisons, we include31 locations for the period subsequent to acquisition did not have a location in the following same site comparisons only if we (or a franchisee of ours for purposes only of the rent and royalty revenues results) continuously operated it from January 1, 2011, through December 31, 2012. We do not exclude locations from the same site comparisons as a result of expansions in their size or changes in the services offered. We excluded from the same site comparisons the two travel centers and two convenience stores we operate for a joint venture in which we own a 40% interest because we account for this investment using the equity method of accounting and, therefore, the related revenues and expenses are not included in the respective line items insignificant impact on our consolidated results


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of operations. Two company operated travel centers were excluded from thisoperations for 2013 and our convenience store segment was not significant to our consolidated operating results for 2013. Therefore, the convenience store segment information for 2013 is not presented below.

 2015 Change
from 2014		 2014
Fuel:     
Fuel revenues$224,894
 98.6% $113,221
Fuel gross margin26,060
 258.4% 7,272
      
Nonfuel:     
Nonfuel revenues155,197
 102.5% 76,634
Nonfuel gross margin46,314
 93.4% 23,946
Total revenues$380,091
 100.2% $189,855
      
Total gross margin$72,374
 131.8% $31,218
Site level operating expenses55,115
 146.2% 22,384
      
Site level gross margin in excess of site level operating expenses$17,259
 95.4% $8,834
The following table presents our same site comparison because they were temporarily closed during significant portions of 2011operating results for our convenience store segment for the year ended December 31, 2015, as a result of flooding.

 
 Years Ended December 31,  
 %
Change
Favorable/
(Unfavorable)		 
(gallons and dollars in thousands)
 2012 2011 Change 

Number of company operated locations

  184  184  —    

Fuel:(1)

             

Fuel sales volume (gallons)

  1,868,867  1,951,359  (82,492) (4.2)%

Fuel revenues

 $6,089,938 $6,182,799 $(92,861) (1.5)%

Fuel gross margin

 $311,404 $292,987 $18,417  6.3%

Fuel gross margin per gallon

 $0.167 $0.150 $0.017  11.3%

Nonfuel:(1)

             

Nonfuel revenues

 $1,288,936 $1,249,467 $39,469  3.2%

Nonfuel gross margin

 $714,918 $710,807 $4,111  0.6%

Nonfuel gross margin percentage

  55.5% 56.9%    (140)b.p.

Total gross margin(1)

 $1,026,322 $1,003,794 $22,528  2.2%

Site level operating expenses(1)

 $660,663 $658,559 $2,104  (0.3)%

Site level operating expenses as a percentage of nonfuel revenues(1)

  51.3% 52.7%    140b.p.

Site level gross margin in excess of site level operating expenses(1)

 $365,659 $345,235 $20,424  5.9%

Number of franchisee operated locations

  31  31  —    

Rent and royalty revenues

 $11,062 $10,025 $1,037  10.3%
(1)
Includes fuel volume, gross margin, revenues and expenses ofcompared to the year ended December 31, 2014. The table includes amounts for locations that were company operated during the entirety of each of the periods presented.

 2015 2014 Change
Number of company operated convenience store locations32
 32
 —
      
Fuel:     
Fuel sales volume (gallons)41,690
 40,048
 4.1 %
Fuel revenues$77,672
 $113,221
 (31.4)%
Fuel gross margin8,917
 7,272
 22.6 %
Fuel gross margin per gallon0.214
 0.182
 17.6 %
      
Nonfuel:     
Nonfuel revenues$79,657
 $76,634
 3.9 %
Nonfuel gross margin25,965
 23,946
 8.4 %
Nonfuel gross margin percentage32.6% 31.2% 140pts
      
Total gross margin$34,882
 $31,218
 11.7 %
      
Site level operating expenses22,498
 22,384
 0.5 %
      
Site level operating expenses as a percentage of nonfuel revenues28.2% 29.2% (100)pts
Site level gross margin in excess of site level operating expenses$12,384
 $8,834
 40.2 %

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        Revenues.Revenues. Revenues for 2012,2015 were $7,995,724, which represented$380,091, an increase of $190,236, or 100.2%, from 2011, of $106,867, or 1.4%, primarily related to2014 that resulted from an increase in fuel and nonfuel revenue.

        Fuel revenues, for 2012, were $6,636,297, an increase of $32,968, or 0.5%, compared to 2011. This increase was principally theas a result of increases in fuel prices and fuel sales at travel centers we acquired during 2011 and 2012. These increases were partially offset by decreases in same site fuel sales volume and also offset by decreases in gallons sold to franchisees. The decreased level of sales volume to franchisees resulted from the sublease renewals entered in the second half of 2012, which increased our rent revenue but eliminated the requirement that these subtenants purchase diesel fuel from us. convenience store acquisitions since January 1, 2014.

The table below shows the changes in fuel revenues between periods that resulted fromof our convenience store segment based on price and volume changes:

changes between periods.

(gallons and dollars in thousands)
 Gallons
Sold		 Fuel
Revenues		 

Results for 2011

  2,087,416 $6,603,329 

Increase due to petroleum products price changes

  —  189,335 

Decrease due to same site volume changes

  (82,492) (269,694)

Increase due to locations opened

  54,559  177,480 

Decrease in sales to franchisees

  (19,464) (63,808)

Other changes, net

  (59) (345)
      
​​​​​​​​

Net change from prior year period

  (47,456) 32,968 
      
​​​​​​​​

Results for 2012

  2,039,960 $6,636,297 
      
​​​​​​​​
​​​​​​​​
      
 Gallons Sold Fuel Revenues
Results for 201440,048
 $113,221
    
Decrease due to petroleum products price changes—
 (38,562)
Increase due to same site volume changes1,642
 3,014
Increase due to locations opened79,914
 147,221
Net change from prior year period81,556
 111,673
    
Results for 2015121,604
 $224,894

TableFuel revenues for 2015 were $224,894, an increase of Contents

$111,673, or 98.6% from 2014. Fuel revenues at our convenience store segment for the 2015 period reflected increases in sales volume from both sites we acquired during 2015 and same sites, partially offset by decreases in market prices for fuel. On a same site basis, fuel sales volume for our company operated locations decreased2015 increased by 82,4921,642 gallons, or 4.2%4.1%, during 2012, compared to 2011.from 2014. We believe that improvedthe increase in fuel efficiency of heavy truck engines and other fuel conservation efforts by trucking customers, capital projects that required usrevenues in our convenience store segment was primarily due to take certain diesel dispensers temporarily out of service during the year, and our decision to avoid certain lower margincontinued focus on managing our fuel sales contributedpricing to decreased same site fuelbalance sales volume despite the slight and slow improvement in the U.S. economy generally and the trucking industry specifically.

profitability.

Nonfuel revenues for 2012,2015 were $1,344,755,$155,197, an increase of $73,670,$78,563, or 5.8%102.5%, comparedfrom 2014, primarily due to 2011. The majorityfavorable results of our marketing initiatives and from the change between years related to those sites we operated continuously since January 1, 2011.acquired during 2015. On a same site basis, for our company operated sites, nonfuel revenues increased by $39,469,$3,023, or 3.2%3.9%, during 2012,for 2015, as compared to 2011. We believe the same site nonfuel revenue increase reflects increased customer spending2014, primarily due to increased customer traffic, certain price increases we have instituted as a result of increased prices we paid for nonfuel inventory purchases and the favorable effects of certain of our capital investments and marketing initiatives. The increase
Site level gross margin in nonfuel revenuesexcess of site level operating expenses. Site level gross margin in excess of site level operating expenses for 2015 was also the result of sales at the travel centers we acquired or opened during 2011 and 2012.

        Rent and royalty revenues for 2012, were $14,672,$17,259, an increase of $229,$8,425, or 1.6%95.4%, comparedfrom 2014. The increase was primarily due to the same periodincreases in 2011. Rentfuel and royalties increased as a result of increased nonfuel revenues at our franchisee locations, the addition of four franchisee locations since the beginning of 2011 and increased rents at six sites currently subleased to franchisees that became effective during the second half of 2012. These increases weregross margin partially offset by our acquisitions during 2011 and 2012 of five franchisee locations and the operations of the businesses of franchisees at four locations that had been subleased from us.

        Cost of goods sold (excluding depreciation).    Cost of goods soldincreases in site level operating expenses. Fuel gross margin increased $18,788, or 258.4%, for 2012, was $6,909,724, an increase of $59,685, or 0.9%,2015, as compared to 2011. Fuel cost of goods sold for 2012 was $6,310,250, an increase of $8,303, or 0.1%, compared to 2011. This increase in fuel cost of goods sold resulted from the increase in fuel prices that was partially offset by the decrease in fuel sales volumes.2014. The fuel gross margin per gallon of $0.167$0.214 on a same site basis for 2012 increased $0.0172015, was $0.032 per gallon higher than 2014. Higher fuel margin per gallon in 2015 primarily as a result ofresulted from our decisioncontinued focus on managing our fuel sales pricing to avoid certain lower margin sales.

        Nonfuel cost of goods sold for 2012, was $599,474, an increase of $51,382, or 9.4%, compared to 2011. Nonfuel cost of goods sold increased due to the nonfuelbalance sales increases noted above, combined with increases in product unit costs.volume and profitability. Nonfuel gross margin increased $22,368, or 93.4%, for 2012, was $745,281,2015, as compared to $722,993 during 2011. Nonfuel2014. The nonfuel gross margin was 55.4%29.8% and 56.9%31.2% of nonfuel revenues during 2012in 2015 and 2011,2014, respectively. The nonfuel gross margin percentage decreased primarily as a result of a shift in our mix of products and services sold, margin compression in our truck service sales largely due to increased tire prices and increased price competition, a decision to lower our retail prices for tobacco products in order to encourage higher sales volumes of store products, and delays in reflecting certain product cost increases in our retail sales pricing.

        Site level operating expenses.    Site level operating expenses for 2012, were $698,522, an increase of $20,564, or 3.0%, compared to 2011. The increase in site level operating expenses primarily was due to the sales mix at the locations and businesses we acquired or opened during 2011 and 2012, including site conversion or startup costs of $1,6232015, partially offset by increases in 2012 and $411 in 2011, and also resulted from adjustments to reserves for certain environmental and litigation matters of $2,525 in 2012 compared to $1,622 in 2011.

nonfuel gross margin percentage at our same sites. On a same site basis, for our company operated sites,the nonfuel gross margin percentage improved to 32.6% from 31.2%. These increases were offset by higher site level operating expenses increased by $2,104,of $32,731, or 0.3%146.2%, for 2012,2015, as compared to 2011,2014, primarily due to increased laborthe locations we acquired during 2015.



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Liquidity and Capital Resources
Our principal liquidity requirements are to meet our operating and financing costs and to fund our capital expenditures, acquisitions and working capital requirements. Our principal sources of liquidity to meet these requirements are our:
cash balance;
operating cash flow;
revolving credit facility with a current maximum availability of $200,000, or our Credit Facility, subject to limits based on our qualified collateral;
sales to HPT, for an increase in our rent, of improvements we make to the sites we lease from HPT, as further described below under "Related Party Transactions";
potential issuances of new debt and equity securities; and
potential financing or selling unencumbered real estate that we own.
We believe that the primary risks we currently face with respect to our operating cash flow are:
economic conditions in the United States and the trucking industry and the risk of a renewed economic slowdown or recession;
decreased demand for our fuel products resulting from the increased level of nonfuel sales. Site level operating expensesregulatory and market efforts for improved engine fuel efficiency and fuel conservation generally;
decreased demand for our products and services that we may experience as a percentageresult of nonfuel revenues for 2012, were 51.3%, compared to 52.7% for 2011 on competition;
a same site basis. The decrease in operating expenses as a percentage of nonfuel revenues primarily was because certainsignificant portion of our expenses are fixed or otherwise do not vary directly with sales so that increasesin nature, which may restrict our ability to realize a sufficient reduction in our revenues didexpenses to offset a reduction in our revenues;
the negative impacts on our gross margins and working capital requirements if there were a return to the higher level of prices for petroleum products we experienced during the first half of 2014 and in prior years, as well as the volatility of those prices; and
the possible inability of acquired properties to generate the stabilized financial results we expect.
Our business requires substantial amounts of working capital, including cash liquidity, and our working capital requirements can be especially large because of the volatility of fuel prices. Our growth strategy of selectively acquiring additional properties and businesses requires us to expend substantial additional capital. In addition, our properties are high traffic areas with many customers, including large trucks, entering and exiting our properties daily, requiring us to expend capital to improve, repair and maintain our properties. Although we had a cash balance of $172,087 on December 31, 2015, and generated net income and net cash from operating activities in 2015, there can be no assurance that we will maintain similar amounts of cash, that we will generate future profits or positive cash flows or that we will be able to obtain additional financing.
Liquidity Aspects of Transactions with HPT
In June 2015, we announced that we had entered a transaction agreement with HPT, pursuant to which we (i) sold and leased back 14 travel centers we owned and certain assets we owned at an additional 11 travel centers that we lease from HPT for $279,383, and (ii) purchased from HPT for $45,042 five travel centers that we previously leased from HPT. All proceeds from the sales transactions were placed in so-called “exchange accounts” with a third party intermediary to facilitate the deferral of related income taxes on the capital gains from these transactions by acquiring other real estate, including the five travel centers we acquired for $45,042. Generally, any proceeds held by our third party intermediary must be invested in replacement real estate within 180 days after the receipt of said proceeds in order for the tax deferral to be effective. The cash held by the third party intermediary is included in our cash balance at December 31, 2015. As of the date of this Annual Report we have invested in replacement real estate all proceeds that had been held by our third party intermediary.
In addition, pursuant to the Transaction Agreement, HPT agreed to purchase from us upon their completion, for our cost, which is not resultexpected to exceed $118,000, five travel centers to be developed on land we own. After December 31, 2015, we completed development of one of these travel centers and we expect to complete the sale of this travel center to HPT during the first quarter of 2016. We currently expect development of two of these travel centers to be completed during 2016 and development of the other two travel centers to be completed during the second half of 2016, or first half of 2017. As of December 31, 2015, we had invested $55,459 (including land costs) in corresponding increases in those site level operating expenses.

the development of these five sites, and the total estimated remaining development costs of these five travel centers as of December 31, 2015, was $57,733.


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        Selling,


Revolving Credit Facility
We have a Credit Facility with a group of commercial banks that matures on December 19, 2019. Under the Credit Facility, a maximum of $200,000 may be drawn, repaid and redrawn until maturity. The availability of this maximum amount is subject to limits based on qualified collateral. Subject to available collateral and lender participation, the maximum amount may be increased to $300,000. The Credit Facility may be used for general business purposes and administrative expenses.    Selling, generalprovides for the issuance of letters of credit. Generally, no principal payments are due until maturity. Borrowings under the Credit Facility bear interest at a rate based on, at our option, LIBOR or a base rate, plus a premium (which premium is subject to adjustment based upon facility availability, utilization and administrative expensesother matters). At December 31, 2015, a total of $84,651 was available to us for 2012,loans and letters of credit under the Credit Facility. At December 31, 2015, there were $95,547,no loans outstanding under the Credit Facility but we had outstanding $34,490 of letters of credit issued under that facility, which reduce the amount available for borrowing under the Credit Facility, leaving $50,161 available for our use.
Senior Notes
On October 5, 2015, we issued in an underwritten public offering $100,000 aggregate principal amount of our 8.00% Senior Notes due on October 15, 2030, or the 2030 8.00% Senior Notes. Our net proceeds from this issuance were approximately $95,494 after underwriters’ discount and commission and other costs of the offering. The 2030 8.00% Senior Notes bear interest at 8.00% per annum, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, beginning on January 15, 2016, and no principal payments are required prior to maturity on October 15, 2030. The 2030 8.00% Senior Notes are callable by us without penalty at any time on or after October 5, 2018.
On December 16, 2014, we issued in an underwritten public offering $120,000 aggregate principal amount of our 8.00% Senior Notes due on December 15, 2029, or the 2029 8.00% Senior Notes. Our net proceeds from this issuance were approximately $114,448 after underwriters’ discount and commission and other costs of the offering. The 2029 8.00% Senior Notes bear interest at 8.00% per annum, payable quarterly in arrears on February 28, May 31, August 31 and November 30 of each year, beginning on February 28, 2015, and no principal payments are required prior to maturity on December 15, 2029. The 2029 8.00% Senior Notes are callable by us without penalty at any time on or after December 15, 2017.
On January 15, 2013, we issued in an underwritten public offering $110,000 aggregate principal amount of our 8.25% Senior Notes due on January 15, 2028, or the 2028 8.25% Senior Notes. Our net proceeds from this issuance were approximately $105,250 after underwriters’ discount and commission and other costs of the offering. The 2028 8.25% Senior Notes bear interest at 8.25% per annum, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, beginning on April 15, 2013, and no principal payments are required prior to maturity on January 15, 2028. The 2028 8.25% Senior Notes are callable by us without penalty at any time on or after January 15, 2016.
We refer to our 2030 8.00% Senior Notes, our 2029 8.00% Senior Notes, and our 2028 8.25% Senior Notes collectively as our Senior Notes, which are our senior unsecured obligations. The total annual cash outlays for interest expense on our Senior Notes is expected to be $26,675.
The indenture governing the Senior Notes does not limit the amount of indebtedness we may incur. We may issue additional debt from time to time.
See Note 7 to the Notes to Consolidated Financial Statements included in Item 15 of this Annual Report for more information about our Credit Facility or our Senior Notes.


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Sources and Uses of Cash Flow
Cash Flow from Operating Activities
In 2015, we had net cash inflows from operating activities of $136,888, a decrease of $24,237 compared to $161,125 in 2014. The decrease was primarily due to lower net income partially offset by lower net working capital in 2015 as compared to 2014, that resulted primarily from lower fuel prices.
In 2014, we had net cash inflows from operating activities of $161,125, an increase of $6,351, or 7.1%,$89,612 compared to 2011. This$71,513 in 2013. The increase was primarily resulted from increases in legal expenses and personnel costs. The increased personnel costs resulted in part from increased headcount in regional operations management due to higher net income and lower net working capital resulting primarily from lower fuel prices, partially offset by a one time litigation settlement payment in 2014, as compared to 2013. In January 2014, we reached a settlement with the increased numberplaintiffs in a long running litigation and made a $10,000 payment in March 2014, which offset our increase in cash flow from operating activities. See Legal Proceedings included in Part I, Item 3 of company operated locations during 2012.

        Real estate rent expense.    Rent expensethis Annual Report for 2012 was $198,927,more information about this settlement.

Cash Flow from Investing Activities
In 2015, we had cash outflows from investing activities of $237,477, an increase of $7,129, or 3.7%,$103,059 compared to 2011 that$134,418 in 2014. The increase was primarily resulteddue to capital expenditures and cash invested for acquisitions, partially offset by proceeds from the increasessale of assets to HPT. In 2015, we invested $320,290 for the acquisition of three travel centers and 170 convenience stores, and we made other capital investments of $295,437 for improvements to our properties. In 2015, we received $378,250 of proceeds from our sales of properties and assets to HPT, including improvements to properties we lease from HPT.
In 2014, we had cash outflows from investing activities of $134,418, a decrease of $61,621 compared to $196,039 in rent2013. The decrease was primarily due to fewer acquisitions in 2014 compared to 2013. In 2014, we invested $28,695 for the acquisition of four properties, and we made other capital investments of $169,825. In 2013, we invested $111,516 for the acquisition of 41 properties, and we made other capital investments of $164,242. In 2014 and 2013, we received $64,735 and $77,593, respectively, of proceeds from our sales to HPT of improvements to the properties leased from HPT.
As of December 31, 2015, we had agreed to acquire an additional 24 convenience stores for purchase prices aggregating $32,788, and we expect to invest an additional $4,672 to rebrand and in some cases expand and improve them. We also had an agreement to acquire certain assets of Quaker Steak & Lube®, or QSL, including the brand, all of its owned and leased restaurants and its franchise agreements, for $25,000. Since December 31, 2015, we have completed the acquisition of seven convenience stores, in Illinois and Missouri, for an aggregate of $13,860 and have entered new agreements to acquire an additional 16 convenience stores in Wisconsin and Illinois for $23,250. We expect to invest an additional $3,803 in these 16 locations to rebrand, renovate and or expand them. We expect to complete the remaining acquisitions in the first half of 2016, but these purchases are subject to conditions, and in the case of QSL the outcome of a bankruptcy auction process, and may not occur, may be delayed or the terms may change.
See Notes 3 and 12 to our Notes to Consolidated Financial Statements included in Item 15 of this Annual Report for more information about our acquisitions and transactions with HPT.
Cash Flow from Financing Activities
In 2015, we had cash inflows from financing activities of $48,495, a decrease of $63,446 compared to $111,941 in 2014. Our financing cash flow consisted primarily of the $95,494 net cash proceeds we received from issuance of our 2030 8.00% Senior Notes, partially offset by the repayment of a financing obligation for $45,042 for five properties we are no longer leasing from HPT.
In 2014, we had cash inflows from financing activities of $111,941, a decrease of $63,086 compared to $175,027 in 2013. Our financing cash flow consisted primarily of the $114,448 net proceeds we received from the issuance of our 2029 8.00% Senior Notes. In 2013, financing cash flow consisted of the $105,250 net proceeds we received from the issuance of our 2028 8.25% Senior Notes and the $65,102 net proceeds of our issuance and sale of 7,475 common shares.


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Off Balance Sheet Arrangements
As of December 31, 2015, we had no off balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, other than with respect to the debt owed by Petro Travel Plaza Holdings LLC, or PTP, an entity in which we own a noncontrolling interest. Additional information regarding our relationship and transactions with PTP can be found in Notes 11 and 12 to the Notes to Consolidated Financial Statements included in Item 15 of this Annual Report.

Related Party Transactions
Relationships with HPT, The RMR Group LLC, and Affiliates Insurance Company
We have relationships and historical and continuing transactions with HPT, RMR and its managing member, The RMR Group Inc., Affiliates Insurance Company, or AIC and other companies to which RMR provides management services and others affiliated with them. For example:
HPT is our former parent company, our principal landlord and our largest shareholder and RMR provides management services to both us and HPT;
As of December 31, 2015, we, HPT and four other companies to which RMR provides management services each owned 14.3% of AIC, an Indiana insurance company, and we and the other shareholders of AIC participate in a property insurance program arranged and reinsured in part by AIC;
In the past we have entered group purchasing arrangements with certain other companies managed by RMR and we currently are exploring ways to expand those arrangements; and
RMR employs our President and Chief Executive Officer; our Executive Vice President, Chief Financial Officer and Treasurer; our Executive Vice President and General Counsel; and both of our Managing Directors; one of our Managing Directors is a controlling shareholder of The RMR Group Inc., which is the managing member of RMR, and owns an indirect interest in RMR; RMR, assists us with various aspects of our business pursuant to a business management agreement and provides building management services at our headquarters office building pursuant to a property management agreement.
See Note 12 to the Notes to Consolidated Financial Statements included in Item 15 of this Annual Report and the section captioned "Business—Our Leases with HPT" above in Part I, Item 1 of this Annual Report for more information about these and other such relationships and related person transactions. In addition, for more information about these transactions and relationships and about the risks that may arise as a result of improvements soldthese and other related person transactions and relationships, please see elsewhere in this Annual Report, including "Warning Concerning Forward Looking Statements" and Part I, Item 1A, "Risk Factors". Copies of certain of our agreements with these related parties, including our leases and related amendments with HPT, our business and property management agreements with RMR, various agreements we have entered with HPT and our shareholders agreement with AIC and its shareholders, are publicly available as exhibits to HPT during 2011our public filings with the SEC and 2012 and percentage rent recognized under the TA Lease based on increases in 2012 fuel and nonfuel revenues over the 2011 amountsaccessible at the sites leased under the TA Lease.

        DepreciationSEC's website, www.sec.gov. We may engage in additional transactions with related persons, including HPT and amortization expense.    Depreciation and amortization expense for 2012, was $51,534, an increasebusinesses to which RMR or its affiliates provide management services.



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Table of $4,068, or 8.6%, compared to 2011, that primarily resulted from an increase in depreciable assets due in large part to the acquisitions we completed during 2011 and 2012.

        Interest expense.    Interest expense consisted of the following:

Contents

 
 Year Ended
December 31,		  
 
(dollars in thousands)
 2012 2011 Change 

Interest related to Credit Facility

 $2,096 $1,036 $1,060 

HPT rent classified as interest

  7,330  7,390  (60)

Amortization of deferred financing costs

  352  403  (51)

Other

  580  176  404 
        
​​​​​​​​​​​

Total interest expense

 $10,358 $9,005 $1,353 
        
​​​​​​​​​​​
​​​​​​​​​​​
        

        Income tax provision.    Our provision for income taxes was $1,491 and $1,379 for 2012 and 2011, respectively. During 2012 and 2011, we did not recognize the benefit of all of our deferred tax assets, but our tax loss and credit carryforwards did offset any federal and certain state income taxes associated with our current taxable income. Our income tax provision represents certain minimum income based state taxes payable without regard to our tax loss carryforwards as well as the recognition of deferred tax liabilities that cannot be used to reduce existing deferred tax assets related to the tax amortization of indefinite lived intangible assets and to foreign currency translation adjustments.

Critical Accounting Policies

The preparation of our financial statements in accordance with GAAPU.S. generally accepted accounting principles requires us to make reasonable estimates and judgmentsassumptions that affectmay involve the reported amountsexercise of assets, liabilities, revenuessignificant judgment. For any estimate or assumption used, there may be other reasonable estimates or assumptions that may have been used. However, based on the available facts and expenses and related disclosure of contingent assets and liabilities. The critical accounting policies we employcircumstances inherent in the preparation ofestimates and assumptions reflected in our consolidated financial statements, are those which involve allowances for doubtful accounts receivable, reserves for excess and obsolete inventories, asset impairments, loyalty program reserves, reserves for self insurance, environmental liabilities and recoveries, legal contingencies, income tax accounting and accounting for leases.

        We maintain our allowances for doubtful accounts receivable based on historical payment patterns, aging of accounts receivable, periodic review of customers' financial condition, and actual write off history. If the financial conditions of customers deteriorate, resulting in impairments of their ability to make payments, additional allowances may be required.

        We maintain reserves for the estimated amounts of obsolete and excess inventories. Thesemanagement believes it is unlikely that applying other reasonable estimates are based on unit sales histories and on hand inventory quantities, known market trends for inventory items and assumptions regarding factors such as future inventory needs, our ability and the related costwould have caused materially different amounts to return items to our suppliers and our ability to sell inventory at a discount when


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necessary. To the extent an estimate is inaccurate, our assets, expenses and net incomehave been reported. Actual results may be understated or overstated.

        Our accounting policies require recording impairment losses ondiffer from these estimates.

Impairment of long lived assets to reduce the carrying value of certain assets to their fair value. For purposesand goodwill. We perform a test for impairment of our impairment analysis of property and equipment we perform the test at the individual site level, since this is the lowest grouping of assets and liabilities at which the related cash flows are largely independent of other assets and liabilities. The need to recognize impairment losses may occur under our policies in two types of circumstances. First, when assets are used in operations and events and circumstances indicate that the assets might be impaired, we record impairments whenever the carrying values of those assets exceed the estimated fair values of those assets at the specific location. Second, when assets are to be disposed of and their carrying values exceed the estimated fair value of the asset less the estimated cost to sell the asset, we record an impairment charge. Our estimates of fair value are based on our estimates of likely market participant assumptions. Key assumptions include our current expectations for projected fuel sales volumes, nonfuel revenues, fuel and nonfuel gross margins, site level operating expensesexpense and rent expense. If the business climate deteriorates, our actual results may not be consistent with these assumptions and estimates. The discount rate, which is used to measure the present value of the projected future cash flows, is set using a weighted average cost of capital method that considers market and industry data as well as our specific risk factors and that is likely to be used by a market participant. The weighted-average cost of capital is our estimate of the overall after tax rate of return required by equity and debt holders of a business enterprise. We also annually assess intangible assets with indefinite lives for impairment. We use a number of assumptions and methods in preparing valuations underlying impairment tests, including estimates of future cash flows and discount rates. During 2013, our assumptions resulted in total2015, we did not record any impairment charges of $659 relatedrelating to three travel centers.our property and equipment. Applying significantly different assumptions or valuation methods could result in different results from these impairment tests. For example, assuming
We also annually assess intangible assets with indefinite lives for impairment. Indefinite lived intangible assets consisted of trademarks and their fair value was determined using a 10% decline in projected fuel sales volumerelief from royalty method. We evaluated goodwill for impairment as of July 31. Goodwill impairment testing for 2015 was performed using a quantitative analysis under which the fair value of our goodwill was estimated using a discounted cash flow model, also known as an income approach, and a three cents per gallon decline in projected fuel gross margins per gallon would result inmarket approach. The discounted cash flow model considered forecasted cash flows discounted at an additional $3,996estimated weighted average cost of capital. The forecasted cash flows were based on our long-term operating plan and a terminal value was used to estimate the cash flows beyond the period covered by the operating plan. The weighted average cost of capital used was an estimate of the overall after tax rate of return required by equity and debt market holders of a business enterprise. The market approach considered comparable publicly traded guideline companies' business values. For each comparable publicly traded guideline company value indicators, or pricing multiples, were considered to estimate the value of our business enterprise. These analyses require the exercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates and the timing of expected future cash flows of the respective reportable segment. During 2015, we did not record any impairment charges related to an additional five travel centers.

our indefinite lived intangible assets and goodwill.

Customer loyalty programs. We have reservesaccruals for the customer loyalty programs we offer, to customers, similar to frequent shopper programs offered by other retailers. Drivers enrolled in these programs earn points for certain fuel and nonfuel purchases that can be redeemed for discounts on future nonfuel products and services at our travel centers. In determining these reserves,accruals, we must estimate redemption rates and future expected point expirations. These estimates are based on historical point expiration patterns, adjusted for expected future changes. To the extent an estimate is inaccurate, our liabilities, expenses and net income may be understated or overstated.

        We are exposed to losses under insurance programs for which we pay deductibles and for which we are partially self insured up to certain stop loss amounts, including claims under our general liability, workers' compensation, motor vehicle and group health benefits policies and programs. Accruals are established under these insurance programs for both estimated losses on known claims and potential claims incurred but not asserted, based on claims histories and using actuarial methods. The most significant risk of this methodology is its dependence on claims histories, which are not always indicative of future claims. To the extent an estimate is inaccurate, our liabilities, expenses and net income may be understated or overstated.

        We establish or adjust environmental contingency reserves when the responsibility to remediate becomes probable and the amount of associated costs is reasonably determinable. We also have a receivable for expected recoveries of certain of these estimated future environmental expenditures, resulting in an estimated net amount to be funded by us in the future. The process of determining both our estimated future costs of remediation and our estimated future recoveries of costs from insurers or others involves a high degree of management judgment based on past experiences and current and



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Income tax matters.

expected regulatory and insurance market conditions. To the extent an estimate is inaccurate, our liabilities, expenses and net income may be understated or overstated.

        We record legal contingency reserves when our liability becomes probable and when we can reasonably estimate the amount of our contingent loss. The process of estimating our liability for legal matters involves a high degree of management judgment, which is based on facts and circumstances specific to each matter and our prior experiences with similar matters that may not be indicative of future results. To the extent an estimate is inaccurate, our liabilities, expenses and net income may be understated or overstated.

As part of the process of preparing our consolidated financial statements, we are required to estimate income taxes in each of the jurisdictions in which we operate. This process involves estimating actual current tax expense along with assessing temporary differences resulting from differing treatment of items for financial statement and tax reporting purposes. These timingtemporary differences result in deferred tax assets and liabilities, which are recorded in our consolidated balance sheets. We are required to record a valuation allowance to reduce deferred tax assets if we are not able to conclude that it is more likely than not these assets will be realized. In measuring our deferred tax assets, we consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for all or a portion of the deferred tax assets. Judgment is required in considering the relative impact of negative and positive evidence. The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified. At year end 2013, we concluded that our profitability over the past three years and our current expectations regarding future income creates sufficient positive evidence such that it is more likely than not the previously unrecognized benefit of certain of our deferred tax assets will be realized. As a result, we reversed the valuation allowance against the majority of our deferred tax assets and we recorded the resulting income tax benefit of $29,853 in the consolidated statement of income and comprehensive income for the year ended December 31, 2013. We continue to maintain a valuation allowance against the deferred tax assets related to certain net operating loss and tax credit carryforwards in certain state and foreign jurisdictions. Our conclusions were based on estimates of future profitability based largely on the profits we have generated over the past three years but these conclusions still could prove to be inaccurate. To the extent our estimates and assumptions prove inaccurate we may need to recognize additional amounts of valuation allowance, which would increase our income tax expense and reduce our net income in future periods.

        Also with respect to income tax accounting, we

We are also required to account forevaluate uncertain tax positions we take inthat benefit our income tax returns. The two step process of recognition and measurement required with respect to uncertain tax positions can require a great deal of management judgment regarding the probability that a tax position, based solely on its technical merits, will be sustained upon examination by the taxing authority, and the measurement of the amount of benefit that is more likely than not to be realized upon ultimate resolution. Many assumptions and estimates may be taken into account in the determination of whether a tax position will be recognized in the financial statements and, if the tax position is to be recognized, the amount of benefit to be recognized. These assumptions and estimates are subject to change due to many factors. To the extent our estimates and assumptions prove inaccurate we may need to adjust the amounts recognized in our financial statements, which could increase or decrease our assets, liabilities, income tax expense and net income in future periods.

Accounting for leases. With respect to accounting for leases, each time we enter a new lease or materially modify an existing lease we evaluate its classification as either a capital lease or an operating lease. The classification of a lease as capital or operating affects whether and how the transaction is reflected in our balance sheet, as well as our recognition of rental payments as rent or interest expense. These evaluations require us to make estimates of, among other things, the remaining useful life and residual value of leased properties, appropriate discount rates and future cash flows that may be realized from the leased properties. Incorrect assumptions or estimates may result in misclassification of our leases.


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Other aspects of our lease accounting policies relate to the accounting for sale-leasebacksale leaseback transactions, including the appropriate amortization of related deferred liabilities and any deferred gains or losses, and the accounting for lease incentives. Our lease accounting policies involve significant judgments based upon our experience, including judgments about current valuations, estimated useful lives and salvage or residual values. In the future we may need to revise our assessments to incorporate information which is not known at the time of our previous assessments, and such revisions could increase or decrease our depreciation expense related to properties that we lease, result in the classification of some of our leases as other than operating leases or decrease the carrying values of some of our assets.

        Any or all of these policies, applied in the future with the benefit of additional facts or better estimates which were not known or available at the time the various required evaluations were made, could result in revisions to estimated liabilities, adjustments to reduce assets to their fair value or recognition of expenses that may be material. However, other than as disclosed in the preceding paragraphs, we do not believe our estimates are reasonably likely to change materially in the near term.

Liquidity and Capital Resources

        Our principal liquidity requirements are to meet our operating and financing expenses and to fund our capital expenditures, acquisitions and working capital requirements. Our principal sources of liquidity to meet these requirements are:

    •
    our cash balance;Business combinations.

    •
    our operating cash flow;

    •
    our credit facility;

    •
    our ability to offer to sell to HPT, for an increase in our rent, tenant improvements we make to the sites we lease from HPT, as further described below under "Related Party Transactions"; and

    •
    our ability to issue new debt and equity securities.

Additionally, the unencumbered operating real estate and vacant land that we own may be financed or sold as a source of additional liquidity over time.

        We believe that the primary risks we currently face with respect to our operating cash flow are:

    •
    decreased demand for our fuel products resulting from regulatory and market efforts for fuel conservation and engine fuel efficiency;

    •
    decreased demand for our products and services we may experience as a result of competition, particularly competition from the other two large companies in our industry, Pilot Flying J and Love's;

    •
    the negative impacts of the volatility and high level of prices for petroleum products on our gross margins and working capital requirements;

    •
    the inability of acquired properties to generate the stabilized financial results we expected when we acquired those properties;

    •
    the potential negative impacts of inflation on our nonfuel cost of goods sold, on our nonfuel gross margins and working capital requirements; and

    •
    economic conditions in the U.S. and the trucking industry and the risk of a renewed economic slowdown or recession.

        A reduction in our revenue without an offsetting reduction in our operating expenses may cause us to use our cash at a rate that we cannot sustain for extended periods. Further, certain of our expenses


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are fixed in nature, which may restrict our ability to realize a reduction in our expenses to offset a reduction in our revenues. Additional increases in the prices we must pay to obtain fuel, decreases in the amount of time we have to pay our trade creditors, or an increase in cash deposits required by our suppliers to secure our credit lines, may increase our working capital funding requirements materially. Also, because of the current economic, industry and global credit market conditions and our historical operating losses, credit may be expensive and difficult for us to obtain.

        At December 31, 2013 and 2012, we had cash and cash equivalents of $85,657 and $35,189, respectively. During the year ended December 31, 2013, we had net cash inflows from operating activities of $71,513, cash outflows from investing activities of $196,039, and cash inflows from financing activities of $175,027. During 2013, our cash balance increased primarily as a result of the $110,000 proceeds we received from the issuance of our Senior Notes, the $65,102 net proceeds of our issuance and sale of 7,475,000 common shares, our operating profit and the $83,912 of proceeds from our sales to HPT of improvements to the properties leased from HPT; $6,319 of these proceeds related to improvements at the sites that did not qualify for operating lease treatment under the sale-leaseback accounting guidance and are therefore classified as cash from financing activities. These sources of cash were partially offset by investments of $109,978 for the acquisition of 41 properties, and our other capital investments of $164,242.

        During the year ended December 31, 2012, we had net cash inflows from operating activities of $83,072, cash outflows from investing activities of $172,474, and cash inflows from financing activities of $6,322. During 2012, our cash balance decreased primarily as a result of investing $52,070 for 14 travel center business acquisitions, our other capital investments of $188,694 and an increase in our working capital investment. These uses of cash were partially offset by our operating profit and the $76,754 of proceeds from our sales to HPT of improvements to the properties leased from HPT; $8,598 of these proceeds related to improvements at the sites that did not qualify for operating lease treatment under the sale-leaseback accounting guidance and are therefore classified as cash from financing activities.

        During the year ended December 31, 2011, we had net cash inflows from operating activities of $30,141, cash outflows from investing activities of $86,798, and cash inflows from financing activities of $49,547. During 2011, our cash balance decreased primarily as a result of our travel center acquisitions, our other capital investments and an increase in our working capital investment. These decreases were partially offset by the $53,135 of net proceeds from our common share offering, $69,122 of proceeds from our sale to HPT of improvements to the properties leased from HPT and our cash from operations.

        Our business requires substantial amounts of working capital, including cash liquidity, and our working capital requirements are especially large because of the level and volatility of fuel prices which has existed in the past several years and which we expect will continue. Further, our growth strategy of selectively acquiring additional properties and businesses requires us to expend substantial additional capital. Although we had a cash balance of $85,657 on December 31, 2013, and generated net income and net cash from operating activities in 2013, there can be no assurances that we will generate future profits or positive cash flows or that we will be able to obtain additional financing to fund and grow our business.

        On March 17, 2014, we filed a Form 12b-25 with the SEC indicating that we were unable to file this Annual Report within the time period prescribed by the Exchange Act due to unanticipated delays encountered in connection with our accounting for income taxes as well as general delays encountered in connection with the completion of our accounting processes and procedures. On May 13, 2014, we filed a second Form 12b-25 indicating that as a result of the delay in completing this Annual Report, we were also unable to file our First Quarter 10-Q within the time period prescribed by the Exchange Act. Our failure to timely file this Annual Report, our consequent inability to use our shelf registration statement on Form S-3 and material weaknesses in our internal control over financial reporting as


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discussed further in Item 9A—"Controls and Procedures" may negatively impact our ability to issue new debt and equity securities and thus adversely impact our liquidity. Furthermore, the late filing of our First Quarter 10-Q could lead to breaches of our revolving credit facility or our indenture governing our Senior Notes, which could give rise to adverse consequences including giving our lenders or holders of the Senior Notes the right to exercise remedies, such as demanding immediate repayment of amounts owed and restricting our ability to borrow. If we are unable to borrow under our credit facility, we may be unable to meet our business obligations or to grow our business.

Assets and Liabilities

        Our total current assets at December 31, 2013, were $470,394, compared to $404,926 at December 31, 2012. Our total current liabilities were $303,613 at December 31, 2013, compared to $283,127 at December 31, 2012. Inventory and accounts payable at December 31, 2013, were $8,195 and $6,040 higher than at December 31, 2012, respectively, principally due to increases in the amounts of inventories required by our additional locations. Accounts receivable decreased principally as a result of reduced fuel sales volumes in December 2013, as compared to December 2012; fuel sales prices in December 2013 were at about the same level as in December 2012.

Revolving Credit Facility

        In October 2011, we entered into an amended and restated loan and security agreement, or our credit facility, with a group of commercial banks. The credit facility amended and restated our preexisting credit facility. Under this credit facility, a maximum of $200,000 may be drawn, repaid and redrawn until maturity in October 2016. The availability of this maximum amount is subject to limits based on qualified collateral. Subject to available collateral and lender participation, the maximum amount may be increased to $300,000. The credit facility may be used for general business purposes and provides for the issuance of letters of credit. Generally, no principal payments are due until maturity. Borrowings under the credit facility bear interest at a rate based on, at our option, LIBOR or a base rate, plus a premium (which premium is subject to adjustment based upon facility availability, utilization and other matters). The annual interest rate for our credit facility was 4.5% as of December 31, 2013. Pursuant to the credit facility, we pay a monthly unused line fee which is subject to adjustment according to the average daily principal amount of unused commitment under the credit facility. For further information regarding how the interest and fees charged under the credit facility are determined, see Note 11 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report.

        The credit facility requires us to maintain certain levels of collateral, limits our ability to incur debt and liens, restricts us from making certain investments and paying dividends and other distributions, requires us to maintain a minimum fixed charge ratio under certain circumstances and contains other customary covenants and conditions. Our credit facility also requires that we furnish certain of our financial statements to our lenders within specified time periods. Effective May 31, 2014, we received a waiver from our lenders extending until June 30, 2014, our requirement to furnish our financial statements as of and for the year ended December 31, 2013, and extending until July 31, 2014 our requirement to furnish our quarterly financial statements as of and for the fiscal quarter ended March 31, 2014. If we are unable to furnish the quarterly financial statements as of and for the fiscal quarter ended March 31, 2014, by July 31, 2014, or obtain an extension of the waiver, we may be in default under our credit facility. The credit facility provides for the acceleration of principal and interest payments upon an event of default including, but not limited to, failure to pay interest or other amounts due, a change in control of us, as defined in the credit facility, and our default under certain contracts, including the HPT Leases and our business management and shared services agreement with RMR.


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        Our credit facility is secured by substantially all of our cash, accounts receivable, inventory, equipment and intangible assets and the amount available to us is determined by reference to a borrowing base calculation based on eligible collateral. At December 31, 2013, a total of $130,783 was available to us for loans and letters of credit under the credit facility. At December 31, 2013, there were no loans outstanding under the credit facility but we had outstanding $44,866 of letters of credit issued under that facility, securing certain purchases, insurance, fuel tax and other trade obligations.

Senior Notes Issuance

        On January 15, 2013, we issued at par $110,000 aggregate principal amount of our 8.25% Senior Notes, or the Senior Notes, in an underwritten public offering. The Senior Notes are our senior unsecured obligations. The Senior Notes bear interest at 8.25% per annum, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, beginning on April 15, 2013. The Senior Notes mature on January 15, 2028. We may, at our option, at any time on or after January 15, 2016, redeem some or all of the Senior Notes by paying 100% of the principal amount of the Senior Notes to be redeemed plus accrued but unpaid interest, if any, to, but not including, the redemption date. The indenture governing the Senior Notes does not limit the amount of indebtedness we may incur. We may issue additional debt from time to time. During 2013, we paid $4,750 of debt issuance costs related to this offering.

        The indenture requires that we file our Exchange Act reports with the indenture trustee within a prescribed time period. We did not maintain compliance with this covenant for the year ended December 31, 2013, but the filing of this Annual Report cures this breach. Our failure to timely file our First Quarter 10-Q, if not cured within a specified time period, could lead to an event of default under the indenture.

Common Shares Issuance

        In December 2013, we issued and sold 7,475,000 common shares in an underwritten public offering for net proceeds of $65,102.

Investment Activities

        Our business of operating high sales volume travel centers open 24 hours every day requires that we make regular capital investments in our business to maintain our competitiveness. During the year ended December 31, 2013, we made capital expenditures of $164,242, including $45,338 to upgrade the travel centers and businesses we acquired in 2011, 2012 and 2013 and including certain capital expenditures which were sold to HPT.

        During the year ended December 31, 2013, we acquired, for an aggregate amount of $46,245, nine travel centers and the business of one franchisee at a travel center that this franchisee previously subleased from us. We acquired one travel center for $3,000 in January 2014. We have entered agreements to acquire two additional travel centers for a total of $21,500. We expect to complete these acquisitions before September 30, 2014; but these purchases are subject to conditions and may not occur, may be delayed or the terms may change. We currently intend to continue our efforts to selectively acquire additional travel centers and convenience stores and to otherwise expand our business.

        On December 16, 2013, we acquired 31 convenience stores for $67,922, including net working capital assets and liabilities.

        During 2013, we received $83,912 of proceeds from the sale to HPT of improvements we previously made to travel centers leased from HPT, and as a result our annual rent increased by $7,133, pursuant to the terms of our HPT Leases. At December 31, 2013, our property and equipment balance


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included $5,096 of completed improvement projects and an additional $23,636 in ongoing improvement projects that we expect to request that HPT purchase for an increase in rent in the future; however, HPT is not obligated to purchase those assets. In March 2014, we sold to HPT $6,063 of improvements for an increase in annual rent payable to HPT of $515.

        During the year ended December 31, 2012, we acquired, for an aggregate amount of $52,310, ten travel centers and the businesses of four franchisees at travel centers that these franchisees previously subleased from us. During 2012, we also made sustaining capital expenditures of $148,650 and we made capital expenditures of $40,044 to improve the travel centers and businesses we acquired in 2011 and 2012. During 2012, we received $76,754 of proceeds from the sale to HPT of improvements we previously made to travel centers leased from HPT, and as a result our rent increased pursuant to the terms of our HPT Leases.

        During the year ended December 31, 2011, we acquired, for an aggregate of $37,975, eight travel centers. During 2011, we also made capital expenditures of $106,182 for improvements to existing travel centers and of $12,065 to improve the eight travel centers we acquired in 2011. During 2011, we received $69,122 of proceeds from the sale to HPT of improvements we previously made to travel centers leased from HPT, and as a result our rent increased pursuant to the terms of our HPT Leases.

        We estimate that during 2014 our sustaining capital investments in our existing business will be approximately $65,000 to $75,000, some of which is expected to be of the type of improvements we typically request HPT purchase from us, and that the capital investment for improvements to those locations we had acquired during 2012 and 2013 or agreed to acquire as of December 31, 2013, will be approximately $36,500. We may also make additional investments in our business for expansion or other projects and at substantial costs.

Litigation Settlement

        In January 2014, we reached a settlement with the plaintiffs in a long running litigation (for further details, see Note 18 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report). We made our related $10,000 payment in March 2014.

Off Balance Sheet Arrangements

        As of December 31, 2013, we had no off balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, other than with respect to the debt described below owed by Petro Travel Plaza Holdings LLC, or PTP, an entity in which we own a minority interest. We own a 40% interest in a joint venture, PTP, which owns travel centers and convenience stores that we operate. These travel centers are encumbered by debt of $17,358 as of December 31, 2013, that is secured by PTP's real property and that matures in December 2018. We account for our investment in PTP underacquisitions of businesses as business combinations, which requires that the equity methodassets acquired and liabilities assumed be recognized at their respective fair values as of accounting and, therefore, we have not recordedthe acquisition date. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the acquisition date. We record any excess of the purchase price over the estimated fair value of the net assets as goodwill. Our accounting for this debt. business combinations involves significant judgments about valuations of assets and liabilities in the current market and the assignment of estimated useful lives. We may adjust our accounting for business combinations to reflect information that is unknown at the time of our respective acquisitions for up to one year after each purchase. Acquisition related transaction costs, such as legal fees, due diligence costs and closing costs, are not included as a component of consideration transferred in an acquisition but are expensed as incurred. The operating results of acquired businesses are reflected in our consolidated financial statements from the date of the acquisition.

Self insurance accruals. We are exposed to losses under insurance programs for which we pay deductibles and for which we are partially self insured up to certain stop loss amounts, including claims under our general liability, workers' compensation, motor vehicle and group health benefits policies and programs. Accruals are established under these insurance programs for both estimated losses on known claims and potential claims incurred but not directly liable forasserted, based on claims histories and using actuarial methods. The most significant risk of this debt, butmethodology is its dependence on claims histories, which are not always indicative of future claims. To the carrying value ofextent an estimate is inaccurate, our investment in this joint venture ($17,672 at December 31, 2013) couldliabilities, expenses and net income may be adversely affected if PTP defaulted on this debt and PTP's property was used to satisfy this debt. Also, in connection with the loan agreement entered by PTP, we and Tejon Development Corporation, the owner of the majority interest in PTP, each agreed to indemnify the lender against liability from environmental matters related to PTP's sites.

understated or overstated.


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Contingencies.

Related Party Transactions

Relationships with HPT, RMRWe establish or adjust environmental contingency accruals when the responsibility to remediate becomes probable and AIC

        We have relationships and historical and continuing transactions with our Directors, our executive officers, HPT, RMR, AIC and other companies to which RMR provides management services and others affiliated with them. For example:

    •
    HPTthe amount of associated costs is our former parent company, our principal landlord and our largest shareholder and RMR provides management services to both us and HPT;

    •
    As of May 9, 2014, we, RMR and five other companies to which RMR provides management services each own 14.3% of AIC, an Indiana insurance company,reasonably determinable and we record legal contingency accruals when our liability becomes probable and when we can reasonably estimate the other shareholders of AIC have property insurance in place providing $500,000 of coverage pursuant to an insurance program arranged by AIC and with respect to which AIC is a reinsurer of certain coverage amounts; and

    •
    RMR, a company that employs our President and Chief Executive Officer; our Executive Vice President, Chief Financial Officer and Treasurer; our Executive Vice President and General Counsel; and bothamount of our Managing Directors and which is majority owned by one of our Managing Directors, assists us with various aspects of our business pursuant tocontingent loss. We also have a business management and shared services agreement and provides building management services related to our headquarters office building pursuant to a property management agreement.

        For further information about these and other such relationships and related person transactions, please see Note 17 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report, which is incorporated herein by reference, and the section captioned "Business—Our Leases With HPT" above in Part I, Item 1 of this Annual Report. In addition,receivable for more information about these transactions and relationships and about the risks that may arise as a result of these and other related person transactions and relationships, please see elsewhere in this Annual Report, including "Warning Concerning Forward Looking Statements" and Part I, Item 1A, "Risk Factors." Copiesexpected recoveries of certain of our agreements with these related parties, includingestimated future environmental expenditures. The process of determining both our leases and related amendments with HPT, our business management agreement and property management agreement with RMRestimated future costs of environmental remediation and our shareholders agreement with AICestimated future recoveries of costs from insurers or others involves a high degree of management judgment based on past experiences and its shareholders, are publicly available as exhibits tocurrent and expected regulatory and insurance market conditions. The process of estimating our public filings with the SEC and accessible at the SEC's website, www.sec.gov.

        We believe that our agreements with HPT, RMR and AIC are on commercially reasonable terms. We also believe that our relationships with HPT, RMR and AIC and their affiliated and related persons and entities benefit us and, in fact, provide us with competitive advantages in operating and growing our business.

Relationship with PTP

        We ownliability for legal matters involves a 40% interest in PTP and operate the two travel centers and two convenience stores that PTP owns. Additional information regarding our relationship and transactions with PTP can be found in Note 17 to the Notes to Consolidated Financial Statements included in Item 15high degree of this Annual Report,management judgment, which is incorporated herein by reference.

based on facts and circumstances specific to each matter and our prior experiences with similar matters that may not be indicative of future results. To the extent an estimate is inaccurate, our liabilities, expenses and net income may be understated or overstated.

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Summary of Contractual Obligations and Commitments

At December 31, 2013,2015, our primary outstanding trade commitments were $44,866$34,490 for letters of credit. The following table summarizes our obligations to make future payments under various agreements as of December 31, 2013:

2015:

 
 Payments due by period 
 
 Total Less than
one year		 1 - 3 years 3 - 5 years More than
5 years		 
 
 (In Thousands)
 

Leases with HPT(1)

 $2,282,768 $228,330 $453,493 $449,335 $1,151,610 

Other operating leases

  17,992  4,894  5,361  2,341  5,396 

Senior Notes(2)

  237,423  9,075  18,150  18,150  192,048 

Letters of credit(3)

  44,866  —  44,866  —  — 

Purchase obligations(4)

  3,000  3,000  —  —  — 

Other long term liabilities(5)

  33,392  15,533  11,281  3,737  2,841 
            
​​​​​​​​​​​​​​​​​

Total contractual obligations

 $2,619,441 $260,832 $533,151 $473,563 $1,351,895 
            
​​​​​​​​​​​​​​​​​
​​​​​​​​​​​​​​​​​
            
 Payments due by period
 Total 
Less than
one year
 1 - 3 years 3 - 5 years 
More than
5 years
Leases with HPT(1)
$3,335,790
 $264,469
 $526,515
 $520,898
 $2,023,908
Other operating leases31,840
 7,316
 10,562
 4,530
 9,432
8.25% Senior Notes due 2028(2)
110,000
 —
 —
 —
 110,000
8.00% Senior Notes due 2029(3)
120,000
 —
 —
 —
 120,000
8.00% Senior Notes due 2030(4)
100,000
 —
 —
 —
 100,000
Interest payments on Senior Notes361,591
 26,675
 53,350
 53,350
 228,216
Purchase obligations(5)
57,788
 57,788
 —
 —
 —
Other long term liabilities(6)
36,221
 16,374
 12,131
 3,952
 3,764
Total contractual obligations$4,153,230
 $372,622
 $602,558
 $582,730
 $2,595,320
(1)
The amounts shown for lease payments to HPT include payments due to HPT for the sites we account for as operating leases and for the sites we account for as a financing under a sale leaseback financing obligation and also include the payments of the deferred rent obligation of $42,915, $29,324, $29,107, $27,421, and $21,233 in June 2024 and December 2026, 2028, 2029, and 2030, respectively, as well as the amounts payable to HPT at the end of the lease terms for the estimated cost of removing underground storage tanks. Interest is not payable on the deferred rent obligation balance unless we default on certain covenants or certain events occur, such as a change of control of us.
(2)
Our $110,000 of outstanding 2028 8.25% Senior Notes bear interest that is payable quarterly and mature (unless previously redeemed) on January 15, 2028. We may, at our option, at any time on or after January 15, 2016, redeem some or all of the 2028 8.25% Senior Notes by paying 100% of the principal amount of the 2028 8.25% Senior Notes to be redeemed plus accrued but unpaid interest, if any, to, but not including, the redemption date.
(3)
Our $120,000 of outstanding 2029 8.00% Senior Notes bear interest that is payable quarterly and mature (unless previously redeemed) on December 15, 2029. We may, at our option, at any time on or after December 15, 2017, redeem some or all of the 2029 8.00% Senior Notes by paying 100% of the principal amount of the 2029 8.00% Senior Notes to be redeemed plus accrued but unpaid interest, if any, to, but not including, the redemption date.
(4)
Our $100,000 of outstanding 2030 8.00% Senior Notes bear interest that is payable quarterly beginning on January 15, 2016, and mature (unless previously redeemed) on October 15, 2030. We may, at our option, at any time on or after October 15, 2018, redeem some or all of the 2030 8.00% Senior Notes by paying 100% of the principal amount of the 2030 8.00% Senior Notes to be redeemed plus accrued but unpaid interest, if any, to, but not including, the redemption date.
(5)
As of December 31, 2015, we had entered agreements to acquire 24 convenience stores for an aggregate of $32,788 and 53 restaurants for an aggregate of $25,000. These acquisitions are subject to conditions and may not occur, may be delayed or the terms may change.
(6)
The other long term liabilities included in the table above include accrued liabilities related to our partial self insurance programs, including for general liability, workers' compensation, motor vehicle and group health benefits claims.

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(1)
The amounts shown for lease payments to HPT include payments due to HPT both for the sites we account for as operating leases and for the sites we account for as a financing under a sale-leaseback financing obligation and also include the payments of the deferred rent obligation of $107,085 in December 2022 and $42,915 in June 2024, as well as the amounts payable to HPT at the end of the lease terms for the estimated cost of removing underground storage tanks. Interest is not payable on the deferred rent obligation balance unless we default on certain covenants or certain events occur, such as a change of control of us.

(2)
Our $110,000 of outstanding Senior Notes bear interest at 8.25% per annum that is payable quarterly and mature on January 15, 2028. We may, at our option, at any time on or after January 15, 2016, redeem some or all of the Senior Notes by paying 100% of the principal amount of the Senior Notes to be redeemed plus accrued but unpaid interest, if any, to, but not including, the redemption date.

(3)
At December 31, 2013, there were $44,866 of letters of credit issued under our credit facility. In the absence of a renewal or replacement of that credit facility, following the maturity of our credit facility in October 2016, we will be obligated to make cash deposits, or possibly provide some other form of collateral, to secure these letters of credit under the credit facility.

(4)
As of December 31, 2013, we had entered an agreement to acquire a travel center property for $3,000. We completed this acquisition in January 2014.

(5)
The other long term liabilities included in the table above include accrued liabilities related to our partial self insurance programs, including for general liability, workers' compensation, motor vehicle and group health benefits claims.

Inflation and Deflation

        Inflation, or a general increase in prices, will likely have more negative than positive impacts on our business. Rising prices may allow us to increase revenues, but also will likely increase our operating costs. Also, rising prices for fuel and other products we sell increase our working capital requirements and in the past have caused some of our customers to reduce their purchases of our goods and services. Because significant components of our expenses are fixed, we may not be able to realize expense reductions which match declines in general price levels, or deflation.


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Seasonality

        Assuming little variation in fuel prices, our revenues are usually lowest in the first quarter of the year when movement of freight by professional truck drivers and motorist travel are typically at their lowest levels of the year, and our revenues in the fourth quarter of a year are often somewhat lower than those of the second and third quarters because, although the beginning of the fourth quarter is often positively impacted by increased movement of freight in preparation for various national holidays, that positive impact is often more than offset by a reduction in freight movement caused by vacation time associated with those holidays taken by professional truck drivers toward the end of the year. While our revenues are modestly seasonal, the quarterly variations in our operating results may reflect greater seasonal differences because our rent and certain other costs do not vary seasonally.


Environmental and Climate Change Matters

        At December 31, 2013, we had an accrued liability of $7,487 for environmental matters as well as a receivable for expected recoveries of certain of these estimated future expenditures of $1,611, resulting in an estimated net amount of $5,876 that we expect to need to fund in the future. We do not have a reserve for unknown current or potential future environmental matters. Accrued liabilities related to environmental matters are recorded on an undiscounted basis because of the uncertainty associated with the timing of the related future payments. We cannot precisely know the ultimate costs we will incur in connection with currently known or future potential environmental related violations, corrective actions, investigation and remediation; however, based on our current knowledge we do not expect that our net costs for such matters to be incurred at our locations, individually or in the aggregate, would be material to our financial condition or results of operations.

        We have insurance of up to $10,000 per incident and up to $40,000 in the aggregate for certain unknown environmental liabilities, subject, in each case, to certain limitations and deductibles. However, we can provide no assurance that we will be able to maintain similar environmental insurance coverage in the future on acceptable terms.

        While the costs of our environmental compliance in the past have not had a material adverse impact on us, it is impossible to predict the ultimate effect changing circumstances and changing environmental laws may have on us in the future. We cannot be certain that contamination presently unknown to us does not exist at our sites, or that material liability will not be imposed on us in the future. If we discover additional environmental issues, or if government agencies impose additional environmental requirements, increased environmental compliance or remediation expenditures may be required, which could have a material adverse effect on us. In addition, legislation and regulation regarding climate change, including greenhouse gas emissions, and other environmental matters and market reaction to any such legislation or regulation or to climate change concerns, may decrease the demand for our major product, diesel fuel, and may require us to expend significant amounts. For instance, federal and state governmental requirements addressing emissions from trucks and other motor vehicles, such as the U.S. Environmental Protection Agency's gasoline and diesel sulfur control requirements that limit the concentration of sulfur in motor vehicle gasoline and diesel fuel, as well as President Obama's recent order that his administration develop and implement new fuel efficiency standards for medium and heavy duty commercial trucks by March 2016, could negatively impact our business. Further, legislation and regulations that limit carbon emissions may cause our energy costs at our locations to increase.

There have recently been severe weather activitiesevents in different parts of the country that some observers believe evidence global climate change, including the recent Hurricane Sandy that impacted portions of the eastern United States in October 2012.change. Such severe weather that may result from climate change may have an adverse effect on individual properties we own, lease or operate. We mitigate these risks by owning, leasing and operating a diversified portfolio of properties, by procuring


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insurance coverage we believe adequate to protect us from material damages and losses and by attempting to monitor and be prepared for such activities.events. However, there can be no assurance that our mitigation efforts will be sufficient or that storms that may occur due to future climate change or otherwise could not have a material adverse effect on our business.

In addition, legislation and regulation regarding climate change, including greenhouse gas emissions, and other environmental matters and market reaction to any such legislation or regulation or to climate change concerns, may decrease the demand for our fuel products, may require us to expend significant amounts and may negatively impact our business. For instance, federal and state governmental requirements addressing emissions from trucks and other motor vehicles, such as the U.S. Environmental Protection Agency’s, or EPA's, gasoline and diesel sulfur control requirements that limit the concentration of sulfur in motor fuel, as well as President Obama’s February 2014 order that his administration develop and implement new fuel efficiency standards for medium and heavy duty commercial trucks by March 2016, has caused us to add certain services and provide certain products to our customers at a cost to us and may decrease the demand for our fuel products and negatively impact our business. Pursuant to the President's executive order, in June 2015 the EPA and the National Highway Traffic Safety Administration proposed a new regulation that would phase in more stringent greenhouse gas emission and fuel efficiency standards for medium and heavy duty vehicles beginning in model year 2021 (model year 2018 for certain trailers) through model year 2027. The proposed regulation would reduce fuel usage between 8% and 24% (depending on vehicle category) by model year 2027. Further, legislation and regulations that limit carbon emissions also may cause our energy costs at our locations to increase.
For further information about these and other environmental and climate change matters, and the related risks that may arise, see the disclosure under the heading "Environmental Matters"Contingencies" in Note 1813 to the Notes to Consolidated Financial Statements included in Item 15 of this Annual Report, which disclosure is incorporated herein by reference. In addition, for more information about these environmental and climate change matters and about the risks which may arise as a result of these environmental and climate change matters, see elsewhere in this Annual Report, including "Warning Concerning Forward Looking Statements", "Environmental and Climate Change Matters""Regulatory Environment—Environmental Regulation" in Item 1 and Item 1A, "Risk Factors".


Item 7A. Quantitative and Qualitative Disclosures About Market Risk (dollars in thousands)

        We have a line of credit that

Our Credit Facility is secured by substantially all of our cash, accounts receivable, inventory, equipment and intangible assets. As of December 31, 2013,2015, no loans were outstanding under this credit facility.Credit Facility. We borrow under this credit facilityCredit Facility in U.S. dollars and those borrowings require us to pay interest at floating interest rates, which are based on LIBOR or a base rate plus a premium. Accordingly, we are vulnerable to changes in U.S. dollar based short term interest rates. There have been recent governmental inquiries regarding the setting of LIBOR, which may result in changes to that process that may have the effect of increasing LIBOR. Increases in LIBOR would increase the amount of interest we would have to pay under our credit facility. A change in interest rates generally would not affect the value of any outstanding floating rate debt but could affect our operating results. For example, if the $200,000 stated maximum amount was drawn under our credit facilityCredit Facility and interest rates decreased or increased by 100 basis points per annum, our interest expense would decrease or increase by $2,000 per year, or $0.07 per share, based on the number of outstanding common shares as of December 31, 2013.year. If interest rates were to change gradually over time, the impact would occur over time. At December 31, 2013, we had outstanding $110,000 aggregate principal amount

52
Table of our Senior Notes. The Senior Notes have a fixed interest rate; therefore, changes in market interest rates will not affect our operating results.

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We are exposed to risks arising from market price changes for fuel. These risks have historically resulted from changes in supply and demand for fuel and from market speculation about future supply and demand for fuel. Some supply changes may arise from local conditions, such as a malfunction in a particular pipeline or at a particular terminal. However, in the recent past most of the supply risks have arisen from national or international conditions, such as weather related shutdowns of oil drilling or refining capacities, political instability in oil producing regions of the world or terrorism. Risks may also arise from changes in the demand for and the price of fuel. BecauseDue to petroleum products arebeing traded in commodity markets, material changes in demand for and the price of fuel worldwide and financial speculation in these commodities markets may have a material effect upon the prices we have to pay for fuel and may also impact our customers' demand for fuel and other products. Almost all of these risks are beyond our control. Nevertheless, we attempt to mitigate our exposure to fuel commodity price market risks in three ways. First, whenever possible, we attempt to maintain supply contracts for diesel fuel with several different suppliers for each of our travel centers;locations; if one supplier has a local problem we may be able to obtain fuel supplies from other suppliers. Second, we maintain modest fuel inventories,inventory, generally less than three days of fuel sales. Modest inventoriesinventory may mitigate the risk that we are required by competitive or contract conditions to sell fuel for less than its cost in the event of rapid price changes;declines; however, the modest level of fuel inventory could exacerbate our fuel supply risks. Third, we sell a majority of our diesel fuel at prices determined by reference to a benchmark which is reflective of the market costs for fuel; by selling on such terms we may be able to substantially maintain our margin per gallon despite changes in the price we pay for fuel. Based on our fuel inventory volume


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as of, and our fuel sales volume for the year ended, December 31, 2013,2015, each one cent change in the price of fuel would change our inventory value by $162$191 and our fuel revenues by $20,349.

$21,301.


Item 8. Financial Statements and Supplementary Data

The information required by this item is included in Item 15 of this Annual Report.


Item 9. Changes in and Disagreements Withwith Accountants on Accounting and Financial Disclosure
None.

        None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 and Rule 15d-15.15d-15 of the Exchange Act. Based upon that evaluation, and as a result of the existence of certain material weaknesses in our internal control over financial reporting as described below in this Item 9A, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective at December 31, 2013.

2015.

Management Report on Assessment of Internal Control over Financial Reporting

We are responsible for establishing and maintaining adequate internal control over financial reporting. Internal control systems are intended to provide reasonable assurance to our management and boardBoard of directorsDirectors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2013.2015. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission inInternal Control—Integrated Framework (1992(2013 Framework). Based on this assessment, our management concluded that, as of December 31, 2013,2015, our internal control over financial reporting was not effective because of the material weaknesses described below. We determined that we had a material weakness in our internal controls over accounting for income taxes; specifically, our internal controls did not provide for timely and thorough reconciliation and review of the income tax accounts and related disclosures. In addition, we also determined we had a material weakness in our internal controls due to a lack of sufficient personnel with requisite accounting competencies. We also identified deficiencies in both design and operating effectiveness of certain of our internal controls, which, when aggregated, represent a material weakness in our financial statement close process. A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. Although none of the identified errors that our internal control over financial reporting failed to prevent or detect on a timely basis were considered material, we concluded that it was reasonably possible that a material misstatement would not have been prevented or detected on a timely basis.effective.

        Management's assessment of the effectiveness of internal control over financial reporting excludes our wholly owned subsidiary, Girkin Development, LLC, which we acquired on December 16, 2013. Girkin Development, LLC represents approximately 7.3% of our consolidated total assets and


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approximately 0.1% of our consolidated total revenues as of and for the year ended December 31, 2013.

The effectiveness of our internal control over financial reporting as of December 31, 2013,2015, has been audited by Ernst & YoungRSM US LLP (formerly McGladrey LLP), an independent registered public accounting firm, as stated in their report which appears in Item 15 of this Annual Report.

Remediation of Material Weakness in Internal Control Over Financial Reporting

        We are in the process of improving our internal controls to remediate the material weaknesses that existed as of December 31, 2013, as set forth above in our Management Report on Assessment of Internal Control over Financial Reporting. These remediation efforts include an expansion of our corporate accounting department.

Changes in Internal Control over Financial Reporting

        Except for

During the material weaknesses noted above,fourth quarter of 2015 there have beenwere no changes into our internal controlcontrols over financial reporting during the quarter ended December 31, 2013, that have materially affected, or are reasonably likely to materially affect, our internal controlcontrols over financial reporting.


53
 Item 9B.    Other Information

        None.


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Item 9B.

Other Information

None.


PART III

Item 10. Directors, Executive Officers and Corporate Governance

        Our LLC agreement provides that the number of Directors shall be determined by our Board of Directors. Currently, the number of our Directors is fixed at five. Our LLC agreement also provides that our Board of Directors shall be divided into three groups, with Directors in each group serving three-year terms.

        The following are the ages and recent principal occupations, as of May 29, 2014, of our Directors and executive officers. The business address of our Directors and executive officers is c/o TravelCenters of America LLC, 24601 Center Ridge Road, Suite 200, Westlake, Ohio 44145. Included in each Director's biography below is an assessment of such Director based on the qualifications, attributes, skills and experience our Board of Directors has determined are important to be represented on our Board of Directors.


DIRECTORS

Barbara D. Gilmore

Independent Director since: 2007

Group/Term: Group II with a term expiring at our 2015 Annual Meeting of Shareholders

Age: 63

Board Committees: Audit; Compensation (Chair); Nominating and Governance

Other Public Company Boards: Five Star Quality Care, Inc. (since 2004); Government Properties Income Trust (since 2009)

        Ms. Gilmore has served as a professional law clerk at the United States Bankruptcy Court, Central Division of the District of Massachusetts, since 2001. Ms. Gilmore was a partner of the law firm of Sullivan & Worcester LLP from 1993 to 2000, during which time she was appointed and served as trustee or examiner in various cases involving business finance matters.

Specific Qualifications, Attributes, Skills and Experience:

Lisa Harris Jones

Independent Director since: 2013

Group/Term: Group III with a term expiring at our 2016 Annual Meeting of Shareholders

Age: 46

Board Committees: Audit; Compensation; Nominating and Governance (Chair)


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        Ms. Jones is the founding member of Harris Jones & Malone, LLC, a law firm based in Maryland. Since founding Harris Jones & Malone, LLC in 2000, Ms. Jones has represented a wide range of clients, focusing her practice in government relations and procurement at both the state and local levels. Prior to founding Harris Jones & Malone, LLC, Ms. Jones was an associate with the law firms of Shapiro and Olander from 1993 to 1997 and Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC from 1997 to 1999, during which time she represented the City of Baltimore and many of its agencies and related quasi-public entities in various real estate development and financing transactions. In addition to her professional accomplishments, Ms. Jones has held leadership positions in many community service and civic organizations for which she has received recognitions and awards, including being the recipient of the YWCA Greater Baltimore Special Leadership Award in 2012.

Specific Qualifications, Attributes, Skills and Experience:

Arthur G. Koumantzelis

Independent Director since: 2007

Group/Term: Group I with a term expiring at our 2014 Annual Meeting of Shareholders

Age: 83

Board Committees: Audit (Chair); Compensation; Nominating and Governance

Other Public Company Boards: RMR Real Estate Income Fund (and its predecessor funds) (since 2002)

        Mr. Koumantzelis has been principally a private investor since 2007. Mr. Koumantzelis was President and Chief Executive Officer of Gainesborough Investments LLC, a private investment company, from 1998 until his retirement from that position in 2007. Mr. Koumantzelis was formerly Chief Financial Officer of Cumberland Farms, Inc., a company engaged in the convenience store business and the sale of petroleum products principally under the name "Gulf Oil" and related trademarks. Before that, Mr. Koumantzelis was a partner at the public accounting firm Ernst & Young LLP or one of its predecessors, Arthur Young & Co., for more than two decades. Mr. Koumantzelis has also served on several state appointed commissions and boards of civic organizations. Mr. Koumantzelis was an Independent Trustee of RMR Funds Series Trust from shortly after its formation in 2007 until its dissolution in 2009 (RMR Funds Series Trust, together with RMR Real Estate Income Fund and its predecessor funds, are collectively referred to herein as the "RMR Funds"). Mr. Koumantzelis was an Independent Director of Five Star Quality Care, Inc., from 2001 to 2010.

Specific Qualifications, Attributes, Skills and Experience:


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Thomas M. O'Brien

Managing Director since: 2006

President and Chief Executive Officer since 2007

Group/Term: Group II with a term expiring at our 2015 Annual Meeting of Shareholders

Age: 47

Other Public Company Boards: VirnetX Holding Corporation (since 2007)

        Mr. O'Brien has been an Executive Vice President of RMR since 2008, was a Senior Vice President of RMR prior to that time since 2006 and was a Vice President of RMR prior to that time since 1996. Since 2007, Mr. O'Brien has been a Director of the National Association of Truck Stop Operators, a not for profit trade association engaged in activities intended to support the travel center industry. Mr. O'Brien was the President and a Director of RMR Advisors Inc., or RMR Advisors, an SEC registered investment advisor, from 2002 until 2007 and President of certain predecessor funds of RMR Real Estate Income Fund since their respective formations (the earliest of which was in 2002) until 2007. From 2002 through 2003, Mr. O'Brien was Executive Vice President of Hospitality Properties Trust, where he had previously served as Treasurer and Chief Financial Officer since 1996.

Specific Qualifications, Attributes, Skills and Experience:

Barry M. Portnoy

Managing Director since: 2006

Group/Term: Group I with a term expiring at our 2014 Annual Meeting of Shareholders

Age: 68


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Other Public Company Boards: Hospitality Properties Trust (since 1995); Senior Housing Properties Trust (since 1999); Five Star Quality Care, Inc. (since 2001); RMR Real Estate Income Fund (and its predecessor funds) (since 2002); Government Properties Income Trust (since 2009); Select Income REIT (since 2011); CommonWealth REIT (1986-2014)

        Mr. Portnoy is an owner of RMR and of RMR Advisors. Mr. Portnoy has been an owner and a Director of RMR (and its predecessor) since its founding in 1986, a full time employee of RMR since 1997, the Chairman of RMR since 1998 and a Director and Vice President of RMR Advisors since 2002. Mr. Portnoy was an Interested Trustee of RMR Funds Series Trust from shortly after its formation in 2007 until its dissolution in 2009. Mr. Portnoy practiced law for many years as a partner in, and chairman of, a law firm until 1997.

Specific Qualifications, Attributes, Skills and Experience:


EXECUTIVE OFFICERS

Thomas M. O'Brien

President and Chief Executive Officer since: 2007

        Mr. O'Brien has been our President and Chief Executive Officer since 2007, in addition to being one of our Managing Directors and having other experience as described above.

Andrew J. Rebholz

Executive Vice President, Chief Financial Officer and Treasurer since: 2007

Age: 49

        Mr. Rebholz has been a Senior Vice President of RMR since 2007. Previously, Mr. Rebholz served as our Senior Vice President and Controller since 2007. Prior to that time, he served as Vice President and Controller of TravelCenters of America, Inc., our predecessor, since 2002, and as Corporate Controller of our predecessor prior to that since 1997.

Mark R. Young

Executive Vice President and General Counsel since: 2007

Age: 51

        Mr. Young has been a Senior Vice President of RMR since 2011. Previously, Mr. Young served as Vice President of Leasing and Associate General Counsel of RMR from 2006 to 2007. Prior to that time, he served as Assistant Vice President and Associate General Counsel of RMR since 2001. Prior


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to 2001, Mr. Young held various positions at CMGI, Inc., Staples, Inc., Wilmer, Cutler, Pickering, Hale and Dorr LLP and Sullivan & Worcester LLP.

Michael J. Lombardi

Executive Vice President since: 2007

Age: 62

        Mr. Lombardi served our predecessor in this capacity since 2007 and previously as Senior Vice President of Sales since 2006. Prior to joining our predecessor, Mr. Lombardi was employed for seven years in senior positions in the global marketing and customer service divisions of Ford Motor Company and prior to that for thirteen years in the retail marketing division of British Petroleum plc.

Barry A. Richards

Executive Vice President since: 2010

Age: 61

        Mr. Richards served as our Senior Vice President, Food, since 2008 and prior to that as Vice President, Restaurants since 2007. Prior to that time, Mr. Richards served our predecessor as a Regional Vice President since 2007 and as a District Manager since 2001.

        There are no family relationships among any of our Directors or executive officers. Our executive officers serve at the discretion of our Board of Directors.

        RMR is a privately owned company that provides management services to public and private companies, including us, Government Properties Income Trust, Hospitality Properties Trust, Select Income REIT, Senior Housing Properties Trust and Five Star Quality Care, Inc. Government Properties Income Trust is a publicly traded REIT that primarily invests in properties that are majority leased to government tenants. Hospitality Properties Trust is a publicly traded REIT that primarily owns hotels and travel centers. Select Income REIT is a publicly traded REIT that primarily owns net leased, single tenant office and industrial properties and leased lands in Hawaii. Senior Housing Properties Trust is a publicly traded REIT that primarily owns senior living properties and medical office buildings. Five Star Quality Care, Inc. is a publicly traded real estate based operating company in the healthcare and senior living services business. RMR Advisors, an affiliate of RMR, is an SEC registered investment adviser to the RMR Funds, which are or were investment companies registered under the Investment Company Act of 1940, as amended. Because certain of our officers and Directors also serve as officers, directors or trustees of RMR and of the foregoing entities, RMR and these entities may be considered to be affiliates of us. RMR also provides management services to CommonWealth REIT, a publicly traded REIT that primarily owns office buildings; however, none of the principals or officers of RMR serve as officers, directors or trustees of CommonWealth REIT, and we do not consider CommonWealth REIT to be our affiliate.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Our executive officers, Directors and certain persons who own more than 10% of our outstanding common shares are required by Section 16(a) of the Exchange Act and related regulations:

        We received written representations from each such person who did not file an annual statement on Form 5 with the SEC that no Form 5 was due. Based on our review of the reports and representations, we believe that all Section 16(a) reports were filed timely in 2013.


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CODE OF BUSINESS CONDUCT AND ETHICS

We have a Codecode of Business Conductbusiness conduct and Ethicsethics that applies to all our representatives, including our officers Directors and employeesDirectors. Our code of business conduct and employees of RMR. Our Code of Business Conduct and Ethicsethics is posted on our website, www.tatravelcenters.com.www.ta-petro.com. A printed copy of our Codecode of Business Conductbusiness conduct and Ethicsethics is also available free of charge to any person who requests a copy by writing to our Secretary, TravelCenters of America LLC, Two Newton Place, 255 Washington Street, Newton, MA 02458. We intend to disclose any amendments to or waivers of our Codecode of Business Conductbusiness conduct and Ethicsethics applicable to our principal executive officer, principal financial officer, principal accounting officer and controller (or any person performing similar functions) on our website.


DIRECTOR NOMINATION PROCESS

        There have been no material changes to

The remainder of the proceduresinformation required by which shareholders may recommend nomineesItem 10 is incorporated by reference to our Board of Directors as described in our Definitivedefinitive Proxy Statement for our 2013 Annual Meeting of Shareholders filed with the SEC on March 18, 2013.

Statement.



AUDIT COMMITTEE

        Our Board of Directors has a standing Audit Committee which was established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee is comprised solely of our Independent Directors: Barbara D. Gilmore, Lisa Harris Jones and Arthur G. Koumantzelis. Mr. Koumantzelis serves as Chair of the Audit Committee. Each member of the Audit Committee meets the independence requirements of the NYSE, the Exchange Act and our Governance Guidelines. Each member of the Audit Committee is financially literate, knowledgeable and qualified to review financial statements. Our Board of Directors has determined that Mr. Koumantzelis is the Audit Committee's "financial expert" and is independent as defined by the rules of the SEC and the NYSE. Our Board of Directors' determination that Mr. Koumantzelis is the Audit Committee's financial expert was based upon his experience as: (i) a member of the audit committees of other publicly owned companies; (ii) the chief financial officer of a company which was required to file reports with the SEC; and (iii) a certified public accountant who was responsible for auditing companies which filed SEC reports.

Item 11. Executive Compensation

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Overview

        This Compensation Discussion and Analysis provides a detailed description of our executive compensation philosophy and programs, the compensation decisions our Compensation Committee made under those programs in 2013 and the factors which impacted those decisions. This Compensation Discussion and Analysis discusses the compensation of our "named executive officers"


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for 2013, who are the officers for whom compensation disclosure is required to be made in this Annual Report on Form 10-K under SEC rules. For 2013, our named executive officers were:

Name
Title
Thomas M. O'BrienPresident and Chief Executive Officer

Andrew J. Rebholz

Executive Vice President, Chief Financial Officer and Treasurer

Michael J. Lombardi

Executive Vice President

Mark R. Young

Executive Vice President and General Counsel

Ara A. Bagdasarian*

Executive Vice President

Barry A. Richards

Executive Vice President
*
On January 31, 2014, we entered into a retirement agreement with Ara Bagdasarian, pursuant to which Mr. Bagdasarian resigned effective as of April 30, 2014.

Compensation Philosophy and Process

        Our compensation program is designed to help us achieve our business objectives, which include increasing, on a long-term basis, the value of us by improving our financial and operating performance, improving our competitive position within our industry and managing risks facing us.

        Individual performance is an important factor in determining each element of compensation. Our Compensation Committee determines the compensation of our Chief Executive Officer, Chief Financial Officer and General Counsel, and determines the amount and terms of share grants to all of our executive officers. Our Compensation Committee recommends to our Board of Directors and our Board of Directors determines all compensation, other than share grants, for our executive officers other than our Chief Executive Officer, Chief Financial Officer and General Counsel. There is no formulaic approach to the determinations of an executive officer's compensation; these determinations are made in the discretion of our Compensation Committee and our Board of Directors. Determinations of an executive officer's compensation are also not made as a direct result of benchmarking compensation against that of other companies.

        Our Compensation Committee and our Board of Directors believe it is important to further align the interests of our executive officers with those of our shareholders and therefore have determined that a significant portion of each executive officer's annual compensation will be paid in the form of share awards that vest subject to continued employment over periods ranging from four to nine years from the date of grant. Our Compensation Committee and our Board of Directors also believe that performance of our executive officers may be improved by paying a substantial portion of each executive officer's cash compensation as an annual bonus. Our Compensation Committee and our Board of Directors currently limit the annual base salaries of our executive officers and utilize changes in annual cash bonus amounts as the primary mechanism for effecting annual compensation adjustments for our executive officers.

The primary factor considered by our Compensation Committee and our Board of Directors when determining discretionary compensation for our executive officers is the historical cash and equity compensation paid to each executive officer and to our other executive officers with similar responsibilities. However, our Compensation Committee and our Board of Directors also consider, among other things, the executive officer's:


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        In addition to the consideration of the various factors described in the preceding paragraphs, our Compensation Committee and our Board of Directors consider available compensation data for public companies that are engaged in businesses similar to our business or that possess size or other characteristics that are similar to us. None of the Company's direct competitors are public companies and therefore the Company does not have access to the compensation practices and amounts of those companies. Consequently, in order to obtain a general understanding of current trends in compensation practices and ranges of amounts being awarded by other public companies, we compiled and reviewed comparative data gleaned from public filings regarding compensation paid by a group of public companies in the following industries: specialty retail; hotels, restaurants and leisure; food retail; and food and staples retailing industries.1

        Because the primary factor considered by our Compensation Committee and our Board of Directors is the historical compensation paid to each individual executive officer and to other executives with similar responsibilities, our Compensation Committee and our Board of Directors believe that our compensation philosophy with respect to our executive officers helps limit incentives for management to take excessive risk for short-term benefit.

Details of 2013 Compensation Process

        In September 2013, Ms. Gilmore, the Chair of our Compensation Committee, met with Mr. Barry Portnoy, our (non-employee) Managing Director, Mr. Adam Portnoy, President and Chief Executive Officer of RMR, and the chairs of the compensation committees of the other public companies for which RMR provides services. RMR provides management services to us, CommonWealth REIT, Government Properties Income Trust, Hospitality Properties Trust, Select Income REIT, Senior Housing Properties Trust and Five Star Quality Care, Inc. The purposes of this meeting were, among other things, to discuss compensation philosophy regarding potential share grants to be made by us and to consider the compensation payable to our Director of Internal Audit (who provides services to us and to other companies to which RMR provides management services), as well as to consider the allocation of internal audit and related services costs among us and other companies to which RMR provides such services.

        At a Compensation Committee meeting in November 2013, our Compensation Committee conducted a review of executive and employee compensation and considered recommendations arising from the September 2013 meeting, recommendations provided by management and other factors such as: (i) the amount of cash compensation historically paid to each executive officer; (ii) the amounts and value of historical share awards made to each executive officer; (iii) the amounts of cash compensation

1
This group of public companies was comprised of Advance Auto Parts, Inc.; AutoZone, Inc.; Brinker International, Inc.; Casey's General Stores, Inc.; Cracker Barrel Old Country Store, Inc.; Darden Restaurants, Inc.; Genuine Parts Company; Jack in the Box Inc.; Office Depot, Inc.; OfficeMax Incorporated; Staples, Inc.; Starbucks Corporation; Susser Holdings Corporation; The Pantry, Inc.; Wendy's International, Inc.; and YUM! Brands, Inc.

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and share awards paid to persons with similar levels of responsibility; (iv) the then current market prices of our common shares; (v) the performance of each executive officer during 2013; (vi) each executive officer's expected future contributions to us; (vii) each executive officer's relative mix of cash and noncash compensation; (viii) the comparative data about executive compensation trends and amounts that we assembled; and (ix) our financial position and operating performance in the past year and our perceived future prospects. Our Compensation Committee did not engage a compensation consultant to participate in the determination or recommendation of the amounts or form of compensation for our executive officers. Messrs. O'Brien, Rebholz and Young participated in parts of the Compensation Committee meeting with regard to consideration of compensation generally and to our other officers, but they left that meeting and did not participate in the Compensation Committee's determination and recommendation of their compensation. Mr. Barry Portnoy participated in parts of the Compensation Committee meeting, but left the meeting and did not participate in the final decisions and recommendations made by our Compensation Committee. All members of our Board of Directors participated in the Board of Directors' decisions on compensation which were not determined by our Compensation Committee.

Compensation Components

        The mix of base salary, cash bonus and equity compensation that we pay to our executive officers varies depending on the executive officer's position and responsibilities with us. Our Compensation Committee does not follow a set formula or specific guidelines in determining how to allocate the compensation components for our executives.

        The components of the compensation packages of our executive officers are as follows:

Base Salary

        Base salaries are reviewed annually and adjusted, if appropriate, on a subjective basis based upon consideration of a number of factors including, but not limited to, the individual performance factors described above, as well as (i) the historical amount paid to each executive officer; (ii) a comparison of the executive officer's pay to that of other individuals within our company and the relative responsibilities, titles, roles, experiences and capabilities of such other individuals; (iii) the comparative data about executive compensation trends and amounts that we assembled; (iv) our financial position and operating performance throughout the relevant year; and (v) for officers other than our Chief Executive Officer and Chief Financial Officer, an evaluation of the officers' performance provided by Messrs. O'Brien, Rebholz and Young. In 2013, we continued our practice of limiting the annual base salaries of our executive officers to a maximum of $300,000, with the exception of Mr. Lombardi whose annual base salary continues to be limited to $339,000, which is the annual base salary amount that was established for him by our predecessor. For 2013, our Compensation Committee also determined to maintain the annual base salary for each of our named executive officers at its prior level, except in the cases of Mr. Bagdasarian, whose annual base salary was increased, effective January 1, 2014, from $260,000 to $265,000, and Mr. Richards, whose annual base salary was increased, effective January 1, 2014, from $240,000 to $255,000.

Annual Bonus and Share Award Plan

        Each of our executive officers is eligible to receive an annual cash bonus and share award. There is no formulaic approach used in determining the amount of these annual cash and share awards. The cash bonus and share awards are determined on a subjective basis by our Compensation Committee and our Board of Directors, as the case may be, based upon consideration of a number of factors, which include the factors taken into account in connection with the base salary determinations discussed above. In addition, in determining cash bonus and share awards for our executive officers, our Compensation Committee and our Board of Directors also consider the recommendations of the


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Chair of our Compensation Committee, Ms. Gilmore, following her meeting with Messrs. Portnoy and the chairs of the compensation committees of other public companies for which RMR provides services. In light of the limitations imposed on the annual base salaries of our executive officers that are described above, changes in annual cash bonus amounts are the primary mechanism for effecting annual compensation adjustments for our executive officers. For bonus amounts paid to our executive officers for 2013, there were no bonus targets established. In addition, no bonus targets have been established for purposes of bonus amounts that may be paid to our executive officers in 2014.

        For 2013, our Compensation Committee awarded Mr. O'Brien a bonus of $1,600,000 in cash and also awarded him 150,000 of our common shares that will vest in ten equal annual installments beginning on the grant date. The shares awarded had a value at the grant date of $1,602,000; the vested portion of the share award was therefore $160,200 as of the grant date. In making this cash bonus and this share award, our Compensation Committee considered, among other things, Mr. O'Brien's performance in leading us through 2013; his role in expanding our business and profitability; his management of capital and operating expenditures in relation to the prevailing business levels; his role in maintaining fuel sales and pricing in order to maintain fuel margin; his role in assessing capital market opportunities and opportunistically procuring capital; his role in our regulatory compliance; his development of new, and enhancement of existing, marketing programs, operating initiatives, products and services that take advantage of our competitive strengths to grow our business in a slowly recovering economy and position us for future growth; his role in identifying potential acquisitions and structuring and negotiating acquisitions for us; his role in the integration of travel centers we acquired in 2011, 2012 and 2013 with our existing operations; his role in negotiating a natural gas initiative with Shell; and his role in negotiating other agreements with our suppliers and customers and managing risks facing us. Our Compensation Committee determined that the share award would vest over time to ensure a continuing commonality of interest between Mr. O'Brien and our shareholders, to provide Mr. O'Brien with an incentive to remain with us to earn the unvested portion of the award and to encourage appropriate levels of risk taking in his decisions affecting our business in the short-term and in the long-term. The foregoing description of the share award to Mr. O'Brien during 2013 does not include the share award granted to him in his capacity as one of our Managing Directors.

        The annual cash bonuses for Mr. Rebholz and Mr. Young were determined by our Compensation Committee after consideration of the same criteria described above with regard to Mr. O'Brien as applied to Mr. Rebholz's and Mr. Young's respective performances and after consideration of the other matters noted above, as applicable, that our Compensation Committee considers in determining compensation generally. The annual cash bonuses for our executive officers, other than Messrs. O'Brien, Rebholz and Young, were recommended by our Compensation Committee and approved by our Board of Directors based upon the consideration and evaluation of each executive's performance and level of total compensation as well as the other matters noted above, with regard to the compensation paid to Messrs. O'Brien, Rebholz and Young. These considerations included, but were not limited to, each executive officer's historical level of total compensation and our financial and operating performance during 2013 and each executive officer's level of total compensation.

        Because at least 80% of Messrs. O'Brien's, Rebholz's and Young's business time is devoted to services to us, 80% of Messrs. O'Brien's, Rebholz's and Young's total cash compensation (that is, the combined base salary and cash bonus paid by us and RMR) was paid by us and the remainder was paid by RMR. Messrs. O'Brien, Rebholz and Young are also eligible to participate in certain RMR benefit plans.

        We made equity awards under our Amended and Restated TravelCenters of America 2007 Equity Compensation Plan, or the Plan, to our executive officers and others based upon factors that our Compensation Committee considered relevant to align the interests of the persons to whom awards were made with our business objectives, which include, but are not limited to, increasing, on a


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long-term basis, the value of us by improving our prospects, competitive position within our industry and financial and operating performance, managing risks facing us, as well as achieving strategic initiatives and objectives. In addition to the award of our common shares made to Mr. O'Brien during 2013, our Compensation Committee awarded our common shares to each of our other executive officers who were employed by us at the grant date. These awards ranged in size and value from 37,500 common shares, having a grant date value of $400,500, to 75,000 common shares, having a grant date value of $801,000. In determining the size of each share award, our Compensation Committee considered the responsibilities of the executive, the prior year's share grant, the relation of the size of the award to the size of the share award made to Mr. O'Brien and other factors, including their past and expected future performances and cash bonuses, the total value of the granted shares relative to the value of past grants, 2013 annual cash salaries, the executive officer's tenure with us and our operational results during 2013. In each case, our Compensation Committee determined that the share awards would vest in five equal annual installments for those other executive officers (other than Mr. Rebholz whose shares vest in ten equal annual installments), in each case with the first tranche being vested on the date of the grant, to ensure a continuing commonality of interest between the recipients and our shareholders, to provide our executives with an incentive to remain with us to earn the unvested portion of the award and to encourage appropriate levels of risk taking in their long-term decisions affecting our business.

Other Benefits

        Our executive officers are entitled to participate in our benefit plans on the same terms as our other employees. These plans include medical, dental and life insurance plans and a defined contribution retirement plan. We suspended matching contribution payments to our defined contribution retirement plan in May 2009 and such payments had not been reinstated as of December 31, 2013. We do not provide other executive perquisites.

All Other Payments

        The Summary Compensation Table below includes a column for amounts described as "All Other Compensation". For each of those years, there no such amounts paid by us to our executive officers.

Say on Pay Results

        Our current policy, consistent with the prior vote of our shareholders, is to provide shareholders with an opportunity to approve, on an advisory basis, the compensation of our named executive officers once every three years at our Annual Meeting of Shareholders. In evaluating our compensation process for 2013, our Compensation Committee generally considered the results of the advisory vote of our shareholders on the compensation of the executive officers named in the proxy statement for our 2012 Annual Meeting of Shareholders. Our Compensation Committee noted that more than 93% of votes cast approved the compensation of the named executive officers as described in our 2012 proxy statement. Our Compensation Committee considered these voting results as supportive of the committee's general executive compensation practices, which have been consistently applied since that prior vote of our shareholders on our executive compensation.


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COMPENSATION COMMITTEE REPORT

        Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysisinformation required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, our Compensation Committee recommended11 is incorporated by reference to our Board of Directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K for the year ended December 31, 2013.


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

        Our Compensation Committee is comprised entirely of our three Independent Directors listed above. No member of our Compensation Committee is a current, or during 2013 was a former, officer or employee of ours. During 2013, no member of our Compensation Committee had a relationship that must be described under SEC rules relating to disclosure of related person transactions. In 2013, none of our executive officers served (i) on the compensation committee of any entity that had one or more of its executive officers serving on our Board of Directors or our Compensation Committee, or (ii) on the board of directors or board of trustees of any entity that had one or more of its executive officers serving on our Compensation Committee. A majority of the members of our Compensation Committee serve as independent directors or independent trustees and compensation committee members of other public companies to which RMR or its affiliates provide management services.


EXECUTIVE COMPENSATION

        The following tables, narratives and footnotes discuss the compensation of our Chief Executive Officer, Chief Financial Officer and all of our other executive officers at December 31, 2013, who are our named executive officers. The compensation information for the persons included in the compensation tables are for services rendered to us and our subsidiaries and do not include information regarding any compensation received by such persons for services rendered to RMR.


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2013 Summary Compensation Table

Name and Principal Position
 Year Salary ($) Bonus ($) Stock
Awards ($)*		 All Other
Compensation ($)		 Total ($) 

Thomas M. O'Brien(1)

  2013 $300,000 $1,600,000 $1,684,875 $— $3,584,875 

President and Chief

  2012  300,000  1,540,000  910,400  —  2,750,400 

Executive Officer

  2011  300,000  1,400,000  907,250  —  2,607,520 

Andrew J. Rebholz

  
2013		  
300,000		  
516,000		  
801,000		  
—		  
1,617,000		 

Executive Vice President,

  2012  300,000  490,000  436,000  —  1,226,000 

Chief Financial Officer and

  2011  300,000  450,000  424,000  —  1,174,000 

Treasurer

                   

Michael J. Lombardi

  
2013		  
339,000		  
316,000		  
400,500		  
—		  
1,055,500		 

Executive Vice President

  2012  339,000  295,000  218,000  —  852,000 

  2011  339,000  275,000  212,000  —  826,000 

Mark. R. Young

  
2013		  
300,000		  
320,000		  
400,500		  
—		  
1,020,500		 

Executive Vice President and

  2012  300,000  300,000  218,000  —  818,000 

General Counsel

  2011  300,000  275,000  212,000  —  787,000 

Ara A. Bagdasarian(2)

  
2013		  
265,000		  
278,000		  
400,500		  
—		  
943,500		 

Executive Vice President

  2012  260,000  250,000  218,000  —  728,000 

  2011  250,000  250,000  212,000  —  712,000 

Barry A. Richards

  
2013		  
255,000		  
283,000		  
400,500		  
—		  
938,500		 

Executive Vice President

  2012  240,000  275,000  218,000  —  733,000 
*
Represents the grant date fair value of shares granted in 2013, 2012 and 2011, as applicable, compiled in accordance with FASB Accounting Standards Codification Topic 718, "Compensation—Stock Compensation", or ASC 718. No assumptions are used in this calculation.

(1)
Mr. O'Brien's share awards amounts include $82,875, $38,400 and $59,250 of compensation received for services as Director for 2013, 2012 and 2011, respectively.

(2)
On January 31, 2014, we entered into a retirement agreement with Ara Bagdasarian, pursuant to which Mr. Bagdasarian resigned effective as of April 30, 2014.

2013 Grants of Plan Based Awards

        Share awards granted by us to our Chief Executive Officer and Chief Financial Officer in 2013 provide that one tenth of each award vests on the grant date and one tenth vests on each of the next nine anniversaries of the grant date. Share awards granted by us to our other named executive officers in 2013 provide that one fifth of each award vests on the grant date and one fifth vests on each of the next four anniversaries of the grant date. In the event a recipient who has been granted a share award ceases to perform duties for us or ceases to be an officer or an employee of RMR or any company that RMR manages or that is affiliated with RMR during the vesting period, at our option, the recipient shall forfeit the common shares that have not yet vested. Holders of vested and unvested shares awarded under the Plan are eligible to receive distributions that the we make, if any, on our shares on the same terms as other holders of our common shares.


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        The following table shows shares granted in 2013, including vested and unvested grants.

Name
 Grant Date All Other Stock Awards:
Number of Shares of Stock
or Units (#)		 Grant Date Fair Value
of Stock and Option
Awards*		 

Thomas M. O'Brien

  5/20/2013  7,500**$82,875 

  11/19/2013  150,000  1,602,000 

Andrew J. Rebholz

  11/19/2013  75,000  801,000 

Michael J. Lombardi

  11/19/2013  37,500  400,500 

Mark R. Young

  11/19/2013  37,500  400,500 

Ara A. Bagdasarian

  11/19/2013  37,500  400,500 

Barry A. Richards

  11/19/2013  37,500  400,500 
*
Equals the number of shares multiplied by the closing price on the date of grant, which is also the grant date fair value under ASC 718. No assumptions are used in this calculation.

**
Shares granted in Mr. O'Brien's capacity as a Director, which vested fully on the grant date.

2013 Outstanding Equity Awards at Fiscal Year-End

 
  
 Stock Awards 
Name
 Year Granted Number of Shares or
Units of Stock That Have
Not Vested (#)*		 Market Value of Shares or
Units of Stock That Have
Not Vested ($)**		 

Thomas M. O'Brien(1)

  2013  135,000 $1,314,900 

  2012  160,000  1,558,400 

  2011  140,000  1,363,600 

  2010  120,000  1,168,800 

  2009  100,000  974,000 

  2008  80,000  779,200 

  2007  60,000  584,400 

Andrew J. Rebholz(1)

  
2013		  
67,500		  
657,450		 

  2012  80,000  779,200 

  2011  70,000  681,800 

  2010  60,000  584,400 

Michael J. Lombardi

  
2013		  
30,000		  
292,200		 

  2012  30,000  292,200 

  2011  20,000  194,800 

  2010  9,000  87,660 

Mark R. Young

  2013  30,000  292,200 

  2012  30,000  292,200 

  2011  20,000  194,800 

  2010  9,000  87,660 

Ara A. Bagdasarian

  
2013		  
30,000		  
292,200		 

  2012  30,000  292,200 

  2011  20,000  194,800 

  2010  9,000  87,660 

Barry A. Richards

  
2013		  
30,000		  
292,200		 

  2012  30,000  292,200 

  2011  20,000  194,800 

  2010  9,000  87,660 
*
Unless noted otherwise, share awards granted by us to our executive officers provide that one fifth of each award vests on the grant date and one fifth vests on each of the next four anniversaries of
definitive Proxy Statement.

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    the grant date. The shares granted in 2013 were granted on November 19, 2013; the shares granted in 2012 were granted on December 4, 2012; the shares granted in 2011 were granted on November 29, 2011; the shares granted in 2010 were granted on December 1, 2010; the shares granted in 2009 were granted on December 8, 2009; the shares granted in 2008 were granted on November 24, 2008; and the shares granted in 2007 were granted on November 26, 2007. At our option, in the event a recipient who has been granted a share award ceases to perform duties for us, RMR or any company that RMR manages or that is affiliated with RMR during the vesting period, the recipient shall forfeit all or a portion of the shares that have not yet vested.

**
Equals the number of shares multiplied by the closing price of our common shares on December 31, 2013.

(1)
These share awards provide that one tenth of each award vested on the grant date and one tenth vests on each of the next nine anniversaries of the grant date.

2013 Stock Vested

        The following table shows share grants that vested in 2013, including shares granted in prior years.

 
 Stock Awards 
Name
 Number of Shares
Acquired on Vesting (#)		 Value Realized
on Vesting ($)*		 

Thomas M. O'Brien

  142,500 $1,512,875 

Andrew J. Rebholz

  52,500  552,950 

Michael J. Lombardi

  45,500  479,860 

Mark R. Young

  45,500  479,860 

Ara A. Bagdasarian

  40,500  427,810 

Barry A. Richards

  40,500  427,810 
*
Equals the number of shares multiplied by the closing price on the 2013 dates of vesting of grants made in 2013 and prior years.

Potential Payments upon Termination or Change in Control

        From time to time, we have entered into arrangements with former employees of ours or RMR in connection with the termination of their employment with us or RMR, providing for the acceleration of vesting of restricted shares previously granted to them under the Plan and, in certain instances, payments for future services to us as a consultant or part time employee and continuation of health care and other benefits. Although we have no formal policy, plan or arrangement for payments to employees of ours or RMR in connection with their termination of employment with us or RMR, we may in the future provide on a discretionary basis for similar payments depending on various factors we then consider relevant and if we believe it is in the its best interests to do so.

        On January 31, 2014, we entered into a retirement agreement with Ara Bagdasarian, our Executive Vice President. Pursuant to the retirement agreement, Mr. Bagdasarian resigned effective as of April 30, 2014. Pursuant to the retirement agreement, from May 1, 2014 through December 31, 2014, Mr. Bagdasarian will provide transition services to us and our subsidiaries. The retirement agreement provides that Mr. Bagdasarian will continue to receive his base salary of $267,000 and other benefits through December 31, 2014, and subject to certain conditions, will receive a bonus of $200,000 on January 9, 2015. The retirement agreement also provides that, in exchange for providing services to us through December 31, 2014, we will accelerate the vesting date of any unvested shares Mr. Bagdasarian owns as of January 1, 2015. The retirement agreement contains other customary terms and conditions, including non-solicitation, non-competition, confidentiality and other covenants.


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        On November 19, 2013, our Compensation Committee approved grants of 150,000 common shares to Mr. Thomas O'Brien, 75,000 common shares to Mr. Andrew Rebholz and 37,500 common shares to each of Messrs. Mark Young, Michael Lombardi, Ara Bagdasarian and Barry Richards. These grants were valued at $10.68 per common share, the closing price of our common shares on the NYSE on the date of grant, and were made under the Plan. The award letter for the grants to Messrs. O'Brien and Rebholz provides for vesting of the common shares in ten equal installments beginning on the date of grant and acceleration of vesting of all share grants (including those previously awarded) upon the occurrence of (i) a change in control of us, or a Change in Control, or (ii) RMR ceasing to be the manager or shared services provider to us, or a Termination Event. The award letter for the grants to each of Messrs. Young, Lombardi, Bagdasarian and Richards provides for vesting of the common shares in five equal installments beginning on the date of grant and acceleration of vesting of all share grants (including those previously awarded) upon the occurrence of a Change in Control or Termination Event.

        The following table describes the potential payments to our named executive officers upon a Change in Control or Termination Event as of December 31, 2013.

Name
 Number of Shares
Vested Upon Change in
Control or Termination
Event (#)		 Value Realized on
Change in Control
or Termination Event
as of December 31,
2013 ($)*		 

Thomas M. O'Brien

  795,000 $7,743,300 

Andrew J. Rebholz

  277,500  2,702,850 

Michael J. Lombardi

  89,000  866,860 

Mark R. Young

  89,000  866,860 

Ara A. Bagdasarian

  89,000  866,860 

Barry A. Richards

  89,000  866,860 
*
Equals the number of shares multiplied by the closing price of the Company's Common Shares on December 31, 2013.


DIRECTOR COMPENSATION

        The Compensation Committee is responsible for reviewing and determining the grants of our common shares awarded to our Directors and making recommendations to our Board of Directors regarding cash compensation paid to our Directors for Board, committee and committee chair services. Under our Compensation Committee's Charter, the committee is authorized to engage consultants or advisors in connection with its review and analysis of Director compensation, though it did not engage any consultants or advisors in 2013 with respect to Director compensation. Our Managing Directors do not receive cash compensation for their services as Directors but do receive grants of our common shares. The number of our common shares granted to each of our Managing Directors is the same as the number granted to each our Independent Directors.

        All of our Directors receive compensation in common shares to further align the interests of our Directors with those of our shareholders. In determining the amount and composition of each of our Director's compensation, our Compensation Committee takes various factors into consideration, including, but not limited to, the responsibilities of our Directors generally, as well as for service on committees and as committee chairs, and the forms of compensation paid to directors or trustees by comparable companies, including the compensation of directors and trustees of other companies managed by RMR. Our Board of Directors reviews our Compensation Committee's recommendations regarding Director cash compensation and determines the amount of such compensation.


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2013 Annual Compensation

        After giving effect to the changes approved by our Board of Directors on May 20, 2013, each of our Independent Directors receives an annual fee of $35,000 for services as a Director, plus a fee of $1,000 for each meeting attended (prior to such date the meeting fee was $750). Up to two $1,000 fees (or, if prior to May 20, 2013, two $750 fees) are paid to each of our Independent Directors if a Board of Directors meeting and one or more Board of Directors committee meetings are held on the same date. In addition, each of our Directors received a grant of 7,500 of our common shares in 2013.

        Each of our Independent Directors who served as a committee chair of our Audit, Compensation and Nominating and Governance Committees received an additional annual fee of $17,500, $7,500 and $7,500, respectively. Our Directors are reimbursed for out of pocket costs they incur from attending continuing education programs and for travel expenses incurred in connection with their service as Directors.

        The following table details the total compensation of our Directors for the year ended December 31, 2013.

Name
 Fees Earned or
Paid in Cash ($)**		 Stock
Awards ($)***		 All Other
Compensation ($)		 Total ($) 

Patrick F. Donelan(1)

 $60,750 $82,875 $— $143,625 

Barbara D. Gilmore

  60,750  82,875  —  143,625 

Lisa Harris Jones(2)

  20,500  80,100  —  100,600 

Arthur G. Koumantzelis

  70,750  82,875  —  153,625 

Thomas M. O'Brien*

  —  82,875  —  82,875 

Barry M. Portnoy*

  —  82,875  —  82,875 
*
Managing Directors do not receive cash compensation for their services as Directors. The compensation of Mr. O'Brien for his services as President and Chief Executive Officer is described above under "Executive Compensation".

**
The amounts reported in the Fees Earned or Paid in Cash column reflect the cash fees earned by each Independent Director. In addition to the $35,000 annual cash fee, each of Messrs. Donelan and Koumantzelis and Ms. Gilmore earned an additional $7,500, $17,500 and $7,500, respectively, for service as a committee chair in 2013. Ms. Jones earned a pro-rated annual cash fee of $17,500. Each of Messrs. Donelan and Koumantzelis and Ms. Gilmore earned an additional $18,250 in fees for meetings attended in 2013. Ms. Jones earned an additional $3,000 for meetings attended in 2013.

***
Equals the number of shares multiplied by the closing price of our common shares on the grant date. This is also the compensation cost for the award recognized by us for financial reporting purposes pursuant to ASC 718. No assumptions are used in this calculation. All share grants to Directors vest at the time of grant.

(1)
Mr. Donelan served as an Independent Director until his death on December 31, 2013.

(2)
Ms. Jones was elected to our Board of Directors on November 19, 2013.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information. EQUITY COMPENSATION PLAN INFORMATION

We may grant options and common shares from time to time to our officers, Directors, employees and other individuals who render services to us subject to vesting requirements, as applicable, under our Amended and Restated TravelCenters of America 2007 Equity Compensation Plan, or the Plan. An aggregateAs of 6,000,000 of ourDecember 31, 2015, 64,355 common shares have been reservedremain available for issuance under the Plan. In 20132015, we issued 619,075671,125 common shares to our Directors, officers, employees and others who provide services to us. The terms of grants made under the Plan are determined by our Board of Directors or the Compensation Committee of our Board of Directors at the time of the grant. The following table

Information required by Item 12 with respect to securities authorized for issuance under equity-based compensation plan is as of December 31, 2013.

Plan Category
Number of securities
to be issued upon
exercise of outstanding
options, warrants and rights
(a)		Weighted average
exercise price of
outstanding options,
warrants and rights
(b)		Number of securities remaining
available for future issuance
under equity compensation plans
(excluding securities reflected
in column (a))
(c)

Equity compensation plans approved by security holders

NoneNone1,533,300

Equity compensation plans not approved by security holders

NoneNoneNone
​​​​​​​

Total

NoneNone1,533,300

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OWNERSHIP OF EQUITY SECURITIES

Directors and Executive Officers

        The following table setsset forth information regarding beneficial ownership of our common shares by each Director, each individual named inunder the 2013 SummaryEquity Compensation Table above and our Directors and executive officers as a group, all as of May 7, 2014. Unless otherwise noted, voting power and investment powerPlan Information section in our common shares are exercisable solelydefinitive Proxy Statement and is incorporated by the named person.

Name and Address*
 Aggregate
Number of
Shares
Beneficially
Owned		 Percent of
Outstanding
Shares**		 Additional
Information

Thomas M. O'Brien

  1,453,190.5 3.9%  

Andrew J. Rebholz

  440,000 1.2%  

Michael J. Lombardi

  275,000 ***  

Mark R. Young

  272,515 ***  

Barry A. Richards

  165,800 ***  

Ara A. Bagdasarian(1)

  132,500 ***  

Barry M. Portnoy

  69,911.6 *** HPT owns 3,420,000 common shares. In his capacity as a managing trustee of HPT and as Chairman, a director and majority beneficial owner of RMR, Mr. Barry Portnoy may also be deemed to beneficially own (and have shared voting and dispositive power over) the 3,420,000 common shares beneficially owned by HPT, but Mr. Barry Portnoy disclaims such beneficial ownership.

Arthur G. Koumantzelis

  48,061.4 ***  

Barbara D. Gilmore

  57,500 *** Includes 10,000 common shares owned by Ms. Gilmore's husband. Ms. Gilmore disclaims beneficial ownership of these shares, except to the extent of her pecuniary interest in the shares.

Lisa Harris Jones

  7,500 ***  

All Directors and executive officers as a group (nine persons)

  2,789,478.5 7.4%  
*
The address of each identified person or entity is: c/o TravelCenters of America LLC, 24601 Center Ridge Road, Suite 200, Westlake, Ohio 44145.

**
Based on 37,625,366 of our common shares outstanding as of March 10, 2014.

***
The identified person owns less than 1% of our common shares outstanding.

(1)
On January 31, 2014, we entered into a retirement agreement with Ara Bagdasarian, pursuant to which Mr. Bagdasarian resigned effective as of April 30, 2014.
reference.

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Principal Stockholders

        Set forth in the table below is information about the number of shares held by persons we know to be the beneficial owners of more than 5% of our common shares.

Name and Address
 Aggregate
Number of
Shares
Beneficially
Owned*		 Percent of
Outstanding
Shares**		 Additional Information

Hospitality Properties Trust

  3,420,000  9.1%HPT owns and has sole voting and

Two Newton Place
255 Washington Street
Newton, Massachusetts 02458

       dispositive power over 3,420,000 common shares, Barry M. Portnoy and Adam D. Portnoy are managing trustees of HPT. RMR manages HPT. RMR is indirectly beneficially owned by Barry M. Portnoy and Adam D. Portnoy; Barry Portnoy is Chairman and a director of RMR and Adam Portnoy is President, Chief Executive Officer and a director of RMR. Barry Portnoy directly owns 69,911.6 common shares and Adam Portnoy directly owns 75,263.8 common shares (including 21,600 common shares subject to vesting periodically through 2017). Under certain regulatory definitions, RMR and Messrs. Barry and Adam Portnoy may be deemed to beneficially own (or to have shared voting and dispositive power over) the common shares owned by HPT; however, RMR and Messrs. Barry and Adam Portnoy have each disclaimed such beneficial ownership.

Capital Research Global Investors

  
2,423,750		  
6.4
%

Based solely on a Schedule 13G filed

("Capital Research")
333 South Hope Street
Los Angeles, California 90071

       with the SEC on February 13, 2014 by Capital Research:

•

Capital Research is a division of Capital Research and Management Company ("CRMC"). Capital Research is deemed to be the beneficial owner of 2,423,750 common shares as a result of CRMC acting as adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940.


*
As of December 31, 2013.

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**
Our LLC agreement and other agreements to which we are a party place restrictions on the ability of any person or group to acquire beneficial ownership of more than 9.8% of any class or series of our shares. In addition, in order to help us preserve the tax treatment of our net operating losses and other tax benefits, our bylaws generally provide that transfers of our shares to a person, entity or group that is then, or would become as a result, an owner of 5% or more of our outstanding shares under applicable standards would be void in total for transferees then already owning 5% or more of our shares, and for transferees that would otherwise become owners of 5% or more of our shares, to the extent the transfer would so result in such level of ownership by the proposed transferee and to the extent not approved by us. The 5% ownership limitation under our Bylaws is determined based on applicable tax rules. Capital Research has represented to us that it does not own 5% or more of our shares under those applicable tax rules or in violation of the 5% ownership limitation under our bylaws. The percentages indicated are based on 37,625,366 of our common shares outstanding as of December 31, 2013.

Item 13. Certain Relationships and Related Transactions, and Director Independence

RELATED PERSON TRANSACTIONS

        Note 17 to the Notes

The information required by Item 13 is incorporated by reference to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K is incorporated herein by reference.

        The foregoing descriptions of our agreements with HPT, RMR and AIC are summaries and are qualified in their entirety by the terms of the agreements. Copies of certain of the agreements evidencing these relationships are filed with the SEC and may be obtained from the SEC's website, www.sec.gov.

        We believe that our agreements with HPT, RMR and AIC are on commercially reasonable terms. We also believe that our relationships with HPT, RMR and AIC and their affiliated and related persons and entities benefit us, and, in fact, provide us with competitive advantages in operating and growing our business.


DIRECTOR INDEPENDENCE

        Under the corporate governance listing standards of the NYSE, our Board of Directors must consist of a majority of independent directors. Under NYSE corporate governance listing standards, to be considered independent:

    •
    the director must not have a disqualifying relationship, as defined in these NYSE standards; and

    •
    our Board of Directors must affirmatively determine that the director otherwise has no material relationship with us directly, or as an officer, shareholder or partner of an organization that has a relationship with us. To aid in the director independence assessment process, our Board of Directors has adopted written Governance Guidelines as described below.

        Our LLC agreement and bylaws also require that a majority of our Board of Directors be Independent Directors. Under our LLC agreement and bylaws, Independent Directors are not employees of ours or RMR, are not involved in our day to day activities and are persons who qualify as independent under the applicable rules of the NYSE and SEC.

        Our Board of Directors regularly, and at least annually, affirmatively determines whether Directors have a direct or indirect material relationship with us, including our subsidiaries, other than serving as our Directors. In making independence determinations, our Board of Directors observes NYSE and SEC criteria, as well as the requirements of our LLC agreement and bylaws. When assessing a Director's relationship with us, our Board of Directors considers all relevant facts and circumstances, not merely from the Director's standpoint, but also from that of the persons or organizations with

definitive Proxy Statement.

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which the Director has an affiliation. As a result of its annual review, our Board of Directors has determined that Barbara D. Gilmore, Lisa Harris Jones and Arthur G. Koumantzelis currently qualify as independent directors under applicable NYSE rules and SEC criteria and are Independent Directors under our LLC agreement and bylaws. In making these determinations, our Board of Directors reviewed and discussed additional information provided by the Directors and us with regard to each of the Independent Directors' relationships with RMR and the companies to which RMR and its affiliates provide management and advisory services. Our Board of Directors has concluded that none of these three Directors possessed or currently possesses any relationship that could impair his or her judgment in connection with his or her duties and responsibilities as an Independent Director or that could otherwise be a direct or indirect material relationship under applicable NYSE standards.

Item 14. Principal Accounting Fees and Services

Audit Fees and Other Fees

The following table shows the fees for audit and other services providedinformation required by Ernst & Young LLP for the fiscal years 2013 and 2012.

 
 2013 Fees* 2012 Fees 

Audit Fees

 $2,628,798 $1,786,518 

Audit-Related Fees

  —  — 

Tax Fees

  25,000  25,000 

All Other Fees

  —  — 
*
The audit fees amount for 2013Item 14 is based on the fees estimate providedincorporated by Ernst & Young LLPreference to and approved by the Audit Committee for services provided to us by Ernst & Young LLP, including in connection with the audit of our 2013 financial statements and internal control over financial reporting, as well as additional estimated amounts for those services. The final amount of the fees for those services may vary from the estimate provided.
definitive Proxy Statement.

        Audit Fees.    This category includes fees associated with the annual financial statements audit and related audit procedures, the audit of internal control over financial reporting, work performed in connection with any registration statements and applicable Current Reports on SEC Form 8-K and the review of our Quarterly Reports on SEC Form 10-Q.

        Audit-Related Fees.    This category consists of services that are reasonably related to the performance of the audit or review of financial statements and are not included in "Audit Fees". These services principally include due diligence in connection with acquisitions, consultation on accounting and internal control matters, audits in connection with proposed or consummated acquisitions, information systems audits and other attest services.

        Tax Fees.    This category consists of fees for tax services, including tax compliance, tax advice and tax planning.

        All Other Fees.    This category consists of services that are not included in the above categories.

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

        Our Audit Committee has established policies and procedures that are intended to control the services provided by our independent auditors and to monitor their continuing independence. Under these policies, no services may be undertaken by the independent auditors unless the engagement is specifically approved by our Audit Committee or the services are included within a category that has been approved by our Audit Committee. The maximum charge for services is established by our Audit



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Committee when the specific engagement or the category of services is approved. In certain circumstances, our management is required to notify our Audit Committee when approved services are undertaken and our Audit Committee or its Chair may approve amendments or modifications to the engagement or the maximum fees. Our Director of Internal Audit is responsible for reporting to our Audit Committee regarding compliance with these policies and procedures.

        Our Audit Committee will not approve engagements of the independent auditors to perform non-audit services for us if doing so will cause the independent auditors to cease to be independent within the meaning of applicable SEC or NYSE rules. In other circumstances, our Audit Committee considers, among other things, whether our independent auditors are able to provide the required services in a more or less effective and efficient manner than other available service providers and whether the services are consistent with the Public Company Accounting Oversight Board Rules.

        All services for which we engaged our independent auditors in 2013 and 2012 were approved by our Audit Committee. The total fees for audit and non-audit services provided by Ernst & Young LLP in 2013 and 2012 are set forth above and include estimated fee amounts. The tax fees charged by Ernst & Young LLP during 2013 and 2012 were for tax compliance services, including those related to our income tax returns for the fiscal years ended December 31, 2012 and 2011, respectively. Our Audit Committee approved the engagement of Ernst & Young LLP to provide these non-audit services because it determined that Ernst & Young LLP providing these services would not compromise Ernst & Young LLP's independence and that the firm's familiarity with our record keeping and accounting systems would permit the firm to provide these services with equal or higher quality, more quickly and at a lower cost than we could obtain these services from other providers.


PART IV

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PART IV

Item 15. Exhibits and Financial Statement Schedules

a)
Index to Financial Statements

The following consolidated financial statements of TravelCenters of America LLC are included on the pages indicated:


Page

TravelCenters of America LLC Audited Financial Statements

Page

Reports of Independent Registered Public Accounting Firm

F-1F- 1

Consolidated Balance Sheets as of December 31, 20132015 and 2012

2014
F-4F- 4

Consolidated Statements of Income and Comprehensive Income for the years ended

December 31, 2013, 20122015, 2014 and 2011

2013
F-5F- 5

Consolidated Statements of Cash Flows for the years ended December 31, 2013, 20122015, 2014 and 2011

2013
F-6F- 6

Consolidated Statements of Shareholders' Equity for the years ended December 31, 2013, 20122015, 2014 and 2011

2013
F-7F- 7

Notes to Consolidated Financial Statements

F-8F- 8

All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are not applicable or the required information is shown in the consolidated financial statements or notes to the consolidated financial statements and, therefore, have been omitted.

    (b)
    Exhibits
(b)Exhibits

2.13.1 Agreement and PlanCertificate of Merger, dated asFormation of September 15, 2006, by and among TravelCenters of America Inc., Hospitality Properties Trust, HPT TA Merger Sub Inc. and Oak Hill Capital Partners, L.P.LLC (Incorporated by reference to Exhibit 2.1 of3.1 to our Registration Statement on Form S-1 filed on December 12, 2006, File No. 333-139272)
    
2.2Amendment No. 1 to the Agreement and Plan of Merger, dated as of January 30, 2007, by and among TravelCenters of America, Inc., Hospitality Properties Trust, HPT TA Merger Sub Inc. and Oak Hill Capital Partners, L.P. (Incorporated by reference to Exhibit 2.2 of our Current Report on Form 8-K filed on February 2, 2007)
2.3Purchase Agreement, dated as of May 30, 2007, by and among TravelCenters of America LLC, Petro Stopping Centers, L.P., Petro Stopping Centers Holdings, L.P. and the partners of Petro Stopping Centers,  L.P. and of Petro Stopping Centers Holdings, L.P. (Incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K filed on June 4, 2007)
2.4Securities Purchase Agreement, dated as of November 14, 2013, by and among Frederick M. Higgins, Frederick M. Higgins Charitable Remainder Unitrust, Heather Higgins, Leslie Higgins Embry, Cathy Howard, Glenn Howard, Stacy Howard Jones, Wesley Howard, Jamie Gaddie Higgins Family Trust, Jamie Gaddie Higgins Marital Trust, Rita Barks, Danny Evans, Jerry Goff, Helen Jernigan, Martha Miller-Webb, Donna Carlyle, Betsy Monroe, Owen Monroe Trust Under Will, Carrie Leigh Porcel, Frederick M. Higgins, as Sellers' Representative, Girkin Development, LLC and TravelCenters of America LLC (filed herewith)
3.1Certificate of Formation of TravelCenters of America LLC (Incorporated by reference to Exhibit 3.1 of our Registration Statement on Form S-1 filed on December 12, 2006, File No. 333-139272)


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3.2 Amended and Restated Limited Liability Company Agreement of TravelCenters of America LLC (Incorporated by reference to Exhibit 3.1 ofto our Current Report on Form 8-K filed on May 24, 2013)
    
3.3 Amended and Restated Bylaws of TravelCenters of America LLC, as amended and restated on February 21, 2013 (Incorporated by reference to Exhibit 3.3 ofto our Current Report on Form 8-K filed on February 27, 2013)
    
4.1 Form of share certificate (Incorporated by reference to Exhibit 4.1 to our Annual Report on Form 10-K for the year ended December 31, 2009, filed on February 24, 2010)
    
4.2 Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of January 15, 2013 (incorporated(Incorporated by reference to Exhibit 4.1 ofto our Current Report on Form 8-K filed January 15, 2013)
    
4.3 First Supplemental Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of January 15, 2013 (incorporated(Incorporated by reference to Exhibit 4.2 ofto our Current Report on Form 8-K filed January 15, 2013)
    
4.4 Second Supplemental Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of December 16, 2014 (Incorporated by reference to Exhibit 4.2 to our Registration Statement on Form 8-A (File No. 001-33274).
  4.4
4.5Third Supplemental Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of October 5, 2015 (Incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form 8-A (File No. 001-33274) filed October 5, 2015)
4.6 Form of 8.25% Senior Notes due 2028 (included in Exhibit 4.3 above)
   
4.7Form of 8.00% Senior Notes due 2029 (included in Exhibit 4.4 above)
 
4.8Form of 8.00% Senior Notes due 2030 (included in Exhibit 4.5 above)
10.1 Transaction Agreement, dated as of January 29, 2007, by and among Hospitality Properties Trust, HPT TA Properties Trust, HPT TA Properties LLC, TravelCenters of America LLC and Reit Management & ResearchThe RMR Group LLC (Incorporated by reference to Exhibit 10.1 ofto our Annual Report on Form 10-K for the fiscal year ended December 31, 2006 filed on March 20, 2007)
   

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10.2 LeaseTransaction Agreement dated as of January 31, 2007, by and among Hospitality Properties Trust, HPT TA Properties Trust, and HPT TA Properties LLC, as Landlord, andHPT PSC Properties Trust, HPT PSC Properties LLC, TravelCenters of America LLC, TravelCenters of America Holding Company LLC, TA Leasing LLC, as Tenantand TA Operating LLC dated June 1, 2015 (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed June 5, 2015).
10.3Deferral Agreement, dated as of August 11, 2008, among Hospitality Properties Trust, HPT TA Properties Trust, HPT TA Properties LLC, HPT PSC Properties Trust, HPT PSC Properties LLC, TravelCenters of America LLC, TA Leasing LLC and Petro Stopping Centers, L.P. (Incorporated by reference to Exhibit 10.6 to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed on August 11, 2008)
10.4Registration Rights Agreement, dated August 11, 2008, between TravelCenters of America LLC and Hospitality Properties Trust (Incorporated by reference to Exhibit 10.7 to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, filed on August 11, 2008)
10.5Amended and Restated Business Management and Shared Services Agreement, dated as of March 12, 2015, by and between TravelCenters of America LLC and Reit Management & Research LLC (Incorporated by reference to Exhibit 10.14 to our Annual Report on Form 10-K for the fiscal year ended December 31, 20062014, filed on March 20, 2007)13, 2015)
   
10.6 First Amendment to Lease Agreement, dated as of March 17, 2008, by and among HPT PSC Properties Trust, HPT PSC Properties LLC and TA Operating LLC (as successor to Petro Stopping Centers, L.P.) (Incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008, filed on November 10, 2008)
  
10.7First Amendment to Lease Agreement, dated as of May 12, 2008, by and among HPT TA Properties Trust, HPT TA Properties LLC and TA Leasing LLC (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 14, 2008)
10.8Amended and Restated Lease No. 1, dated June 9, 2015, by and among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed June 15, 2015)
10.9Amended and Restated Lease No. 2, dated June 9, 2015, by and among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed June 15, 2015)
10.10Amended and Restated Lease No. 3, dated June 9, 2015, by and among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed June 15, 2015)
10.11Amended and Restated Lease No. 4, dated June 9, 2015, by and among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed June 15, 2015)
10.12Amendment to Lease Agreement, dated June 9, 2015, by and among HPT PSC Properties Trust, HPT PSC Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.9 to our Current Report on Form 8-K filed June 15, 2015)
10.13First Amendment to Amended and Restated Lease Agreement No. 2, dated June 16, 2015, by and among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed June 22, 2015)
10.14First Amendment to Amended and Restated Lease Agreement No. 4, dated June 16, 2015, by and among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed June 22, 2015)
10.15Second Amendment to Amended and Restated Lease Agreement No. 2, dated June 23, 2015, by and among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed June 25, 2015)
10.16Second Amendment to Amended and Restated Lease Agreement No. 4, dated June 23, 2015, by and among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed June 25, 2015)
10.17Third Amendment to Amended and Restated Lease Agreement No. 2, dated September 23, 2015, by and among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed September 24, 2015)
10.18Third Amendment to Amended and Restated Lease Agreement No. 4, dated September 23, 2015, by and among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed September 24, 2015)

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10.19First Amendment to Amended and Restated Lease Agreement No. 3, dated September 23, 2015, by and among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed September 24, 2015)
10.20 Guaranty Agreement, dated as of January 31, 2007, made by TravelCenters of America LLC, TravelCenters of America Holding Company LLC and TA Operating LLC, as Guarantors, for the benefit of HPT TA Properties Trust and HPT TA Properties LLC, as Landlord, under the Lease Agreement, dated as of January 31, 2007, by and among such Landlord and TA Leasing LLC (Incorporated by reference to Exhibit 10.4 ofto our Annual Report on Form 10-K for the fiscal year ended December 31, 2006 filed on March 20, 2007)
    
10.4Lease Agreement, dated as of May 30, 2007, by and among HPT PSC Properties Trust and HPT PSC Properties LLC, as Landlord, and TA Operating LLC (as successor to Petro Stopping Centers, L.P.), as Tenant (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on June 4, 2007)
10.510.21 Guaranty Agreement, dated as of May 30, 2007, made by TravelCenters of America LLC, as Guarantor, for the benefit of HPT PSC Properties Trust and HPT PSC Properties LLC, as Landlord, under the Lease Agreement, dated as of May 30, 2007, by and among such Landlord and TA Operating LLC (as successor to Petro Stopping Centers, L.P.) (Incorporated by reference to Exhibit 10.2 ofto our Current Report on Form 8-K filed on June 4, 2007)
   
10.610.22 First Amendment to LeaseGuaranty Agreement, dated asJune 9, 2015, by TravelCenters of March 17, 2008, byAmerica LLC and amongTravelCenters of America Holding Company LLC for the benefit of HPT PSCTA Properties Trust and HPT PSCTA Properties LLC and TA Operating LLC (as successor to Petro Stopping Centers, L.P.) (Incorporated by reference to Exhibit 10.5 ofto our Quarterlycurrent Report on Form 10-Q for the Quarterly period ended September 30, 2008,8-K filed on November 10, 2008)June 15, 2015)
   
10.710.23 First Amendment to LeaseGuaranty Agreement, dated asJune 9, 2015, by TravelCenters of May 12, 2008, byAmerica LLC and amongTravelCenters of America Holding Company LLC for the benefit of HPT TA Properties Trust and HPT TA Properties LLC and TA Leasing LLC (incorporated(Incorporated by reference to Exhibit 10.1 of10.6 to our Current Report on Form 8-K filed on May 14, 2008)

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June 15, 2015)
   
10.24 Guaranty Agreement, dated June 9, 2015, by TravelCenters of America LLC and TravelCenters of America Holding Company LLC for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (Incorporated by reference to Exhibit 10.7 to our Current Report on Form 8-K filed June 15, 2015)
 10.8
10.25 DeferralGuaranty Agreement, dated asJune 9, 2015, by TravelCenters of August 11, 2008,America LLC and TravelCenters of America Holding Company LLC for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (Incorporated by reference to Exhibit 10.8 to our Current Report on Form 8-K filed June 15, 2015)
10.26Property Exchange Agreement, dated June 9, 2015, by and among Hospitality Properties Trust, HPT TA Properties Trust, HPT TA Properties LLC, the Registrant and TA Operating LCC (Incorporated by reference to Exhibit 10.10 to our Current Report on Form 8-K filed June 15, 2015)
10.27Sales Agreement, dated June 16, 2015, between HPT PSCTA Properties Trust and TA Operating LLC (Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed June 22, 2015)
10.28Sales Agreement, dated June 16, 2015, between HPT PSCTA Properties Trust and TA Operating LLC TravelCenters of America(Incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed June 22, 2015)
10.29Sales Agreement, dated June 23, 2015, between HPT TA Properties Trust and TA Operating LLC (Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed June 25, 2015)
10.30Sales Agreement, dated June 23, 2015, between HPT TA LeasingProperties Trust and TA Operating LLC (Incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed June 25, 2015)
10.31Sales Agreement, dated September 23, 2015, between HPT TA Properties Trust and Petro Stopping Centers, L.P.TA Operating LLC (Incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed September 24, 2015)
10.32Sales Agreement, dated September 23, 2015, between HPT TA Properties Trust and TA Operating LLC (Incorporated by reference to Exhibit 10.5 to our Current Report on Form 8-K filed September 24, 2015)
10.33Sales Agreement, dated September 23, 2015, between HPT TA Properties Trust and TA Operating LLC (Incorporated by reference to Exhibit 10.6 ofto our QuarterlyCurrent Report on Form 10-Q for the Quarterly period ended June 30, 2008,8-K filed on August 11, 2008)September 24, 2015)
   
10.910.34 Registration RightsForm of Development Property Agreement dated August 11, 2008, between TravelCenters of Americaan HPT entity and TA Operating LLC and Hospitality Properties Trust (Incorporated by reference to Exhibit 10.7 ofB-3 to Exhibit 10.1 to our QuarterlyCurrent Report on Form 10-Q for the Quarterly period ended8-K filed June 30, 2008, filed on August 11, 2008)5, 2015)
   
10.1010.35 Amendment Agreement, dated as of January 31, 2011, among Hospitality Properties Trust, HPT TA Properties Trust, HPT TA Properties LLC, HPT PSC Properties Trust, HPT PSC Properties LLC, TravelCenters of America LLC, TA Leasing LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.1 ofto our Current Report on Form 8-K filed on February 1, 2011)
    
10.1110.36 Amendment Agreement, dated as of April 15, 2013, among HPT TA Properties Trust, HPT TA Properties LLC, HPT PSC Properties Trust, HPT PSC Properties LLC and together with HPT TA Trust, HPT TA LLC, HPT PSC Trust, TA Leasing LLC and TA Operating LLC (incorporated(Incorporated by reference to Exhibit 10.1 ofto our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013, filed on May 7, 2013)
    

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10.12
10.37 Amendment Agreement, dated as of July 1, 2013, among HPT TA Properties Trust, HPT TA Properties LLC and TA Leasing LLC (incorporated(Incorporated by reference to Exhibit 10.3 ofto our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 filed on August 6, 2013)
    
10.1310.38 Amendment Agreement, dated as of December 23, 2013, among HPT PSC Properties Trust, HPT PSC Properties LLC and TA Operating LLC (filed herewith)(Incorporated by reference to Exhibit 10.13 to our Annual Report on Form 10-K for the year ended December 31, 2013, filed on June 6, 2014)
    
10.14Amended and Restated Business Management and Shared Services Agreement, dated as of December 4, 2012, by and between TravelCenters of America LLC and Reit Management & Research LLC (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on December 6, 2012)
10.1510.39 Amended and Restated Shareholders Agreement, dated May 21, 2012, by and among Affiliates Insurance Company, Five Star Quality Care, Inc., Hospitality Properties Trust, CommonWealth REIT, Senior Housing Properties Trust, TravelCenters of America LLC, Reit Management & ResearchThe RMR Group LLC, Government Properties Income Trust and Select Income REIT (Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012, filed on August 7, 2012)
   
10.1610.40 Amended and Restated Loan and Security Agreement, dated as of October 25, 2011, by and among TravelCenters of America LLC, TA Leasing LLC, TA Operating LLC, as borrowers, each of the Guarantors named therein, Wells Fargo Capital Finance, LLC, as Agent, and the entities from time to time parties thereto as Lenders (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on October 28, 2011)
    
10.41 Amendment to Amended and Restated Loan and Security Agreement, dated as of December 19, 2014, by and among TravelCenters of America LLC, TA Leasing LLC, TA Operating LLC, as borrowers, each of the Guarantors named therein, Wells Fargo Capital Finance, LLC, as Agent, and the entities from time to time parties thereto as Lenders (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed December 23, 2014)
  10.17
10.42Joinder Agreement, dated February 26, 2014, by and among TravelCenters of America LLC, TA Leasing LLC, TA Operating LLC, TravelCenters of America Holding Company LLC, Petro Franchise Systems LLC, TA Franchise Systems LLC, TA Operating Nevada LLC, TA Operating Texas LLC, and Wells Fargo Capital Finance, LLC (Incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014, filed August 21, 2014)
10.43*Composite copy of the Amended and Restated TravelCenters of America LLC 2007 Equity Compensation Plan, as amended as of May 12, 2011 (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on May 16, 2011)
 
  

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10.1810.44*Form of Restricted Share Agreement under the 2007 Equity Compensation Plan of TravelCenters of America LLC (for restricted share grants under the plan prior to October 24, 2008) (Incorporated by reference to Exhibit 10.1 ofto our Current Report on Form 8-K dated November 30, 2007)
    
10.1910.45*Form of Restricted Share Agreement under the Amended and Restated TravelCenters of America LLC 2007 Equity Compensation Plan (for restricted shares granted under the plan on and after October 24, 2008 but prior to November 19, 2013) (Incorporated by reference to Exhibit 10.16 to our Annual Report on Form 10-K for the year ended December 31, 2009, filed on February 24, 2010)
    
10.2010.46*Form of Restricted Share Agreement under the Amended and Restated TravelCenters of America LLC 2007 Equity Compensation Plan (for restricted shares granted under the plan on and after November 19, 2013) (filed herewith)(Incorporated by reference to Exhibit 10.20 to our Annual Report on Form 10-K for the year ended December 31, 2013, filed on June 6, 2014)
    
10.47*Retirement Agreement, dated as of January 31, 2014, by and among TravelCenters of America LLC and Ara A. Bagdasarian (Incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014, filed on August 21, 2014)
  10.21
10.48*Vesting Agreement, dated as of January 31, 2014, by and among TravelCenters of America LLC and Ara A. Bagdasarian (Incorporated by reference to Exhibit 10.3 of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014, filed on August 21, 2014)
10.49 Form of Indemnification Agreement (Incorporated by reference to Exhibit 10.22 to our Annual Report on Form 10-K for the year ended December 31, 2011, filed on March 16, 2012)
    
10.2210.50 Summary of Director Compensation (incorporated(Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 24, 2013)29, 2015)
    
10.2310.51 Definitive Master Class Settlement Agreement, executed as of March 3, 2014 (filed herewith)(Incorporated by reference to Exhibit 10.23 to our Annual Report on Form 10-K for the year ended December 31, 2013, filed on June 6, 2014)
   
12.1 Statement of Computation of Ratio of Earnings to Fixed Charges (filed herewith)
    
21.1 Subsidiaries of TravelCenters of America LLC (filed herewith)
    

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23.1 Consent of Ernst & YoungRSM US LLP (filed herewith)
    
23.2 Consent of Ernst & Young LLP (filed herewith)
    
31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith)
    
31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith)
    
32.1 Section 1350 Certification of Chief Executive Officer and Chief Financial Officer (furnished herewith)
    
99.1 FedEx Pricing Agreement (Incorporated by reference to Exhibit 99.1 to our Quarterly Report on Form 10-Q for the Quarterly period ended June 30, 2015, filed on August 6, 2015)
 99.1
99.2 Property Management Agreement, dated as of July 21, 2011, by and between Reit Management & ResearchThe RMR Group LLC and TA Operating LLC (Incorporated by reference to Exhibit 99.1 ofto our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011, filed on November 7, 2011)
    
99.299.3 Amended and Restated Reimbursement Agreement, dated May 1, 2012, by and among Reit Management & ResearchThe RMR Group LLC, TravelCenters of America LLC and Five Star Quality Care, Inc. (Incorporated by reference to Exhibit 99.1 ofto our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012, filed on August 7, 2012)
   
99.3Financial Statements of Petro Travel Plaza Holdings LLC (filed herewith)
101.1 The following materials from TravelCenters of America LLC's Annual Report on Form 10-K for the year ended December 31, 2013,2015, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income and Comprehensive Income, (iii) the Consolidated Statements of Cash Flows, and (iv) related notes to these financial statements, tagged as blocks of text. (furnishedtext (filed herewith)
*
Management contract or compensatory plan or arrangement.


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The



To the Board of Directors and Shareholders of
TravelCenters of America LLC


We have audited the accompanying consolidated balance sheets of TravelCenters of America LLC as of December 31, 20132015 and 2012,2014, and the related consolidated statements of income and comprehensive income, shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2015. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of TravelCenters of America LLC as of December 31, 2015 and 2014, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), TravelCenters of America LLC's internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 14, 2016 expressed an unqualified opinion on the effectiveness of TravelCenters of America LLC’s internal control over financial reporting.


/s/ RSM US LLP


Cleveland, Ohio
March 14, 2016


F- 1
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Shareholders of
TravelCenters of America LLC

We have audited the consolidated statements of income and comprehensive income, shareholders' equity, and cash flows of TravelCenters of America LLC for each of the three years in the periodyear ended December 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

audit.


We conducted our auditsaudit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provideaudit provides a reasonable basis for our opinion.


 In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial positionresults of operations and cash flows of TravelCenters of America LLC at December 31, 2013 and 2012, andfor the consolidated results of its operations and its cash flows for each of the three years in the periodyear ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), TravelCenters of America LLC's internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) and our report dated June 6, 2014, expressed an adverse opinion thereon.



  /s/ Ernst & Young LLP


Boston, Massachusetts
June 6, 2014

except for Note 15, as to which the date is
March 14, 2016



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The


To the Board of Directors and Shareholders of
TravelCenters of America LLC


We have audited TravelCenters of America LLC's internal control over financial reporting as of December 31, 2013,2015, based on criteria established in Internal Control-IntegratedControl - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) (the COSO criteria).in 2013. TravelCenters of America LLC'sLLC’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management'sManagement’s Report on Assessment of Internal Control over Financial Reporting in Item 9A. Our responsibility is to express an opinion on the Company'scompany's internal control over financial reporting based on our audit.


We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, andrisk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.


A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1)(a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2)(b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3)(c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        A


In our opinion, TravelCenters of America LLC maintained, in all material weakness is a deficiency, or a combination of deficiencies, inrespects, effective internal control over financial reporting such that there is a reasonable possibility that a material misstatementas of December 31, 2015, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the company's annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknessesTreadway Commission in 2013.

We have been identified and included in management's assessment. Management has identified a material weakness in internal controls over accounting for income taxes, specifically, that these internal controls did not provide for timely and thorough reconciliation and review of the income tax accounts and related disclosures. Management has also identified a material weakness in internal controls due to lack of sufficient personnel with requisite accounting competencies. Deficiencies also were identified in both design and operating effectiveness, which, when aggregated, represent a material weakness in the financial statement close process.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of TravelCenters of America LLC as of December 31, 20132015 and 2012,2014, and the related consolidated statements of income and comprehensive


Table of Contents

income, shareholders'shareholders’ equity and cash flows of TravelCenters of America LLC for each of the threetwo years in the period ended December 31, 2013. These material weaknesses were considered in determining the nature, timing2015 and extent of audit tests applied in our audit of the 2013 consolidated financial statements, and this report does not affect our report dated June 6, 2014, whichMarch 14, 2016 expressed an unqualified opinion on those financial statements.

        As indicated in the accompanying Management's Report on Assessment of Internal Control over Financial Reporting, management's assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Girkin Development, LLC, which is included in the 2013 consolidated financial statements of TravelCenters of America LLC and constituted 7.3% of consolidated total assets as of December 31, 2013, and 0.1% of consolidated total revenues for the year then ended. Our audit of internal control over financial reporting of TravelCenters of America LLC also did not include an evaluation of the internal control over financial reporting of Girkin Development, LLC.

        In our opinion, because of the effect of the material weaknesses described above on the achievement of the objectives of the control criteria, TravelCenters of America LLC has not maintained effective internal control over financial reporting as of December 31, 2013, based on the COSO criteria.

opinion.


  /s/ Ernst & YoungRSM US LLP

Boston, Massachusetts
June 6, 2014



Cleveland, Ohio
March 14, 2016


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TravelCenters of America LLC

Consolidated Balance Sheets

(in thousands, except share data)thousands)


 December 31,
2013		 December 31,
2012		 December 31,
2015		 December 31,
2014

Assets

      
  

Current assets:

      
  

Cash and cash equivalents

 $85,657 $35,189 $172,087
 $224,275

Accounts receivable (less allowance for doubtful accounts of $1,304 and $1,516 as of December 31, 2013, and December 31, 2012, respectively)

 105,932 106,273 

Inventories

 199,201 191,006 
Accounts receivable (less allowance for doubtful accounts of $850 and $1,312 as of
December 31, 2015, and December 31, 2014, respectively)		91,580
 96,478
Inventory183,492
 172,750

Other current assets

 79,604 72,458 48,181
 46,672
Total current assets495,340
 540,175
        
​​​​​

Total current assets

 470,394 404,926 

Property and equipment, net

 
704,866		 
576,512		 989,606
 765,828

Goodwill and intangible assets, net

 48,772 20,041 105,977
 54,550

Other noncurrent assets

 33,250 28,240 44,171
 42,264
     
​​​​​

Total assets

 $1,257,282 $1,029,719 $1,635,094
 $1,402,817
     
​​​​​
​​​​​
        

Liabilities and Shareholders' Equity

      
  

Current liabilities:

      
  

Accounts payable

 $149,645 $143,605 $125,079
 $123,084

Current HPT Leases liabilities

 29,935 28,354 37,030
 31,637

Other current liabilities

 124,033 111,168 133,513
 112,417
Total current liabilities295,622
 267,138
        
​​​​​

Total current liabilities

 303,613 283,127 
Long term debt330,000
 230,000

Noncurrent HPT Leases liabilities

 
343,926		 
351,135		 385,498
 332,934

Senior Notes due 2028

 110,000 — 

Other noncurrent liabilities

 45,866 42,023 74,655
 54,135
Total liabilities1,085,775
 884,207
        
​​​​​

Total liabilities

 803,405 676,285 

Commitments and contingencies (Note 18)

 
 		 
 		 

Shareholders' equity:

 
 		 
 		  
  

Common shares, no par value, 39,158,666 and 31,683,666 shares authorized at December 31, 2013 and 2012, respectively, and 37,625,366 and 29,536,466 shares issued and outstanding at December 31, 2013 and 2012, respectively

 674,391 605,106 

Accumulated other comprehensive income

 834 1,299 
Common shares, no par value, 39,069 and 39,159 shares authorized at December 31,
2015 and 2014, respectively, 38,808 shares issued and outstanding as of
December 31, 2015, and 38,426 shares issued and 38,336 shares outstanding at
December 31, 2014		682,219
 679,482
Accumulated other comprehensive (loss) income(240) 435

Accumulated deficit

 (221,348) (252,971)(132,660) (160,379)
     
​​​​​
Treasury shares, 90 shares as of December 31, 2014—
 (928)

Total shareholders' equity

 453,877 353,434 549,319
 518,610
     
​​​​​

Total liabilities and shareholders' equity

 $1,257,282 $1,029,719 $1,635,094
 $1,402,817
     
​​​​​
​​​​​
     

   The accompanying notes are an integral part of these consolidated financial statements.




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TravelCenters of America LLC

Consolidated Statements of Income and Comprehensive Income

(in thousands, except per share data)

 
 Years Ended December 31, 
 
 2013 2012 2011 

Revenues:

          

Fuel

 $6,481,252 $6,636,297 $6,603,329 

Nonfuel

  1,450,792  1,344,755  1,271,085 

Rent and royalties from franchisees

  12,687  14,672  14,443 
        
​​​​​​​​​​​

Total revenues

  7,944,731  7,995,724  7,888,857 

Cost of goods sold (excluding depreciation):

          

Fuel

  6,139,080  6,310,250  6,301,947 

Nonfuel

  652,824  599,474  548,092 
        
​​​​​​​​​​​

Total cost of goods sold (excluding depreciation)

  6,791,904  6,909,724  6,850,039 

Operating expenses:

          

Site level operating

  755,942  698,522  677,958 

Selling, general & administrative

  107,447  95,547  89,196 

Real estate rent

  209,320  198,927  191,798 

Depreciation and amortization

  58,928  51,534  47,466 
        
​​​​​​​​​​​

Total operating expenses

  1,131,637  1,044,530  1,006,418 
        
​​​​​​​​​​​

Income from operations

  21,190  41,470  32,400 

Acquisition costs

  (2,523) (785) (446)

Interest income

  1,314  1,485  835 

Interest expense

  (17,650) (10,358) (9,005)
        
​​​​​​​​​​​

Income before income taxes and income from equity investees

  2,331  31,812  23,784 

Benefit (provision) for income taxes

  26,618  (1,491) (1,379)

Income from equity investees

  2,674  1,877  1,169 
        
​​​​​​​​​​​

Net income

 $31,623 $32,198 $23,574 

Other comprehensive income (loss), net of tax:

  
 		  
 		  
 		 

Foreign currency translation adjustment, net of taxes of $(133), $55 and $(55), respectively

  (415) 143  (136)

Equity interest in investee's unrealized gain (loss) on investments

  (50) 22  77 
        
​​​​​​​​​​​

Other comprehensive income (loss)

  (465) 165  (59)
        
​​​​​​​​​​​

Comprehensive income

 $31,158 $32,363 $23,515 
        
​​​​​​​​​​​
​​​​​​​​​​​
        

Net income per common share:

          

Basic and diluted

 $1.06 $1.12 $0.98 
        
​​​​​​​​​​​
​​​​​​​​​​​
        
 Year Ended December 31,
 2015 2014 2013
Revenues: 
  
  
Fuel$4,055,448
 $6,149,449
 $6,481,252
Nonfuel1,782,761
 1,616,802
 1,450,792
Rent and royalties from franchisees12,424
 12,382
 12,687
Total revenues5,850,633
 7,778,633
 7,944,731
      
Cost of goods sold (excluding depreciation):     
Fuel3,640,954
 5,720,949
 6,139,080
Nonfuel819,995
 738,871
 652,824
Total cost of goods sold4,460,949
 6,459,820
 6,791,904
      
Operating expenses: 
  
  
Site level operating885,646
 815,611
 755,942
Selling, general and administrative121,767
 106,823
 107,447
Real estate rent231,591
 217,155
 209,320
Depreciation and amortization72,383
 65,584
 58,928
Total operating expenses1,311,387
 1,205,173
 1,131,637
      
Income from operations78,297
 113,640
 21,190
      
Acquisition costs5,048
 1,160
 2,523
Interest expense, net22,545
 16,712
 16,336
Income from equity investees4,056
 3,224
 2,674
Loss on extinguishment of debt10,502
 —
 —
Income before income taxes44,258
 98,992
 5,005
(Provision) benefit for income taxes(16,539) (38,023) 26,618
Net income$27,719
 $60,969
 $31,623
      
Other comprehensive loss, net of tax: 
  
  
Foreign currency loss, net of taxes of $355, $198 and $133,
respectively		$(655) $(400) $(415)
Equity interest in investee's unrealized (loss) gain on investments(20) 1
 (50)
Other comprehensive loss(675) (399) (465)
      
Comprehensive income$27,044
 $60,570
 $31,158
      
Net income per common share: 
  
  
Basic and diluted$0.72
 $1.62
 $1.06

   The accompanying notes are an integral part of these consolidated financial statements.



F- 5

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TravelCenters of America LLC

Consolidated Statements of Cash Flows

(in thousands)

 
 Years Ended December 31, 
 
 2013 2012 2011 

Cash flows from operating activities:

          

Net income

 $31,623 $32,198 $23,574 

Adjustments to reconcile net income to net cash provided by operating activities:

          

Noncash rent expense

  (8,828) (9,628) (4,946)

Share based compensation expense

  4,183  2,470  2,435 

Depreciation and amortization expense

  58,928  51,534  47,466 

Income from equity investees

  (2,674) (1,877) (1,169)

Distribution from equity investee

  —  4,800  — 

Amortization of deferred financing costs

  667  352  403 

Deferred income tax (benefit) provision

  (29,386) 641  429 

Provision for (recovery of) doubtful accounts

  (274) 349  99 

Changes in operating assets and liabilities, net of effects of business acquisitions:

          

Accounts receivable

  2,138  24,200  (48,444)

Inventories

  (2,411) (17,045) (27,048)

Other assets

  8,309  6,529  (6,916)

Accounts payable and other liabilities

  9,543  (13,131) 43,847 

Other, net

  (305) 1,680  411 
        
​​​​​​​​​​​

Net cash provided by operating activities

  71,513  83,072  30,141 
        
​​​​​​​​​​​

Cash flows from investing activities:

          

Proceeds from sales of improvements to HPT

  77,593  68,156  69,122 

Acquisitions of businesses, net of cash acquired

  (109,978) (52,070) (31,216)

Capital expenditures

  (164,242) (188,694) (124,851)

Proceeds from asset sales

  588  134  147 
        
​​​​​​​​​​​

Net cash used in investing activities

  (196,039) (172,474) (86,798)
        
​​​​​​​​​​​

Cash flows from financing activities:

          

Proceeds from issuance of common shares, net of offering costs

  65,102  —  53,135 

Proceeds from Senior Notes issuance

  110,000  —  — 

Proceeds from borrowings under credit facility

  —  —  1,000 

Repayment of borrowings under credit facility

  —  —  (1,000)

Payment of deferred financing fees

  (4,750) (187) (1,542)

Proceeds from sale-leaseback transactions with HPT

  6,319  8,598  — 

Sale-leaseback financing obligation payments

  (1,644) (2,089) (2,046)
        
​​​​​​​​​​​

Net cash provided by financing activities

  175,027  6,322  49,547 
        
​​​​​​​​​​​

Effect of exchange rate changes on cash

  (33) 14  (31)
        
​​​​​​​​​​​

Net increase (decrease) in cash and cash equivalents

  50,468  (83,066) (7,141)

Cash and cash equivalents at the beginning of the year

  35,189  118,255  125,396 
        
​​​​​​​​​​​

Cash and cash equivalents at the end of the year

 $85,657 $35,189 $118,255 
        
​​​​​​​​​​​
​​​​​​​​​​​
        

Supplemental disclosure of cash flow information:

          

Interest paid (including rent classified as interest and net of capitalized interest)

 $15,226 $10,227 $10,462 

Income taxes paid (net of refunds)

  750  1,127  658 
 Year Ended December 31,
 2015 2014 2013
Cash flows from operating activities: 
  
  
Net income$27,719
 $60,969
 $31,623
Adjustments to reconcile net income to net cash provided by
   operating activities:
 
  
  
Noncash rent expense(15,170) (8,982) (8,828)
Depreciation and amortization expense72,383
 65,584
 58,928
Deferred income tax provision (benefit)7,367
 13,790
 (29,386)
Loss on extinguishment of debt10,502
 —
 —
Changes in operating assets and liabilities, net of effects of
   business acquisitions:
 
  
  
Accounts receivable5,076
 8,838
 2,138
Inventory5,140
 27,594
 (2,411)
Other assets(1,546) 2,414
 8,309
Accounts payable and other liabilities18,023
 (12,010) 9,543
Other, net7,394
 2,928
 1,597
Net cash provided by operating activities136,888
 161,125
 71,513
      
Cash flows from investing activities: 
  
  
Proceeds from asset sales378,250
 64,927
 78,181
Capital expenditures(295,437) (169,825) (164,242)
Acquisitions of businesses, net of cash acquired(320,290) (28,695) (109,978)
Investment in equity investee—
 (825) —
Net cash used in investing activities(237,477) (134,418) (196,039)
      
Cash flows from financing activities: 
  
  
Proceeds from Senior Notes issuance100,000
 120,000
 110,000
Proceeds from issuance of common shares, net of offering costs—
 (14) 65,102
Payment of deferred financing fees(4,506) (6,135) (4,750)
Proceeds from sale leaseback transactions with HPT1,190
 1,398
 6,319
Sale leaseback financing obligation payments(46,347) (2,380) (1,644)
Acquisition of treasury shares from employees(1,842) (928) —
Net cash provided by financing activities48,495
 111,941
 175,027
      
Effect of exchange rate changes on cash(94) (30) (33)
      
Net (decrease) increase in cash and cash equivalents(52,188) 138,618
 50,468
      
Cash and cash equivalents at the beginning of the year224,275
 85,657
 35,189
Cash and cash equivalents at the end of the year$172,087
 $224,275
 $85,657
      
Supplemental disclosure of cash flow information: 
  
  
Interest paid (including rent classified as interest and net of
   capitalized interest)
$21,204
 $16,055
 $15,226
Income taxes paid, net of refunds1,984
 1,527
 750

   The accompanying notes are an integral part of these consolidated financial statements.



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TravelCenters of America LLC

Consolidated Statements of Shareholders' Equity

(in thousands, except share data)thousands)


 
 Number of
Common
Shares		 Common
Shares		 Accumulated
Other
Comprehensive
Income (Loss)		 Accumulated
Deficit		 Total
Shareholders'
Equity		 

December 31, 2010

  18,016,196 $547,066 $1,193 $(308,743)$239,516 

Grants under share award plan and share based compensation, net of forfeitures

  
759,475		  
2,435		  
—		  
—		  
2,435		 

Shares issued in public offering

  10,000,000  53,135  —  —  53,135 

Other comprehensive loss, net of tax

  —  —  (59) —  (59)

Net income

  —  —  —  23,574  23,574 
            
​​​​​​​​​​​​​​​​​

December 31, 2011

  28,775,671  602,636  1,134  (285,169) 318,601 

Grants under share award plan and share based compensation, net of forfeitures

  
760,795		  
2,470		  
—		  
—		  
2,470		 

Other comprehensive income, net of tax

  —  —  165  —  165 

Net income

  —  —  —  32,198  32,198 
            
​​​​​​​​​​​​​​​​​

December 31, 2012

  29,536,466  605,106  1,299  (252,971) 353,434 

Grants under share award plan and share based compensation, net of forfeitures

  
613,900		  
4,183		  
—		  
—		  
4,183		 

Shares issued in public offering, net of offering costs

  7,475,000  65,102  —  —  65,102 

Other comprehensive loss, net of tax

  —  —  (465) —  (465)

Net income

  —  —  —  31,623  31,623 
            
​​​​​​​​​​​​​​​​​

December 31, 2013

  37,625,366 $674,391 $834 $(221,348)$453,877 
            
​​​​​​​​​​​​​​​​​
​​​​​​​​​​​​​​​​​
            
 
Number of
Common
Shares
 
Common
Shares
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Accumulated
Deficit
 
Treasury
Shares
 
Total
Shareholders'
Equity
December 31, 201229,536
 $605,106
 $1,299
 $(252,971) $—
 $353,434
Grants under share award
   plan and share based
   compensation, net
614
 4,183
 —
 —
 —
 4,183
Common shares issued in public
   offering, net of offering costs
7,475
 65,102
 —
 —
 —
 65,102
Other comprehensive loss,
   net of tax
—
 —
 (465) —
 —
 (465)
Net income—
 —
 —
 31,623
 —
 31,623
December 31, 201337,625
 674,391
 834
 (221,348) —
 453,877
Grants under share award
   plan and share based
   compensation, net
711
 5,105
 —
 —
 (928) 4,177
Offering costs—
 (14) —
 —
 —
 (14)
Other comprehensive loss,
   net of tax
—
 —
 (399) —
 —
 (399)
Net income—
 —
 —
 60,969
 —
 60,969
December 31, 201438,336
 679,482
 435
 (160,379) (928) 518,610
Grants under share award
   plan and share based
   compensation, net
472
 2,737
 —
 —
 (1,842) 895
Retirement of treasury shares—
 —
 —
 —
 2,770
 2,770
Other comprehensive loss,
   net of tax
—
 —
 (675) —
 —
 (675)
Net income—
 —
 —
 27,719
 —
 27,719
December 31, 201538,808
 $682,219
 $(240) $(132,660) $—
 $549,319

   The accompanying notes are an integral part of these consolidated financial statements.



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Table of Contents



TravelCenters of America LLC

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts)



1.Summary of Significant Accounting Policies
General Information and Basis of Presentation Business Description and Organization

TravelCenters of America LLC, which we refer to as the Company or we, us and our, operatesis a Delaware limited liability company. We operate and franchises travel centers under the "TravelCenters of America," "TA" or related brand names, or the TA brand, and the "Petro Stopping Centers" and "Petro" brand names, or the Petro brand, primarily along the U.S. interstate highway system. Ourfranchise 456 travel center and convenience store locations. Our customers include long haul trucking fleets and their drivers, independent truck drivers and highway and local motorists. We also operate convenience stores with retail gasoline stations, primarily under the Minit Mart brand name, that generally serve motorists.

        At December 31, 2013, our geographically diverse business included 247 travel centers in 42 U.S. statesoffer a broad range of products and in Canada,services, including 172 travel centers operating under the TA or related brands, and 75 travel centers operating under the Petro brand. As of December 31, 2013, we operated 217 of these travel centers, which we refer to as company operated sites, and our franchisees operated 30 of these travel centers. Of our 247 travel centers at December 31, 2013, we owned 33, we leased or managed 189 from or for others, including 184 that we leased from Hospitality Properties Trust, or HPT, and franchisees owned or leased from others 25. We sublease to franchisees five of the travel centers we lease from HPT.

        Our travel centers typically include over 25 acres of land and offer customers diesel fuel and gasoline, as well as nonfuel products and services such as truck repair and maintenance services, full service restaurants, more than 39 different brands of quick service restaurants, travelor QSRs, travel/convenience stores and othervarious driver amenities. We also collect rents, royalties and other fees from our franchisees.

tenants, franchisees and dealers.

We manage our business on the basis of two reportable segments: travel centers and convenience stores. See Note 15 for more information about our segments. We have a single travel center located in a foreign country, Canada, that we do not consider material to our operations.
As of December 31, 2013,2015, our business included 252 travel centers in 43 states in the United States, or U.S., primarily along the U.S. interstate highway system, and the province of Ontario, Canada. Our travel centers included 176 operated under the "TravelCenters of America" and "TA" brand names, or the TA brand, including 161 that we operated 34and 15 that franchisees operated, including five we lease to franchisees, and 76 operated under the "Petro Stopping Centers" and "Petro" brand names, or the Petro brand, including 62 that we operated and 14 that franchisees operated. Of our 252 travel centers at December 31, 2015, we owned 32, we leased 194, including 192 that we leased from Hospitality Properties Trust, or HPT, we operated two for a joint venture and our franchisees owned or leased from others 24. Substantially all of our travel centers include a convenience store, at least one restaurant, a truck service/repair facility and fueling lanes for trucks and passenger vehicles. We report this portion of our business as our travel center segment.
As of December 31, 2015, our business also included 204 convenience stores not located on a travel center property in four11, primarily Midwestern, states of the U.S. We operate our convenience stores primarily Kentucky. Our typical convenience store includes ten fueling positions and approximately 5,000 square feet of interior space offering merchandise and QSRs.under the "Minit Mart" brand name, or the Minit Mart brand. Of our 34these 204 convenience stores at December 31, 2013,2015, we owned 27,173 and we leased five,or managed 29, including one that we leased from HPT, and we operated two for a joint venture in which we own a minoritynoncontrolling interest.

Additionally, we collect rent from one dealer who operates a convenience store we own. We were formed as a Delaware limited liability company on October 10, 2006, by HPT. We were a wholly owned, indirect subsidiary of HPT, and we conducted no business activities until January 31, 2007. On January 31, 2007, HPT acquired TravelCenters of America, Inc., our predecessor, through a merger of one of its subsidiaries with TravelCenters of America, Inc. HPT then restructured the businessreport this portion of our predecessor and distributedbusiness as our then outstanding shares to its shareholders in a spin off transaction. The principal effects of the restructuring were that (i) our predecessor became our 100% owned subsidiary, (ii) subsidiaries of HPT became owners of the real estate at substantially all of the travel centers and certain other assets previously owned by our predecessor as of January 31, 2007, (iii) we entered a lease for that real estate and those other assets, which we refer to as the TA Lease, and (iv) all of the outstanding indebtedness of our predecessor was repaid in full. Herein we refer to this series of transactions as the HPT Transaction. We retained the balance of the assets previously owned by our predecessor and continue their operation.

        On May 30, 2007, we acquired Petro Stopping Centers, L.P., or Petro, from Petro Stopping Centers Holdings, L.P., or Petro Holdings. Also on May 30, 2007, HPT acquired Petro Holdings, which owned the real estate of 40 Petro travel centers. Simultaneously with HPT's acquisition of this real estate, we leased these 40 travel centers from HPT. We refer to this lease as the Petro Lease and we refer to the TA Lease and the Petro Lease collectively as the HPT Leases. Herein we refer to our acquisition of Petro as the Petro Acquisition.

convenience store segment.

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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies

        Principles of Consolidation.Our consolidated financial statements include the accounts of TravelCenters of America LLC and its wholly owned subsidiaries (collectively, we, us or the Company).subsidiaries. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. We use the equity method of accounting for investments in entities when we have the ability to significantly influence, but not control, the investee's operating and financial policies, typically when we own 20% to 50% of the investee's voting stock. See Note 1611 for more information about our equity investments.

        Use of Estimates.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant Accounting Policies
        Segment Reporting.    We manage our business on the basis of one operating segment and, therefore, have one reportable segment. Our locations sell similar products and services, use similar processes to sell those products and services, and sell their products and services to similar groups of customers. We make specific disclosures concerning fuel and nonfuel products and services because it facilitates our discussion of trends and operational initiatives within our business and industry. We have a single travel center located in a foreign country, Canada, and, accordingly, the revenues and assets related to our operations in Canada are considered to be not material.

Revenue Recognition.We recognize sales revenuesrevenue and the related costs at the time of final sale to consumers at our company operated locations for retail fuel and nonfuel sales and at the time of delivery of motor fuel to customers at either the terminal or the customer's facility for wholesale fuel sales. We record the estimated cost to us of the redemptionloyalty program redemptions by customers of our loyalty program points as a discount against gross salesrevenue in determining net salesrevenue presented in our consolidated statementstatements of income and comprehensive income.

For those travel centers that we subleaselease to a franchisee, we recognize rent revenue based on the amount of rent payment due for each period. These leases specify rent increases each year based on inflation rates for the respective periods or capital improvements we make at the travel center. BecauseSince the rent increases related to these factors are contingent upon future events, we recognize the related rent revenue after such events have occurred.


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TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


We collect and recognize franchise royalty revenues monthly as earned. We determine royalty revenues generally as a percentage of the franchisees' revenues. We recognize initial franchise fee revenues when the franchisee opens for business under our brand name, which is when we have fulfilled all of our initial obligations under the related agreements.

        Motor Fuel and Sales Taxes.    We collect the cost of certain motor fuel and sales taxes from consumers and remit those amounts to the supplier or the appropriate governmental agency. We present these collections and remittances net in the accompanying consolidated statements of income and comprehensive income.

        Earnings Per Share.    We calculate basic earnings per common share by dividing net income or loss available to common shareholders (and, if applicable, income from continuing operations, cumulative effect of a change in accounting, extraordinary items and discontinued operations) for the period by the


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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

weighted average number of common shares outstanding during the period. The net income or loss attributable to participating securities is deducted from our total net income or loss to determine the net income or loss attributable to common shareholders. We calculate diluted earnings per common share by adjusting weighted average outstanding shares, assuming conversion of all potentially dilutive share securities, using the treasury stock method; but we had no dilutive share securities outstanding as of December 31, 2013, nor at any time during the three year period then ended. Unvested shares issued under our share award plan are deemed participating securities because they participate equally in earnings or losses with all of our other common shares.

        Cash and Cash Equivalents.    We consider all liquid investments with an initial maturity of three months or less at date of purchase to be cash equivalents. The carrying amount of cash and cash equivalents is equal to its fair value.

Accounts Receivable and Allowance for Doubtful Accounts.We record trade accounts receivable at the invoiced amount and those amounts do not bear interest. The recorded allowance for doubtful accounts is our best estimate of the amount of probable losses in our existing accounts receivable. We base the allowance on customer risk assessmenthistorical payment patterns, aging of accounts receivable, periodic review of customers' financial condition and historicalactual write off experience. We individually review for collectability past due balances over specific amounts. We review all other balances for collectability on a pooled basis by the type of receivable.history. We charge off account balances against the allowance when we believe it is probable the receivable will not be recovered.collected.

        Inventories.Inventory. We state our inventoriesinventory at the lower of cost or market value. We determine cost principally on the weighted average cost method.

        Other current assets.    Other current assets primarily consisted We maintain reserves for the estimated amounts of prepaid expenses,obsolete and excess inventory. These estimates are based on unit sales histories and on hand inventory quantities, known market trends for inventory items and assumptions regarding factors such as future inventory needs, our ability and the current portion of expected future recoveries of environmental expenditures,related cost to return items to our suppliers and supplier deposits. The most significant item included in other current assets is supplier deposits, which amountedour ability to $29,443 and $39,487sell inventory at December 31, 2013 and 2012, respectively.a discount when necessary.

Property and Equipment.We recordedrecord property and equipment that we acquired as a result of the HPT Transaction, Petro Acquisition or any subsequent business combinationcombinations based on their fair market values as of the date of the respective transaction. We charge to expense the costs we incur in evaluating and effecting a business combination, including legal fees, due diligence costs and closing costs, in the period that the costs are incurred.acquisition. We record all other property and equipment at cost. We depreciate our property and equipment on a straight line basis generally over the following estimated useful lives of the assets:

Buildings and site improvements15 to 40 years
Machinery and equipment3 to 15 years
Furniture and fixtures5 to 10 years

We depreciate leasehold improvements over the shorter of the lives shown above or the remaining term of the underlying lease. Although the assets related to the qualifying tenant improvements funded by HPT under the tenant improvements allowance that we had fully utilized as of September 30, 2010, are legally owned by HPT, they remained on our balance sheet after the funding by HPT and are amortized over the estimated useful lives of the assets or the remaining term of the lease, whichever is shorter, as depreciation and amortization expense. We account for these leasehold improvements


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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

funded through a rental allowance as lease incentives. Amortization expense related to assets recorded in connection with the sale-leasebacksale leaseback financing obligation pertaining to certain travel centers we lease under the TA Leasefrom HPT is included in depreciation and amortization expense over the shorter of the estimated useful lives of the assets.

        We charge repair and maintenance costs to expense as incurred, while we capitalize renewals and betterments. We remove fromassets or the accounts the cost and related accumulated depreciation of property and equipment sold, replaced or otherwise disposed. We recognize any resulting gains or losses in depreciation and amortization in the accompanying consolidated statements of income and comprehensive income.

lease term.

        Capitalized Interest.    We capitalize the portion of our interest expense that is attributable under GAAP to our more significant construction projects over the duration of the respective construction periods. Capitalized interest is amortized to depreciation and amortization expense over the estimated useful life of the corresponding asset.

Goodwill and Intangible Assets.    We initially recognize our acquired intangible assets, other than goodwill, based on their fair values in accordance with the Financial Accounting Standards Board, or FASB's, guidance regardingIn a business combinations. This guidance requires an allocation of purchase pricecombination we are required to allrecord assets and liabilities acquired, including those intangible assets that arise from contractual or other legal rights or are otherwise capable of being separated or divided from the acquired entity, (but excluding goodwill), based on the fair values of the acquired assets and liabilities. Any excess of acquisition cost over the fair value of the acquired net assets is recognized as goodwill. We expense as incurred the costs of internally developing, maintaining, or restoring intangible assets that are not specifically identifiable, that have indeterminate lives or that are inherent in a continuing business and related to the entityCompany as a whole. We amortize the recorded costcosts of intangible assets with finite lives on a straight line basis over their estimated lives, principally the terms of the related contractual agreements giving rise to them. We do not amortize goodwill or intangible assets with indefinite lives but instead we review these assets for impairment each year (or more frequently if impairment indicators arise).agreements. See Note 85 for more information about our goodwill and intangible assets.

        Internal Use Software Costs.    During the application development stage of an internal use computer software project, we capitalize (i) the external direct costs of materials and services consumed in developing or obtaining the internal use computer software, (ii) to the extent of time spent directly on the project, payroll costs of employees directly associated with, and who devote time to, the project, and (iii) related interest costs incurred. Internal and external costs incurred in the preliminary project stage and post-implementation stage, such as for exploring alternative technologies, vendor selection and maintenance, are expensed as incurred, as are all training costs. We account for the costs of significant upgrades and enhancements that result in additional functionality in the same manner as similar costs for new software projects. We expense as incurred the costs of all other upgrades and enhancements. The amounts capitalized in accordance with this policy are included in the property and equipment balances in our consolidated balance sheets.

Impairment. We review definite lived assets for indicators of impairment during each reporting period. We recognize impairment charges when (a)(i) the carrying value of a long lived or indefinite lived asset group to be held and used in the business is not recoverable and exceeds its fair value and (b)(ii) when the carrying value of a long lived asset to be disposed of exceeds the estimated fair value of


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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

the asset less the estimated cost to sell the asset. Our estimates of fair value are based on our estimates of likely market participant assumptions, including projected operating results, rental payments and the discount rate used to measure the present value of projected future cash flows. If the business climate deteriorates actual results may not be consistent with these assumptions and estimates. We recognize impairment charges in the period during which the circumstances surrounding an asset to be held and used have changed such that the carrying value is no longer recoverable, or during which a commitment to a plan to dispose of the asset is made. TheWe perform our impairment analysis for substantially all of our property and equipment at the individual location level because that is the lowest level of asset groupings for which the cash flows are largely independent of the cash flows of other assets and liabilities is the individual location and, accordingly, it is at the individual location level that we perform our impairment analysis for substantially allliabilities.


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Table of our property and equipment.

Contents



TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


We evaluate definite lived intangible assets for impairment when indicators exist and we evaluate goodwill and indefinite lived intangible assets for impairment at least annually. GAAP permits that we first perform a qualitative assessment to determine whetherannually or whenever events or changes in circumstances indicate the carrying amount may not be recoverable using either a quantitative assessmentor qualitative analysis. We evaluate goodwill for impairment as of July 31 at the reporting unit level, which is required.equivalent to our reportable segments. We subject goodwill and intangible assets to further evaluation and recognize impairment charges when events and circumstances indicate the carrying value of the goodwill or intangible asset exceeds the fair market value of the asset. With respect to goodwill, if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of impairment to be recognized, if any. InGoodwill impairment testing for 2015 was performed using a quantitative analysis under which the first step of the review process, we compare the estimated fair value of our goodwill was estimated using a discounted cash flow model, also known as an income approach, and a market approach. The discounted cash flow model considers forecasted cash flows discounted at an estimated weighted average cost of capital. The forecasted cash flows were based on our long-term operating plan and a terminal value was used to estimate the reporting unit with its carrying value. Ifcash flows beyond the estimated fairperiod covered by the operating plan. The weighted average cost of capital used was an estimate of the overall after tax rate of return required by equity and debt market holders of a business enterprise. The market approach considered comparable publicly traded guideline companies' business values. For each comparable publicly traded guideline company value indicators, or pricing multiples, were considered to estimate the value of our business enterprise. These analyses require the reporting unit is less than its carrying value, we recognize an impairment loss forexercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates and the excess, if any,timing of expected future cash flows of the carrying value over the implied fair value of the reporting unit's goodwill amount. We determine the estimated fair value of a reporting unit using a combination of market and income approaches. We includerespective reportable segment. During 2015, we did not record any impairment charges when required, in depreciation and amortization expense in our consolidated statements of income and comprehensive income.

        Deferred Financing Costs.    We capitalize costs incurred to borrow and we amortize those costs as interest expense over the term of the related borrowing using the effective interest method. Deferred financing costs were $5,594 and $1,511 at December 31, 2013 and 2012, respectively, net of accumulated amortization of $1,083 and $416, respectively, and are included in other noncurrent assets in our consolidated balance sheets. We recognized $107 of expense to write off deferred financing fees when we entered into an amended and restated loan and security agreement, or the credit facility, in October 2011 and we capitalized $1,542 of costs related to entering the credit facility in 2011. In 2012 we capitalized $165 of costs related to the issuance of our 8.25% Senior Notes due on January 15, 2028, or the Senior Notes,indefinite lived intangible assets and in 2013 capitalized an additional $4,750 of costs related to the Senior Notes offering. We estimate we will recognize future amortization of deferred financing fees of approximately $680 in 2014 and 2015, $616 in 2016 and $328 in 2017 and 2018. We recognized interest expense from the amortization of deferred financing fees, of $667, $352 and $403 for the years ended December 31, 2013, 2012 and 2011, respectively.

goodwill.

        Classification of Costs and Expenses.    Cost of goods sold (excluding depreciation) represents the costs of fuels and other products sold, including freight. Site level operating expenses principally represent costs incurred in operating our locations, consisting primarily of labor (including labor that is sold as service in our truck service facilities), maintenance, supplies, utilities, property taxes, inventory losses, environmental costs, and credit card transaction fees.


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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

Share Based Employee Compensation.    We recognize compensation cost related to share based payment transactions in the financial statements based on the fair value at the grant date. The awards made under our share award plan to date have consisted of share grants and not share options.been restricted shares. Shares issued to directors vest immediately. Shares issued to others vest in five to ten equal annual installments beginning on the date of grant. The compensationCompensation expense related to share grants is determined based on the market value of our shares on either the date of grant for employees or the vesting date for nonemployees, as appropriate, with the aggregate value of the granted shares amortized to expense over the related vesting period. We include share based compensation expense in selling, general and administrative expenses in our consolidated statements of income and comprehensive income.

Environmental Remediation.We record the expense of remediation costscharges and penalties when the obligation to remediate is probable and the amount of associated costs is reasonably determinable. We include remediation expenses within site level operating expensesexpense in our consolidated statements of income and comprehensive income. Generally, the timing of remediation accrualsexpense recognition coincides with completion of a feasibility study or the commitment to a formal plan of action. Accrued liabilities related to environmental matters are recorded on an undiscounted basis because of the uncertainty associated with the timing of the related future payments. We record a receivable if recoveries of remediation costs from third parties are probable. In our consolidated balance sheets, the accrual for environmental matters is included in other noncurrent liabilities, with the amount estimated to be expended within the subsequent twelve months included in other current liabilities and the related receivable for probable expected recoveries is included in other noncurrent assets.liabilities.

Self Insurance Accruals.For insurance programs for which we pay deductibles and for which we are partially self insured up to certain stop loss amounts, we establish accruals for both estimated losses on known claims and claims incurred but not reported, based on claims histories and using actuarial methods. In our consolidated balance sheets, the accrual for self insurance costs is included in other noncurrent liabilities, with the amount estimated to be expended within the subsequent twelve months included in other current liabilities.

Asset Retirement Obligations.We recognize the future costs for our obligations related to the removal of our underground storage tanks and certain improvements we own at leased properties over the estimated useful lives of each asset requiring removal. We record a liability for the fair value of an asset retirement obligation with a corresponding increase to the carrying value of the related long lived asset at the time such an asset is installed. We amortize the amount recorded as property and equipment and recognize accretion expense in depreciation and amortization in our consolidated statements of income and comprehensive income in connection with the discounted liability over the remaining life of the respective asset. We base the estimated liability on our historical experiences in removing these assets, their estimated useful lives, external estimates as to the cost to remove the assets in the future and regulatory or contractual requirements. The liability is a discounted liability using a credit adjusted risk free rate. RevisionsOur asset retirement obligations at December 31, 2015 and 2014, were $7,602 and $2,392, respectively. The asset retirement obligations balance at December 31, 2015 increased compared to 2014 primarily due to the liability could occur due to changesasset retirement obligations assumed with the acquisitions that occurred in removal costs, asset useful lives or if new regulations regarding the removal of underground storage tanks are enacted and/or amendments to the lease contracts are negotiated.2015. See Note 73 for more information about our asset retirement obligations.acquisitions.


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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

Leasing Transactions.Leasing transactions are a material part of our business. The following discussion summarizes various aspectsWe have five leases with HPT, four of which we refer to as our New TA Leases and one of which we refer to as the Petro Lease, and which we refer to collectively as the HPT Leases. See Note 12 for more information about our accounting for leasing transactions and the related balances.HPT Leases.


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TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


We charge rent under operating leases without scheduled rent increases to expense over the lease term as it becomes payable. Certain operating leases specify scheduled rent increases over the lease term or other lease payments that are not scheduled evenly throughout the lease term. We recognize the effects of those scheduled rent increases in rent expense over the lease term on an average, or straight line, basis. The rent payments resulting from our sales to HPT of improvements to the properties we lease from HPT are contingent rent. Other than at the travel centers discussed below under "Sale-leaseback Financing Obligation,"where our leases are accounted for as sale leaseback financing obligations, we recognize the expense related to this contingent rent evenly throughout the remaining lease term beginning on the dates of the related sales to HPT.


•
Sale-leaseback Financing Obligation.  GAAP governing the transactions related to our entering the TA Lease required us to recognize in our consolidated balance sheets the leased assets at 13 of the travel centers previously owned by our predecessor that we now lease from HPT because we subleased more than a minor portion of those travel centers to third parties, and at one travel center that did not qualify for operating lease treatment for other reasons. Accordingly, we recorded the leased assets at these travel centers at an amount equal to HPT's recorded initial carrying amounts, which were equal to their fair values, and recognized an equal amount of liability that is presented as sale-leaseback financing obligation in our consolidated balance sheets. We recognize a portion of the total rent payments to HPT related to these assets as a reduction of the sale-leaseback financing obligation and a portion as interest expense in our consolidated statements of income and comprehensive income. We determine the allocation of these rent payments to the liability and to interest expense using the effective interest method. The assets and liabilities resulting from this accounting for the affected sites are derecognized when the subleases end and we defer any resulting gain or loss, as further discussed below under "Deferred Gain on Sale-Leaseback Transactions". At sites for which we have recorded a sale-leaseback financing obligation, we follow this same accounting when we sell to HPT improvements at those sites; the assets remain on our balance sheet and we recognize an increase in the sale-leaseback financing obligation for the amount of proceeds received.

•
Deferred Gain on Sale-Leaseback Transactions.  Under GAAP, the gain or loss from the sale portion of a sale-leaseback transaction is deferred and amortized into rent expense on a straight line basis over the term of the lease.

•
Deferred Tenant Improvements Allowance.  HPT committed to fund up to $125,000 of capital projects at the sites we lease under the TA Lease without an increase in rent payable by us, which amount HPT had fully funded by September 30, 2010, net of discounting to reflect our accelerated receipt of those funds. In connection with this commitment, we recognized a liability for the rent deemed to be related to this improvement allowance. This improvement allowance was initially recorded at an amount equal to the leasehold improvements receivable we recognized for the discounted value of the then expected future amounts to be received from HPT, based upon our then expected timing of receipt of those tenant improvements funding payments. We amortize the deferred tenant improvements allowance on a straight line basis over the term of the TA Lease as a reduction of rent expense.

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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

Income Taxes.We establish deferred income tax assets and liabilities to reflect the future tax consequences of differences between the tax bases and financial statement bases of assets and liabilities. We reduce the measurement of deferred tax assets, if necessary, by a valuation allowance when it is more likely than not that the deferred tax asset will not be realized.

We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. We evaluate and adjust these tax positions based on changing facts and circumstances. For tax positions meeting the more likely than not threshold, the amount we recognize in the financial statements is the largest benefit that we estimate has a greater than 50 percent50% likelihood of being realized upon ultimate settlement with the relevant tax authority. We classify interest and penalties related to uncertain tax positions, if any, in our financial statements as a component of interest expense and selling, general and administrative expenses, respectively.

        Concentration of Credit Risk.    We grant credit to some of our trucking company customers and are therefore exposed to a concentration of our accounts receivable from that one industry. We may require letters of credit or other collateral from customers based on our evaluation of their credit worthiness.

        Certain Significant Risks and Uncertainties.    We are exposed to risks arising from the changes in the demand for and the price of fuel. Because petroleum products are traded in commodity markets, material changes in demand for and the price of fuel worldwide and financial speculation in these commodities markets may have a material effect upon the prices we have to pay for fuel and may also impact our customers' demand for fuel and other products.

        Fair Value of Financial Instruments.    The fair values of financial instruments classified as current assets or current liabilities approximate the carrying values due to the short term maturity of the instruments. We estimate the fair value of our Senior Notes based on their closing trading price as of the balance sheet date.

        Revisions to prior year financial statements and disclosures.    During the fourth quarter of 2013, we determined that our historical approach to assessing the accounting impact of ownership changes on our net operating loss carryforwards did not consider all of the provisions of Section 382 of the Internal Revenue Code, or the Code. We also identified errors in the recognition and reporting of other deferred tax assets and liabilities disclosed in prior years. For all prior years, we recorded a full valuation allowance against our net deferred tax assets. Therefore these errors in the recorded amounts of our tax carryforwards and other deferred tax assets and liabilities were offset by errors in the related valuation allowance and liability for uncertain tax positions and had no effect on the income tax provision recognized in any period. However, these errors did result in misstatements in the presentation ofexpense. See Note 10 for more information about our income tax related amounts on our balance sheets as well as disclosures related to income taxes. We have assessed the misstatements in our historical financial statements and determined them to be immaterial.


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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

        We have revised the presentation of our deferred tax assets and liabilities in our consolidated balance sheet as of December 31, 2012, to correct these errors, resulting in an increase to other current assets and an increase to other noncurrent liabilities of $11,438 in comparison to the amounts originally presented.

        We have also revised our disclosure of the significant components of our deferred tax assets and liabilities as of December 31, 2012, to reflect the correction of these errors. These revisions resulted in a decrease in our net deferred tax assets of $66,100, a decrease in our valuation allowance of $71,500, and an increase in our recognized liability for uncertain tax positions of $5,400, in comparison to the amounts originally presented. We have also reclassified certain components of our disclosure of our deferred tax assets and liabilities to conform to current year presentation.

        We failed to properly consider the application of FASB Accounting Standards Codification, or ASC, 740 to uncertain tax positions related to our historical approach to evaluating Section 382 of the Code. As a result, we failed to identify and disclose that we had approximately $60,138 of unrecognized tax benefits as of December 31, 2012, and overstated our unrestricted federal net operating loss carryforwards as of December 31, 2012, by approximately $108,250. That is, as of December 31, 2012, we disclosed that we had tax carryforwards resulting in deferred tax assets that were offset by a valuation allowance but, upon further analysis, we determined that under GAAP we should have instead disclosed that we had unrecognized tax benefits for the uncertain tax positions we had taken in our tax returns. Our tax footnote disclosure for 2013 includes disclosures for uncertain tax positions.

        These errors do not affect our consolidated statements of income and comprehensive income or consolidated statements of cash flows for the years ended December 31, 2012 and 2011.

Reclassifications. Certain prior year amounts have been reclassified to be consistent with the current year presentation.presentation, including reclassifications associated with the early adoption of ASU 2015-17 related to classification of deferred tax liabilities and assets. See below for the impact on our consolidated balance sheet.

Recently Issued Accounting Pronouncements

        In January 2013, we adopted FASB Accounting Standards Update, or ASU, 2013-02,Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This update requires companies to report, in one place, information about reclassifications out of accumulated other comprehensive income. Companies are also required to present details of reclassifications in the disclosure of changes in accumulated other comprehensive income balances. The update is effective for interim and annual reporting periods beginning after December 15, 2012. The implementation of this update as of January 1, 2013, caused no changes to our consolidated financial statements.

        In July 2013, the FASB issued ASU 2013-11,Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which sets forth explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. This guidance is effective for fiscal years and interim reporting periods beginning after December 15, 2013, with early adoption permitted. We elected to adopt early the guidance in ASU 2013-11 in our consolidated financial statements for the year ended December 31, 2013, and have applied this guidance retroactively to our consolidated financial statements for the year ended December 31, 2012. Accordingly, our unrecognized tax benefits have been presented as a reduction of our net operating loss and tax credit carryforwards in the accompanying consolidated balance sheets as of December 31, 2013 and 2012.


Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

In May 2014, the Financial Accounting Standards Board, or the FASB, issued ASUAccounting Standards Update 2014-09,Revenue from Contracts with Customers, which establishes a comprehensive revenue recognition standard under GAAP for virtually all industries in U.S. GAAP.industries. The new standard will apply for annual periods beginning after December 15, 2016,2017, including interim periods therein. Early adoption is prohibited. We have not yet determined the effects, if any, the adoption of this update may have on our consolidated financial statements.

3. Earnings Per ShareIn April 2015, the FASB issued Accounting Standards Update 2015-03,

Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a reduction of the associated debt liability. In August 2015, the FASB clarified the previous Accounting Standards Update and issued Accounting Standards Update 2015-15, Presentations and Subsequent Measurement of Debt Issuance Costs Associated With Lines of Credit Arrangements- Amendments to SEC Paragraphs Pursuant to Staff Announcements on June 18, 2015 EITF Meeting, which addresses the presentation of debt issuance costs related to line of credit arrangements. These updates are effective for interim and annual reporting periods beginning after December 15, 2015, and requires retrospective application. The adoption of this update will cause reclassification of debt issuance costs from assets to a reduction of liabilities in our consolidated balance sheets. Debt issuance costs related to line of credit arrangements will remain classified as assets in accordance with Accounting Standards Update 2015-15. At December 31, 2015, our capitalized unamortized debt issuance costs totaled $14,442.

In November 2015, the FASB issued Accounting Standards Update 2015-17, Balance Sheet Classification of Deferred Taxes, which requires deferred tax liabilities and assets to be classified as noncurrent in the consolidated balance sheet. The update is effective for interim and annual reporting periods beginning after December 15, 2016, and may be applied either prospectively or retrospectively. Early adoption of the standard is permitted, and we adopted this standard during the current reporting period and applied it to all periods presented. Adoption of this standard resulted in presenting current and prior period deferred tax assets and liabilities as noncurrent and net of one another on the balance sheet. Current deferred tax assets totaling $22,357 for 2014 were reclassified to noncurrent and presented net with noncurrent deferred tax liabilities.

F- 11
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TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


In January 2016, the FASB issued Accounting Standards Update 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which was implemented to improve the recognition and measurement of financial instruments. The update is effective for interim and annual periods beginning after December 15, 2017, and early adoption is not permitted, with the exception of specific early application guidance. We anticipate that the adoption of this standard will not have a material impact on our consolidated financial statements.
In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases, which establishes a comprehensive lease standard under GAAP for virtually all industries. The new standard requires lessees to recognize a right of use asset and a lease liability for virtually all of their leases, other than leases that meet the definition of short term leases and will apply for annual periods beginning after December 15, 2018, including interim periods therein. Early adoption is permitted. We have not yet determined the effects the adoption of this update may have on us; however, we believe this adoption will have a material impact on our consolidated financial statements.

2.Earnings Per Share
We calculate basic earnings per common share by dividing net income available to common shareholders for the period by the weighted average number of common shares outstanding during the period. The net income attributable to participating securities is deducted from our total net income to determine the net income attributable to common shareholders. We calculate diluted earnings per common share by adjusting weighted average outstanding shares, assuming conversion of all potentially dilutive share securities, using the treasury stock method; but we had no dilutive share securities outstanding as of December 31, 2015, nor at any time during the three year period then ended. Unvested shares issued under our share award plan are deemed participating securities because they participate equally in earnings with all of our other common shares. The following table presents a reconciliation from net income to the net income available to common shareholders and the related earnings per share.

 
 Years Ended December 31, 
 
 2013 2012 2011 

Net income, as reported

 $31,623 $32,198 $23,574 

Less: net income attributable to participating securities

  1,957  1,851  1,384 
        
​​​​​​​​​​​

Net income available to common shareholders

 $29,666 $30,347 $22,190 
        
​​​​​​​​​​​
​​​​​​​​​​​
        

Weighted average common shares(1)

  28,081,790  27,193,889  22,689,063 

Basic and diluted net income per share

 $1.06 $1.12 $0.98 
        
​​​​​​​​​​​
​​​​​​​​​​​
        
(1)
Excludes the unvested shares granted under our share award plan, which shares are considered participating securities because they participate equally in earnings and losses with all of our other common shareholders. The weighted average number of unvested shares outstanding for the years ended December 31, 2013, 2012 and 2011, was 1,852,548, 1,658,718 and 1,415,892, respectively.

4. Accounts Receivable

        Changes in, and balances of, the allowance for doubtful accounts receivable were as follows:

 Year Ended December 31,
 2015 2014 2013
Net income, as reported$27,719
 $60,969
 $31,623
Less: net income attributable to participating securities1,386
 2,986
 1,957
Net income available to common shareholders$26,333
 $57,983
 $29,666
      
Weighted average common shares(1)
36,485
 35,856
 28,082
      
Basic and diluted net income per common share$0.72
 $1.62
 $1.06
 
 Balance at
Beginning
of Period		 Amounts
Charged/
(Credited)
To Expense		 Amounts
Charged Off,
Net of
Recoveries		 Balance at
End of
Period		 

Year Ended December 31, 2013

             

Deducted from accounts receivable for doubtful accounts

 $1,516 $(274)$62 $1,304 
          
​​​​​​​​​​​​​​
​​​​​​​​​​​​​​
          

Year Ended December 31, 2012

             

Deducted from accounts receivable for doubtful accounts

 $1,679 $349 $(512)$1,516 
          
​​​​​​​​​​​​​​
​​​​​​​​​​​​​​
          

Year Ended December 31, 2011

             

Deducted from accounts receivable for doubtful accounts

 $2,023 $99 $(443)$1,679 
          
​​​​​​​​​​​​​​
​​​​​​​​​​​​​​
          
(1)
Excludes the unvested shares granted under our share award plan, which shares are considered participating securities because they participate equally in earnings and losses with all of our other common shareholders. The weighted average number of unvested shares outstanding for the years ended December 31, 2015, 2014 and 2013, was 1,920, 1,846 and 1,853, respectively.


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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

5. Inventories

        Inventories at



3.Acquisitions
During the year ended December 31, 20132015, we acquired three travel centers and 2012, consisted170 convenience stores and we accounted for these transactions as business combinations, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their respective fair values as of the following:

date of acquisition. The following table summarizes the amounts we recorded for the assets we acquired and liabilities we assumed based on their fair values in the business combinations described above, along with resulting goodwill. Substantially all of the goodwill acquired during 2015 will be deductible for tax purposes.

 
 2013 2012 

Nonfuel products

 $150,600 $144,025 

Fuel products

  48,601  46,981 
      
​​​​​​​​

Total inventories

 $199,201 $191,006 
      
​​​​​​​​
​​​​​​​​
      
 Travel Centers 
Convenience
Stores
 Total
Inventory$683
 $15,296
 $15,979
Property and equipment7,815
 251,956
 259,771
Goodwill and intangibles1,295
 51,430
 52,725
Other liabilities(455) (7,730) (8,185)
Total aggregate purchase price$9,338
 $310,952
 $320,290

6. Acquisitions

We have included the results of these acquired travel centers and convenience stores in our consolidated financial statements from the dates of acquisition. Total revenues attributable to these acquisitions included within our consolidated revenues for the year ended December 31, 2015, were $237,148. The pro forma impact of each of these acquisitions is individually insignificant to our consolidated financial statements but these acquisitions are significant in the aggregate. The following pro forma consolidated revenue amounts reflect our revenues as if the acquisitions occurred on January 1, 2014.
 Unaudited
 
Year Ended
December 31, 2015
 
Year Ended
December 31, 2014
Total revenues$6,299,036
 $8,321,178
It is not practical to estimate the pro forma effect of these acquisitions on our consolidated net income because audited or unaudited financial statements prepared in conformity with GAAP were not available from each of the acquisition targets. In addition, the sellers' historical levels of selling, general and administrative expenses, depreciation and amortization expense, interest income and expense and provision (benefit) for income taxes were not significant factors in our acquisition underwriting process.
During the year ended December 31, 2014, we acquired four travel centers for a total of $28,695 and we accounted for these transactions as business combinations.
During the year ended December 31, 2013, we acquired, for an aggregate amountpurchase price of $46,245,$46,160, nine travel centers and the business of one of our franchisees at a travel center that this franchisee previously subleased from us, and we accounted for these transactions as business combinations, except that one of the acquired travel centers was closed at the time we acquired it and was accounted for as an asset acquisition, as required by GAAP. See Note 17 below for further information regarding the acquisition of a former franchisee business and certain lease accounting effects resulting from that transaction.

On December 16, 2013, we acquired all of the issued and outstanding membership units of Girkin Development, LLC, a Kentucky limited liability company that ownsthen owned a total of 31 convenience stores in Kentucky and Tennessee, operating under the proprietary Minit Mart brand, for an aggregate purchase price of approximately $67,922. We intend to continue to use the Minit Mart brand name, which we own. Four$65,356.

As of the Minit Mart sites are leased by us from third parties.

        During the year ended December 31, 2012,2015, we acquired,had entered agreements to acquire 24 convenience stores for an aggregate amountpurchase price of $52,310, ten travel centers in six business combination transactions$32,788 and the businesses53 restaurants, 41 of ourwhich are operated by franchisees, at four travel centers that these franchisees previously subleased from us in two business combination transactions. Eachfor an aggregate of $25,000 and since December 31, 2015, we entered into agreements to acquire an additional16 convenience stores for an aggregate purchase price of $23,250. Seven of these transactions wasconvenience stores were acquired in January and February 2016 for an aggregate purchase price of $13,860. We expect to complete the purchaseremaining acquisitions in the first half of assets for cash2016, but these purchases are subject to conditions, and was accounted for asin the case at the 53 restaurants the outcome of a business combination. See Note 17 below for further information regardingbankruptcy auction process, and may not occur, may be delayed or the acquisitions of former franchisee businesses and certain lease accounting effects resulting from those transactions.

terms may change.


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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

6. Acquisitions (Continued)

        The following table summarizes the amounts assigned, based on their fair values, to the assets we acquired



Acquisition related transaction costs, such as legal fees, due diligence costs and liabilities we assumedclosing costs, are not included as a component of consideration transferred in the business combinations described above.

 
 Year Ended
December 31, 2013		 

Cash

 $2,651 

Accounts receivable

  1,701 

Inventories

  5,831 

Other current assets

  164 

Property and equipment

  96,167 

Leasehold interests

  173 

Agreements with franchisors

  2,836 

Trademarks

  3,800 

Goodwill

  23,250 

Other noncurrent assets

  295 

Accounts payable and other current liabilities

  (7,272)

Deferred tax liabilities

  (15,780)

Other noncurrent liabilities

  (1,187)
    
​​​​​

Total purchase price

 $112,629 
    
​​​​​
​​​​​
    

but instead are expensed as incurred. During 2013, 20122015, 2014 and 2011,2013, we incurred acquisition related costs totaling $5,048, $1,160 and $2,523, $785respectively, for legal, due diligence and $446, respectively, of acquisition costs related to the business combinations described above, which amounts are included in our consolidated statements of income and comprehensive income. We have included the results of these sites in our consolidated financial statements from their respective dates of acquisition. The pro forma impact of including the results of operations of theseactivities associated with acquisitions from the beginning of the period is not material to our consolidated financial statements.

        As of December 31, 2013, we had entered an agreement to acquire a travel center property for approximately $3,000. We completed this acquisition in January 2014.

7. Property and Equipment

considered or completed.


4.Property and Equipment
Property and equipment, at cost, as of December 31, 20132015 and 2012,2014, consisted of the following:

December 31,

 2013 2012 2015 2014

Land and improvements

 $214,483 $176,313 $280,550
 $243,499

Buildings and improvements

 203,416 120,529 287,276
 220,013

Machinery, equipment and furniture

 252,951 205,195 327,853
 298,232

Leasehold improvements

 200,972 182,955 216,177
 221,027

Construction in progress

 88,361 95,744 207,489
 101,416
     1,319,345
 1,084,187
​​​​​

 960,183 780,736 

Less: accumulated depreciation and amortization

 255,317 204,224 329,739
 318,359
     
​​​​​

Property and equipment, net

 $704,866 $576,512 $989,606
 $765,828
     
​​​​​
​​​​​
     

Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

7. Property and Equipment (Continued)

Total depreciation expense for the years ended December 31, 2015, 2014 and 2013, 2012was $70,042, $63,880 and 2011, was $57,456, $46,888 and $42,344, respectively, including impairment charges of $659, $351 and $302 for the years ended December 31, 2013, 2012 and 2011, respectively.

The following table shows the amounts of property and equipment owned by HPT but recognized in our consolidated balance sheets and included within the balances of property and equipment shown in the table above, as a result of the required accounting for the assets funded by HPT under the tenant improvements allowance and for the assets that we lease from HPT that did not qualify for sale-leasebacksale leaseback accounting. During 2012,
 December 31,
 2015 2014
Land and improvements$14,053
 $61,809
Buildings and improvements6,586
 27,812
Machinery, equipment and furniture3,216
 6,155
Leasehold improvements114,989
 115,089
 138,844
 210,865
Less: accumulated depreciation and amortization71,357
 75,063
Property and equipment, net$67,487
 $135,802
In June 2015, we acquired the businesses of the former franchisees at fourentered a transaction agreement with HPT, pursuant to which, among other things, we purchased from HPT five travel centers that we subleased tothen leased from HPT, which resulted in a decrease in the franchisees and that did not previously qualify for sale-leaseback accounting. Those acquisitions eliminated the sublease such that these sites then qualified for sale-leaseback accounting. Accordingly, we derecognized the undepreciated and unamortized balances of the assets and liabilities related to those sites as of the dates of the respective acquisitions. We reduced our property and equipment, net, owned by HPT but recognized in our consolidated balance by $22,229sheets. See Note 12 for more information about our relationship with HPT and our sale-leaseback financing obligation balance by $24,646, resulting in a gain of $2,417 that was deferred and will be amortized as a reduction of rent expense over the remaining term of the TA Lease. In October 2013, the sublease at another one of these travel centers was terminated and we began to operate that travel center. As a result, we reduced our property and equipment balance by $2,030 and our sale-leaseback financing obligation balance by $2,463, resulting in a gain of $433 that was deferred and will be amortized as a reduction of rent expense over the remaining term of the TA Lease.

Transaction Agreement.
 
 December 31, 
 
 2013 2012 

Land and improvements

 $60,908 $62,818 

Buildings and improvements

  27,498  21,999 

Machinery, equipment and furniture

  5,972  5,925 

Leasehold improvements

  115,735  115,820 
      
​​​​​​​​

  210,113  206,562 

Less: accumulated depreciation and amortization

  64,144  53,527 
      
​​​​​​​​

Property and equipment, net

 $145,969 $153,035 
      
​​​​​​​​
​​​​​​​​
      

At December 31, 2013,2015, our property and equipment balance included $5,096$43,986 of completed improvement projects and an additional $23,636 in ongoing improvement projectsassets of the type that we expect totypically request that HPT purchase for an increase in rent in the future;rent; however, HPT is not obligated to purchase those assets.

these improvements.


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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

7. Property and Equipment (Continued)

        The following table shows a reconciliation of our asset retirement obligation liability for the sites we operate that we do not lease from HPT. This liability is included within other noncurrent liabilities in our consolidated balance sheets.



5.Goodwill and Intangible Assets
 
 Years Ended December 31, 
 
 2013 2012 2011 

Balance at beginning of period

 $1,430 $829 $485 

Liabilities acquired

  693  505  361 

Liabilities settled

  (114) —  (74)

Accretion expense

  147  96  57 
        
​​​​​​​​​​​

Balance at end of period

 $2,156 $1,430 $829 
        
​​​​​​​​​​​
​​​​​​​​​​​
        

8. Goodwill and Intangible Assets

Goodwill and intangible assets, net, as of December 31, 20132015 and 2012,2014, consisted of the following:


 Year Ended December 31, 2013 December 31, 2015

 Cost Accumulated
Amortization		 Net Cost 
Accumulated
Amortization
 Net

Amortizable intangible assets:

        
  
  

Agreements with franchisees

 $16,189 $(7,044)$9,145 $15,913
 $(8,907) $7,006

Leasehold interests

 2,267 (2,097) 170 5,837
 (2,259) 3,578

Agreements with franchisors

 2,836 (25) 2,811 2,836
 (1,003) 1,833

Other

 3,200 (3,200) — 5,362
 (3,277) 2,085
       
​​​​​​​

Total amortizable intangible assets

 24,492 (12,366) 12,126 29,948
 (15,446) 14,502

Carrying value of trademarks (indefinite lived)

 11,706 — 11,706 11,707
 —
 11,707
       
​​​​​​​

Total intangible assets

 36,198 (12,366) 23,832 41,655
 (15,446) 26,209

Goodwill

 24,940 — 24,940 79,768
 —
 79,768
       
​​​​​​​

Total goodwill and intangible assets

 $61,138 $(12,366)$48,772 $121,423
 $(15,446) $105,977
       
​​​​​​​
​​​​​​​
       

Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

8. Goodwill and Intangible Assets (Continued)



 Year Ended December 31, 2012 December 31, 2014

 Cost Accumulated
Amortization		 Net Cost 
Accumulated
Amortization
 Net

Amortizable intangible assets:

        
  
  

Agreements with franchisees

 $18,258 $(7,813)$10,445 $16,189
 $(8,041) $8,148

Leasehold interests

 2,094 (2,094) — 2,267
 (2,158) 109
Agreements with franchisors2,836
 (520) 2,316

Other

 3,200 (3,200) — 3,200
 (3,200) —
       
​​​​​​​

Total amortizable intangible assets

 23,552 (13,107) 10,445 24,492
 (13,919) 10,573

Carrying value of trademarks (indefinite lived)

 7,906 — 7,906 11,706
 —
 11,706
       
​​​​​​​

Total intangible assets

 31,458 (13,107) 18,351 36,198
 (13,919) 22,279

Goodwill

 1,690 — 1,690 32,271
 —
 32,271
       
​​​​​​​

Total goodwill and intangible assets

 $33,148 $(13,107)$20,041 $68,469
 $(13,919) $54,550
       
​​​​​​​
​​​​​​​
       

Total amortization expense for amortizable intangible assets for the years ended December 31, 2015, 2014 and 2013 2012was $1,703, $1,491 and 2011 was $1,325, $3,606 and $3,892, respectively, including $282, $215 and $1,034, respectively, related to write offs related to early terminations of franchise and lease agreements for various reasons.

respectively.

We amortize our amortizable intangible assets over a weighted average period of 911 years. During 2013, we acquired leasehold interests and agreements with franchisors with weighted average remaining lives of 10 and 6 years, respectively. We estimate theThe aggregate amortization expense for our amortizable intangible assets to be as follows for each of the next five years:

years is:

Year ending December 31,
  
 

2014

 $1,626 

2015

 $1,538 
Total

2016

 $1,481 $1,884

2017

 $1,395 1,799

2018

 $1,272 1,707
20191,627
20201,461


F- 15
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TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


Goodwill.    Goodwill results from our business combinationsDuring 2015 and represents the excess of amounts paid to the sellers over the fair values of the identifiable assets acquired. During 2013 and 2012,2014, we recognized $23,250$47,497 and $1,690,$7,331, respectively, of goodwill in connection with our business combinations. We had not recognized any goodwill as of December 31, 2011. Our goodwill balance includes $9,068


Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

8. Goodwill and Intangible Assets (Continued)

included $63,647 that is deductible for tax purposes. The table below shows the changes in our goodwill during the periods presented.

Goodwill by reportable segment was as follows:

 
 Goodwill 

Balance as of December 31, 2011

 $— 

Add: Goodwill from business combinations

  1,690 
    
​​​​​

Balance as of December 31, 2012

  1,690 

Add: Goodwill from business combinations

  23,250 
    
​​​​​

Balance as of December 31, 2013

 $24,940 
    
​​​​​
​​​​​
    
  December 31,
  2015 2014
Travel Centers $17,287
 $16,150
Convenience Stores 62,481
 16,121
   Total goodwill $79,768
 $32,271

The estimateestimates of the value of our goodwill acquired during 2013 was2015 were based upon our estimates and assumptions about the fair valuevalues of the identifiable assets and assumed liabilities assumed we acquired and are subject to change if we obtain additional information during the respective measurement period (up to one year from the acquisition date), which may impact the value of our goodwill.

9. Other Current Liabilities

.


6.Other Current Liabilities
Other current liabilities, as of December 31, 20132015 and 2012,2014, consisted of the following:

December 31,

 2013 2012 2015 2014

Taxes payable, other than income taxes

 $34,096 $35,127 $43,457
 $38,554
Accrued capital expenditures22,739
 9,645
Self insurance program accruals, current portion16,374
 17,439

Accrued wages and benefits

 14,529 13,494 15,587
 13,472

Self insurance program accruals, current portion

 15,534 14,797 

Loyalty programs accruals

 16,700 11,967 

Accrued capital expenditures

 10,261 15,327 

Litigation and claims reserve

 11,321 1,961 

Environmental reserve, current portion

 5,639 7,988 
Loyalty program accruals13,383
 14,560

Other

 15,953 10,507 21,973
 18,747
     
​​​​​

Total other current liabilities

 $124,033 $111,168 $133,513
 $112,417
     
​​​​​
​​​​​
     

10. Other Noncurrent Liabilities

        Other noncurrent liabilities,


7.Long Term Debt
Long term debt, as of December 31, 20132015 and 2012,2014, consisted of the following:

 
 2013 2012 

Self insurance program accruals, noncurrent portion

 $17,858 $16,573 

Asset retirement obligations

  2,156  1,430 

Environmental reserve, noncurrent portion

  1,848  2,367 

Deferred tax liabilities, noncurrent portion

  18,510  18,367 

Other noncurrent liabilities

  5,494  3,286 
      
​​​​​​​​

Total other noncurrent liabilities

 $45,866 $42,023 
      
​​​​​​​​
​​​​​​​​
      
 December 31,
 2015 2014
2028 8.25% Senior Notes$110,000
 $110,000
2029 8.00% Senior Notes120,000
 120,000
2030 8.00% Senior Notes100,000
 —
Credit Facility—
 —
Total long term debt$330,000
 $230,000


F- 16

Table of Contents



TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

11.



Senior Notes
On October 5, 2015, we issued in an underwritten public offering $100,000 aggregate principal amount of our 8.00% Senior Notes due on October 15, 2030, or the 2030 8.00% Senior Notes. Our net proceeds from this issuance were $95,494 after underwriters’ discount and commission and other costs of the offering. The 2030 8.00% Senior Notes bear interest at 8.00% per annum, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, beginning on January 15, 2016, and the 2030 8.00% Senior Notes will mature (unless previously redeemed) on October 15, 2030, and no principal payments are required prior to that date. We may, at our option, at any time on or after October 15, 2018, redeem some or all of the 2030 8.00% Senior Notes by paying 100% of the principal amount to be redeemed plus accrued and unpaid interest, if any, to, but not including, the redemption date.
In December 2014, we issued in an underwritten public offering $120,000 aggregate principal amount of our 8.00% Senior Notes due on December 15, 2029, or the 2029 8.00% Senior Notes. Our net proceeds from this issuance were approximately $114,448 after underwriters’ discount and commission and other costs of the offering. The 2029 8.00% Senior Notes bear interest at 8.00% per annum, payable quarterly in arrears on February 28, May 31, August 31 and November 30 of each year. The 2029 8.00% Senior Notes will mature (unless previously redeemed) on December 15, 2029, and no principal payments are required prior to that date. We may, at our option, at any time on or after December 15, 2017, redeem some or all of the 2029 8.00% Senior Notes by paying 100% of the principal amount of the 2029 8.00% Senior Notes to be redeemed plus accrued but unpaid interest, if any, to, but not including, the redemption date.
In January 2013, we issued in an underwritten public offering $110,000 aggregate principal amount of our 8.25% Senior Notes due on January 15, 2028, or the 2028 8.25% Senior Notes. Our net proceeds from this issuance were approximately $105,250 after underwriters’ discount and commission and other costs of the offering. The 2028 8.25% Senior Notes bear interest at 8.25% per annum, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year. The 2028 8.25% Senior Notes will mature (unless previously redeemed) on January 15, 2028 and no principal payments are required prior to that date. We may, at our option, at any time on or after January 15, 2016, redeem some or all of the 2028 8.25% Senior Notes by paying 100% of the principal amount of the 2028 8.25% Senior Notes to be redeemed plus accrued but unpaid interest, if any, to, but not including, the redemption date.
We refer to the 2028 8.25% Senior Notes, 2029 8.00% Senior Notes and 2030 8.00% Senior Notes collectively as the Senior Notes, which are our senior unsecured obligations. The indenture governing our Senior Notes does not limit the amount of indebtedness we may incur. We may issue additional debt from time to time. We estimate that the fair values of our 2028 8.25% Senior Notes, 2029 8.00% Senior Notes, and 2030 8.00% Senior Notes were $109,736, $118,992, and $98,240, respectively, based on their respective closing prices on the New York Stock Exchange, or NYSE, (a Level 1 input) on December 31, 2015.
Revolving Credit Facility

        In October 2011,

On December 19, 2014, we entered into theamended our revolving credit facility, withor the Credit Facility, to, among other things: (i) extend the maturity of the Credit Facility from October 25, 2016 to December 19, 2019; (ii) reduce the applicable margins on borrowings and standby letter of credit fees; (iii) reduce the unused line fee rate; (iv) reduce the threshold for triggering a group of commercial banks that amendedminimum fixed charge ratio requirement; and restated our preexisting credit facility.(v) make certain adjustments to the borrowing base calculation in a manner we believe is favorable to us. Under this credit facility,Credit Facility, a maximum of $200,000 may be drawn, repaid and redrawn until maturity in October 2016.December 2019. The availability of this maximum amount is subject to limits based on qualified collateral. Subject to available collateral and lender participation, the maximum amount may be increased to $300,000. The credit facilityCredit Facility may be used for general business purposes and provides for the issuance of letters of credit. Generally, no principal payments are due until maturity. Borrowings under the credit facilityCredit Facility bear interest at aan annual rate based on, at our option, LIBOR or a base rate, plus a premium (which premium is subject to adjustment based upon facility availability utilization and other matters). The annual interest rate for our credit facility was 4.5% as of December 31, 2013. Pursuant to the credit facility,Credit Facility, we pay a monthly unused line fee which is subject to adjustment according to the average daily principal amount of unused commitment under the Credit Facility. As of December 31, 2015, our letter of credit facility.

fees were an annual rate of 1.75% of our outstanding standby letters of credit and our unused line fee rate was an annual rate of 0.25% of the maximum balance minus our utilization and letters of credit.


F- 17
Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


The credit facilityCredit Facility requires us to maintain certain levels of collateral, limits our ability to incur debt and liens, restricts us from making certain investments and paying dividends and other distributions, requires us to maintain a minimum fixed charge ratio under certain circumstances and contains other customary covenants and conditions. The credit facilityCredit Facility provides for the acceleration of principal and interest payments upon an event of default including, but not limited to, failure to pay interest or other amounts due, a change in control of us, as defined in the credit facility,Credit Facility, and our default under certain contracts, including the HPT Leases, and our business management and shared services agreement with The RMR Group LLC (formerly known as Reit Management & Research LLC,LLC), or RMR. We received a waiver, until June 30, 2014, from lenders under our credit facility of the requirement under our credit facility to furnish audited consolidated financial statements for the year ended December 31, 2013, within 90 days of the end of such year. We also received a waiver, until July 31, 2014, of the requirement under our credit facility to furnish unaudited consolidated financial statements as of and for the fiscal quarter ended March 31, 2014, within 45 days of such quarter end.

Our credit facilityCredit Facility is secured by substantially all of our cash, accounts receivable, inventory, equipment and intangible assets and theassets. The amount available to us is determined by reference to a borrowing base calculation based on eligible collateral. At December 31, 2013,2015, a total of $130,783$84,651 was available to us for loansborrowings and letters of credit under the credit facility.Credit Facility. At December 31, 2013,2015, there were no loansborrowings outstanding under the credit facilityCredit Facility but we had outstanding $44,866$34,490 of letters of credit issued under that facility, securing certain purchases,trade payables, insurance, fuel tax and other trade obligations. These letters of credit reduce the amount available for borrowing under the credit facility.

12. Senior Notes

        On January 15, 2013, we issuedCredit Facility.

Deferred Financing Costs
Deferred financing costs were $14,442 and $10,930 at par $110,000 aggregate principal amount of our 8.25% Senior Notes, or the Senior Notes, in an underwritten public offering. The Senior Notes are our senior unsecured obligations. The Senior Notes bear interest at 8.25% per annum, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, beginning on April 15, 2013. The Senior Notes mature on January 15, 2028 and no principal payments are required prior to that date. We may, at our option, at any time on or after January 15, 2016, redeem some or all of the Senior Notes by paying 100% of the principal amount of the Senior Notes to be redeemed plus accrued but unpaid interest, if any, to, but not including, the redemption date. The indenture governing our Senior Notes


Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

12. Senior Notes (Continued)

does not limit the amount of indebtedness we may incur. We may issue additional debt from time to time. The indenture also requires that we file our Exchange Act reports with the indenture trustee within a prescribed time period. We did not maintain compliance with this covenant for the year ended December 31, 2013, but the filing2015 and 2014, respectively, net of this Annual Report cures this breach. Our failure to timely file our First Quarter 10-Q, if not cured within a specified time period, could lead to an eventaccumulated amortization of default under the indenture.

        Total costs of the offering of $4,915 were capitalized as deferred financing costs, which$1,659 and $664, respectively, and are included in other noncurrent assets in our consolidated balance sheet and which are being amortized oversheets. In 2015, we capitalized $4,506 of costs related to the termissuance of our 2030 8.00% Senior Notes. In 2014, we capitalized $5,552 of the costs related to the 2029 8.00% Senior Notes as interest expense.

offering and $583 related to amending our Credit Facility and we recognized expense of $96 to write off previously capitalized fees when we amended our Credit Facility. In 2013, we capitalized $4,915 of costs related to the 2028 8.25% Senior Notes offering. We estimate thatwe will recognize future amortization of deferred financing fees of approximately $1,222 in each of the fair valueyears from 2016 through 2019, and $1,000 in 2020. We recognized interest expense from the amortization of our Senior Notes was $115,192 based ondeferred financing fees, of $995, $703 and $667 for the closing trading price (a Level 1 input) of our Senior Notes onyears ended December 31, 2013. The fair value of the Senior Notes exceeds the book value because the Senior Notes were trading at a premium to their par value.

2015, 2014 and 2013, respectively.


8.Leasing Transactions
13. Leasing Transactions

As a lessee.We have entered into lease agreements covering a majoritymany of our retail locations, our warehouse space, and various equipment and vehicles, with the most significant leases being the two we have entered withfive HPT Leases as further described below. Certain leases include renewal options, and certain leases include escalation clauses and purchase options. Future minimum lease payments required under leases that had remaining noncancelable lease terms in excess of one year, as of December 31, 2013,2015, were as follows (included herein are the full payments due under the HPT Leases including the amount attributed to the lease of those sites that are accounted for as a financing in our consolidated balance sheet as reflected in the sale-leasebacksale leaseback financing obligation):

Year ending December 31,
 Total 

2014

 $233,224 

2015

  230,581 

2016

  228,273 

2017

  226,724 

2018

  224,952 

Thereafter

  1,157,006 
    
​​​​​

Total

 $2,300,760 
    
​​​​​
​​​​​
    
 Total
2016$271,785
2017269,752
2018267,325
2019263,880
2020261,548
Thereafter2,033,340
Total$3,367,630


F- 18
Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


The expenses related to our operating leases are included in the site level operating expense; selling, general and administrative expense; and real estate rent lines of the operating expenses section


Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

13. Leasing Transactions (Continued)

of our consolidated statements of income and comprehensive income. Rent expense under our operating leases consisted of the following:

 
 Years Ended December 31, 
 
 2013 2012 2011 

Minimum rent

 $205,413 $195,964 $189,984 

Sublease rent

  8,697  8,736  8,625 

Contingent rent

  2,540  1,710  790 
        
​​​​​​​​​​​

Total rent expense

 $216,650 $206,410 $199,399 
        
​​​​​​​​​​​
​​​​​​​​​​​
        
 Year Ended December 31,
 2015 2014 2013
Minimum rent$233,211
 $212,711
 $205,413
Sublease rent8,422
 8,932
 8,697
Contingent rent (1)
(1,266) 3,671
 2,540
Total rent expense$240,367
 $225,314
 $216,650

(1)
Since 2007, we had accrued contingent rent associated with one site leased from HPT. In June 2015, we became no longer liable for this contingent rent, and the related accrual was reversed during the year ended December 31, 2015.

Pursuant to two leases with HPT, the TA Lease and the Petro Lease, which we refer to collectively as the HPT Leases, we lease 185193 properties from HPT. Our TA Lease is for 145 properties that we operate primarily under the TA brand. The TA Lease became effective on January 31, 2007. Our Petro Lease is for 40 properties that we operate under the Petro brand name. Our Petro Lease became effective on May 30, 2007. The TA Lease expires on December 31, 2022. The Petro Lease expires on June 30, 2024, and may be extended by us for up to two additional periods of 15 years each. We have the right to use the "TA", "TravelCenters of America" and other trademarks, which are owned by HPT, during the term of the TA Lease.

        The HPT Leases are "triple net" leases that require us to pay all costs incurred in the operation of the leased properties, including personnel, utilities, acquiring inventories, providing services to customers, insurance, paying real estate and personal property taxes, environmental related expenses, underground storage tank removal costs and ground lease payments at those properties at which HPT leases the property from the owner and subleases it to us. We also are required generally to indemnify HPT for certain environmental matters and for liabilities which arise during the terms of the leases from ownership or operation of the leased properties. The HPT Leases also include arbitration provisions for the resolution of certain disputes, claims and controversies. See Note 1712 for a further description of themore information about our HPT Leases and related transactions and relationships.

As a lessor.As of December 31, 2013, 2012 and 2011,2014, five six and ten, respectively, of the travel centers we leaseleased from HPT were subleased to franchisees under operating lease agreements. PriorDuring 2015, we acquired these properties from HPT and leased these travel centers directly to the HPT Transaction, our predecessor owned these sites and leased themfranchisees pursuant to these franchisees. During 2013 and 2012, we acquired the operations at one and four, respectively, of the travel centers that previously had been subleased from us to former franchisees.five separate lease agreements. See Note 12 for more information about this transaction with HPT. The current terms of the five remaining subleaselease agreements expire between June and September 2017. Four of the five subleasesleases have one remaining renewal option for an additional five year period;term; the fifth subleaselease has no further renewal option. These leases include rent escalations that are contingent on future events, namely inflation or our investing in capital improvements at these travel centers. Rent revenue from these operating leases totaled $4,869, $5,724$4,458, $4,365 and $5,152$4,869 for the years ended December 31, 2015, 2014 and 2013, 2012 and 2011, respectively.


Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

13. Leasing Transactions (Continued)

Future minimum lease payments due to us for the five subleasedleased sites under these operating leases as of December 31, 2013,2015, were as follows:

Year ending December 31,
 Total 

2014

 $4,292 

2015

  4,292 

2016

  4,292 

2017

  2,412 
    
​​​​​

Total

 $15,288 
    
​​​​​
​​​​​
    
 Total
2016$4,458
20172,499


9.Shareholders' Equity
14. Shareholders' Equity

In December 2013, and May 2011, we issued 7,475,000 and 10,000,000, respectively,7,475 common shares in a public offerings,offering, raising proceeds of approximately $65,102 and $53,135, respectively, after underwriters' discounts and commissions and other costs of the offering.

Share Award Plan.An aggregate of 6,000,0006,000 of our common shares were authorized for issuance under the terms of our Amended and Restated 2007 Equity Compensation Plan, or the Plan. We awarded a total of 619,075, 767,925671, 803 and 760,875619 common shares under the Plan during the years ended December 31, 2013, 20122015, 2014 and 2011,2013, respectively, with aggregate market values of $6,626, $3,377$6,607, $7,766 and $3,363,$6,626, respectively, based on the closing prices of our common shares on the exchange on which they were tradedNYSE on the dates of the awards. During the years ended December 31, 2013, 20122015, 2014 and 2011,2013, we recognized total share based compensation expense of $4,183, $2,470$5,507, $5,105 and $2,435,$4,183, respectively. During the years ended December 31, 2013, 20122015, 2014 and 2011,2013, the vesting date fair value of common shares that vested was $7,621, $6,233 and $6,454, $2,554 and $2,301, respectively.


F- 19
Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


The weighted average grant date fair value of common shares issued in 2015, 2014 and 2013 2012was $9.84, $9.67 and 2011 was $10.70, $4.40 and $4.42, per share, respectively. SharesCommon shares issued to directors vestvested immediately and the related compensation expense iswas recognized on the grant date. SharesCommon shares issued to others vestvested in five5 to ten10 equal annual installments beginning on the date of grant. The related compensation expense iswas determined based on the market value of our common shares on either the date of grant for employees or the vesting date for nonemployees, as appropriate, with the aggregate value of the granted common shares expensed over the related vesting period. As of December 31, 2013, 1,533,3002015, 64 common shares remained available for issuance under the Plan. As of December 31, 2013,2015, there was a total of $10,930$14,662 of share based compensation related to unvested common shares that will be expensed over a weighted average remaining service period of 5.3five years. The following table sets forth the number and weighted average grant date


Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

14. Shareholders' Equity (Continued)

fair value of unvested common shares and common shares issued under the Plan for the year ended December 31, 2013.

2015.

 
 Number
of
Shares		 Weighted Average
Grant Date
Fair Value
Per Share		 

Unvested shares balance as of December 31, 2012

  1,838,165 $4.45 

Granted during 2013

  619,075 $10.70 

Vested during 2013

  (609,640)$5.89 

Forfeited/canceled during 2013

  (5,175)$4.67 
       
​​​​​​​​

Unvested shares balance as of December 31, 2013

  1,842,425 $6.08 
       
​​​​​​​​
​​​​​​​​
       
 
Number
of Shares
 
Weighted Average
Grant Date Fair Value Per Share
Unvested shares balance as of December 31, 20141,989
 $7.34
Granted671
 9.84
Vested(723) 8.04
Forfeited/canceled(3) 9.09
Unvested shares balance as of December 31, 20151,934
 7.95

        Accumulated Other Comprehensive Income.Treasury Shares.     Accumulated other comprehensive income atCertain recipients of share awards may elect to have us withhold the number of their vesting common shares with a fair market value sufficient to fund the minimum required tax withholding obligations with respect to share awards. For the years ended December 31, 2013, 20122015 and 2011, consisted2014, we acquired through this share withholding process 197 and 90 common shares, respectively, with an aggregate value of the following:$1,842 and $928, respectively. On September 30, 2015, we retired 90 treasury shares, no par value, with a carrying value of $928 that reduced common shares. On December 14, 2015, we retired 197 treasury shares, no par value, with a carrying value of $1,842.

 
 Foreign
currency
translation
adjustment		 Equity interest in
investee's
unrealized gain
(loss) on
investments		 Accumulated
other
comprehensive
income		 

Balance at December 31, 2010

 $1,193 $— $1,193 

2011 foreign currency translation adjustment, net of tax of $(55)

  
(136
)		 
—		  
(136
)

2011 equity interest in investee's unrealized gain on investments

  —  77  77 
        
​​​​​​​​​​​

Balance at December 31, 2011

 $1,057 $77 $1,134 

2012 foreign currency translation adjustment, net of tax of $55

  
143		  
—		  
143		 

2012 equity interest in investee's unrealized gain on investments

  —  22  22 
        
​​​​​​​​​​​

Balance at December 31, 2012

 $1,200 $99 $1,299 

2013 foreign currency translation adjustment, net of tax of $(133)

  
(415
)		 
—		  
(415
)

2013 equity interest in investee's unrealized loss on investments

  —  (50) (50)
        
​​​​​​​​​​​

Balance at December 31, 2013

 $785 $49 $834 
        
​​​​​​​​​​​
​​​​​​​​​​​
        

Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

15. Income Taxes

        Our
10.Income Taxes

We had a tax provision (benefit) amountsof $16,539 and $38,023 for the years ended December 31, 2013, 20122015 and 2011, were $(26,618), $1,491,2014, respectively, and $1,379, respectively.a tax benefit of $26,618 for the year ended December 31, 2013. The amount for 2013 includesincluded a $29,853 benefit from changes in the valuation allowance that primarily resulted from the reversal of the valuation allowance we historically had maintained with respect to certainmost of our deferred tax assets. Included in tax expense for the years ended December 31, 2015, 2014 and 2013, 2012were $2,659, $1,196 and 2011, were $822, $850 and $950, respectively, for certainof state taxes on operating income that are payable without regard to our tax loss carryforwards. During 2012 and 2011, tax expense also included $641 and $429, respectively, related to a noncash deferred liability that arose from the amortization of indefinite lived intangible assets for tax purposes but not for GAAP purposes and foreign currency translation adjustments that were unavailable to offset our deferred tax assets while we maintained a valuation allowance against our net deferred tax assets. Our income tax provision differed from the amounts of provision expected to be calculated at statutory rates primarily due to the impact of the valuation allowance. The following tables present the components of our income tax provision (benefit) and the principal reasons for the difference between our income tax provision (benefit) and the income tax provision (benefit) at the U.S. Federal statutory income tax rate of 35%.

Effective Tax Rate Reconciliation
 
 Years Ended December 31, 
 
 2013 2012 2011 

Current tax provision:

          

Federal

 $1,836 $— $— 

State

  822  850  950 

Foreign

  110  —  — 
        
​​​​​​​​​​​

Total current tax provision

  2,768  850  950 

Deferred tax provision (benefit):

          

Federal

  (22,312) 587  383 

State

  (7,074) 54  46 
        
​​​​​​​​​​​

Total deferred tax provision (benefit)

  (29,386) 641  429 
        
​​​​​​​​​​​

Total tax provision (benefit)

 $(26,618)$1,491 $1,379 
        
​​​​​​​​​​​
​​​​​​​​​​​
        
 Year Ended December 31,
 2015 2014 2013
U.S. federal statutory rate applied to income before taxes35.00 % 35.00 % 35.00 %
State income taxes, net3.79 % 4.13 % 18.74 %
Nondeductible expenses0.60 % 0.49 % 17.51 %
Nondeductible executive compensation3.35 % 0.90 % 15.31 %
Benefit of tax credits(5.75)% (2.20)% (21.99)%
Taxes on foreign income at different than U.S. rate— % 0.25 % 0.38 %
Change in valuation allowance— % — % (596.38)%
Other, net(0.03)% (0.35)% (0.32)%
Total tax provision (benefit)36.96 % 38.22 % (531.75)%


F- 20
 
 Years Ended December 31, 
 
 2013 2012 2011 

U.S. federal statutory rate applied to income before taxes

 $1,752 $11,791 $8,734 

State income taxes

  938  1,817  1,544 

Nondeductible expenses

  1,643  1,564  846 

Benefit of tax credits

  (1,101) (6,010) (1,316)

Taxes on foreign income at different than U.S. rate

  19  125  (377)

Change in valuation allowance

  (29,853) (8,341) (9,381)

Other—net

  (16) 545  1,329 
        
​​​​​​​​​​​

Total tax provision (benefit)

 $(26,618)$1,491 $1,379 
        
​​​​​​​​​​​
​​​​​​​​​​​
        

Table of Contents



TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)



15.Components of the Income Taxes (Continued)Tax Provision

        In measuring

 Year Ended December 31,
 2015 2014 2013
Current tax provision: 
  
  
Federal$6,513
 $23,037
 $1,946
State2,659
 1,196
 822
Total current tax provision9,172
 24,233
 2,768
Deferred tax provision (benefit): 
  
  
Federal7,438
 10,880
 (22,312)
State(71) 2,910
 (7,074)
Total deferred tax provision (benefit)7,367
 13,790
 (29,386)
Total tax provision (benefit)$16,539
 $38,023
 $(26,618)
As of December 31, 2015, our deferredestimated net operating loss carryforwards for U.S. federal and state corporate income taxes were $39,933 and $38,174, respectively. We also had estimated tax assets,credit carryforwards to offset future federal income tax totaling $17,169. If not used, the state and federal net operating loss carryforwards will begin to expire in 2016 and 2030, respectively, and the tax credit carryforwards will begin to expire in 2019. As of December 31, 2015, we considered all available evidence, both positive and negative, to determine whether, based on the weight of that evidence,had a valuation allowance is needed for all or a portion of the deferred tax assets. Judgment is required in considering the relative impact of negative and positive evidence. The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is unnecessary. In order to assess the likelihood of realizing the benefit of these deferred tax assets, we are required to rely on our projections of future income. Because we historically did not have sufficient history of generating taxable income, prior to the fourth quarter of 2013 we did not recognize in our income tax provision the future benefit of all of our deferred tax assets. During the fourth quarter of 2013, based on our continued recent history of generating income, including for the year ended December 31, 2013, and our expectation that we will continue to generate income in future periods, we concluded that it is more likely than not that we will realize most of our deferred tax assets. Accordingly, we reversed the valuation allowance we historically had recognized with respect to our deferred tax assets, other than $957 of valuation allowance$2,380 related to certain of ourfederal and state tax credit carryforwards and deferred tax assets in certainforeign jurisdictions for which we continue to believe it is more likely than not that we will not realize those assets due to the specific circumstances in those jurisdictions.

        In 2012uncertainty of their realization.

Components of Deferred Tax Assets and 2011, we used $20,191 and $49,338, respectively, of our federal net operating loss carryforward generated in 2009 and 2010 to reduce the amount of tax that would otherwise have been payable. As of December 31, 2013, we had net operating loss and tax credit carryforwards of approximately $144,761 and $9,094, respectively, for tax purposes, which will be available to offset

Liabilities
 December 31,
 2015 2014
Noncurrent deferred tax assets: 
  
Straight line rent accrual$19,974
 $14,325
Reserves24,740
 24,228
Sale leaseback financing obligation63,111
 34,331
Asset retirement obligation3,117
 7,263
Tax credits3,627
 524
Tax loss carryforwards5,971
 5,223
Deferred tenant improvements allowance20,142
 21,063
Other1,594
 3,314
Total noncurrent deferred tax asset before valuation allowance142,276
 110,271
Valuation allowance(2,380) (955)
Total noncurrent deferred tax assets139,896
 109,316
    
Noncurrent deferred tax liabilities: 
  
Depreciable assets(142,257) (104,243)
Intangible assets(5,269) (5,047)
Other(837) (1,484)
Total noncurrent deferred tax liabilities(148,363) (110,774)
    
Net deferred tax liabilities$(8,467) $(1,458)

F- 21

Table of Contents



TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

15. Income Taxes (Continued)

future taxable income. If not used, these carryforwards will expire between 2022 and 2033. Significant components of our deferred tax assets and liabilities at December 31, 2013 and 2012, were as follows:

 
 2013 2012 

Current deferred tax assets:

       

Reserves

 $21,498 $17,881 

Deferred tenant improvements allowance

  2,614  2,633 

Straight line rent accrual

  920  681 

Tax credits

  524  — 

Tax loss carryforwards

  2,403  — 

Other

  2,796  1,558 
      
​​​​​​​​

Total current deferred tax asset before valuation allowance

  30,755  22,753 

Valuation allowance

  (39) (5,914)
      
​​​​​​​​

Total current deferred tax assets

  30,716  16,839 

Noncurrent deferred tax assets:

       

Straight line rent accrual

  21,549  22,591 

Reserves

  7,092  6,310 

Sale-leaseback financing obligation

  33,538  33,060 

Asset retirement obligation

  673  556 

Tax credits

  —  457 

Tax loss carryforwards

  5,801  7,175 

Deferred tenant improvements allowance

  20,911  23,696 

Other

  844  24 
      
​​​​​​​​

Total noncurrent deferred tax asset before valuation allowance

  90,408  93,869 

Valuation allowance

  (918) (24,921)
      
​​​​​​​​

Total noncurrent deferred tax assets

  89,490  68,948 
      
​​​​​​​​

Total deferred tax assets

  120,206  85,787 

Noncurrent deferred tax liabilities:

       

Depreciable assets

  (102,008) (83,993)

Intangible assets

  (4,730) (2,232)

Other

  (1,262) (1,090)
      
​​​​​​​​

Total

  (108,000) (87,315)
      
​​​​​​​​

Net deferred tax assets (liabilities)

 $12,206 $(1,528)
      
​​​​​​​​
​​​​​​​​
      

Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

15. Income Taxes (Continued)

The following table presents the locationclassification in our consolidated balance sheets of the deferred tax assets and liabilities presented in the table above.

 December 31,

 December 31,
2013		 December 31,
2012		  2015 2014

Deferred tax amounts are included in:

         

Other current assets

 $30,716 $16,839 
Other noncurrent assets $87
 $—

Other noncurrent liabilities

 $18,510 $18,367  (8,554) (1,458)

        Changes in, and balances of, our valuation allowance for deferred tax assets were as follows:

Uncertain Tax Positions
 
 Balance at
Beginning
of Year		 Additions/
(Reversals)
Recorded in the
Provision for
Income Taxes		 Other
Changes		 Balance at
End of Year		 

Year Ended December 31, 2013

 $30,835 $(29,853)$(25)$957 
          
​​​​​​​​​​​​​​
​​​​​​​​​​​​​​
          

Year Ended December 31, 2012

 $39,176 $(8,341)$— $30,835 
          
​​​​​​​​​​​​​​
​​​​​​​​​​​​​​
          

Year Ended December 31, 2011

 $48,557 $(9,381)$— $39,176 
          
​​​​​​​​​​​​​​
​​​​​​​​​​​​​​
          
 Year Ended December 31,
 2015 2014 2013
Balance at beginning of period$59,557
 $59,557
 $60,138
Reductions to current year tax positions—
 —
 (502)
Reductions to prior year tax positions—
 —
 (79)
Interest185
 —
 —
Balance at end of period$59,742
 $59,557
 $59,557

        Section 382 of the Code, as amended, provides an annual limitation on the utilization of net operating loss and tax credit carryforwards when a corporation has undergone an ownership change as defined by U.S. federal tax law. The annual utilization limitation is an amount equal to the value of the corporation immediately before the ownership change multiplied by the long-term tax-exempt rate as published by the Internal Revenue Service, or IRS, in the month of the ownership change. If it is determined that a company has a "net unrecognized built-in loss" at the time of the ownership change, then certain deductions claimed for the first five years after the ownership change are also subject to the annual limitation. A "net unrecognized built-in loss" is defined as the amount by which the fair market value of the assets immediately before the change in ownership is less than the aggregate adjusted tax basis of the assets at the time of such ownership change. Similar rules apply in most of the states in which we operate.

        As a result of an ownership change for federal income tax purposes that we experienced as a result of certain trading in our common shares during 2007, we have not recognized for financial reporting purposes all of our 2007 federal net operating loss carryforward of $49,230 and other tax credit carryforwards of $887 due to the application of ASC 740 to uncertain tax positions, as further described below; $11,753 is available to us for the purpose of offsetting future taxable income through 2032, subject to an annual limitation. In addition, we determined in 2013 that at the time of the ownership change in 2007 it was more likely than not that there was a net unrecognized built-in loss. As a result, an additional $117,440 of our post-2007 net operating losses have not been recognized in our consolidated financial statements due to the application of ASC 740 to uncertain tax positions.

As of December 31, 20132015, 2014 and 2012, the total federal and state income tax benefits not recognized in our deferred tax assets and liabilities in the table above as a result of the ownership change are $58,487 and $58,566, respectively.


Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

15. Income Taxes (Continued)

        At December 31, 2013, we had approximately $16,153 of net operating loss carryforwards subject to an annual limitation and will expire in future years through 2032. At December 31, 2013, we also had $524 of tax credits available to reduce future income taxes payable in jurisdictions within the United States, of which $186 have no expiration and the remainder expire through 2033.

        As of December 31, 2013, 2012 and 2011, we had unrecognized tax benefits of $59,742, $59,557 $60,138 and $57,448,$59,557, respectively. These unrecognized tax benefits relate to uncertainties concerning our value as of the date of the 2007 ownership change in 2007, whether certain capital contributions made in thethat year of the ownership change should be included in the computation of the annual net operating loss deduction limitation, and uncertainties as to the measurement of the net unrecognized built-in loss and allocation of the net unrecognized built-in loss, if any, to our various assets as of the date of the ownership change. These uncertainties impact the amount of the loss carryforwards that are subject to the annual net operating loss deduction limitation as well as the annual net operating loss deduction limitation itself.

        The following table summarizes the activity related to our unrecognized tax benefits:

 
 Years Ended December 31, 
 
 2013 2012 2011 

Balance at beginning of period

 $60,138 $57,448 $52,291 

Reductions to current year tax positions

  (502) (471) (233)

Additions (reductions) to prior year tax positions

  (79) 3,161  5,390 

Settlements

  —  —  — 

Lapse of statute of limitations

  —  —  — 
        
​​​​​​​​​​​

Balance at end of period

 $59,557 $60,138 $57,448 
        
​​​​​​​​​​​
​​​​​​​​​​​
        

The amount of the uncertain tax benefits, if settled favorably, that would have an impact on the effective tax rate is $57,413, $57,228 $57,280 and $54,119$57,228 for the years ended December 31, 2015, 2014 and 2013, 2012 and 2011, respectively. However, with respect to the years ended December 31, 2012 and 2011, the impact would have been fully offset by an increase in the valuation allowance. As of December 31, 20132015 and 2012, $57,7212014, $24,931 and $60,138,$34,675, respectively, of the uncertain tax benefits were classified as a reduction to our noncurrent deferred tax assets and $1,836$34,811 and $0$24,882, respectively, were classified as a noncurrent liability at December 31, 2013 and 2012, respectively.liability. We havedid not accruedaccrue interest or penalties for the years ended December 31, 2014 and 2013, due to the existence of net operating loss and credit carryforwards to offset any additional income tax liability. We do not anticipate the amount of the existing unrecognized tax benefits will significantly change in the next twelve months.

        We file income tax returns in the United States, various states, and Canada.

Our U.S. federal income tax returns are subject to tax examinations for the tax years ended December 31, 20102012 through December 31, 2013.2015. Our state and Canadian income tax returns are generally subject to examination for the tax years ended December 31, 20092011 through December 31, 2013.2015. To the extent we have tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted by the taxing authorities to the extent the carryforwards are claimed in a future year by the IRS and state tax authorities. We have been notified by the IRS that it will examine the Company's federal income tax return for the year ended December, 31, 2012, including the net operating loss carryforwards. We believe we have made adequate provision for income taxes and interest and penalties on unpaid income taxes that may become payable.

year.


F- 22
Table of Contents



TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

16. Equity Investments



11.Equity Investments
Affiliates Insurance Company

At December 31, 2013,2015, we owned 12.5%approximately 14.3% of Affiliates Insurance Company, or AIC. Although we own less than 20% of AIC, we use the equity method to account for this investment because we believe that we have significant influence over AIC because a majorityall of our Directors are also directors of AIC. This investment had a carrying value of $5,913 and $5,629$6,828 as of December 31, 20132015 and 2012, respectively,2014 and is presented in our consolidated balance sheets in other noncurrent assets. During 2013, 20122015, 2014 and 2011,2013, we recognized income of $334, $316$20, $89 and $140,$334, respectively, related to this investment. In May 2014, we acquired additionalpurchased 3 AIC shares of AIC from a former shareholder of AIC, such that our ownership percentage increased to approximately 14.3%.for $825. See Note 1712 for a further description ofmore information about our transactions with AIC and our purchase of additional shares of AIC.

Petro Travel Plaza Holdings LLC

We own a 40% interest in Petro Travel Plaza Holdings LLC, or PTP, and operate two travel centers and two convenience stores that PTP owns for which we receive management and accounting fees. This investment is accounted for under the equity method. The carrying value of this investment as of December 31, 20132015 and 2012,2014, was $17,672$20,042 and $15,332,$20,807, respectively, and was included in other noncurrent assets in our consolidated balance sheets. The carrying value of our investment in PTP exceeded the amount of underlying equity in net assets of PTP by $3,246 as of the date we acquired Petro. This difference arose through the valuation process that was applied to the assets acquired in the Petro Acquisition and is being amortized over a period of 15 years, the estimated useful life of the assets whose values resulted in this difference. The equity income recorded from this investment for the years ended December 31, 2015, 2014 and 2013, 2012was $4,036, $3,135 and 2011, was $2,340, $1,561 and $1,029, respectively. See Note 1712 for a further description ofmore information about our transactions with PTP.

        The following tables set forth summarized financial information of PTP and do not represent the amounts we have included in our consolidated financial statements in connection with our investment in PTP.

 
 December 31, 
 
 2013 2012 

Total current assets

 $14,832 $9,578 

Total noncurrent assets

 $44,158 $44,442 

Total current liabilities

 $2,383 $2,823 

Total noncurrent liabilities

 $16,755 $17,499 


 
 Years Ended December 31, 
 
 2013 2012 2011 

Total revenues

 $125,804 $133,962 $128,344 

Total cost of sales (excluding depreciation)

 $102,766 $111,894 $108,278 

Operating income

 $6,707 $6,047 $3,908 

Interest expense, net

 $(553)$(803)$(1,219)

Net income

 $6,154 $5,244 $2,689 

Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

16. Equity Investments (Continued)

The locations owned by PTP are encumbered by debt with aan outstanding balance due of approximately $17,358$15,808 and $16,602 as of December 31, 2013.2015 and 2014, respectively. Since we account for our investment in PTP under the equity method of accounting, we have not recorded a liability for this debt. We are not directly liable for this loan, but the carrying value of our investment in this joint venture could be adversely affected if the joint venture defaulted on this debt and the joint venture's property, which is collateral for this loan, was sold. In connection with the loan agreement entered by PTP, in 2009, we and our joint venture partner each agreed to indemnify the lender against liability from environmental matters related to PTP's sites.

Fair Value

It is not practicable to estimate the fair value of TA'sour investment in the equity of AIC or PTP because of the lack of quoted market prices and the inability to estimate current fair value without incurring excessive costs. However, management believes that the carrying amounts of AIC and PTP at December 31, 2013,2015, were not impaired given these companies' overall financial conditions and earnings trends.

17. Related Party Transactions


12.Related Party Transactions
Governance Guidelines

We have adopted written Governance Guidelines that describe the consideration and approval of anya related person transactions.transaction. Under these Governance Guidelines, we may not enter into anya transaction in which any Director or executive officer, any member of the immediate family of any Director or executive officer or any other related person, has or will have a direct or indirect material interest unless that transaction has been disclosed or made known to our Board of Directors and our Board of Directors reviews and approves or ratifies the transaction by the affirmative vote of a majority of the disinterested Directors, even if the disinterested Directors constitute less than a quorum. If there are no disinterested Directors, the transaction must be reviewed, authorized and approved or ratified by both (1)(i) the affirmative vote of a majority of our Board of Directors and (2)(ii) the affirmative vote of a majority of our Independent Directors. In determining whether to approve or ratify a transaction, our Board of Directors, or disinterested Directors or Independent Directors, as the case may be, shall act in accordance with any applicable provisions of our limited liability company agreement and bylaws, consider all of the relevant facts and circumstances and approve only those transactions that they determine are fair and reasonable to us and our shareholders.us. All related person transactions described below were reviewed and approved or ratified by a majority of the disinterested Directors or otherwise in accordance with our policies, and limited liability company agreement and bylaws, each as described above. In the case of any transaction with us in which any other employee of ours who is subject to our Code of Business Conduct and Ethics and who has a direct or indirect material interest in the transaction, the employee must seek approval from an executive officer who has no interest in the matter for which approval is being requested. Copies

F- 23
Table of our Governance Guidelines and CodeContents


TravelCenters of Business Conduct and Ethics are available on our website, www.tatravelcenters.com.

America LLC

Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


Relationship with HPT

HPT was our parent company until 2007 and is our principal landlord and our largest shareholder. We were createdshareholder and as a separate public company in 2007 as a result of a spin off from HPT. As of


Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

17. Related Party Transactions (Continued)

December 31, 2013, HPT2015 owned 3,420,0003,420 of our common shares, (which included the 880,000 shares of our common shares that HPT purchased from the underwriters in our public offering that we completed in December 2013), representingor approximately 9.1%8.8% of our outstanding common shares. One of our Managing Directors, Mr. Barry Portnoy, is a managing trustee of HPT. Mr. Barry Portnoy's son, Mr. Adam Portnoy, is also a managing trustee of HPT, and Mr. Barry Portnoy's son-in-law, Mr. Ethan Bornstein, is an executive officer of HPT. Our other Managing Director, Mr. Thomas O'Brien, who is also our President and Chief Executive Officer, was a former executive officer of HPT. One of our Independent Directors, Mr. Arthur Koumantzelis, was an independent trustee of HPT prior to our spin-off from HPT.

        We have

Until June 2015, we had two leases with HPT, the Prior TA Lease and the Petro Lease, pursuant to which we lease 185then leased 184 properties from HPT. OurThe Prior TA Lease iswas for 145144 properties that we operate primarily underand the TA brand. Our Petro Lease iswas for 40 properties thatproperties. As disclosed below, in June 2015, the Prior TA Lease was expanded and subdivided into four amended and restated leases, which we operate underrefer to as the New TA Leases, and the Petro brand. TheLease was amended. We refer to the New TA Leases and the Petro Lease (or, with respect to periods prior to June 2015, the Prior TA Lease expires on December 31, 2022. Theand the Petro Lease expires on June 30, 2024, and may be extended by us for up to two additional periods of 15 years each. We haveLease) collectively as the right to use the "TA", "TravelCenters of America" and other trademarks, which are owned by HPT during the term of the TA Lease.

Leases.

The HPT Leases are "triple net" leases that require us to pay all costs incurred in the operation of the leased properties, including costs related to personnel, utilities, acquiring inventories, providinginventory acquisition and provision of services to customers, insurance, paying real estate and personal property taxes, environmental related expenses, underground storage tank removal costs, and, ground lease payments at those properties at which HPT leases the property from the owner and subleases it to us.us, ground lease payments. We also are required generally to indemnify HPT for certain environmental matters and for liabilities whichthat arise during the terms of the leases from ownership or operation of the leased properties. In addition,properties and, at lease expiration, we are obligatedrequired to pay HPT at lease expiration an amount equal to an estimate of the cost of removing underground storage tanks on the leased properties.

        As amended by the Amendment Agreement that we entered into with The HPT in January 2011, or the Amendment Agreement, which is further described below, the TA Lease required us to pay minimum rent to HPT of $135,139 per yearLeases also include arbitration provisions for the period from January 1, 2011 through January 31, 2012, and $140,139 per year for the period from February 1, 2012 through December 31, 2022. These amounts are exclusiveresolution of any increase in minimum rent as a result of subsequent amendments and, as described below, as a result of HPT's purchasing improvements to the leased TA properties. During 2013, 2012 and 2011 our minimum annual rent under the TA Lease increased by $4,730, $4,656 and $4,184, respectively, due to such purchases. As amended by the Amendment Agreement, the Petro Lease required us to pay minimum rent to HPT of $54,160 per year through June 30, 2024. This amount is exclusive of any increase in minimum rent to HPT as a result of subsequent amendments and, as described below, as a result of HPT's purchasing improvements to the leased Petro properties. During 2013, 2012 and 2011 our minimum annual rent under the Petro Lease increased by $2,403, $1,868 and $1,691, respectively, due to such purchases. Taking into account the increases in minimum rents due to both HPT's purchasing improvements at the leased properties and the lease amendments during 2013 described below, as of December 31, 2013, our annual minimum lease payments due to HPT under the TA Lease and the Petro Lease were $159,333 and $60,227, respectively.

        Effective January 2012 and 2013, we began to incur percentage rent payable to HPT under the TA Lease and the Petro Lease, respectively. In each case, the percentage rent equals 3% of increases in

disputes.

Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

17. Related Party Transactions (Continued)

nonfuel gross revenues and 0.3% of increases in gross fuel revenues at the leased properties over base amounts. The increases in percentage rents attributable to fuel revenues are subject to a maximum each year calculated by reference to changes in the consumer price index. Also, as discussed below, HPT has agreed to waive payment of the first $2,500 of percentage rent that may become due under our Petro Lease; HPT waived $366 of percentage rent under our Petro Lease for the year ended December 31, 2013, pursuant to that waiver. The total amount of percentage rent (which is net of the waived amount) that we incurred during the years ended December 31, 2013 and 2012, was $2,050 and $1,465, respectively.

Under the HPT Leases, we may request that HPT purchase approved amounts for renovations, improvements and equipment at the leased properties in return for increases in our minimum annual rent according to the following formula: the minimum rent per year will be increased by an amount equal to the amount paid by HPT multiplied by the greater of (i) 8.5% or (ii) a benchmark U.S. Treasury interest rate plus 3.5%. During 2013, 20122015, 2014 and 2011,2013, pursuant to the terms of the HPT Leases, we sold to HPT $99,896, $66,133 and $83,912, $76,754 and $69,122respectively, of improvements we previously made to properties leased from HPT, and, as a result, our minimum annual rent payable to HPT increased by approximately$8,491, $5,621 and $7,133, $6,524 and $5,875, respectively. At December 31, 2013,2015, our property and equipment balance included $28,732$43,986 of improvements of the type that we expect totypically request that HPT purchase for an increase in rent in the future;rent; however, HPT is not obligated to purchase these improvements. In March 2014,

On June 1, 2015, we entered a transaction agreement, or the Transaction Agreement, with HPT, pursuant to which, among other things (i) we and HPT agreed to expand and subdivide the Prior TA Lease into the four New TA Leases, (ii) we sold to HPT, $6,063 of improvements for an increaseaggregate of $279,383, 14 travel centers and certain assets we owned at 11 properties we lease from HPT and we leased back these properties and assets from HPT under the New TA Leases, (iii) we purchased from HPT, for an aggregate of $45,042, five travel centers that we then leased from HPT under the Prior TA Lease and (iv) we agreed to sell to HPT five travel centers upon the completion of their development at a purchase price equal to their development costs, including the cost of the land, which costs are estimated to be not more than $118,000 in the aggregate, and we agreed to lease back these development properties from HPT under the New TA Leases. The terms of the Transaction Agreement were approved by special committees of our Independent Directors and HPT’s independent trustees, none of whom are directors or trustees of the other company. Each special committee was represented by separate counsel.
As of December 31, 2015, we have completed the following transactions pursuant to the Transaction Agreement:
We entered into four new TA Leases with HPT, or New TA Lease 1, New TA Lease 2, New TA Lease 3 and New TA Lease 4 which expire in 2029, 2028, 2026 and 2030, respectively. Percentage rent for 2014 under the Prior TA Lease, which totaled $2,902, was incorporated into the minimum annual rent under the New TA Leases, and 2015 became the percentage rent base year for the New TA Leases. Beginning in 2016, percentage rent will be 3% of the excess of gross nonfuel revenues for any particular year over the percentage rent base year amount. Our deferred rent obligation of $107,085, which was due December 31, 2022, was allocated among the New TA Leases and the due dates were extended to the end of the initial term of each respective New TA Lease.

F- 24
Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


We sold to HPT, for $279,383, 14 travel centers we owned and certain assets we owned at 11 properties we lease from HPT. We leased back these properties and assets from HPT under the New TA Leases. Our minimum annual rent increased by $24,027 as a result of the completion of our sale and lease back of these properties and assets. These sales generated an aggregate gain of $133,668, which was deferred and will be amortized as a reduction of our rent expense over the terms of the New TA Leases.
We purchased from HPT, for $45,042, five travel centers that we previously leased from HPT and subleased to franchisees. The lease of these properties had been accounted for as a financing, with the related assets recognized in our consolidated balance sheets. The purchase prices paid for the properties exceeded the unamortized balance of the sale leaseback financing obligation, resulting in our recognition of a loss on extinguishment of debt of $10,502. Our minimum annual rent payment decreased by $3,874 as a result of the completion of our purchase of these properties.
We and HPT entered into an amendment to our Petro Lease, pursuant to which we lease 40 Petro travel centers from HPT. Among other things, this amendment eliminated percentage rent payable on fuel revenues, which in 2014 was nominal, and was not paid to HPT because HPT previously had waived payment of the first $2,500 of percentage rent due under the Petro Lease.
As of December 31, 2015, we leased from HPT a total of 153 properties under the New TA Leases and 40 properties under the Petro Lease. As of December 31, 2015, the number of properties leased, the term, the minimum annual rent and deferred rent balances under our HPT Leases were as follows:
 
Number
of Sites
 
Initial Term
End Date(1)
 
Minimum Annual
Rent as of
December 31, 2015(2)
 
Deferred Rent(3)
New TA Lease 139 December 31, 2029 $48,862
 $27,421
New TA Lease 238 December 31, 2028 47,229
 29,107
New TA Lease 338 December 31, 2026 50,077
 29,324
New TA Lease 438 December 31, 2030 44,577
 21,233
Petro Lease40 June 30, 2024 64,875
 42,915
Total193   $255,620
 $150,000
(1)
We have two renewal options of 15 years each under each of the leases.
(2)
These minimum rents are exclusive of any increase in minimum rent as a result of our selling or being reimbursed costs of improvements to leased properties or purchase/lease back of additional properties occurring after December 31, 2015.
(3)
The deferred rent obligation is subject to acceleration at HPT's option upon an uncured default under our HPT agreements or a change in control of us, each as provided under the leases.
Prior to the Transaction Agreement, we incurred percentage rent payable to HPT of $515.

        The following table sets forth the amounts of minimum lease payments required under the HPT Leases asPrior TA Lease and the Petro Lease, respectively. In each case, the percentage rent equaled 3% of December 31, 2013,increases in eachnonfuel gross revenues and 0.3% of the years shown.

Year ending December 31,
 Minimum
Rent(1)		 Rent for Ground
Leases Acquired
by HPT(1)		 Total Minimum
Lease Payments
Due to HPT(1)		 Rent for Ground
Leases Subleased
from HPT(1)		 

2014

 $214,473 $5,087 $219,560 $8,770 

2015

  214,473  4,932  219,405  8,257 

2016

  214,473  4,983  219,456  6,375 

2017

  214,473  5,047  219,520  5,528 

2018

  214,473  4,915  219,388  4,899 

2019

  214,473  4,508  218,981  3,087 

2020

  214,473  2,518  216,991  2,435 

2021

  214,473  1,563  216,036  2,197 

2022(2)

  346,079  —  346,079  1,483 

2023

  60,227  —  60,227  846 

2024(3)

  82,424  —  82,424  618 
(1)
The timing of minimum rent payments does not match the recognition of expense under GAAP, which requires that the minimum rent payments are recognizedincreases in expense evenly over the term of the lease regardless of the payment schedule.

(2)
Includes previously deferred rent payments of $107,085 and estimated cost of removing underground storage tanks ongross fuel revenues at the leased properties over base amounts. HPT previously had agreed to waive payment of $24,520the first $2,500 of percentage rent that may become due onunder the Petro Lease. HPT waived $1,121 of percentage rent under our Petro Lease for the year ended December 31, 2022.
2015, pursuant to that waiver; and through December 31, 2015, HPT has cumulatively waived $2,128 of the $2,500 of percentage rent to be waived. The total amount of percentage rent (which is net of the waived amount) that we incurred during the years ended December 31, 2015, 2014 and 2013, was $1,999, $2,984 and $2,050, respectively.


F- 25

Table of Contents



TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

17. Related Party Transactions (Continued)

(3)
Includes previously deferred rent payments of $42,915 and estimated cost of removing underground storage tanks on the leased properties of $9,395 due on June 30, 2024.

        In 2008, we entered into


Pursuant to a rent deferral agreement with HPT, pursuant to whichfrom July 2008 through December 31, 2010, we were permitted to defer up todeferred a total of $150,000 of rent payable to HPT. We were not permitted to defer any additional amounts of rent after December 31, 2010. As of December 31, 2010, we had deferred $150,000 of rent,HPT, which remained outstanding as of December 31, 2013. The deferral agreement also included a prohibition2015. This deferred rent obligation was allocated among the HPT Leases and is due at the end of the initial terms of the respective HPT Leases as noted above. Interest ceased to accrue on share repurchases and dividendsdeferred rent owed to HPT by us while anybeginning on January 1, 2011; however, the deferred rent remains unpaidamounts shall be accelerated and provided that allinterest shall begin to accrue on the deferred rent and interest thereon, at 1% per month, would become immediately due and payable by us to HPTamounts if certain events describedprovided in thatthe deferral agreement occurred,occur, including a change of control of us, (asas defined in the agreement) while any deferred rent remains unpaid. Also, inthat agreement. In connection with the deferral agreement, we entered into a registration rights agreement with HPT, which provides HPT with certain rights to require us to conduct a registered public offering with respect to our common shares issued to HPT pursuant to the deferral agreement, which rights continue through the date that is twelve months following the latest of the expiration of the terms of the New TA LeaseLeases and the Petro Lease.

        In January 2011, we and HPT entered

The following table sets forth the Amendment Agreement that amended the TA Lease, the Petro Lease and our 2008 rent deferral agreement with HPT. This Amendment Agreement provided for the following:

        RMR provides management services to both us and HPT and, as noted above, there are other current and historical relationships between us and HPT. Accordingly, the terms of the Amendment Agreement were negotiated and approved by special committees of our Independent Directors and HPT's independent trustees, none of whom are directors or trustees of the other company, and each special committee was represented by separate counsel.


Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

17. Related Party Transactions (Continued)

        The following table summarizes the various amounts related to the HPT Leases and other lessors that are reflected in real estate rent expense in our consolidated statements of income and comprehensive income.

 
 Years Ended December 31, 
 
 2013 2012 2011 

Cash payments for rent under the HPT Leases and interest on the deferred rent obligation

 $216,659 $207,653 $196,364 

Change in accrued estimated percentage rent

  327  (11) — 

Adjustments to recognize expense on a straight line basis

  (1,734) (2,664) 3,021 

Less sale-leaseback financing obligation amortization

  (1,644) (2,089) (2,046)

Less portion of rent payments recognized as interest expense

  (7,400) (7,330) (7,390)

Less interest paid on deferred rent

  —  —  (1,450)

Less deferred tenant improvements allowance amortization

  (6,769) (6,769) (6,769)

Amortization of deferred gain on sale-leaseback transactions

  (354) (103) — 
        
​​​​​​​​​​​

Rent expense related to HPT Leases

  199,085  188,687  181,730 

Rent paid to others(1)

  10,206  9,915  9,764 

Adjustments to recognize expense on a straight line basis for other leases

  29  325  304 
        
​​​​​​​​​​​

Total real estate rent expense

 $209,320 $198,927 $191,798 
        
​​​​​​​​​​​
​​​​​​​​​​​
        
years shown.
(1)
Includes rent paid directly to HPT's landlords under leases for properties we sublease from HPT as well as rent related to properties we lease from landlords other than HPT.

  
Minimum
Rent
 
Rent for Ground
Leases Subleased
from HPT
2016 $255,620
 $8,849
2017 255,620
 7,921
2018 255,620
 7,354
2019 255,620
 5,526
2020 255,620
 4,132
2021 255,620
 2,285
2022 255,620
 1,571
2023 255,620
 934
2024(1)
 307,133
 700
2025 190,744
 228
2026(2)
 227,982
 2
2027 140,667
 —
2028(3)
 178,937
 —
2029(4)
 129,827
 —
2030(5)
 76,037
 —

Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

17. Related Party Transactions (Continued)

        The following table summarizes the various amounts related to the HPT Leases that are included in our consolidated balance sheets.

(1)
Includes previously deferred rent payments of $42,915 and estimated cost of removing underground storage tanks on the leased properties of $8,598 due on June 30, 2024.
(2)
Includes previously deferred rent payments of $29,324 and estimated cost of removing underground storage tanks on the leased properties of $7,913 due on December 31, 2026.
(3)
Includes previously deferred rent payments of $29,107 and estimated cost of removing underground storage tanks on the leased properties of $9,163 due on December 31, 2028.
(4)
Includes previously deferred rent payments of $27,421 and estimated cost of removing underground storage tanks on the leased properties of $8,967 due on December 31, 2029.
(5)
Includes previously deferred rent payments of $21,233 and estimated cost of removing underground storage tanks on the leased properties of $10,228 due on December 31, 2030.

 
 December 31,
2013		 December 31,
2012		 

Current HPT Leases liabilities:

       

Accrued rent

 $18,041 $17,092 

Current portion of sale-leaseback financing obligation(1)

  2,358  2,038 

Current portion of straight line rent accrual(2)

  2,382  2,149 

Current portion of deferred gain on sale-leaseback transactions(3)

  385  306 

Current portion of deferred tenant improvements allowance(4)

  6,769  6,769 
      
​​​​​​​​

Total Current HPT Leases liabilities

 $29,935 $28,354 
      
​​​​​​​​
​​​​​​​​
      

Noncurrent HPT Leases liabilities:

       

Deferred rent obligation(5)

 $150,000 $150,000 

Sale-leaseback financing obligation(1)

  83,762  82,195 

Straight line rent accrual(2)

  52,901  55,233 

Deferred gain on sale-leaseback transactions(3)

  3,117  2,792 

Deferred tenant improvements allowance(4)

  54,146  60,915 
      
​​​​​​​​

Total Noncurrent HPT Leases liabilities

 $343,926 $351,135 
      
​​​​​​​​
​​​​​​​​
      
(1)
Sale-leaseback Financing Obligation. GAAP governing the transactions related to our entering the TA Lease required us to recognize in our consolidated balance sheets the leased assets at thirteen of the properties previously owned by our predecessor that we now lease from HPT because we subleased more than a minor portion of those properties to third parties, and one property that did not qualify for operating lease treatment for other reasons. Accordingly, we recorded the leased assets at these properties at an amount equal to HPT's recorded initial carrying amounts, which were equal to their fair values, and recognized an equal amount of liability that is presented as sale-leaseback financing obligation in our consolidated balance sheets. In addition, sales to HPT of improvements at these properties are accounted for as sale-leaseback financing transactions and these liabilities are increased by the amount of proceeds we receive from HPT. We recognize a portion of the total rent payments to HPT related to these assets as a reduction of the sale-leaseback financing obligation and a portion as interest expense in our consolidated statements of income and comprehensive income. We determined the allocation of these rent payments to the liability and to interest expense using the effective interest method. The amounts allocated to interest expense during the years ended December 31, 2013, 2012 and 2011, were $7,400, $7,330 and $7,390, respectively.

During 2012, the subleases at four of these properties were terminated and we began operating these properties, qualifying the related properties for sale-leaseback accounting. Accordingly, we reduced our property and equipment balance by $22,229 and our sale-leaseback financing obligation balance by $24,646, resulting in a deferred gain of $2,417. In October 2013, the sublease at another one of these properties was terminated and we began to operate that property, qualifying it for sale-leaseback accounting. Accordingly, we reduced our property and equipment


Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

17. Related Party Transactions (Continued)

    balance by $2,030 and our sale-leaseback financing obligation balance by $2,463, resulting in a deferred gain of $433. See footnote (3) below for further discussion regarding the deferred gains.

(2)
Straight Line Rent Accrual. The TA Lease included scheduled rent increases over the first six years of the lease term, as do certain of the leases for properties we sublease from HPT, the rent for which we pay directly to HPT's landlords. Also, under our leases with HPT, we are obligated to pay to HPT at lease expiration an amount equal to an estimate of the cost of removing underground storage tanks we would have if we owned the underlying assets. We recognize the effects of scheduled rent increases and the future payment to HPT for the estimated cost of removing underground storage tanks in real estate rent expense over the lease terms on a straight line basis, with offsetting entries to this accrual balance.

(3)
Deferred Gain on Sale-Leaseback Transactions. This gain arose from the terminations during 2012 and 2013 of subleases for five properties we lease from HPT, as further described in note (1) above, and from the sales of certain assets to HPT. Under GAAP, the gain or loss from the sale portion of a sale-leaseback transaction is deferred and amortized into our real estate rent expense on a straight line basis over the then remaining term of the lease.

(4)
Deferred Tenant Improvements Allowance. HPT committed to fund up to $125,000 of capital projects at the properties we lease under the TA Lease without an increase in rent payable by us, which amount HPT had fully funded by September 30, 2010, net of discounting to reflect our accelerated receipt of those funds. In connection with this commitment, we recognized a liability for the rent deemed to be related to this tenant improvements allowance. This deferred tenant improvements allowance was initially recorded at an amount equal to the leasehold improvements receivable we recognized for the discounted value of the then expected future amounts to be received from HPT, based upon our then expected timing of receipt of those payments. We amortize the deferred tenant improvements allowance on a straight line basis over the term of the TA Lease as a reduction of real estate rent expense.

(5)
Deferred Rent Obligation. Pursuant to a rent deferral agreement with HPT, through December 31, 2010, we deferred a total of $150,000 of rent payable to HPT. The deferred rent obligation is payable in two installments, $107,085 in December 2022 and $42,915 in June 2024. This obligation does not bear interest, unless certain events of default or other events occur, including a change of control of us.

On April 15, 2013, we entered an agreement with Equilon Enterprises LLC doing business as Shell Oil Products US, or Shell, pursuant to which Shell has agreed to construct a network of natural gas fueling lanes at up to 100 of our travel centers located along the U.S. interstate highway system, including travel centers we lease from HPT. In connection with that agreement, on April 15, 2013, we and HPT amended theour leases with HPT Leases to revise the calculation of percentage rent payable by us under the HPT Leases,our leases with the intended effect that the amount of percentage rent would be unaffected by the type of fuel sold, whether diesel fuel or natural gas.HPT. That amendment also made certain administrative changes to the terms of the HPT Leases.our leases with HPT. Also on that date, in order to facilitate our agreement with Shell, HPT entered into a subordination, non-disturbance and attornment agreement with Shell, whereby HPT agreed to recognize Shell's license and other rights with respect to the natural gas fueling lanes at our HPT leased travel centers on certain conditions and in certain circumstances.



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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

17. Related Party Transactions (Continued)



On July 1, 2013, HPT purchased land that was previously leased by HPT from a third party and subleased to us under the Prior TA Lease. Effective as of that date, rents due to that third party and our paying of those rents of approximately $545 annually on behalf of HPT under the terms of the Prior TA Lease ceased. Also on that date, we and HPT amended the Prior TA Lease to reflect our direct lease from HPT of that land and certain minor properties adjacent to other existing properties included in the Prior TA Lease that also had been purchased by HPT and to increase the annual rent due under the Prior TA Lease by $537, which was 8.5% of HPT's investment.

On August 13, 2013, the travel center located in Roanoke, VA that we leased from HPT under the Prior TA Lease was taken by eminent domain proceedings brought by the Virginia Department of Transportation, or VDOT, in connection with planned highway construction. The Prior TA Lease provided that the annual rent payable by us be reduced by 8.5% of the amount of the proceeds HPT receives from the taking or, at HPT's option, the fair market value rent of the property on the commencement date of the Prior TA Lease. In January 2014, HPT received proceeds from VDOT of $6,178, which is a substantial portion of VDOT's estimate of the value of the property, and as a result our annual rent under the Prior TA Lease was reduced by $525 effective January 6, 2014. We and HPT are challenging VDOT's estimate of this property's value and we expect that the final resolution of this matter will take considerable time.
On December 23, 2013, HPT purchased property adjacent to a property we lease from HPT under the Petro Lease. Effective as of that date, we and HPT amended the Petro Lease to add that property to that lease and to increase annual rent due under the Petro Lease by $105, which was 8.5% of HPT's investment.

On August 13, 2013,October 30, 2015, HPT completed the travel center located in Roanoke, VA that we leased from HPT under the TA Lease was taken by eminent domain proceedings brought by the Virginia Department of Transportation, or VDOT, in connection with planned highway construction. The TA Lease provides that the annual rent payable by us is reduced by 8.5%purchase of the amount of the proceeds HPT receives from the taking or,land and improvements at HPT's option, the fair market value rent of the property on the commencement date of the TA Lease. In January 2014, HPT received proceeds from VDOT of $6,178, which is a portion of VDOT's estimate of the value of the property, and as a result our annual rent under the TA Lease was reduced by $525 effective January 6, 2014. We and HPT intend to challenge VDOT's estimate of the property's value. HPT has entered a lease agreement with VDOT to lease this property through August 2014 for $40 per month. We entered into a sublease for this property with HPT and we plan to continue operating it as a travel center through August 2014,it then leased from a third party and subleased to us located in Waterloo, NY. Upon HPT's acquisition, the land and improvements were directly leased to us under the terms of the TAPetro Lease. The Petro Lease we will be responsiblewas amended and minimum annual rent increased by $1,275, but our obligation to pay thisthe ground rent of $1,260 annually was terminated.
The following table summarizes the various amounts related to the HPT Leases and other lessors that are reflected in real estate rent expense in our consolidated statements of income and comprehensive income.
 Year Ended December 31,
 2015 2014 2013
Cash payments for rent under the HPT Leases$241,962
 $222,722
 $216,659
Change in accrued estimated percentage rent(1,275) 959
 327
Adjustments to recognize expense on a straight line basis(4,910) (1,621) (1,734)
Less: sale leaseback financing obligation amortization(974) (2,380) (1,644)
Less: portion of rent payments recognized as interest expense(3,445) (5,887) (7,400)
Less: deferred tenant improvements allowance amortization(5,019) (6,769) (6,769)
Amortization of deferred gain on sale leaseback transactions(5,180) (385) (354)
Rent expense related to HPT Leases221,159
 206,639
 199,085
Rent paid to others(1)
10,583
 10,786
 10,206
Adjustments to recognize expense on a straight line basis for
   other leases
(151) (270) 29
Total real estate rent expense$231,591
 $217,155
 $209,320
(1)
Includes rent paid directly to HPT's landlords under leases for properties we sublease from HPT as well as rent related to properties we lease from landlords other than HPT.

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TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


The following table summarizes the various amounts related to the HPT Leases that are included in our consolidated balance sheets.
 December 31,
2015		 December 31,
2014
Current HPT Leases liabilities: 
  
Accrued rent$21,098
 $19,407
Sale leaseback financing obligation(1)
469
 2,547
Straight line rent accrual(2)
2,458
 2,529
Deferred gain(3)
9,235
 385
Deferred tenant improvements allowance(4)
3,770
 6,769
Total Current HPT Leases liabilities$37,030
 $31,637
    
Noncurrent HPT Leases liabilities: 
  
Deferred rent obligation(5)
$150,000
 $150,000
Sale leaseback financing obligation(1)
20,719
 82,591
Straight line rent accrual(2)
48,373
 50,234
Deferred gain(3)
121,049
 2,732
Deferred tenant improvements allowance(4)
45,357
 47,377
Total Noncurrent HPT Leases liabilities$385,498
 $332,934
(1)
Sale leaseback Financing Obligation. Prior to the New TA Leases, the assets related to nine travel centers leased from HPT were reflected in our consolidated balance sheets, as was the related financing obligation. This accounting was required primarily because, at the time of the inception of the Prior TA Lease, more than a minor portion of these nine travel centers was subleased to third parties. As part of the June 2015 transactions with HPT, we purchased five of the nine travel centers. That purchase was accounted for under GAAP as an extinguishment of the related financing obligation and resulted in a loss on extinguishment of debt of $10,502 because the price we paid to HPT to purchase the five properties was $10,502 in excess of the then remaining related financing obligation. Also, because the New TA Leases were accounted for under GAAP as new leases and two of the remaining four properties that had been reflected as financings under the Prior TA Lease qualified for operating lease treatment under the New TA Leases, the remaining net assets and financing obligation related to these two properties was eliminated, resulting in a gain of $1,033, which was deferred and will be recognized over the terms of the New TA Leases as a reduction of rent expense.
(2)
Straight Line Rent Accrual. The Prior TA Lease began in 2007 and included increasing rent payments through 2012. Since rent expense was recognized evenly over those years we recognized this accrual. While the New TA Leases contain no stated rent payments increases, this accrual continues to be amortized on a straight line basis over the terms of the New TA Leases as a reduction to real estate rent expense. The straight line rent accrual also includes our obligation for the estimated cost of removal of underground storage tanks at properties leased from HPT at the end of the related lease; we recognize these obligations on a straight line basis over the term of the related leases as additional rent expense.
(3)
Deferred Gain. The deferred gain primarily includes $133,668 of gains from the sale of assets to HPT that we leased back from HPT under the New TA Leases during 2015. We amortize the deferred gains on a straight line basis over the terms of the related leases as a reduction of rent expense.
(4)
Deferred Tenant Improvements Allowance. HPT funded certain capital projects at the properties we lease under the HPT Leases without an increase in rent payable by us. In connection with HPT's initial commitment, we recognized a liability for the rent deemed to be related to this deferred tenant improvements allowance. We amortize the deferred tenant improvements allowance on a straight line basis over the terms of the HPT Leases as a reduction of real estate rent expense.

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TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


(5)
Deferred Rent Obligation. Pursuant to a rent deferral agreement with HPT, from July 2008 through December 31, 2010, we deferred a total of $150,000 of rent payable to HPT. This deferred rent obligation was allocated among the HPT Leases and is due at the end of the initial terms of the respective HPT Leases as noted above.
Pro Forma Impact
The following unaudited pro forma information includes adjustments related to the amendment to our leases with HPT, the purchase of assets and our sale and lease rent.

back of assets completed through December 31, 2015, pursuant to our Transaction Agreement with HPT. The pro forma adjustments assume that these transactions occurred on January 1, 2015.

 
Year Ended
December 31, 2015
Net Income$32,167
Basic and diluted earnings per share$0.85
The historical consolidated financial information has been adjusted in the pro forma information to give effect to pro forma events that are: (i) directly attributable to the transactions with HPT; (ii) factually supportable; and (iii) expected to have a continuing impact on the combined results. The $10,502 loss on extinguishment of debt recognized in June 2015, as noted above, is not reflected in the pro forma information above because it is non-recurring.
Relationship with RMR

RMR provides business management and shared services to us pursuant to a business management agreement. RMR is owned by The RMR Group Inc. and shared services agreement, or our business management agreement.ABP Trust and ABP Trust is the controlling shareholder of The RMR Group Inc. One of our Managing Directors, Mr. Barry Portnoy is Chairman, majority owner and an employee of RMR. Mr. Barry Portnoy'shis son, Mr. Adam Portnoy, are owners of ABP Trust. Mr. Barry Portnoy is an ownerthe Chairman of RMR and serves asa Managing Director and officer of The RMR Group Inc. and Mr. Adam Portnoy is the President and Chief Executive Officer of RMR and a directorManaging Director, President and Chief Executive Officer of RMR.The RMR Group Inc. Our other Managing Director, Mr. Thomas O'Brien, who is also our President and Chief Executive Officer, Mr. Andrew Rebholz, our Executive Vice President, Chief Financial Officer and Treasurer, and Mr. Mark Young, our Executive Vice President and General Counsel, are officers and employees of RMR. RMR provides management services to HPT and HPT's executive officers are officers and employees of RMR. TwoA majority of our Independent Directors also serve as independent directors or independent trustees of other public companies to which RMR, or its affiliates, provideprovides management services. Mr. Barry Portnoy serves as a managing director or managing trustee of a majority of those companies and Mr. Adam Portnoy serves as a managing trustee of a majority of those companies. In addition, officers of RMR serve as officers of those companies.

        Because atother companies to which RMR or its affiliates provides management services.

At least 80% of Messrs. O'Brien's, Rebholz's and Young's business time is devoted to services to us, and 80% of Messrs. O'Brien's, Rebholz's and Young's total cash compensation (that is, the combined base salary and cash bonus paid by us and RMR) was paid by us and the remainder was paid by RMR (for Mr. Young, this arrangement was not in place prior to October 2011).RMR. Messrs. O'Brien,


Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

17. Related Party Transactions (Continued)

Rebholz and Young are also eligible to participate in certain RMR benefit plans. We believe the compensation we paid to these officers reasonably reflected their division of business time;time and efforts; however, periodically, these individuals may divide their business time and efforts differently than they do currently and their compensation from us may become disproportionate to this division.

Our Board of Directors has given our Compensation Committee, which is comprised exclusively of our Independent Directors, authority to act on our behalf with respect to our business management agreement with RMR. The charter of our Compensation Committee requires the committee to review annually review the terms of the business management agreement, evaluate RMR's performance under this agreement and determine whether to renew, amend or terminate the business management agreement.


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TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


Pursuant to the business management agreement, RMR assists us with various aspects of our business, which may include, but are not limited to, compliance with various laws and rules applicable to our status as a publicly owned company, advice and supervision with respect to our travel centers, site selection for properties on which new travel centers may be developed, identification of, and purchase negotiation for, travel centerscenter and travel centerconvenience store properties and companies, accounting and financial reporting, capital markets and financing activities, investor relations and general oversight of our daily business activities, including legal and tax matters, human resources, insurance programs, management information systems and the like. Under our business management agreement, we pay RMR an annual business management fee equal to 0.6% of the sum of our gross fuel margin (which is our fuel sales revenues less our cost of fuel sales) plus our total nonfuel revenues. The fee is payable monthly based on the prior month's margins and revenues. This fee totaled $10,758, $10,025$13,179, $12,272 and $9,435$10,758 for the years ended December 31, 2013, 20122015, 2014 and 2011,2013, respectively. These amounts are included in selling, general and administrative expenses in our consolidated statements of income and comprehensive income.

RMR also provides internal audit services to us in return for our share of the total internal audit costs incurred by RMR for us and other publicly owned companies managed byto which RMR andor its affiliates provides management services, which amounts are subject to approval by our Compensation Committee. Our Audit Committee appoints our Director of Internal Audit. Our share of RMR's costs of providing this internal audit function was approximately $208, $193$257, $272 and $240$208 for the years ended December 31, 2013, 20122015, 2014 and 2011,2013, respectively. These allocated costs are in addition to the business management fees paid to RMR.

The current term of our business management agreement with RMR ends on December 31, 2014,2016, and automatically renews for successive one year terms unless we or RMR givegives notice of non-renewal before the end of an applicable term. We orOn March 12, 2015, we and RMR entered into an amended and restated business management agreement, which was approved by our Compensation Committee, comprised solely of our Independent Directors. As amended, RMR may terminate the business management agreement upon 60 days prior120 days' written notice. RMR may alsonotice, and we have the right to terminate the business management agreement upon five business60 days' written notice, subject to approval by a majority vote of our Independent Directors. As amended, if we undergo a change of control, as defined interminate or do not to renew the business management agreement.

agreement other than for cause, as defined, we are obligated to pay RMR a termination fee equal to 2.875 times the annual base management fee and the annual internal audit services expense, which amounts are based on averages during the 24 consecutive calendar months prior to the date of notice of termination or nonrenewal. Also, as amended, RMR agrees to provide certain transition services for us for 120 days following termination by us or notice of termination by RMR. The business management agreement includes arbitration provisions for the resolution of disputes.

Under our business management agreement with RMR, we acknowledge that RMR also provides management services to other companies, including HPT. The fact that RMR has responsibilities to other entities, including our largest landlord, HPT, could create conflicts; and in the event of such conflicts, our business management agreement allows RMR to act on its own behalf and on behalf of HPT or such other entity rather than on our behalf.


Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

17. Related Party Transactions (Continued)

We are also generally responsible for all of our expenses and certain expenses incurred by RMR on our behalf. Pursuant to our business management agreement, RMR may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of services to us. As part of this arrangement, we have in the past, and may in the future enter agreements with RMR and other companies to which RMR provides management services for the purpose of obtaining more favorable terms from such vendors and suppliers.

        In July 2011, we entered

We have a property management agreement with RMR under which RMR provides building management services to us for our headquarters building. The charter of our Compensation Committee requires that annually the committeeCommittee annually review the property management agreement, evaluate RMR's performance under this agreement and renew, amend or terminate this agreement. We paid RMR $143, $132$145, $141 and $58$143 for property management services at our headquarters building for the years ended December 31, 2013, 20122015, 2014 and 2011,2013, respectively. These amounts are included in selling, general and administrative expenses in our consolidated statements of income and comprehensive income.


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TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


Under theour Plan, we grant restricted shares to certain employees of RMR who are not also Directors, officers or employees of ours. We granted a total of 48,950, 59,72562, 63 and 61,35049 shares with an aggregate value of $523, $260$575, $610 and $260$523 to such persons in 2013, 20122015, 2014 and 2011,2013, respectively, based upon the closing price of our common shares on the NYSE (for grants made in 2013) or NYSE MKT (for grants made in 2012 and 2011) on the dates of the grants. One fifth of those shares vested on the grant dates and one fifth vests on each of the next four anniversaries of the grant dates. These share grants to RMR employees are in addition to both the fees we pay to RMR and our share grants to our Directors, officers and employees. Under our Plan, recipients of vesting restricted common share awards (including our officers and employees and officers and employees of RMR) may request that we purchase some of the vesting common shares in satisfaction of tax withholding and payment obligations at the closing price for our common shares on the NYSE on the date of purchase. See Note 9 for more information about share withholding.
On occasion, we have entered into arrangements with former employees of ours or RMR in connection with the termination of their employment with us or RMR, providing for the acceleration of vesting of shares previously granted to them under the Plan. Additionally, each of our President and Chief Executive Officer, Executive Vice President, Chief Financial Officer and Treasurer, and Executive Vice President and General Counsel received grants of restricted shares of other companies to which RMR provides management services, including HPT, in their capacities as officers of RMR.

Other Relationships with HPT and RMR

        In connection with

At the time our spin off fromshares were distributed to HPT shareholders in 2007, we entered a transaction agreement with HPT and RMR, pursuant to which we granted HPT a right of first refusal to purchase, lease, mortgage or otherwise finance any interest we own in a travel center before we sell, lease, mortgage or otherwise finance that travel center to or with another party, and we granted HPT and any other company managed byto which RMR provides management services a right of first refusal to acquire or finance any real estate of the types in which they invest before we do. We also agreed that for so long as we are a tenant of HPT we will not permit: the acquisition by any person or group of beneficial ownership of 9.8% or more of the voting shares or the power to direct the management and policies of us or any of our subsidiary tenants or guarantors under our leases with HPT; the sale of a material part of our assets or of any such tenant or guarantor; or the cessation of our continuing Directors to constitute a majority of our Board of Directors or any such tenant or guarantor. Also, we agreed not to take any action that might


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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

17. Related Party Transactions (Continued)

reasonably be expected to have a material adverse impact on HPT's ability to qualify as a real estate investment trust, or REIT, and to indemnify HPT for any liabilities it may incur relating to our assets and business.

        In connection The transaction agreement includes arbitration provisions for the resolution of disputes.

Relationship with a shareholder derivative litigation on behalf of us against members of our Board of Directors,AIC
We, ABP Trust, HPT and RMR that we settled in 2011, we paid $119 to HPT and $51 to RMR pursuant to our indemnity obligations under our limited liability company agreement and our agreements with HPT and RMR.

Relationship with AIC

        We, RMR and sixfour other companies to which RMR provides management services each owned 12.5% ofcurrently own AIC, an Indiana insurance company, and are parties to an amended and restated shareholders agreement regarding AIC. On May 9, 2014, as a result of December 31, 2013. A majoritya change in control of Equity Commonwealth (formerly known as CommonWealth REIT), or EQC, as defined in the amended and restated shareholders agreement, we and the other AIC shareholders purchased pro rata the AIC shares EQC owned in accordance with the terms of that agreement. Pursuant to that purchase, we purchased 3 AIC shares from EQC for $825. Following these purchases, we and the other remaining six shareholders each owns approximately 14.3% of AIC.

All of our Directors and mostall of the trustees and directors of the other AIC shareholders currently serve on the board of directors of AIC. RMR provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC. Our Governance Guidelines provide that any material transaction betweenPursuant to this agreement, AIC pays RMR a service fee equal to 3.0% of the total annual earned premiums payable under then active policies issued or underwritten by AIC or by a vendor or an agent by AIC on its behalf or in furtherance of AIC's business. The shareholders agreement among us, the other shareholders of AIC and AIC shall be reviewed, authorized and approved or ratified byincludes arbitration provisions for the affirmative votesresolution of both a majority of our Board of Directors and a majority of our Independent Directors.

disputes.

As of December 31, 2013,2015, we have invested $5,229$6,054 in AIC since its formation in 2008. Although we own less than 20% of AIC, we use the equity method to account for this investment because we believe that we have significant influence over AIC as a majority of our Directors are also directors of AIC. Our investment in AIC had a carrying value of $5,913 and $5,629$6,828 as of December 31, 20132015 and 2012, respectively,2014, which amounts are included in other noncurrent assets on our consolidated balance sheets. We recognized income of $334, $316$20, $89 and $140,$334, related to our investment in AIC for 2015, 2014 and 2013, 2012 and 2011, respectively.

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TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


In June 2013,2015, we and the other shareholders of AIC renewed our participation in an insurance program arranged by AIC. In connection with that renewal, we purchased a one-yearthree year combined property insurance policy providing $500,000 of coverage pursuantannually with the premium to an insurance programbe paid annually and a one year standalone policy providing certain other coverage of $200,000 for our properties, which policies were arranged by AIC and with respect to which AIC is a reinsurer of certain coverage amounts.AIC. We paid AIC a premium,aggregate annual premiums, including taxes and fees, of $2,743$2,283 in connection with thatthese policies for the policy whichyear ending June 30, 2016, and this amount may be adjusted from time to time as we acquire orand dispose of properties that are included in the policy.property insurance program. Our annual premiums for this property insurance arranged by AIC were $1,601 and $2,743 in 20122014 and 2011 were $3,183 and $1,664, respectively, before adjustments made2013, respectively. See Note 11 for acquisitions or dispositions we made during these periods. We may determine to renewmore information about our participationinvestment in this program in June 2014 AIC.
We periodically consider the possibilities for expanding our insurance relationships with AIC to include other types of insurance and may in the future participate in additional insurance offerings AIC may provide or arrange. We may invest additional amounts in AIC in the future if the expansion of this insurance business requires additional capital, but we are not obligated to do so. By participating
Directors' and Officers' Liability Insurance
In August 2015, we extended through September 2017 our combined directors' and officers' insurance policy with The RMR Group Inc. and five other companies managed by RMR, that provides $10,000 in thisaggregate primary coverage, including certain errors and omission coverage. At that time, we also extended through September 2016 our separate additional directors' and officers' liability insurance businesspolicies that provide $20,000 of aggregate excess coverage plus $5,000 of excess non-indemnifiable coverage. The total premium payable by us for these extensions was $225. We paid an aggregate premium of $351 in 2014 for a combined directors' and officers' insurance policy with RMR, and thefive other companies to which RMR provides management services, we expect that we may benefit financiallymanaged by reducing our insurance expenses and by realizing our pro rata share of any profits of this insurance business. See Note 16RMR. The premiums for a further description of our investment in AIC.

        On March 25, 2014, as a result of the removal, without cause, of all ofcombined policies were allocated among the trustees of CommonWealth REIT, or CWH, CWH underwent a change in control, as defined in the shareholders agreement among us, the other shareholders of AIC and AIC. As a result of that change in control and in accordanceinsured companies after consultation with the terms of the shareholders agreement, weinsurance broker and the other non-CWH shareholders exercised our rights to purchase shares of AIC that CWH then owned. Pursuant to that exercise, on


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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except shareapproval by each company's board and per share amounts)

17. Related Party Transactions (Continued)

May 9, 2014, we and those other shareholders purchased pro rata the AIC shares CWH owned. In accordance with that exercise, we purchased 2,857 AIC shares from CWH for $825. Following these purchases, we and the other remaining six shareholders each owned approximately 14.3% of AIC.

independent trustees or directors as applicable.

Relationship with PTP

PTP is a joint venture between us and Tejon Development Corporation which owned the land on which PTP has builtthat owns two travel centers and two convenience stores in California. We own a 40% interest in PTP and operate the two travel centers and two convenience stores PTP owns for which we receive management and accounting fees.fees, which totaled $838, $800 and $800 for the years ended December 31, 2015, 2014 and 2013, respectively. The carrying value of our investment in PTP as of December 31, 20132015 and 2012,2014, was $17,672$20,042 and $15,332,$20,807, respectively. During each of the years ended December 31, 2013, 2012 and 2011, we recognized management and accounting fee income of $800. At December 31, 20132015 and 2012,2014, we had a net payable toreceivable from PTP of $1,147$43 and $575,$430, respectively. We recognized income of $2,340, $1,561$4,036, $3,135 and $1,029$2,340 during the years ended December 31, 2013, 20122015, 2014 and 2011,2013, respectively, related to this investment. During 2012,investment, which is separate from and in addition to the management and accounting fees we received distributions from PTP totaling $4,800. These distributions represented a return on our investment and, accordingly, are included as operating activities in the accompanying consolidated statements of cash flows.earned. See Note 1611 for a further description ofmore information about our investment in PTP.

18. Commitments



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TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


13.Contingencies
Legal Proceedings
We are routinely involved in various legal and Contingencies

Purchase Commitments

        As of December 31, 2013, we had entered an agreementadministrative proceedings, including tax audits, incidental to acquire an additional travel center property for $3,000. We completed this acquisition in January 2014.

Guarantees

        In the normalordinary course of our business, we periodically enter into agreements that contain guarantees or indemnification provisions. While we cannot estimate the maximum amount tonone of which we may be exposed under these agreements, we do not believe that any potential guarantyexpect, individually or indemnification is likelyin the aggregate, to have a material adverse effect on our consolidatedbusiness, financial position orcondition, results of operations.

        We offer a warranty of our workmanship in our truck maintenance and repair facilities, but we believe the annual warranty expense and corresponding liability are not material to us.

operations or cash flows.

Environmental Matters

Contingencies

Extensive environmental laws regulate our operations and properties. These laws may require us to investigate and clean up hazardous substances, including petroleum or natural gas products, released at our owned and leased properties. Governmental entities or third parties may hold us liable for property damage and personal injuries, and for investigation, remediation and monitoring costs incurred in connection with any contamination and regulatory compliance.compliance at our locations. We use both underground storage tanks and above ground storage tanks to store petroleum products, natural gas and wasteother hazardous substances at our locations. We must comply with environmental laws regarding tank construction, integrity testing, leak detection and monitoring, overfill and spill control, release reporting and financial assurance for corrective action in the event of a release. At some locations we must also comply with environmental laws relative to


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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

18. Commitments and Contingencies (Continued)

vapor recovery or discharges to water. Under the terms of our leases,the HPT Leases, we generally have agreed to indemnify HPT for any environmental liabilities related to properties that we lease from HPT and we are required to pay all environmental related expenses incurred in the operation of the leased properties. Under ouran agreement with Shell we have agreed to indemnify Shell and its affiliates from certain environmental liabilities incurred with respect to our travel centers where Shell has installed natural gas fueling lanes are installed.

lanes.

From time to time we have received, and in the future likely will receive, notices of alleged violations of environmental laws or otherwise have become or will become aware of the need to undertake corrective actions to comply with environmental laws at our locations. Investigatory and remedial actions were, and regularly are, undertaken with respect to releases of hazardous substances at our locations. In some cases we received, and may receive in the future, contributions to partially offset our environmental costs from insurers, from state funds established for environmental clean up associated with the sale of petroleum products or from indemnitors who agreed to fund certain environmental related costs at locations purchased from those indemnitors. To the extent we incur material amounts for environmental matters for which we do not receive or expect to receive insurance or other third party reimbursement or for which we have not previously recorded a reserve,liability, our operating results may be materially adversely affected. In addition, to the extent we fail to comply with environmental laws and regulations, or we become subject to costs and requirements not similarly experienced by our competitors, our competitive position may be harmed.

At December 31, 2013,2015, we had a gross accrued liability of $7,487$4,713 for environmental matters as well as a receivable for expected recoveries of certain of these estimated future expenditures of $1,611,$1,089, resulting in an estimated net amount of $5,876$3,624 that we expect to need to fund in the future. We do not have a reserve for unknown current or potential future environmental matters. Accrued liabilities related to environmental matters are recorded on an undiscounted basis because of the uncertainty associated with the timing of the related future payments. We cannot precisely know the ultimate costs we willmay incur in connection with currently known or future potential environmental related violations, corrective actions, investigation and remediation; however, based on our current knowledge we do not expect that our netthe costs for such matters to be incurred at our locations,material, individually or in the aggregate, would be material to our financial conditionposition or results of operations.

        We have insurance of up to $10,000 per incident and up to $40,000 in the aggregate for certain environmental liabilities not known by us at the time the policies were issued, subject, in each case, to certain limitations and deductibles. However, we can provide no assurance that we will be able to maintain similar environmental insurance coverage in the future on acceptable terms.



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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

18. Commitments and Contingencies (Continued)

        The following table sets forth the various amounts regarding environmental matters, as of December 31, 2013 and 2012, recorded in our consolidated balance sheets as either current or noncurrent assets or liabilities.

 
 December 31, 
 
 2013 2012 

Gross liability for environmental matters:

       

Included in other current liabilities

 $5,639 $7,988 

Included in other noncurrent liabilities

  1,848  2,367 
      
​​​​​​​​

Total recorded liabilities

  7,487  10,355 

Less-expected recoveries of future expenditures, included in other noncurrent assets

  (1,611) (2,718)
      
​​​​​​​​

Net estimated environmental costs to be funded by future operating cash flows

 $5,876 $7,637 
      
​​​​​​​​
​​​​​​​​
      

        While the costs of our environmental compliance in the past have not had a material adverse impact on us, it is impossible to predict the ultimate effect changing circumstances and changing environmental laws may have on us in the future or the ultimate outcome of matters currently pending. We cannot be certain that contamination presently unknown to us does not exist at our sites, or that material liability will not be imposed on us in the future. If we discover additional environmental issues, or if government agencies impose additional environmental requirements, increased environmental compliance or remediation expenditures may be required, which could have a material adverse effect on us. In addition, legislation and regulation regarding climate change, including greenhouse gas emissions, and other environmental matters and market reaction to any such legislation or regulation or to climate change concerns, may decrease the demand for our major product, diesel fuel, and may require us to expend significant amounts. For instance, federal and state governmental requirements addressing emissions from trucks and other motor vehicles, such as the U.S. Environmental Protection Agency's gasoline and diesel sulfur control requirements that limit the concentration of sulfur in motor vehicle gasoline and diesel fuel, as well as President Obama's recent order that his administration develop and implement new fuel efficiency standards for medium and heavy duty commercial trucks by March 2016, could negatively impact our business and has caused us to add certain services and provide certain products to our customers. Further, legislation and regulations that limit carbon emissions also may cause our energy costs at our locations to increase.

        As of December 31, 2013, the estimated gross amounts of the cash outlays by year related to the matters for which we have accrued an environmental liability are $5,639, $836, $348, $348 and $316 for the years 2014, 2015, 2016, 2017 and 2018, respectively. These cash expenditure amounts do not reflect any amounts for the expected recoveries as we cannot accurately predict the timing of those cash receipts. These estimated future gross cash disbursements are subject to change based on, among other things, changes in the underlying remediation activities and changes in the regulatory environment.


Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

18. Commitments and Contingencies (Continued)

Legal Proceedings

In May 2010, the California Attorney General commenced litigation on behalf ofFebruary 2014, we reached an agreement with the California State Water Resources Control Board, or the State Water Board, to settle certain claims the State Water Board had filed against various defendants, including us HPT TA Properties Trust (which is a subsidiary of HPT), PTP and Tejon in theCalifornia Superior Court of California for Alameda County seeking unspecified civil penalties and injunctive relief forin 2010 relating to alleged violations of underground storage tank laws and regulations at various facilities in Kern and Merced Counties, which alleged violations do not include release of contamination into the environment. On July 26, 2010, the California Attorney General voluntarily dismissed this litigation against us and the other named defendants, and on September 2, 2010, refiled its complaint against the same defendants in the Superior Court of California for Merced County, or the Superior Court, seeking unspecified civil penalties and injunctive relief. We have denied the material allegations in the complaint and asserted various affirmative defenses. Under the TA Lease and our expired lease agreement with Tejon for a travel center that was closed in 2009, we are liable to indemnify HPT TA Properties Trust and Tejon for any liabilities, costs and expenses they incur in connection with this litigation. In February 2014, the parties reached an agreement to settle these claims for a cash payment of $1,800,$1,800; suspended penalties of $1,000 that may become payable by us in the future if, prior to March 2019, we fail to comply with specified underground storage tank laws and regulations; and our agreement to invest, prior to March 2018, up to $2,000 of verified costs that are directly related to the development and implementation of a comprehensive California Enhanced Environmental Compliance Program for the underground storage tank systems at all of our California facilities that is above and beyond minimum requirements of California law and regulations related to underground storage tank systems. During 2013, we incurred $206 of such verified compliance costs that qualify towards the $2,000 requirement. To the extent that we do not incur the full $2,000 of eligible environmental compliance costsThe settlement, which was approved by March 2018, the difference between the amount we incur and $2,000 will be payable to the State Water Board. The parties submitted to the Superior Court for approval a form of Proposed Final Consent Judgment and Permanent Injunction, whichon February 20, 2014, also included injunctive relief provisions requiring that we comply with certain California environmental laws and regulations applicable to underground storage tank systemssystems. In October 2015, the State Water Board issued a notice of alleged suspended penalty conduct claiming that we are liable for the full amount of the $1,000 in suspended penalties as a result of five alleged violations of underground storage tank regulations and requesting further information concerning the alleged violations. We believe we have meritorious defenses to these alleged violations, but cannot predict whether any penalties relating to these matters will be assessed by the Superior Court, approvedwhich has retained jurisdiction over such matters. The State Water Board also has retained the related Proposed Final Consent Judgmentright to file a separate action relating to these violations, but to date has not done so. In November 2015, we filed our response to the notice and Permanent Injunction on February 20, 2014.we anticipate further negotiations with the State Water Board before this matter proceeds to a hearing before the Superior Court. As of December 31, 2013,2015, we have a liability of $3,594$1,718 recorded with respect to this matter. The expense related tomatter and believe that an additional amount of loss we may realize above that accrued, if any, upon the ultimate resolution of this matter was recognized in prior years. will not be material.
We believe that the probabilitycurrently have insurance of triggering any portion of the $1,000 of suspended penalties is remoteup to $10,000 per incident and have not recognized a loss or a liability for that amount, but it is possible that such events will occur and some portion or all of the $1,000 may become payable and would be chargedup to expense at the time of that future event.

        Beginning in December 2006, a series of class action lawsuits was filed against numerous companies$25,000 in the petroleum industry, including our predecessoraggregate for certain environmental liabilities, subject, in each case, to certain limitations and our subsidiaries, in U.S. district courts in over 20 states. Major petroleum refiners and retailers were named as defendants in one or more of these lawsuits. The plaintiffs in the lawsuits generally alleged that they are retail purchasers who purchased motor fuel at temperatures greater than 60 degrees Fahrenheit at the time of sale. One theory alleged that the plaintiffs purchased smaller amounts of motor fuel than the amount for which defendants charged them because the defendants measured the amount of motor fuel they delivered by volumes which, at higher temperatures, contain less energy. A second theory alleged that fuel taxes are calculated in temperature adjusted 60 degree gallons and are collected by governmental agencies from


Table of Contents


TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

18. Commitments and Contingencies (Continued)

suppliers and wholesalers, who are reimbursed in the amount of the tax by the defendant retailers before the fuel is sold to consumers. These "tax" cases allege that, when the fuel is subsequently sold to consumers at temperatures above 60 degrees, the retailers sell a greater volume of fuel than the amount on which they paid tax, and therefore reap unjust benefit because the customers pay more tax than the retailer pays. A third theory alleged that all purchasers of fuel at any temperature are harmed because the defendants do not use equipment that adjusts for temperature or disclose the temperature of fuel being sold, and thereby deprive customers of information they allegedly require to make an informed purchasing decision. All of these cases were consolidated in the U.S. District Court for the District of Kansas pursuant to multi-district litigation procedures. On May 28, 2010, that Court ruled that, with respect to two cases originally filed in the U.S. District Court for the District of Kansas, it would grant plaintiffs' motion to certify a class of plaintiffs seeking injunctive relief (implementation of fuel temperature equipment and/or posting of notices regarding the effect of temperature on fuel). On January 19, 2012, the Court amended its prior ruling, and certified a class with respect to plaintiffs' claims for damages as well. A TA entity was named in one of those two Kansas cases, but the Court ruled that the named plaintiffs were not sufficient to represent a class as to TA. TA was thereafter dismissed from the Kansas case. Several defendants in the Kansas cases, including major petroleum refiners, have entered into multi-state settlements. Following a September 2012 trial against the remaining defendants in the Kansas cases, the jury returned a unanimous verdict in favor of those Kansas defendants, and the judge likewise ruled in the Kansas defendants' favor on the sole non-jury claim. In early 2013, the Court announced its intention to remand three cases originally filed in federal district courts in California back to their original courts. On April 9, 2013, the Court granted plaintiffs' motion for class certification in connection with the California claims in the California cases. On August 14, 2013, the Court granted summary judgment for the defendants with respect to all California claims in the California cases, and in February 2014, the U.S. District Court for the Northern District of California entered judgment in favor of the defendants with respect to those claims. The plaintiffs in the California cases all dismissed their non-California claims against TA, except for one individual plaintiff, who continues to assert claims based on purchases of fuel in states other than California. In January 2014, TA was dismissed with prejudice in all the non-California cases in all states in which it remained a defendant at that time. Therefore, the only case in which TA remains a defendant is the case in which one remaining plaintiff is pursuing non-California claims. We believe there are substantial factual and legal defenses to the allegations made in this remaining case. Whiledeductibles. However, we do not expectcan provide no assurance that we will incur a material loss in this case, we cannot estimate our ultimate exposurebe able to loss or liability, if any, related to the lawsuit.

        On April 6, 2009, five independent truck stop owners, who are plaintiffs in a purported class action suit against Comdata Network, Inc., or Comdata,maintain similar environmental insurance coverage in the U.S. District Court forfuture on acceptable terms.

We cannot predict the Eastern District of Pennsylvania, filed a motion to amend their complaint to addultimate effect changing circumstances and changing environmental laws may have on us as a defendant, which was allowed on March 25, 2010. The amended complaint also added as defendants Ceridian Corporation, Pilot Travel Centers LLC and Love's Travel Stops & Country Stores, Inc. Comdata markets fuel cards which are used for payments by trucking companies at truck stops. The amended complaint alleged antitrust violations arising out of Comdata's contractual relationships with truck stops in connection with its fuel cards. The plaintiffs have sought unspecified damages and injunctive relief. On March 24, 2011, the Court dismissed the claims against TA in the amended complaint, but granted plaintiffs leave to file a new amended complaint. Four independent truck stop owners, as plaintiffs, filed a new amended


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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

18. Commitments and Contingencies (Continued)

complaint against us on April 21, 2011, repleading their claims. On May 6, 2011, we renewed our motion to dismiss the complaint with prejudice while discovery otherwise proceeded. The Court denied our renewed motion to dismiss on March 29, 2012, and we filed an answer to the complaint on April 30, 2012. During December 2013, we entered into settlement discussions among the co-defendants and the plaintiffs that continued into 2014. On February 28, 2014, we entered into a Definitive Master Class Settlement Agreement with the plaintiffs,future or the settlement agreement. The settlement agreement provides for the Company and the co-defendantsultimate outcome of matters currently pending. We cannot be certain that contamination presently unknown to pay an aggregate of $130,000 to a settlement fund for class members, including $10,000 fromus does not exist at our sites, or that material liability will not be imposed on us in exchange for the dismissal with prejudice of the litigation and the unconditional release of all claims that class members broughtfuture. If we discover additional environmental issues, or could have brought against us and the co-defendants with respect to the litigation and related actions. The settlement agreement is subject to the approval of the Court. On March 17, 2014, the Court preliminarily approved the settlement agreement, authorized notice to the class and scheduled a hearing for July 14, 2014, to consider the final approval of the settlement. We recognized a $10,000 loss in connection with this matter in December 2013 and made the cash payment in March 2014.

        In addition to the legal proceedings referenced above, we are routinely involved in various other legal and administrative proceedings, including tax audits, incidental to the ordinary course of our business, none ofif government agencies impose additional environmental requirements, increased environmental compliance or remediation expenditures may be required, which we expect, individually or in the aggregate, tocould have a material adverse effect on our business, financial condition, results of operations or cash flows.

19. Other Information

us.
 
 Years Ended December 31, 
 
 2013 2012 2011 

Operating expenses included the following:

          

Repairs and maintenance expenses

 $40,946 $38,893 $35,871 

Advertising expenses

 $22,748 $20,563 $18,768 

Taxes other than payroll and income taxes

 $17,463 $15,818 $16,252 

        Interest expense
14.Inventory

Inventory at December 31, 2015 and 2014, consisted of the following:

 
 Years Ended December 31, 
 
 2013 2012 2011 

Interest related to our Senior Notes and Credit Facility

 $10,537 $2,096 $1,036 

HPT rent classified as interest

  7,400  7,330  7,390 

Amortization of deferred financing costs

  667  352  403 

Capitalized interest

  (1,033) —  — 

Other

  79  580  176 
        
​​​​​​​​​​​

Interest expense

 $17,650 $10,358 $9,005 
        
​​​​​​​​​​​
​​​​​​​​​​​
        
 2015 2014
Nonfuel products$159,256
 $146,370
Fuel products24,236
 26,380
Total inventory$183,492
 $172,750

        We capitalize the portion of our interest expense that is attributable under GAAP to our more significant construction projects over the duration of the respective construction periods. Capitalized interest is amortized to depreciation and amortization expense over the estimated useful life of the corresponding asset.



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TravelCenters of America LLC

Notes to Consolidated Financial Statements (Continued)

(in thousands, except share and per share amounts)

20. Selected Quarterly



15.
Segment Information
As a result of the growth in our convenience store business throughout 2015, we now present two reportable segments: travel centers and convenience stores not located at travel centers. Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. For these reportable segments, previously reported financial information within the notes to the consolidated financial statements has been updated for all periods presented. We measure our reportable segments profitability based on site level gross margin in excess of site level operating expenses.
Travel Centers
We operate and franchise travel centers under the "TravelCenters of America" and "TA" brand names, or the TA brand, and the "Petro Stopping Centers" and "Petro" brand names, or the Petro brand, primarily along the U.S. interstate highway system. Our travel center customers include trucking fleets and their drivers, independent truck drivers and motorists. Our travel centers include, on average, approximately 25 acres of land and substantially all of them offer customers diesel fuel and gasoline as well as nonfuel products and services such as truck repair and maintenance services, full service restaurants, QSRs, travel and convenience stores and various driver amenities. 
Convenience Stores
We operate convenience stores with retail gasoline stations, primarily under the "Minit Mart" brand name, or the Minit Mart brand, that generally serve motorists and are not located at a travel center. These convenience stores typically offer customers gasoline as well as nonfuel products and services such as coffee, groceries and other convenience items, some fresh food offerings and QSRs.
Corporate and Other
We include unallocated corporate expenses, the operations of our distribution centers and all other businesses which do not meet the definition of a travel center or convenience store and which are not material to our operations in corporate and other. For purposes of segment performance measurement, we do not allocate to either our travel center or convenience store segments items that are of a non-operating or of a corporate nature such as selling, general and administrative expenses, transaction costs associated with the acquisition of certain businesses, interest, income from equity investees and income taxes.
Identifiable assets of the business segments exclude general corporate assets, which primarily consist of certain cash, accounts receivable, certain property and equipment, deferred income taxes and certain other assets. Other than cash that resides at the travel centers or convenience stores, cash and accounts receivable are managed within our treasury and finance function at corporate.
Additional Information
The accounting policies of the business segments are the same as the polices described in Note 1. Intersegment sales and transfers are accounted for at the same prices as if the sales and transfers were made to third parties and are eliminated in consolidation.

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TravelCenters of America LLC
Notes to Consolidated Financial Data (unaudited)

Statements

(in thousands, except per share amounts)


Segment Information
 Year Ended December 31, 2015
 
Travel
Centers
 
Convenience
Stores
 
Corporate
and Other
 Consolidated
Revenues       
Fuel$3,763,415
 $224,894
 $67,139
 $4,055,448
Nonfuel1,626,646
 155,197
 918
 1,782,761
Rent and royalties from franchisees12,424
 —
 —
 12,424
Total revenues5,402,485
 380,091
 68,057
 5,850,633
        
Site level gross margin in excess of
   site level operating expenses
$483,009
 $17,259
 $3,770
 $504,038
        
Corporate operating expenses       
Selling, general and administrative$—
 $—
 $121,767
 $121,767
Real estate rent—
 —
 231,591
 231,591
Depreciation and amortization—
 —
 72,383
 72,383
Income from operations
 
 
 78,297
        
Acquisition costs—
 —
 5,048
 5,048
Interest expense, net—
 —
 22,545
 22,545
Income from equity investees—
 —
 4,056
 4,056
Loss on extinguishment of debt—
 —
 10,502
 10,502
Income before income taxes
 
 
 44,258
Provision for income taxes—
 —
 (16,539) (16,539)
Net income$—
 $—
 $—
 $27,719
        
Capital expenditures for property and equipment$210,385
 $14,191
 $70,861
 $295,437
Acquisitions of businesses, net of cash acquired9,338
 310,952
 —
 320,290
Total assets725,714
 431,014
 478,366
 1,635,094

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TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


 Year Ended December 31, 2014
 
Travel
Centers
 
Convenience
Stores
 
Corporate
and Other
 Consolidated
Revenues       
Fuel$5,961,764
 $113,221
 $74,464
 $6,149,449
Nonfuel1,539,996
 76,634
 172
 1,616,802
Rent and royalties from franchisees12,382
 —
 —
 12,382
Total revenues7,514,142
 189,855
 74,636
 7,778,633
        
Site level gross margin in excess of
   site level operating expenses
$492,618
 $8,834
 $1,750
 $503,202
        
Corporate operating expenses       
Selling, general and administrative$—
 $—
 $106,823
 $106,823
Real estate rent—
 —
 217,155
 217,155
Depreciation and amortization—
 —
 65,584
 65,584
Income from operations
 
 
 113,640
        
Acquisition costs—
 —
 1,160
 1,160
Interest expense, net—
 —
 16,712
 16,712
Income from equity investees—
 —
 3,224
 3,224
Income before income taxes
 
 
 98,992
Provision for income taxes—
 —
 (38,023) (38,023)
Net income$—
 $—
 $—
 $60,969
        
Capital expenditures for property and equipment$147,509
 $3,668
 $18,648
 $169,825
Acquisitions of businesses, net of cash acquired28,695
 —
 —
 28,695
Total assets829,071
 87,782
 485,964
 1,402,817

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TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


 Year Ended December 31, 2013
 
Travel
Centers
 
Convenience
Stores
 
Corporate
and Other
 Consolidated
Revenues       
Fuel$6,378,801
 $20,828
 $81,623
 $6,481,252
Nonfuel1,442,715
 8,077
 —
 1,450,792
Rent and royalties from franchisees12,687
 —
 —
 12,687
Total revenues7,834,203
 28,905
 81,623
 7,944,731
        
Site level gross margin in excess of
   site level operating expenses
$393,505
 $1,639
 $1,741
 $396,885
        
Corporate operating expenses       
Selling, general and administrative$—
 $—
 $107,447
 $107,447
Real estate rent—
 —
 209,320
 209,320
Depreciation and amortization—
 —
 58,928
 58,928
Income from operations
 
 
 21,190
        
Acquisition costs—
 —
 2,523
 2,523
Interest expense, net—
 —
 16,336
 16,336
Income from equity investees—
 —
 2,674
 2,674
Income before income taxes
 
 
 5,005
Benefit for income taxes—
 —
 26,618
 26,618
Net income$—
 $—
 $—
 $31,623
        
Capital expenditures for property and equipment$154,233
 $144
 $9,865
 $164,242
Acquisitions of businesses, net of cash acquired44,622
 65,356
 —
 109,978
Total assets804,519
 88,007
 346,246
 1,238,772


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TravelCenters of America LLC
Notes to Consolidated Financial Statements
(in thousands, except per share amounts)


16.Selected Quarterly Financial Data (unaudited)
The following is a summary of our unaudited quarterly results of operations for 20132015 and 2012:

2014:


 Year Ended December 31, 2013 Year Ended December 31, 2015

 First
Quarter		 Second
Quarter		 Third
Quarter		 Fourth
Quarter		 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter

Total revenues

 $1,957,351 $2,018,754 $2,062,096 $1,906,530 $1,407,701
 $1,582,883
 $1,508,993
 $1,351,056

Gross profit (excluding depreciation)

 263,807 301,228 307,141 280,651 338,499
 345,794
 358,480
 346,911

Income (loss) from operations

 (8,460) 19,971 20,938 (11,259)
Income from operations32,170
 21,974
 21,444
 2,709
(Provision) benefit for income taxes(10,486) (2,515) (6,157) 2,619

Net income (loss)

 $(12,139)$15,984 $15,803 $11,975 15,729
 3,772
 9,826
 (1,608)

Net income (loss) per share:

         
Net income (loss) per common share: 
  
  
  

Basic and diluted

 $(0.41)$0.54 $0.53 $0.39 0.41
 0.10
 0.26
 (0.04)
Comprehensive income (loss)15,428
 3,754
 9,514
 (1,652)



 Year Ended December 31, 2012 Year Ended December 31, 2014

 First
Quarter		 Second
Quarter		 Third
Quarter		 Fourth
Quarter		 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter

Total revenues

 $1,994,869 $2,041,507 $2,034,153 $1,925,195 $1,967,309
 $2,076,109
 $2,009,217
 $1,725,998

Gross profit (excluding depreciation)

 243,352 294,223 288,306 260,119 301,564
 325,093
 332,136
 360,020

Income (loss) from operations

 (11,309) 32,017 20,933 (171)

Net income (loss)

 $(14,185)$29,852 $18,990 $(2,459)

Net income (loss) per share:

         
Income from operations4,865
 26,939
 25,324
 56,512
Provision for income taxes(276) (9,673) (9,442) (18,632)
Net income197
 13,634
 12,796
 34,342
Net income per common share: 
  
  
  

Basic and diluted

 $(0.49)$1.04 $0.66 $(0.08)0.01
 0.36
 0.34
 0.91
Comprehensive income24
 13,825
 12,538
 34,184

During the fourth quarter of 20132015 and 2014 we recognized a $10,000 charge related to a litigation settlement; an asset impairment chargebenefit of $659; an increase of $1,500 to our inventory reserves for excess$7,997 and obsolete parts; a $1,097 charge for a claim against us related to invalid biodiesel renewable identification numbers; and $29,853$6,898, respectively, related to the reversalreinstatement of a portionbiodiesel and renewable energy fuel tax credits on certain fuel purchases made during each of the valuation allowance for deferred tax assets. Additionally, during the fourth quarter of 2013 we recognized a charge of $2,435 to correct for certain misstatements in our historical financial statements that we determined to be immaterial.

2015 and 2014.


F- 39

Table of Contents


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





 TRAVELCENTERS OF AMERICA LLC

June 6, 2014

 

By:

 

/s/ ANDREW J. REBHOLZ

Date:March 14, 2016By:/s/ Andrew J. Rebholz
   Name:Andrew J. Rebholz

   Title:
Executive Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature
Title
Date


 
Title
 
Date
/s/ THOMAS M. O'BRIEN
Thomas M. O'Brien		 Managing Director, President and Chief Executive Officer (Principal Executive Officer) June 6, 2014March 14, 2016

Thomas M. O'Brien
/s/ ANDREW J. REBHOLZ
Andrew J. Rebholz
 
Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)		March 14, 2016
Andrew J. Rebholz
/s/ William E. MyersSenior Vice President, Chief Accounting Officer and Principal(Principal Accounting Officer)
 
June 6, 2014March 14, 2016

William E. Myers
/s/ BARRY M. PORTNOY
Barry M. Portnoy
 
Managing Director
 
June 6, 2014March 14, 2016

Barry M. Portnoy
/s/ BARBARA D. GILMORE
Barbara D. Gilmore
 
Independent Director
 
June 6, 2014March 14, 2016

Barbara D. Gilmore
/s/ LISA HARRIS JONES
Lisa Harris Jones
 
Independent Director
 
June 6, 2014March 14, 2016

Lisa Harris Jones
/s/ ARTHUR G. KOUMANTZELIS
Arthur G. Koumantzelis
 
Independent Director
 
June 6, 2014March 14, 2016
Arthur G. Koumantzelis
/s/ Joseph L. MoreaIndependent DirectorMarch 14, 2016
Joseph L. Morea