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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

For the quarterly period ended September 30, 2009

OR

Commission File Number 001-33274

TRAVELCENTERS OF AMERICA LLC

(Exact name of registrant as specified in its charter)

24601 Center Ridge Road, Suite 200, Westlake, OH 44145-5639

(Address of Principal Executive Offices)

(440) 808-9100

(Registrant’s Telephone Number, Including Area Code)

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 x  No o

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 o  No o

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.

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

Number of Common Shares outstanding at November 6, 2009: 16,668,445 common shares.

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TRAVELCENTERS OF AMERICA LLC

FORM 10-Q

September 30, 2009

INDEX

As used herein the terms “we”, “us”, “our” and “TA” include TravelCenters of America LLC and its consolidated subsidiaries unless otherwise expressly stated or the context otherwise requires.

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Part I.  Financial Information

Item 1.  Financial Statements

TravelCenters of America LLC

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share data)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TravelCenters of America LLC

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

(in thousands, except per share data)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TravelCenters of America LLC

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

(in thousands, except per share data)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TravelCenters of America LLC

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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TravelCenters of America LLC

Notes to Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands, except share and per share amounts)

1.                                    Basis of Presentation, Business Description and Organization

TravelCenters of America LLC, together with its subsidiaries, which we refer to as the Company, we, us and our, operates and franchises travel centers under the “TravelCenters of America,” “TA” and “Petro” brands primarily along the U.S. interstate highway system.  Our customers include trucking fleets and their drivers, independent truck drivers and motorists.  Our travel centers are typically 20 to 25 acre sites and provide our customers with diesel fuel and gasoline, as well as nonfuel products and services such as truck repair and maintenance services, full service restaurants, quick service restaurants, travel and convenience stores and various other driver services.  We also collect rents and franchise royalties from our franchisees.

At September 30, 2009, our business included 233 travel centers in 41 states and in Canada, 166 of which were operated under the “Travel Centers of America” or “TA” brand names and 67 of which were operated under the “Petro” brand name.  We operated 188 of these travel centers, which we refer to as Company operated sites, and our franchisees operated 45 of these travel centers, including 10 travel centers which our franchisees sublease from us and 35 travel centers which our franchisees own or lease from other lessors.  We lease 145 of our TA branded sites and 40 of our Petro branded sites under leases with Hospitality Properties Trust, or Hospitality Trust, which we refer to as the TA Lease and Petro Lease, respectively.  See Note 5.

The accompanying condensed consolidated financial statements are unaudited.  These unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, applicable for interim financial statements.  Therefore, the disclosures do not include all the information necessary for complete financial statements in accordance with GAAP.  These unaudited interim financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2008.  In the opinion of our management, all adjustments, which include only normal recurring adjustments, considered necessary for a fair presentation have been included.  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.  For this and other reasons, our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

In preparing these condensed consolidated financial statements, we evaluated events that occurred through November 9, 2009, the date of issuance of these condensed consolidated financial statements, for potential recognition or disclosure.

2.                                    Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board, or FASB, issued The FASB Accounting Standards CodificationTM, or the Codification.  The Codification is the single source of authoritative nongovernmental U.S. generally accepted accounting principles and is effective for financial statements issued for interim and annual periods ending after September 15, 2009.  The adoption of the Codification did not cause any change to our current accounting practices.

Effective June 30, 2009, we adopted the Subsequent Events Topic of the Codification.  This topic establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued.  It requires the disclosure of the date through which an entity has evaluated subsequent events and whether that date represents the date the financial statements were issued or were available to be issued.

Effective January 1, 2009, we adopted the Fair Value Measurements and Disclosures Topic of the Codification that provides a common fair value hierarchy for companies to follow in determining fair value measurements in the preparation of financial statements.  This Topic also expands disclosure requirements relating to how such fair value measurements were developed.  We adopted these new requirements effective January 1, 2008, for our financial assets and liabilities and effective January 1, 2009 for our nonfinancial assets and liabilities required to be measured at fair value on a non-recurring basis.  This adoption did not have a material effect on our consolidated financial statements.

Effective January 1, 2009, we adopted the guidance added to the Earnings Per Share Topic of the Codification that clarifies whether instruments granted in share based payment transactions should be included in the computation of earnings per share prior to vesting.  Under this section of the Codification, unvested share based payment awards that contain rights to receive non-forfeitable dividends (whether paid or unpaid) are considered participating securities and should be included in the calculation of basic and diluted earnings per share for all periods presented.  Accordingly, basic and diluted earnings per share for the three and nine months ended September 30, 2008, have been adjusted to reflect the new guidance in the Codification.

In June 2009 the FASB issued new guidance that is contained in the Consolidation section of the Codification that eliminates some exceptions that were previously included in GAAP related to consolidating qualifying special purpose entities, contains new criteria for determining the primary beneficiary of a variable interest entity, and increases the frequency of required reassessments to

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TravelCenters of America LLC

Notes to Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands, except share and per share amounts)

determine whether a company is the primary beneficiary of a variable interest entity.  The new guidance also contains a new requirement that any term, transaction, or arrangement that does not have a substantive effect on an entity’s status as a variable interest entity, a company’s power over a variable interest entity, or a company’s obligation to absorb losses or its right to receive benefits of an entity must be disregarded in applying previously issued rules related to variable interest entities.  The elimination of the qualifying special purpose entity concept and its consolidation exceptions means more entities will be subject to consolidation assessments and reassessments.  These new requirements will be effective for us as of January 1, 2010.  We are currently assessing the potential impacts of adopting the new requirements, if any, on our consolidated financial statements.

3.                                    Earnings Per Share

Basic earnings per share for the three and nine month periods ended September 30, 2009 and 2008 were computed using the weighted average number of shares outstanding during those periods.  As discussed in Note 2, new requirements under the Earnings Per Share Topic of the Codification became effective for us on January 1, 2009.  Accordingly, the unvested shares granted under our equity incentive plan have been included in the calculation of basic and diluted earnings per share as participating securities.  Basic and diluted earnings per share for the three and nine month periods ended September 30, 2008, have been adjusted to reflect the new requirements.  The total combined number of weighted average common shares and participating securities outstanding for the three month periods ended September 30, 2009 and 2008 were 16,668,869 and 15,359,199, respectively.  The total combined number of weighted average common shares and participating securities outstanding for the nine month periods ended September 30, 2009 and 2008 were 16,649,618 and 14,782,947, respectively.  The number of unvested shares included in the earnings per share calculations as participating securities for the three month periods ended September 30, 2009 and 2008 were 713,569 and 274,770, respectively.  The numbers of unvested shares included in the earnings per share calculations as participating securities for the nine month periods ended September 30, 2009 and 2008 were 714,418 and 284,503, respectively.

4.                                    Inventories

Inventories consisted of the following:

5.                                    Related Party Transactions

The following table summarizes the various amounts related to our leases with Hospitality Trust that are reflected in our operating results:

Other current liabilities in our consolidated balance sheets at September 30, 2009, and December 31, 2008, included $13,946 and $13,283, respectively, of rent due to Hospitality Trust.  As of September 30, 2009, we had deferred an aggregate of $75,000 of rent payable to Hospitality Trust, which amount, together with any other amounts we may defer pursuant to our rent deferral

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TravelCenters of America LLC

Notes to Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands, except share and per share amounts)

agreement with Hospitality Trust, is payable by us not later than July 1, 2011 pursuant to that rent deferral agreement.  During the nine month period ended September 30, 2009, we sold leasehold improvements to Hospitality Trust for total cash proceeds, after the discounts for accelerated receipt, of $5,722.  At September 30, 2009, there remained available an undiscounted amount of $10,272 of the $125,000 total amount of the leasehold improvements that we may sell to Hospitality Trust with no increase in our rent.

In connection with our management and shared services agreement with Reit Management & Research LLC, or Reit Management, for the three months ended September 30, 2009 and 2008, we recognized expense of $2,151 and $2,602, respectively, and for the nine months ended September 30, 2009 and 2008 we recognized expense of $6,257 and $6,755, respectively.  These amounts are included in selling, general and administrative expenses in our consolidated financial statements.

In February 2009 we invested $25 in common stock of Affiliates Insurance Company, or Affiliates Insurance, concurrently with Reit Management and other companies to which Reit Management provides management services, and in April 2009 we invested another $5,049 in Affiliates Insurance.  We owned approximately 16.67% of Affiliates Insurance as of September 30, 2009.  Although we own less than 20% of Affiliates Insurance, we use the equity method to account for this investment because we believe that we have significant influence over Affiliates Insurance since each of our directors is a director of Affiliates Insurance.  This investment is carried on our balance sheet in other noncurrent assets.  For the three and nine months ended September 30, 2009, we recognized a loss of $23 and, $132, respectively, related to this investment.

We recognized equity in earnings of affiliates of $336 and $465 for the three month periods ended September 30, 2009 and 2008, respectively, and $651 and $821 for the nine month periods ended September 30, 2009 and 2008, respectively, related to our joint venture interest in Petro Travel Plaza Holdings LLC.  In addition, our results for the three month periods ended September 30, 2009 and 2008, included management and accounting fee income earned in connection with this joint venture of $104 and $95, respectively.  Our results for the nine month periods ended September 30, 2009 and 2008, included management and accounting fee income of $308 and $285, respectively, earned in connection with this joint venture.  At September 30, 2009 and December 31, 2008, we had a net payable to this joint venture of $888 and $150, respectively.

6.                                    Commitments and Contingencies

Guarantees

In the normal course of our business we periodically enter into agreements that contain guarantees or indemnification provisions.  While the maximum amount to which we may be exposed under such agreements cannot be estimated, we do not believe that any potential guaranty or indemnification will have a material adverse effect on our consolidated financial position or results of operations.

We offer a warranty of our workmanship in our truck repair shops, but we believe the annual warranty expense and corresponding liability are not material to us.

Environmental Matters

Our operations and properties are extensively regulated by environmental laws that (i) regulate our operations that may have adverse environmental effects, such as potentially hazardous discharges to air, soil and water, (ii) regulate our management of petroleum products and other potentially hazardous substances, and (iii) impose liability for the costs of cleaning up sites affected by, and for damages resulting from, disposal or other releases of hazardous substances.  We use underground and above ground storage tanks to store petroleum products and waste at our travel centers; and we must comply with requirements of environmental laws regarding tank construction, integrity testing, leak detection and monitoring, overfill and spill control, contaminant release reporting, financial assurance and corrective action in the event of a release from a storage tank into the environment.  We regularly conduct investigatory and/or remedial actions with respect to releases of hazardous substances at a number of our sites.  We regularly receive notices of alleged violations of environmental laws at our travel centers.

Under certain environmental agreements entered into as part of our predecessor’s acquisitions of travel centers, prior owners of certain of our sites are required to indemnify us for certain environmental conditions.  Certain of our remediation expenditures may be recovered from state government administered funds.  In addition, we have insurance of up to $35,000 for environmental liabilities at certain of our travel centers that were known at the time the policies were issued, and up to $60,000 for unknown environmental liabilities, subject, in each case, to certain limitations and deductibles.

At September 30, 2009, we had an accrued liability for environmental matters of $9,383, as well as a receivable for expected recoveries of certain of these estimated future expenditures and cash in an escrow account to fund certain of these estimated future

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TravelCenters of America LLC

Notes to Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands, except share and per share amounts)

expenditures, resulting in an estimated net amount of $3,514 to be funded by us in the future.  While it is not possible to quantify with certainty our environmental exposure, in our opinion, based upon the information now known to us, our potential liability for clean up and remediation in excess of the accrual we have recorded will not have a material adverse effect on our financial condition, results of operations or cash flows.

While the costs of our environmental compliance in the past have not had, and we do not believe such costs will have, a material adverse impact on us, it is impossible to predict the ultimate effect that changing circumstances and changing environmental laws may have on us in the future.  We cannot be certain that additional 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 additional environmental matters arise or are discovered, or if additional environmental requirements are imposed by government agencies, increased environmental compliance or remediation expenditures may be required, and such costs could have a material adverse effect on us.

Pending Litigation

On February 1, 2008, a purported holder of our shares, Alan R. Kahn, filed a purported derivative action in the Delaware Court of Chancery on behalf of us against members of our board of directors, Hospitality Trust and Reit Management.  This action alleged that our directors breached their fiduciary duties in connection with our May 30, 2007 acquisition of Petro Stopping Centers, L.P., which we refer to as the Petro Acquisition, and sought an award of unspecified damages and reformation of the Petro Lease, which we entered with Hospitality Trust in connection with the Petro Acquisition.  This action also appeared to allege that Reit Management and Hospitality Trust aided and abetted our directors.  Under our limited liability company agreement and agreements with Reit Management and Hospitality Trust, we are liable to indemnify our directors, Hospitality Trust and Reit Management for liabilities, costs and expenses incurred by them in connection with this litigation.  On May 6, 2008, we moved to dismiss this complaint.  On June 20, 2008, the plaintiff filed an amended complaint making additional allegations regarding the members of our board of directors and withdrawing his request for reformation of the Petro Lease.  On July 2, 2008, we moved to dismiss the amended complaint.  On October 30, 2008, plaintiff’s claims against Reit Management were voluntarily dismissed.  On December 11, 2008, our motion to dismiss the amended complaint was denied and a previously imposed stay of discovery was lifted.  On January 21, 2009, Hospitality Trust sent a letter to the plaintiff demanding arbitration of his claims pursuant to the terms of the Petro Lease.  We believe that the plaintiff and Hospitality Trust have agreed to defer the arbitration demand.  This case is now in the early stages of discovery.

In July 2008, Riverside and San Bernardino counties in the State of California each filed litigation against us in the Superior Court of California for Riverside and San Bernardino counties, respectively, seeking civil penalties and injunctive relief for alleged past violations of various state laws and regulations relating to our predecessor’s management of underground storage tanks.  In April 2009, the California Attorney General intervened in the action in Riverside County.  The California Attorney General’s complaint repeats many of the allegations made by Riverside County and adds allegations of past violations of state laws and regulations governing the management of hazardous wastes.  We have been engaged in active negotiations with San Bernardino County in an effort to resolve its pending claims and we expect to have more active settlement discussions in the Riverside County case in the future.  Although we believe that the judgments or settlements which may result from these litigations and negotiations are unlikely to be material to us, California’s environmental laws provide for the possible assessment of large civil penalties for various violations, including some violations which do not result in environmental harm or continuing environmental risks.  Accordingly, these litigations and negotiations may result in our obligation to pay material amounts.

Beginning in mid December 2006, a series of class action lawsuits was filed against numerous companies in the petroleum industry, including our predecessor and our subsidiaries, in United States District Courts in over 20 states.  Major petroleum refineries and retailers have been named as defendants in one or more of these lawsuits.  The plaintiffs in the lawsuits generally allege that they are retail purchasers who purchased motor fuel at temperatures greater than 60 degrees Fahrenheit at the time of sale.  One theory alleges that the plaintiffs purchased smaller quantities 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.  These “temperature” cases seek, among other relief, an order requiring the defendants to install temperature correcting equipment on their retail fuel pumps, damages and attorneys’ fees.  A second theory alleges that fuel taxes are calculated in temperature adjusted 60 degree gallons and are collected by governments from 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.  These “tax” cases seek, among other relief, recovery of excess taxes paid and punitive damages.  We believe that there are substantial factual and legal defenses to the theories alleged in these so called “hot fuel” lawsuits.  The cases have been consolidated in the United States District Court for the District of Kansas pursuant to multi district litigation procedures.  Plaintiffs purporting to represent purchasers of motor fuel in 17 different states have

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TravelCenters of America LLC

Notes to Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands, except share and per share amounts)

moved for certification of their respective classes, which motions are currently pending.  Because discovery is ongoing, we cannot estimate our ultimate exposure to loss or liability, if any, related to these lawsuits.

On April 6, 2009, five independent truck stop owners, who are plaintiffs in a purported class action suit against Comdata Network, Inc., or Comdata, in the United States District Court for the Eastern District of Pennsylvania, filed a motion to amend their complaint to add us as a defendant.  The proposed amended complaint also seeks to add as defendants Ceridian Corporation, Pilot Travel Centers LLC, and Loves Travel Stops & Country Stores, Inc.  Comdata markets fuel cards which are used as a form of payment by trucking companies at truck stops.  The proposed amended complaint alleges antitrust violations arising out of Comdata’s contractual relationships with truck stops in connection with its fuel cards.  The plaintiffs are seeking unspecified damages and injunctive relief.  We believe that the plaintiffs’ claims are similar to claims asserted, and subsequently dismissed voluntarily, by proposed classes of independent truck stop owners against our predecessor in 2007.  On April 23, 2009, we filed an opposition to the plaintiffs’ efforts to amend their complaint to add us as a defendant in this ongoing action.  In response to that opposition, on May 21, 2009, plaintiffs filed a second action against us and the other companies that the plaintiffs sought to add as defendants with their previously pending action seeking the same relief they sought from us and the other defendants in the preexisting case.  The complaint in this second action contains the same allegations and claims as the proposed amended complaint in the first action.  We have moved to dismiss the second action and continue to oppose the plaintiffs’ efforts to add us as a defendant in the first action.  We believe that there are substantial factual and legal defenses to the plaintiffs’ claims against us.

We are involved from time to time in various other legal and administrative proceedings and threatened legal and administrative proceedings incidental to the ordinary course of our business, none of which we expect, individually or in the aggregate, to have a material adverse effect on our business, financial condition, results of operations or cash flows.

7.                                    Income Taxes

The provisions (benefits) for income taxes included in our current and historical financial statements were as follows:

Because of our short history and our history of operating losses, we do not currently recognize the benefit of any of our deferred tax assets, including tax loss carry forwards, that may be used to offset future taxable income.  We will, however, continue to assess our ability to generate sufficient taxable income during future periods in which our deferred tax assets may be realized.  If and when we believe it is more likely than not that we will realize the benefit from our deferred tax assets, we will record these assets as an income tax benefit in our consolidated statement of operations.  Our federal net operating loss carryforward generated in 2007 was $50,470.  Our federal net operating loss generated in 2008 was $23,255.  Our 2007 federal net operating loss and other tax credit carryforwards are generally not available to us for the purpose of offsetting future taxable income because of certain Internal Revenue Code, or IRC, provisions regarding changes in ownership of our common shares.  Our ability to utilize the 2008 federal net operating loss and other tax credit carryforwards is currently not restricted by application of these certain IRC provisions, but could be subject to limitation based on future events.  Our 2008 federal net operating loss carryforward will expire in 2028.

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TravelCenters of America LLC

Notes to Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands, except share and per share amounts)

Our provision for income taxes differed from the amount calculated at the statutory rate primarily due to recognition of a valuation allowance against our net deferred tax assets and to certain state income taxes that are due without regard to our net operating losses.

8.                                    Supplemental Cash Flow Information.

9.                                    Other Information

In the first quarter of 2008 we recognized a charge of $5,000 in selling, general and administrative expense related to a legal settlement.

Interest expense for the nine months ended September 30, 2008, included $1,273 related to the 9% Senior Secured Notes, or the 9% Notes, we assumed as part of the Petro Acquisition.  Interest income for the nine months ended September 30, 2008, included $1,165 of interest income earned from restricted investments that had been used to defease the 9% Notes at the time of the Petro Acquisition and which were used to repay in full the 9% Notes in February 2008.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The following discussion should be read in conjunction with the financial statements included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2008.

Our revenues and income are subject to potentially material changes as a result of the market prices of diesel fuel and gasoline, as well as the availability of these products.  These factors are subject to the worldwide petroleum products supply chain, which historically has incurred shocks as a result of, among other things, severe weather, terrorism, political crises, wars and other military actions and variations in demand, which are often the result of changes in the macroeconomic environment.  Over the past few years there has been significant volatility in the cost of diesel fuel and gasoline: first, as crude oil demand increased during the previous economic expansion in the United States and events such as Hurricane Katrina affected the supply system; then as economic growth in certain developing economies, such as China and India, increased demand for petroleum products; then, as the world value of the U.S. dollar declined and as speculation in the price of petroleum commodities increased; and, more recently, as the price of diesel fuel and gasoline declined dramatically as the current worldwide recession reduced demand for petroleum products.  During the third quarter of 2009, as the comparative value of the U.S. dollar began to decline, diesel fuel and gasoline prices have again begun to rise dramatically.  We expect that these significant changes in our costs for these products can largely be passed on to our customers, but increased volatility in the crude oil and refined products markets can result in negative effects on our sales and profitability and increases in our working capital requirements.  Nonetheless, for the foreseeable future, we expect that the crude oil and refined product markets will continue to be volatile.

In addition to the factors cited above, our financial results during the three and nine month periods ended September 30, 2009, were, and our financial results in future periods may be, affected by the condition of the U.S. economy, generally, and the financial condition and activity of the trucking industry in the U.S, specifically.  The trucking industry is the primary customer for our goods and services.  Freight and trucking demand in the U.S. generally reflects the amount of commercial activity in the U.S. economy.  Because the U.S. economy has been in a recession, demand for our products and services has declined during the past year.  The decline in new home starts and the decline in import activity in the U.S. during that time have contributed to reduced trucking industry activity in the U.S. generally and to declines in our fuel sales volume.  Although recently the U.S. economy has shown signs of stabilizing, it is unclear as to whether these trends will continue or be sustainable.  If the U.S. economy continues to operate as it has over the past 12 to 18 months or if it worsens, our financial results may not improve and may decline, resulting in our experiencing increased losses from our operations.  The current economic conditions in the U.S. generally, and in the trucking industry in particular, have retarded our efforts to produce profitable results from our operations in 2008 and 2009.

Summary of Travel Center Site Counts

The following table summarizes the changes in the composition of our business (company operated, franchisee leased and operated or franchisee owned and operated) from December 31, 2007 through September 30, 2009:

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Relevance of Fuel Revenues

Due to volatile pricing of fuel products and our pricing arrangements with 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 increase or decrease significantly as compared to our historical results, in both absolute amounts and on a percentage basis, without a comparable change in fuel sales volumes or in gross margin per gallon.  We consider fuel volumes and gross margin to be better measures of comparative performance than fuel revenues.

Results of Operations

Three months ended September 30, 2009 compared to September 30, 2008

The following table summarizes our results for the three month periods ended September 30, 2009 and 2008.

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Same Site Comparisons. A travel center is included in the following same site comparisons if it was continuously operated by us from July 1, 2008 through September 30, 2009 or, in the case of rent revenues and royalty revenues, by a franchisee of ours for that same period.  Travel centers are not excluded from the same site comparisons as a result of changes in their size or in the services offered.

(1)                  Includes fuel volume, fuel margin, revenues and expenses of company operated travel centers only.

(2)                  Excludes real estate rent expense.

Revenues. Revenues for the three month period ended September 30, 2009, were $1,281.9 million, which represented a decrease from the quarter ended September 30, 2008, of $875.8 million, or 40.6%, primarily related to a decrease in fuel revenue.

Fuel revenues were 76.8% of total revenues for the quarter ended September 30, 2009, as compared to 84.9% for the same period in 2008.  Fuel revenues for the quarter ended September 30, 2009, were $984.9 million, a decrease of $847.5 million, or 46.3%, as compared to the same period in 2008.  This decrease was principally the result of decreases in fuel prices and also resulted from reduced fuel sales volume.  The table below shows the changes in fuel revenues between periods that resulted from price and volume changes:

On a same site basis for our company operated sites, fuel sales volume decreased by 18.0 million gallons, or 3.6%, during the three months ended September 30, 2009 compared to the same period in 2008.  We believe the same site fuel sales volume decrease resulted primarily from a decline in trucking activity attributable to the significant decline in economic activity in the U.S. throughout 2008 and continuing into 2009, particularly the declines in the shipments of durable goods, including new home building supplies, as well as a decline in imports into the U.S. that are transported by truck combined with increased fuel conservation efforts by truck operators throughout 2008 and continuing into 2009 as a result of the historically high cost of fuel in 2008.  The same site fuel sales volume decline for the quarter was somewhat lessened by an increase in fuel sales volumes to motorist customers that we believe resulted from both the decline in fuel prices in 2009 as compared to 2008 and our retail pricing strategy.